Capitol expense

0711madcapitol

A cursory overview of the economic highlights of the 2011-2013 biennial state budget

Compiled by Sean Fitzgerald

Gov. Scott Walker’s first two-year budget passed through the state legislature in relatively quick fashion in mid-June and he was preparing to sign it as of the New North B2B press deadline in late June.

The $66 billion two-year spending plan, which took effect July 1, includes a host of spending cuts to balance a projected $3 billion shortfall. It also includes no general tax increases. The final version of the budget closely parallels the original budget document Gov. Walker presented in March.

Here are some of the economic and business-related highlights of the budget:

Taxes

  • Does not include any sales or income tax increases and would limit schools and local governments on raising property taxes. Property taxes on owners of median-valued homes are projected to increase a total of $54 over two years.
  • Creates a new capital gains tax deferral for investments in Wisconsin-based companies. The measure costs $36 million over two years.
  • Creates a new tax credit for manufacturers and agricultural businesses. The cost is expected to be about $129 million a year once it’s fully phased in starting in 2016.
  • Loosens taxes charged to multistate corporations – indoctrinated through the combined reporting law enacted during the Gov. Doyle administration – which provides a tax break worth more than $46 million over two years.
  • Creates a new sales tax exemption for advertising and promotional direct mail starting in 2013.

Medicaid

  • Cuts $500 million from Medicaid through a variety of reforms including increasing co-pays and deductibles. The changes do not reduce benefits across the board or cut provider reimbursement rates.
  • The approved budget does reject Walker’s proposal to require participants in the SeniorCare prescription drug program to first enroll in Medicare Part D.

K-12 schools

  • Cuts aid to schools by about $800 million over two years and also reduces how much schools can collect from property taxes per student, a combined cut expected to reduce revenue to districts by about $1.6 billion.
  • Repeals the enrollment limit for voucher schools in the City of Milwaukee and expands vouchers to all Milwaukee County schools and to Racine.

Higher education

  • Cuts University of Wisconsin System funding by $250 million, but keeps the flagship Madison campus as part of the system while giving it and other UW campuses more autonomy in how they operate and spend money.
  • Cuts aid to technical colleges by $72 million, or about 30 percent of 2009-11 biennial budget levels.

Transportation

  • Increases transportation funding by 1.2 percent.
  • Provides $225 million to rebuild the Zoo Interchange in Milwaukee.
  • Provides $195 million to continue reconstruction of Interstate 94 between Milwaukee and Kenosha.

Natural resources

  • Continues to require local recycling programs and maintains state funding to help finance those programs.
  • Reduces Stewardship Program funding by $26 million a year. The program protects land from development by purchasing it and preserving it for public recreational use.

Government

  • Ends public financing in races for governor, the legislature and the state supreme court.
  • Cuts aid to local governments by $76 million.
  • Increases state spending by 1.8 percent over the 2009-11 budget plan.
  • Cuts most state agency budgets by 10 percent, but makes exceptions for salary and benefits.
  • Eliminates 1,032 state positions, most of which have been vacant more than a year.
  • Downsizes the state treasurer and secretary of state’s offices, moving many of their existing duties elsewhere.
  • Eliminates the structural deficit and leaves the state with a $306 million surplus.

Sources: Wisconsin Legislative Fiscal Bureau and The Associated Press