Wisconsin Budget Stalemate Goes On

Three months ago today (Friday), the Wisconsin Legislature should have been putting the finishing touches on a two-year, $41 billion state budget. But top legislators still are at it, and for the second budget cycle in a row the budget is delayed far past the July 1 start of the new fiscal year.

There’s no budget crisis, because unlike the federal government when lawmakers fail to act, Wisconsin government doesn’t shut down. It continues to run at previously set budget levels, as the state discovered in 1997.

Two years ago, internal strife inside the majority Senate Democratic caucus tied up the budget for weeks. The legislature, with Republican Gov. Tommy Thompson’s help, finally passed a budget on Sept. 29.

Local governments increasingly are nervous about this year’s delay because they need to know state aid levels before they can put together their own budgets. Also, some $48 million in federal welfare money is at risk.

And Thompson, a former legislative leader himself in the first year of his fourth term as governor, is clearly irritated.

Earlier this week, he called the budget stall an “embarrassing situation” and at one point issued an ultimatum before stopping short of dramatic action when a deal appeared close.

“I’m sure other states are snickering,” said Thompson, who in reality has little power to force a deal beyond embarrassing the legislature by calling a special session.

Thompson and legislative leaders agreed to have the powerful Joint Finance Committee satisfy the two most pressing deadlines. The committee Thursday acted to secure the $48 million in federal money and confirmed for school districts that they’ll get $3.8 billion in general aid in the 1999-2000 year.

The budget slowdown started innocently. The budget-writing Finance Committee got off to a slow start, but it eventually approved a bipartisan spending plan for 1999-2001 with the help of a nearly $500 million surplus and the promise of tax cuts.

But then a bigger surplus pot was estimated — more than $1 billion in surplus dollars are now projected by mid-2001 — and things started to bog down.

The GOP-run Assembly and the Democrat-run Senate passed rival tax-cut plans. The Assembly tilted to permanent income tax cuts, which Republicans ran on in 1998. And the Senate favored big property tax cuts, which Democrats campaigned on in 1998. Thompson, who began the budget debate in February with a middle-income tax cut plan, hoped to preserve his proposal, add some other tax cuts and put money away for the “structural deficit” that plagues budget-makers at the beginning of every new budget cycle.

An eight-man budget conference committee was formed to find compromise. Itwas composed of four Senate Democrats and four Assembly Republicans. Butthe two sides had deep suspicions, and personalities got in the way.

The two leaders –Senate Majority Leader Chuck Chvala, D-Madison, and Assembly Speaker Scott Jensen, R-Waukesha, — are both ambitious politicians with conflicting ideologies. Chvala, who lost to Thompson in the 1994 governor’s race, could run for attorney general in 2002. And Jensen, Thompson’s former chief of staff, is angling to run for governor.

On July 15, Jensen and the Assembly negotiating team walked out claimingChvala wasn’t serious about tax cuts and wanted to spend too much of the surplus. The two sniped all summer, and got back together only after Jensen called Chvala. That was on Sept. 13. The two have been meeting behind closed doors — sometimes with top Thompson aides — since then.

But progress has been very slow. Lately, negotiators have appeared to come close to a total tax-cut package of about $900 million composed of permanent income tax cuts and property tax relief.

The leaders have so far rejected calls for big one-time rebate, as was done in neighboring Minnesota. Thompson favors some kind of rebate, and so do many taxpayers. But the state’s largest big-business lobby, which wants permanent income tax relief, has a poll that says taxpayers want permanent tax cuts.

The budget deal-making also has been complicated by the desire to satisfy state employee unions which want pension improvements. The improvements beingdiscussed would help current retirees, future retirees and the local governments that help fund pensions. Any pension improvements would come in a companion bill.

Thompson, still contemplating a special legislative session or some other unspecified action, appears to have backed off until the weekend as he’s attending an education summit in New York with other governors that runs through Friday.

On Wednesday he said the two sides were closer and that only three or four major items remained. But Thompson, who has resisted publicly taking sides to the chagrin of Assembly Republicans, sent a warning to Chvala: “I’ve gone as far as I’m going to go on spending.”

Chvala has been pushing for millions in new permanent education spending to lower class sizes and freeze university tuition.

Chvala loyalists, however, pointed out that the governor has his own spending wish list, too. One of them is money for a state high school graduation test that Thompson would have liked to have touted at the education summit.