Budget Plan Gives Wisconsin Big Political Issue

Wisconsin Gov. Scott McCallum has triggered an election year battle with his proposal to phase out a 90 year-old program of state aid to local governments to erase a $1.2 billion state budget deficit. The politically risky plan, fiercely opposed by many urban leaders and Democratic legislative leaders, would reduce the $1 billion per year “Shared Funding” program by more than one-third this year alone.

“Brace yourself for claims of catastrophic property tax increases and elimination of every vital local service. But don’t be fooled by that rhetoric,” McCallum declared as he unveiled the plan. “I am not asking local government to do anything different than what state government is expected to do.

“It’s what families and businesses in Wisconsin have been doing all along – living within their means,” the 51-year-old Republican said.

Prospects of McCallum’s election as governor in his own right in November’s election could hinge on the outcome of the fight. He took over as Badger State leader after being popular former Gov. Tommy Thompson’s understudy for 14 years when Thompson went to Washington last year to join the Bush Administration.

McCallum’s proposed budget fix could sharply define him as this year’s campaign begins, making voters see him as a more forceful political persona. It drew a predictable reaction from members of Wisconsin’s divided legislature.

State Senator Brian Burke (D-Milwaukee), co-chair of the powerful Joint Finance Committee, said the plan was “fundamentally a scheme to shift taxes to local units of government” and predicted the Democrat-controlled state Senate would reject it. But Speaker Scott Jensen of the Republican-controlled Assembly cautiously embraced the governor’s plan. He says “big pieces” of it ought to be adopted by the legislature.

Many local leaders, in main Democrats, are up in arms.

Kenosha alderman Frank Pacetti said McCallum “might as well have said that he solved this budget problem by making a deal with the aliens on ‘X-Files ‘.”

Dan Thompson of the League of Wisconsin Municipalities says an end to state aid means cities will have to cut services — and jobs. “We don’t ask gnomes and elves to do this for us in the middle of the night, magically” says Thompson. “We hire people to pick up trash. And if we don’t have the money, we can’t hire the people.”

Among the details of McCallum’s plan to erase Wisconsin’s deficit:

A controversial raid on the state’s tobacco lawsuit settlement funds. $794 million will be “borrowed” to help pay for the state’s shared revenue aid program for local governments until the program is completely phased out in three years.

A $350 million cut in state aid to local governments this year. The money is used among other things to pay for garbage pickup, police and fire services.

A 5.5 % cut in state funding for the University of Wisconsin system over two years, amounting to $50.5 million.

State government operations would be reduced by 11.5 percent, with the governor’s office taking the largest cut (16.5 percent), followed by the Department of Corrections (6 percent).

K-12 public education funding would be untouched, as would health and social service programs for the needy.

The financial firm Standard & Poors has put Wisconsin on a credit watch because of its current budget crisis. It lowered the state’s bond rating last year making it more costly for Wisconsin to borrow money.

McCallum nevertheless is drawing a line in the sand over tax increases. He appears to have decided the people of the state will be with him in a crusade against what he dubs “big spenders”. He says he wants to change the state’s relationship with local governments because that’s where the long-term budget fix lies.

State Representative Shirley Krug (D-Milwaukee) says McCallum has grabbed a legislative tiger by the tail. “He’s declared war on on all the citizens of Wisconsin,”says Krug. “He’s thrown down the gauntlet. The war is on.”

Underscoring the high stakes involved, Wisconsin’s Republican party launched a statewide TV ad campaign supporting the budget plan the day McCallum introduced it to a joint session of the legislature.

(Doug Cunningham is a Wisconsin radio reporter)