Boosted by federal stimulus dollars, Doyle’s budget calls for a 7.4 percent increase in total state and federal spending. But the proposed spending from the state’s main account actually drops by 1.7 percent to $27.9 billion over 2010 and 2011. It would leave the state with $270 million in reserves.
The budget includes a host of major proposed changes:
• Cutting $900 million from existing agency budgets, including a 1 percent across-the-board cut, and rejecting $1.8 billion from the amount those agencies sought in new spending. The cuts include closing three dozen Division of Motor Vehicle offices, two state trooper stations and 25 Department of Natural Resources offices and cutting state staff at welcome centers for tourists.
State employees would avoid large layoffs and furloughs but the amount of state jobs would shrink by 209 to 69,038 by June 2011.
• Levying $1.4 billion in new taxes and fees, including a tax on oil companies of $544 million. That includes increasing the income tax rate on spring 2010 returns by 1 percentage point to 7.75 percent for single filers earning more than $225,000 a year and married filers earning more than $300,000. The proposal would also lower the state’s exemption for capital gains taxes from 60 percent to 40 percent, raising up to $95 million.
• Providing $426 million more in mostly federal money for K-12 schools over two years, a move Doyle said was essential to holding down property taxes. The budget would hold funding for the University of Wisconsin System essentially flat, leaving universities to manage rising costs through tuition increases, new efficiencies or service cuts.
For what may be the first time in state government history, general-fund spending will actually drop for the fiscal year that begins July 1, by about 5%. Total state spending – including tuition, fees, licenses and federal aid – will rise, however.
But, Doyle said, he had no choice but to ask the Legislature to approve $1.4 billion in tax increases – the largest reworking of the tax codes in decades.
The tax increases include: $540 million paid from oil company profits; $318 million by creating a new 7.75% tax rate for the richest 1% of taxpayers; $290 million in higher taxes on cigarette smokers; $215 million in higher corporate income taxes; and $85 million paid on capital gains investments.