State budget repair deal reached

By Steven Walters
Milwaukee Journal Sentinel

Legislative leaders announced a budget-repair package today that nets $209 million from refinancing future payments from cigarette and tobacco manufacturers and delays a $125 million payment for public schools, pushing it into the next budget cycle.

The package is scheduled for quick votes this week in the Assembly and Senate to fix a $652 million shortfall in tax collections that were projected when the budget was adopted last fall.

Approval by the Legislature is also to keep Gov. Jim Doyle from delaying or canceling summer highway maintenance and construction contracts that total up to $261 million.

The deal was announced by Senate Majority Leader Russ Decker (D–Weston), Assembly Speaker Mike Huebsch (R–West Salem) and Democratic Rep. Jim Kreuser (D–Kenosha). The Republican-controlled Assembly will need some Democrats to vote for the budget deal, because some Republicans are expected to reject it.

Legislative leaders said the package would:

• Net $209 million by paying off bonds, approved in 2001, that sold off the first round of payments from cigarette and tobacco manufacturers. The new deal would issue bonds for expected payments from those manufacturers after 2018.


• Delay $125 million in aid to public schools until July 2009, so it doesn't count as an expense in the current two-year budget. Doyle has repeatedly said he opposes that delay, which raises the possibility that he may veto it outright.


• Lower balances in surplus state accounts, which were designed as a hedge against emergencies, by $97 million. The required budget-ending balance would drop from $65 million to $25 million.


• Require $69 million in spending cuts in current programs.


• Use $22 million raised by increases in the cost of drivers' license fees. The money was to be used to implement plans related to the federal Real ID requirements, but the money became available when the federal government extended the deadline.

When the state's cash shortfall was announced in February, Doyle aides announced that they would also save $125 million by mid-2009 by paying only interest — and not principal — on long-term state debt.

A Kreuser aide said the governor had not indicated whether he would veto any of the budget-repair provisions. Doyle is expected to address the package later today.