Wisconsin's budget condition worsens

MADISON, Wis. (AP) - A new budget projection released Thursday shows Wisconsin faces a $143 million shortfall, more than enough to require the Legislature to take action.

But Gov. Scott Walker said the imbalance will be dealt with through cost-savings moves made by his administration that won't require emergency legislation.

• Click here to view the projections from the Legislative Fiscal Bureau

No matter how it's addressed, the downward economic forecast is bad news for Walker, who is in the midst of a recall election. That effort was based largely on criticisms of his two-year budget last year that made steep budget cuts and stripped most public workers of nearly all their collective bargaining rights. Thursday's news also comes in the wake of six straight months of job losses in Wisconsin.

The nonpartisan Legislative Fiscal Bureau projected in October that the state would end the two-year budget in July 2013 with a $73 million surplus. But the new estimate is $216 million worse, fueled largely by a projected $273 million drop in tax collections.

Walker remained optimistic.

"When compared to the past and to other states, Wisconsin is heading in the right direction," he said in a statement.

The Republican didn't detail what he would do to deal with the projected shortfall next year, other than saying he could balance the budget without raising taxes.

Fiscal Bureau Director Bob Lang said in the memo to co-chairs of the Legislature's budget committee that the Walker administration is looking to address the problem through debt refinancing and restructuring.

The Department of Administration, which researches and writes the governor's budget plan, will manage the expected budget shortfall by finding further efficiencies in government and eliminating waste, said agency spokeswoman Jocelyn Webster.

"As we continue to turn the state's economy around and grow the tax base through job creation and business development, (Walker's administration) is well-equipped to manage the state's projected budget shortfall," Webster said.

Democrats said the new numbers showed Walker's plan wasn't working. Democratic Assembly Minority Leader Peter Barca said the governor didn't have a serious focus on jobs and the economy, causing the state to fall farther behind on the road to recovery.

"When people are not working and not spending because of Republican priorities, the state is going to see a drop in revenues," said Barca, who is considering running against Walker in a recall election.

Wisconsin Democratic Party Chairman Mike Tate said the new forecast was just another reason to recall Walker.

"We are now realizing the effects of Scott Walker's fiscal mismanagement," Tate said.

But Rep. Robin Vos, the Republican co-chair of the Legislature's budget committee, said the shortfall was manageable. He noted that the two-year budget is on track to be balanced this year, and there's plenty of time to fix the problem before July 2013.

"I'm not going to push the panic button until we have a much clearer view of what's going on," Vos said. "We are poised for growth, but at the same time we face a challenging national environment."

Walker's handling of the budget last year is at the heart of the effort to recall him from office. Four Republican state senators, along with Walker's lieutenant governor, also face potential recall elections this spring or summer.

Walker argued that he made the tough choices necessary to balance a $3.6 billion budget shortfall without widespread layoffs or tax increases. The most controversial part of his plan reduced collective bargaining rights for public workers and increased how much they had to pay for pension and health care benefits.

Walker's budget also cut aid to schools by about $800 million over two years and reduced how much schools can collect from property taxes per student, a combined cut expected to reduce revenue to districts by about $1.6 billion.

The Legislature's Republican leaders, Sen. Scott Fitzgerald and Rep. Jeff Fitzgerald, issued a joint statement Thursday defending their handling of the budget and reiterating their plans to solve the current problem without raising taxes.

"Wisconsin is not immune to the bad economy, we're simply responding to it better," the Fitzgerald brothers said in a statement. "Instead of tax hikes that shift the burden away from the government and onto taxpayers, and instead of playing political games that make the business climate worse, Republicans in Madison will continue to keep focusing on growing jobs, not the government."