Editor's note: The following text was the preamble to Wisconsin Gov. Scott Walker's budget veto message to the Assembly Sunday.
To the Honorable Members of the Assembly:
I have approved Assembly Bill 40 as 2011 Wisconsin Act 32 and deposited it in the Office of the Secretary of State.
This budget reflects a return to the bedrock principles of our state's constitution – frugality and moderation. It's a budget that is, for the first time in many years, balanced – now and in the future – with a structural surplus of over $300 million in the 2013-15 biennium. It avoids relying on accounting gimmicks, fund raids and one-time funds. With this budget, we have begun to put our state's financial house in order and make our finances more transparent. And this budget is enacted before the start of the new biennium – with the earliest signing date since 1967.
Last March, I introduced a budget based on those fundamental values in our constitution. My budget brought spending in line with revenues - now and in the future - it did not raise taxes; it provided local governments with the tools to reduce costs and maintain essential services; and it set priorities on job creation and economic development. The budget I sign today, with limited vetoes, remains consistent with those goals and values. I want to commend the Legislature for its work in completing the budget on time. Together we have put Wisconsin back on a course toward job creation and prosperity. True economic growth requires a robust private sector. By balancing the budget through limits on government spending and focusing on priorities, we are on our way to creating 250,000 jobs by 2015.
Over 50 percent of Wisconsin's general fund budget is devoted to local government services – primarily to public schools and public safety. Preserving those services and reducing spending demanded that local officials be given the tools to truly manage costs. With employee compensation the largest part of those costs, changes to state and local government employee collective bargaining and increased employee contributions to pensions and health insurance costs were critical to preserving government services and Wisconsin's quality of life.
These changes will help set Wisconsin on a course toward stable, affordable and effective government. State and local government will become more nimble in the face of change and be able to achieve continuous improvement. With these tools, state and local officials can help lay the foundation for success – for our school children, our higher education graduates, our entrepreneurs and our businesses.
This budget protects Wisconsin tax payers – including middle class families, seniors in their homes and small businesses. It does not raise taxes. It freezes municipal, county and technical college district levies. It reduces school district revenue limits in line with necessary state aid reductions and consistent with savings from cost-containment measures. It limits growth in property taxes on the median value home to less than 1 percent each year. It eliminates regional transit authorities and their potential to independently raise local taxes.
This budget promotes job creation. It provides tax incentives for investing capital gains in Wisconsin businesses and growing manufacturing jobs. It devotes $160 million to the new Wisconsin Economic Development Corporation in support of our state's economic prosperity. It promotes Wisconsin tourism by investing approximately $14 million annually in our state's marketing efforts, a nearly 40 percent increase. It supports business expansion by investing over $5.7 billion in our state's transportation system. It streamlines business licensing and regulation through a new Department of Safety and Professional Services.
Education is critical to job creation and Wisconsin's future prosperity. Wisconsin's public schools and higher education systems are among the best in the country. Flexible and accountable operations are central to ensuring Wisconsin children and young adults receive the best education possible. The budget invests $15 million in better school performance data systems, sets the stage for improved reading attainment in early grades and puts the state on a course toward implementing high quality student assessment systems.
The University of Wisconsin-Madison and all University of Wisconsin System campuses are given greater financial and management flexibility along with a greater focus on accountability through annual reports measuring time to graduation, accessibility to key courses and other important performance and outcome measures. Low-income families are given greater access to education by lifting the enrollment cap on the Milwaukee private school choice program, expanding choice to Racine and protecting higher education grants from cuts.
Ensuring sustainable health care programs is the cornerstone of this budget. Due to the sunset of one-time federal funding and dramatic expansions in program participation, nearly all of the general fund revenue growth over the next two years is allocated to fund Medicaid. In order to bring health care costs in future budgets in line with available revenue, the Department of Health Services will begin implementing various measures to "bend-the-cost-curve." These measures include revamping BadgerCare so that it functions more efficiently and effectively, modifying Family Care toward a greater emphasis on self-directed and focused care, consolidating and streamlining back-office eligibility functions, and preserving SeniorCare.
The following is a brief summary of how this budget, including my vetoes, will address some of the key issues facing the citizens of Wisconsin:
Provides more than $160 million in funding over the biennium for the newly created Wisconsin Economic Development Corporation to support a concentrated focus on economic development in the state.
Increases tourism marketing from $9.9 million in fiscal year 2010-11 to $13.8 million annually in part by redirecting arts spending to emphasize those activities that both support the arts and grow the economy.
Ensures Wisconsin's meat processing industry can participate in national and global markets by authorizing 10.0 FTE positions for meat inspection activities.
Reduces regulatory burdens on business expansion by streamlining reporting and eligibility requirements under the prevailing wage law.
Improves the solvency of the unemployment trust fund by implementing a one-week delay in receiving initial benefits, similar to benefit programs in many other states.
Creates the Department of Safety and Professional Services to consolidate the regulatory and licensing functions of several agencies to improve the cost-effectiveness and efficiency of operations. Licensing fees charged to regulated professions will be frozen at the same level as the previous biennium, which is due, in part, to the increased efficiency expected from the consolidated operations.
General Fund Taxes
Protects middle class families, seniors and small businesses by avoiding any tax increases despite one of the largest deficits in state history.
Provides an income and franchise tax credit for manufacturers and agricultural producers, reducing the tax burden on those industries to encourage job creation and investment in Wisconsin in sectors where the state has a competitive advantage.
Creates a capital gains deferral for realized gains reinvested in Wisconsin-based businesses as well as a 100 percent capital gains exclusion for gains realized on
Wisconsin-sourced capital assets held for more than five years to create an incentive for greater investment in Wisconsin businesses.
Shared Revenue and Tax Relief
Enacts the strongest levy limits in Wisconsin history by limiting levy increases for counties and municipalities to the greater of 0 percent or the change in equalized value due to net new construction, and creating a new levy limit on technical college districts, which limits increases to changes in property values unless approved by the voters in the district.
Provides local governments with additional flexibility in meeting budget challenges by increasing the ability of local governments to realize employee compensation savings, repealing the emergency services maintenance of effort requirement, allowing local governments to create combined municipal protective services departments to provide both police and fire services, and suspending the county operating limit for two years to prevent counties with low mill rates from being forced to reduce levies due to falling property values.
Protected sustainable funding for equalization aid in the face of one of the largest deficits in state history.
Provides a $50 per pupil revenue increase in fiscal year 2012-13 and creates a one-time $42.5 million GPR categorical aid program to match district revenue increases.
Expands the private school choice program by repealing the enrollment limit, allowing schools throughout the state to serve eligible city of Milwaukee residents, raising the income threshold to 300 percent of poverty and allowing the Racine School District to participate in the program based on newly established program criteria.
Supports greater accountability and performance by investing $15 million in the development of a statewide student information system and requiring the Department of Public Instruction to implement a new pupil assessment based on mastery of Common Core Standards by 2014-15.
Invests in education by ensuring all elementary school students can read at grade level by providing $1.2 million over the biennium in support of the Governor's Read to Lead Task Force.
Provides greater financial and management flexibility to the University of Wisconsin-Madison and the University of Wisconsin System campuses, including the ability to establish separate personnel management and compensation systems.
Requires the University of Wisconsin-Madison and University of Wisconsin System campuses to provide annual accountability reports, including time to receive a degree, availability of key courses, economic development activities and other important measures.
Maintains current funding levels for financial aid programs and phases out the unsustainable Wisconsin Covenant program.
Seeks to prevent unfair competition in telecommunications and broadband services between the University of Wisconsin and the private sector by increasing legislative oversight in order to focus university supported programs on education and research activities.
Health Care, Children and Families
Protects the state's most vulnerable citizens by preserving the health care safety net provided by Medicaid, BadgerCare Plus and SeniorCare while implementing significant program reforms to bring an end to the unsustainable rate of program growth.
Requires a comprehensive review of the Family Care long-term care program to ensure that public dollars are used in the most effective way to support the needs of the elderly and people with disabilities. Over the past five years, the Family Care program has grown from five pilot counties to 56 counties covering 80 percent of the state's population. During that expansion, there has not been an adequate review of the effectiveness of the program in meeting the care needs of participants and providing services in a cost-effective and accountable manner.
Redesigns the income maintenance eligibility determination system for public benefits to improve the accuracy and timeliness of eligibility determinations, while reducing total program costs by $40 million per year once fully implemented.
Provides funding for building projects to help address the shortage of nurses and support public health education in Wisconsin. New facilities include the Madison School of Nursing, the River Falls Health and Human Performance Building, and the Milwaukee School of Public Health.
Reforms the Wisconsin Works (W-2) program to emphasize work and the Wisconsin Shares child care program to provide information on the quality of child care services, to contain costs and to combat fraud.
Strengthens the finances for Wisconsin's transportation infrastructure system by transferring $160.1 million in general fund revenue to the transportation fund, including an ongoing transfer of 0.25 percent of general fund taxes annually, with an annual minimum of $35.1 million.
Makes progress toward addressing the state's critical highway infrastructure needs by providing $3.2 billion for highway construction and maintenance, an increase of $429.3 million over the biennium.
Creates a new Southeast Wisconsin freeways megaprojects program to fund construction on the I-94 North-South corridor project and the Zoo Interchange in Milwaukee County. The budget provides a total of $420.0 million for those two projects, an increase of $229.9 million above current funding levels.
Ensures local highway projects are completed efficiently by increasing competition and allowing greater private sector participation through new requirements that local governments award projects to the lowest bidder, not perform construction for private development projects, and limit the use of their workforce to projects occurring in all towns, and cities and villages with populations under 5,000.
Invests in programs to assist law enforcement, including additional resources to fight Internet crimes against children, funding for an interoperable communications system and staff resources at the state crime labs to ensure DNA samples are processed in a timely fashion.
Consolidates juvenile correctional facilities to manage decreasing populations while saving resources and minimizing county placement costs.
Provides funding for Victim Information and Notification Everyday (VINE) and VINE Protective Order services to protect public safety and provide information to victims and affected parties.
Provides funding to the State Public Defender for the revised indigency standard which became effective June 19, 2011.
Natural Resources and Environment
Maintains hunting and fishing license fees and parks admission fees at current levels to ensure that even in times of economic challenges access to Wisconsin's abundant natural resources are kept affordable.
Requires the Stewardship program to focus only on the best value purchases by reducing bonding authority by $234 million through fiscal year 2019-20, saving Wisconsin as much as $80 million in total debt service costs.
Modifies the formula for aids provided in lieu of property tax payments for lands purchased through the Stewardship program, saving the state $190,000 in fiscal year 2012-13, but reducing future payments by half or more. Total payments for aids in lieu of property taxes are estimated to be $13.2 million in fiscal year 2012-13.
Ensures a balance between environmental protection and local costs by specifying that the Department of Natural Resources may not enforce an administrative rule for nonagricultural performance standards for runoff from urban areas if the provision has a reduction in total suspended solids exceeding 20 percent.
Reduces bonding authority under the Working Lands program by $12 million and repeals the conversion fee for rezoning from a farmland preservation district. This will allow landowners to decide for themselves the best use of their property without paying a penalty if the use of the land will change.
General Government and Veterans
Limits growth in spending from all funds to 1.8 percent over the biennium, despite a $1.8 billion, 11 percent increase in funding for health care programs and eliminates over 1,000 FTE positions compared to the base year. This small rate of growth, over 70 percent lower than the previous budget, is achieved through increased state and local government employee contributions to pensions and health insurance, elimination of long-term vacancies, closure of state facilities, and across-the-board cuts to many programs.
Requires more transparency in state government through on-line reporting of state expenditures, grants and contracts on a searchable Internet Web site available to the public.
Ensures the solvency of the veterans trust fund over the next biennium by providing $5 million GPR in additional funding to support benefits to veterans.
Strengthens the veterans tuition remission program by expanding it to include the University of Wisconsin-Madison Executive Masters in Business Administration program, distance education, on-line and 100 percent fee funded programs, and by increasing the number of credits or semesters eligible for state tuition remissions.
Provides $1.8 million GPR and 5.0 FTE GPR positions to the Government Accountability Board and $10 million SEG and 55.0 FTE SEG positions to the Department of Transportation for the implementation of the voter identification legislation.
Separates the core functions of promoting job growth from regulating job creators by funding the new public/private Wisconsin Economic Development Corporation focused solely on job creation and a new Department of Safety and Professional Services that can provide a one-stop shop for commercial regulation.
Improves customer service by consolidating responsibilities for trademark and trade name registrations and notary public commissions with the corporate filing activities at the Department of Financial Institutions.
Helps ensure an adequate number of dentists in Wisconsin by providing $16 million in general fund supported borrowing and private funds for expansion of the Marquette Dental School.
Helps improve homeland security and coordination of law enforcement and intelligence data by providing $6.8 million for a Fusion Center at the Department of Military Affairs.
Provides funding for educational facilities including the Horicon Marsh International Education Center. The Horicon Marsh is recognized as a Wetland of International Importance. The center provides educational experiences for scientists and visitors who come from around the world.
Encourages fiscal responsibility by reducing previously authorized bonding for projects that have not moved forward or were constructed under budget.
Directs the Department of Administration to use the proceeds from the sale of buildings to reduce outstanding debt whenever possible.
I have made 50 vetoes to the budget. These vetoes remove unnecessary reports and requirements, clarify program implementation timelines, and improve the intended focus of certain programs. These vetoes reduce spending by $10,000 SEG.
I commend the leadership of the Legislature in maintaining its focus through some of the most difficult political discussions this state has ever faced. They improved on my budget and accomplished something few ever thought attainable – a structural surplus. Together, we are paying our bills and staying focused on job creation.
The budget I sign today reflects a return to Wisconsin's values. From Superior to Kenosha and from Green Bay to Platteville, we are independent-minded, moderate, pragmatic and frugal. This budget embraces those values by giving our local officials the tools to truly focus spending on delivering efficient and effective government services. Together we move forward with a stable government that has put its fiscal house in order so that its people can engage in private enterprise and create jobs that fuel our economy.