Milwaukee Biz Blog

We are turning things around.  We are heading in the right direction.  We are moving Wisconsin forward. 

In 2011, we added thousands of private sector jobs and the unemployment rate is down from a year ago.  In fact, it’s the lowest it has been since 2008. 

In the past, 150,000 of our fellow citizens lost their jobs in the private sector.  Two years ago, a mere 10 percent of our employers thought that Wisconsin was headed in the right direction. 

In contrast, we created a better environment for job creation in our state over the past year.  Now, 94 percent of our employers say Wisconsin is headed in the right direction.  A majority of those employers say that they plan on growing in 2012. 

To help small businesses continue to grow, our Wisconsin Working jobs plan helps connect job seekers to employers and to the skills that they need to fill those jobs.  Our initiatives have broad, bi-partisan support.   

To continue to grow our economy, we also needed to address the fiscal crisis we inherited.  Last January, Wisconsin faced a $3.6 billion budget deficit. 

We balanced that budget deficit.  Unlike other states, we did it without raising taxes, without massive layoffs and without budget tricks.  That allowed us to put more than $1.2 billion (one of the biggest increases in the country) into Medicaid to support programs that help needy families, children and seniors. 

Property taxpayers also benefited from our reforms.  For the five years prior to my talking office, the average school tax levy increased $220 million per year.  Our reforms led to the first decrease in the school property tax levy in six years.

We proved that we can have great schools and protect the taxpayers.  We just have to spend our money more wisely. 

In the past, schools were often forced to buy their health insurance from just one company.  Now, they can bid it out and school districts are saving millions. 

As the father of two students in a public high school in Wisconsin, I am thankful for our great schools and outstanding teachers.  That’s why I’m glad schools can now staff based on merit and pay based on performance.  That means we can put the best and the brightest in our classrooms, and we can keep them there. 

Looking ahead, we have a plan to improve reading in our state through our Read to Lead initiative.  We want to be certain that every child is reading early so they don’t ever feel that learning isn’t for them. 

We are also working with State Superintendent of Public Instruction Tony Evers on a system to hold schools and school districts accountable to educators, parents, employers and each community.  Our system will help replicate success and help fix problems.   

Overall, we are working hard to help the people of our state create more jobs, continue to balance our budget and make sure that every kid has access to a great education.  Working together, I know we can improve Wisconsin.

We made some tough decisions over the past year because I didn’t want to pass on a mess to my kids and others like them.  We thought more about the next generation than we did about the next election.  We kept our promises. 

Thankfully, we are turning things around and are heading in the right direction. Together, we will continue to move Wisconsin forward.

Scott Walker is the governor of Wisconsin.

The Kaukauna School District recently announced that our reforms will allow them to add more teachers, reduce class sizes and set funds aside to reward excellent teachers next school year. This is a prime example of how our budget and budget reforms protect middle class jobs and property taxpayers – as well as future generations.

The 2011-2013 state budget I recently signed transformed a $3.6 billion deficit into a surplus, it caps property taxes and it provides support for basic safety net programs to protect seniors and needy families. It does what we said we would do to get this state working again.

The balanced budget is built on our reforms that give schools and local governments the tools to balance their own budgets and protect jobs – without hurting taxpayers.

Recently a 60-year-old custodian wrote to me about his property taxes. He noted they went up $500 last year. When he retires he said, “My property tax bill will be my highest expense next to health insurance. I will have to find a part-time job just to live normally.”

Under our budget, the average property taxpayer will save $700. It is my hope that savings like this will help keep more people like that custodian safely in their homes.

Our balanced budget also provides a safety net. Over the next two years, nearly all new revenue that the state receives will go to programs that care for needy families and children – as well as our seniors.

As the father of two kids in a public high school, seeing our schools do well is important to me. Spending for our public schools continues to be the largest part of the budget at the same time that our reforms allow schools to put more of their resources into the classroom.

Our budget also allows us to look to the future. It is the first truly balanced budget in more than a decade. The national bond rating agencies call it “credit positive” because we make the structural changes needed to ensure stability for the future.

This fiscal stability will do more than balance the budget; it will help us improve the economy.

Already, we have seen signs of recovery. That’s vital to middle class families. Recently, a woman named Tina emailed me about her family of four (soon to be five). Her husband lost his job last year and she said that she’s hoping that our efforts to boost the economy will continue to grow jobs in this state.

Through May, Wisconsin has added more than 26,000 private sector jobs (13,000 in manufacturing). Our national ranking on good places to do business rose from 41 to 24. And a ranking of job creators in the state showed that 88% of them think we are going in the right direction this year (versus 10% in 2010).

Still, we can not rest until the economic recovery goes from Wall Street to Main Street and – most importantly – to every street in Wisconsin. That is why our budget includes incentives to create more manufacturing and agricultural jobs, in addition to increasing investments in Wisconsin-based companies that employee our residents.

We have to succeed so that families like Tina’s can get back to work. And working together, we will.

Our budget chooses to fix our problems now, so that our children and our grandchildren don't face the same challenges we face today. I want them to grow up in a Wisconsin even better than the Wisconsin I grew up in - that's what this budget sets out to do.
                             
Scott Walker is the governor of Wisconsin.

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:

Economic Development
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.
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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.

K-12 Education

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.

Higher Education
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.

Transportation
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.

Justice
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.
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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.
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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.
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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.

Building Program
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.

 

The following is the written testimony of Wisconsin Gov. Scott Walker for the U.S. House of Representatives’ Committee on Oversight and Government Reform’s April 14 hearing on “State and Municipal Debt: Tough Choices Ahead” in Washington, D.C.

Chairman Issa and Distinguished Committee Members, I appreciate this opportunity to testify before you today and look forward to our discussion regarding the budget challenges faced by states across this nation, Wisconsin’s current state budget deficit and our committed approach to putting our state back on the path to prosperity.

In nearly every state across America, Governors are facing major budget deficits.  In fact, according to the Center on Budget and Policy Priorities, 44 states and the District of Columbia face shortfalls in Fiscal year 2012 totaling more than$111 billion and ranging from 2 to 45% of their total state budgets.  In Wisconsin, we are currently facing a biennial budget deficit of $3.6 billion.

Many Governors, Democrat and Republican alike, are cutting state aid to schools and other local governments - which forces massive layoffs, massive property tax increases or both.

In Wisconsin, we are doing something truly progressive.  In addition to holding the line on spending and finding efficiencies in state government, we are implementing long term budget reforms focused on protecting middle class jobs and middle class taxpayers.

While our idea may be a bold political move it is a very modest request of our employees.  We are reforming the collective bargaining system so our state and local governments can ask employees to contribute 5.8% for pension and 12.6% for health insurance premiums.  These reforms will help them balance their budgets.  In total, our collective bargaining reforms save local governments more than $700 million each year.

Most workers outside of government would love our proposal.  For example, my brother David works as a banquet manager and as a part-time bartender.  His wife works at a local department store.  They have two beautiful children.  They are a typical middle class family.

He told me that he pays about $800 a month for his health insurance and the little he can set aside in his 401(k).  Like many other workers in our state, he would love a deal like the one I offered government workers.

Over the past several months, I have visited numerous factories and small businesses across Wisconsin.  On these tours, workers tell me that they pay anywhere from 15% to 50% of their health insurance premium costs.  The average middle class worker is paying more than 20% of his or her premium.  Like my brother, they would love a plan like the one we are offering.

Even federal employees pay more than twice what we are asking state and local government workers to pay and most of them don’t have collective bargaining for wages or benefits. These facts beg the question as to why the protesters are in Wisconsin and not in Washington, D.C.  By nearly any measure, our requests are quite reasonable.

Beyond helping to balance current and future budgets, our reforms will also make our government work better.

In 2010, Megan Sampson was named an Outstanding First Year Teacher in Wisconsin.  A week later, she received a layoff notice from the Milwaukee Public Schools.  So why would one of the best new teachers be one of the first let go?  Because her collective bargaining contract requires staffing decisions to be made based on seniority.

Ms. Sampson received a layoff notice because the union leadership would not accept reasonable changes to their contract.  Instead, they hid behind a collective bargaining agreement that costs the taxpayers more than $101,000 per year for each teacher; a contract which protects a 0% contribution for health insurance premiums; and a contract that forces schools to staff based on seniority and union rules.

Our budget reforms allow school districts to assign staff based on merit and performance.  That keeps great teachers like Ms. Sampson in the classroom.

And it works at the state level too.  In 2005, Governor Mitch Daniels reformed collective bargaining in Indiana.  In turn, the government became more efficient, more effective and more accountable to the public.  Governor Daniels even encouraged employees to come forward with ways to save taxpayer dollars and they responded.  Eventually, the state was able to reward top performing employees.  This is true reform – making government work for the people.

Since January 3rd, we passed some of the most aggressive economic development legislation in the country.  And on nearly every measure, many Democrats joined with all of the Republicans and an Independent to vote in favor of the various pieces of legislation.  The Wisconsin legislature recognized that we are growing, not Republican or Democratic jobs, but Wisconsin jobs.  Together, we worked to show that Wisconsin is open for business.

But sometimes, bi-partisanship is not so good.  During several of the past budgets, members of both political parties raided segregated funds, used questionable accounting principles and deferred tough decisions. This, along with the use of billions of dollars worth of one-time federal stimulus money for the budget two years ago, left Wisconsin with the current $3.6 billion deficit.

Our reforms allow us to take a new and better approach.  Instead of avoiding the hard decisions and searching for short-term solutions, we make a commitment to the future.  The choices we are making now in Wisconsin will make sure our children are not left picking up the pieces of the broken state budget others left behind.  Our reforms create the lowest structural deficit in recent history ensuring our budget is stable for decades to come.  Moody’s called our budget proposal “credit positive” because of our dynamic efforts to reduce the structural deficit.

These changes do more than just balance the budget; they give small businesses the confidence they need to grow and invest in our state.  Investors want stability and our budget provides long-term fiscal certainty for our state and local governments.

We live in the greatest nation on earth.  For more than 200 years we’ve had leaders who cared more about their children and grandchildren than themselves – leaders who have demonstrated the courage to make decisions in the best interest of the next generation – and not just the next election. This is truly a concept that America has always admired, but many have now forgotten as we face our greatest challenge – balancing our budgets.

My hope is that our actions in Wisconsin will remind the rest of the nation what makes our country great, but more importantly my sincere hope is that by reforming our state budget for the long haul we will be sending a strong signal to job creators from around the world that Wisconsin is Open for Business.

Editor’s note: In the weeks since Wisconsin Gov. Scott Walker introduced his reforms to balance the budget and revoke the collective bargaining rights of public employees, The New York Times repeatedly used its editorial pages to opine on the reforms. Below is the Op-Ed that Governor Walker wrote that the New York Times chose not to run. Walker calls it “the one opinion piece The New York Times didn’t want you to read.”

In nearly every state across America, Governors are facing major budget deficits.  Many, Democrat and Republican alike, are cutting state aid to schools and other local governments - which will force massive layoffs, massive property tax increases or both.

In Wisconsin, we are doing something progressive in the best sense of the word.  We are implementing reforms to protect middle class jobs and middle class taxpayers.  While our idea may be a bold political move it is a very modest request of our employees. 

We are reforming the bargaining system so our state and local governments can ask employees to contribute 5.8% for pension and 12.6% for health insurance premiums.  These reforms will help them balance their budgets.  In total, our reforms save local governments more than $700 million each year.

Most workers outside of government would love our proposal.  Over the past several months, I have visited numerous factories and small businesses across Wisconsin.  On these tours, workers tell me that they pay anywhere from 15% to 50% of their health insurance premium costs.  The average middle class worker is paying more than 20% of his or her premium. 

Even federal employees pay more than twice what we are asking state and local government workers to pay and most of them don’t have collective bargaining for wages or benefits. These facts beg the question as to why the protesters are in Wisconsin and not in Washington, D.C.  By nearly any measure, our requests are quite reasonable. 

Beyond helping to balance current and future budgets, our reforms will improve the quality of our governments.  No longer will hiring and firing be done solely based on seniority and union contracts.  Instead, schools - as well as state and local governments - will be able to make decisions based on merit and performance. 

This concept works well in Indiana.  In 2005, Governor Mitch Daniels reformed collective bargaining.  In turn, the government got more efficient, more effective and more accountable to the public.  Governor Daniels even encouraged employees to come forward with ways to save taxpayer dollars and they responded.  Eventually, the state was able to reward top performing employees.  This is true reform – making government work for the people.

A recent columnist on these pages opined that “common problems deserve common solutions” suggesting that Republicans and Democrats work together.  In principle, that is a good idea.

Since January 3rd, we passed some of the most aggressive economic development legislation in the country.  And on nearly every measure, many Democrats joined with all of the Republicans and an Independent to vote in favor of the various pieces of legislation.  The Wisconsin legislature recognized that we are growing, not Republican or Democratic jobs, but Wisconsin jobs.  Together, we worked to show that Wisconsin is open for business. 

But sometimes, bi-partisanship is not so good.  During several of the past budgets, members of both political parties raided segregated funds, used questionable accounting principles and deferred tough decisions. This, along with the use of billions of dollars worth of one-time federal stimulus money for the budget two years ago, left Wisconsin with the current $3.6 billion deficit. 

Our reforms allow us to take a new and better approach.  Instead of avoiding the hard decisions and searching for short-term solutions, we make a commitment to the future.  The choices we are making now in Wisconsin will make sure our children are not left picking up the pieces of the broken state budget left behind.  Our reforms create the lowest structural deficit in recent history ensuring our budget is stable for decades to come.  These changes will give businesses the confidence they need to grow and invest in our state. 

We live in the greatest nation on earth because for more than 200 years we’ve had leaders who cared more about their children and grandchildren than themselves.  Having the courage to make decisions in the best interest of the next generation – despite external pressures – is a concept that America has always admired, but is forgetting today.  My hope is that Wisconsin will remind the nation what makes our country great.

Imagine the outrage if government workers did not have collective bargaining for wages and benefits. Consider the massive protests that would be staged by labor leaders all across the country.

Think I’m talking about Wisconsin? No, I’m talking about the federal government.

Contrary to what the Obama administration would lead you to believe, most employees of the federal government do not have collective bargaining for wages and benefits. That means the budget reform plan we signed into law in Wisconsin on Friday is more generous than what President Obama offers federal employees.

Our reform plan calls for a 5.8 percent pension contribution from government workers, including myself, and a 12.6 percent health insurance premium payment. Both are well below what middle-class, private-sector workers pay. Federal workers, however, pay an average of 28 percent of health insurance costs.

It’s enough to make you wonder why there are no protesters circling the White House.

My brother is a banquet manager and occasional bartender at a hotel. He pays nearly $800 a month for his family’s health insurance and can put away only a little bit toward his 401(k). He would love the plan I’m offering to public employees.

As my brother recognizes, our plan is a good deal for government workers when compared with what other middle-class workers are paying for benefits. It would be a great deal for federal workers.

Nearly every state in the country is facing a large budget deficit, just like the federal government. Many states are cutting billions of dollars in funding for schools and local governments, resulting in massive layoffs or massive property tax increases — or both.

In Wisconsin, we are choosing a different way. The Wisconsin way allows local governments to balance the budget through reasonable benefit contributions. These reasonable contributions will save local governments almost $1.5 billion.

The financial savings in our budget reforms will protect 1,500 jobs this fiscal year and 10,000 jobs over the next two years. The savings come from giving state and local governments the tools to manage benefit costs through collective bargaining reform.

Some have questioned the need to reform collective bargaining. After all, they say, the union bosses in Washington said publicly that their workers were ready to pay a little bit more for their benefits. But the truth is that as the national union bosses were saying one thing, their locals were doing something entirely different. Over the past several weeks, local unions across Wisconsin have pursued contracts without new pension or health insurance contributions. Some have even pushed through pay increases.

Their actions leave one wondering how tone-deaf and out of touch union bosses are with what’s happening in the private sector. Even the president instituted a pay freeze on government workers this year, something he was able to do only because federal employees enjoy fewer collective bargaining rights than do Wisconsin workers — even with our recent reforms.

Beyond balancing budgets, our reforms give schools — as well as state and local governments — the tools to improve their operations. We allow them to reward merit and performance instead of facing the barriers of collective bargaining that all too often block innovation and reform. Because of our reforms, government will become more efficient and effective for the people.

Ultimately, our budget repair bill is about the next generation. We are making the difficult decisions now so that our children don’t have to make even more difficult choices to balance the budget we left them.

A lot of people have made their voices heard during this debate, including the president and the union bosses. But middle-class taxpayers who want a government that works for them also deserve a voice. Now they have one.

 

Scott Walker is the governor of Wisconsin. This column originally appeared in The Washington Post.

The budget repair bill is now in the hands of the Legislature. Although it is getting a lot more attention than most bills, it is still just a bill working its way through the process. In our state, budget bills are introduced by the Governor, reviewed by the Joint Finance Committee and then brought before the State Assembly and State Senate. 

Legislators can debate budget bills in committee and on the floor of their respective houses and offer amendments.  Most importantly they have the responsibility to vote, much like citizens do at the ballot box during elections. 

The public offered suggestions and we made changes to the bill because of their participation in the public process. I also applaud Assembly Democrats for publicly debating the budget repair bill I introduced two weeks ago. 

In contrast, their counterparts in the Senate fled the state in an effort to prevent democracy from working, stifle debate, and ultimately try and negate the results of the election that took place last November.

The reason Senate Democrats claimed they left the state was because citizens needed more time to debate the issue. This is ironic because 12 of the 14 missing Senate Democrats passed Governor (Jim) Doyle’s budget repair bill, which raised taxes by a billion dollars, within 24 hours of introduction and without a public hearing in February 2009.  Senate Republicans vehemently disagreed with the bill and the process Democrats used to ram it through; however they stayed in Wisconsin, debated the legislation and made the choice to participate in democracy by casting their vote in opposition. 

The Legislation has been public for two weeks and the Joint Finance Committee listened to more than 17 hours of public testimony on the budget repair bill. Yet Senate Democrats still remain out of state endlessly holding media interviews. 

In one interview Senator (Chris) Larson said, “It’s almost like a reality TV show.”

I have a message for Senator Larson: No it isn’t. This isn’t for entertainment, this is real. 

We have a deficit for the remainder of this fiscal year and a $3.6 billion deficit for the next budget that starts on July 1. Our budget repair bill allows us to save $300 million from state government workers and gives local units of government the tools to save $1.44 billion in the next state budget. In addition, it gives local governments the tools to save even more in order to protect jobs and vital services. To achieve these savings, we need to pass our repair bill. That’s why the Senate Democrats need to come home. 

I go to work every day to defend the plan I laid out to make the tough decisions needed to balance Wisconsin’s budget.

It’s clear Senate Democrats disagree with the bill I put forward. I understand and respect that.  I’ll always be willing to cooperate and communicate with the Democrats, but that has to happen at the State Capitol in Madison.

 

Scott Walker is the governor of Wisconsin.

Editor's note: The following is the text of Wisconsin Gov. Scott Walker's address to the people Tuesday night.

 

Good evening. 

Wisconsin is showing the rest of the country how to have a passionate, yet civil debate about our finances. That’s a very Midwestern trait and something we should be proud of. I pray, however, that this civility will continue as people pour into our state from all across America.

First, let me be clear: I have great respect for those who have chosen a career in government. I really do.

In 1985, when I was a high school junior in the small town of Delavan, I was inspired to pursue public service after I attended the American Legion's Badger Boys State program.  The military veterans and educators who put on that week-long event showed the honor in serving others.

Tonight, I thank the 300,000-plus state and local government employees who showed up for work today and did their jobs well.  We appreciate it.  If you take only one message away tonight, it’s that we all respect the work that you do.

I also understand how concerned many government workers are about their futures.  I’ve listened to their comments and read their emails. 

I listened to the educator from Milwaukee who wrote to me about her concerns about the legislation and what it might mean for her classroom.

That’s why last week we agreed to make changes to the bill to address many of those issues.

And I listened to others like the correctional officer in Chippewa Falls who emailed me arguing that bargaining rights for public employee unions are the only way to ensure that workers get a fair say in their working conditions.

I understand and respect those concerns.  It’s important to remember that many of the rights we’re talking about don’t come from collective bargaining.  They come from the civil service system in Wisconsin.  That law was passed in 1905 (long before collective bargaining) and it will continue long after our plan is approved. 

You see, despite a lot of the rhetoric we’ve heard over the past 11 days the bill I put forward isn’t aimed at state workers, and it certainly isn’t a battle with unions.  If it was, we would have eliminated collective bargaining entirely or we would have gone after the private-sector unions. 

But, we did not because they are our partners in economic development.  We need them to help us put 250,000 people to work in the private sector over the next four years. 

The legislation I’ve put forward is about one thing. It’s about balancing our budget now -- and in the future. Wisconsin faces a 137 million dollar deficit for the remainder of this fiscal year and a 3.6 billion dollar deficit for the upcoming budget.

Our bill is about protecting the hardworking taxpayer.  It’s about Wisconsin families trying to make ends meet and help their children.

People like the woman from Wausau who wrote me saying “I’m a single parent of two children, one of whom is autistic. I have been intimately involved in my school district, but I can no longer afford the taxes I pay.  I am in favor of everyone paying for benefits, as I have to.”

It’s also about the small business owner who told me about the challenges he faces just making payroll each week. His employees pay much larger premiums than we are asking because that’s how they keep the company going and that’s how they protect their jobs. 

Or the substitute teacher here in Madison, who wrote to me last week about having to sit at home unable to work because her union had closed the school down to protest.

She sent me an email that went on to say, “I was given no choice in joining the union and I am forced to pay dues… I am missing out on pay today… I feel like I have no voice.”

I assure you that she does have a voice.

And so does the factory worker in Janesville who was laid off nearly two years ago.  He's a union guy in a union town who asks simply why everyone else has to sacrifice except those in government.  

Last week, I traveled the state visiting manufacturing plants and talking to workers – just like the guy from Janesville.  Many of them are paying twenty-five to fifty percent of their health care premiums.  Most, had 401k plans with limited or no match from the company. 

My brother’s in the same situation.  He works as a banquet manager and occasional bartender at a hotel and my sister-in-law works for a department store.  They have two beautiful kids. 

In every way, they are a typical middle-class family here in Wisconsin.  David mentioned to me that he pays nearly $800 a month for his health insurance and the little he can set aside for his 401k. 

He – like so many other workers across Wisconsin – would love a deal like the benefits we are pushing in this budget repair bill. 

That’s because what we are asking for is modest – at least to those outside of government. 

Our measure asks for a 5.8% contribution to the pension and a 12.6% contribution for the health insurance premium.  Both are well below the national average. 

And this is just one part of our comprehensive plan to balance the state’s 3.6 billion dollar budget deficit. 

Now, some have questioned why we have to reform collective bargaining to balance the budget. The answer is simple the system is broken: it costs taxpayers serious money – particularly at the local level.  As a former county official, I know that first hand.

For years, I tried to use modest changes in pension and health insurance contributions as a means of balancing our budget without massive layoffs or furloughs.  On nearly every occasion, the local unions (empowered by collective bargaining agreements) told me to go ahead and layoff workers.  That’s not acceptable to me.

Here’s another example:  in Wisconsin, many local school districts are required to buy their health insurance through the WEA Trust (which is the state teachers union’s company).  When our bill passes, these school districts can opt to switch into the state plan and save $68 million per year.  Those savings could be used to pay for more teachers and put more money into the classroom to help our kids.

Some have also suggested that Wisconsin raise taxes on corporations and people with high-incomes.  Well -- Governor Doyle and the Legislature did that: two years ago.  In fact they passed a budget-repair bill (in just one day, mind you) that included a billion-dollar tax increase.

Instead of raising taxes, we need to control government spending to balance our budget. 

Two years ago, many of the same Senate Democrats who are hiding out in another state approved a biennial budget that not only included higher taxes – it included more than two billion dollars in one-time federal stimulus aid. 

That money was supposed to be for one-time costs for things like roads and bridges.  Instead, they used it as a short-term fix to balance the last state budget.  Not surprisingly, the state now faces a deficit for the remainder of this fiscal year and a 3.6 billion dollar hole for the budget starting July 1st. 

What we need now more than ever, is a commitment to the future.

As more and more protesters come in from Nevada, Chicago and elsewhere, I am not going to allow their voices to overwhelm the voices of the millions of taxpayers from across the state who think we’re doing the right thing.  This is a decision that Wisconsin will make.

Fundamentally, that’s what we were elected to do. Make tough decisions.  Whether we like the outcome or not, our democratic institutions call for us to participate.  That is why I am asking the missing Senators to come back to work. 

Do the job you were elected to do.  You don’t have to like the outcome, or even vote yes, but as part of the world’s greatest democracy, you should be here, in Madison, at the Capitol.

The missing Senate Democrats must know that their failure to come to work will lead to dire consequences very soon.   Failure to act on this budget repair bill means (at least) 15 hundred state employees will be laid off before the end of June.  If there is no agreement by July 1st, another 5-6 thousand state workers -- as well as 5-6 thousand local government employees would be also laid off. 

But, there is a way to avoid these layoffs and other cuts.  The 14 State Senators who are staying outside of Wisconsin as we speak can come home and do their job.

We are broke because time and time again politicians of both parties ran from the tough decisions and punted them down the road for another day.  We can no longer do that, because, you see, what we’re really talking about today is our future. 

The future of my children, of your children, of the children of the single mother from Wausau that I mentioned earlier. 

Like you, I want my two sons to grow up in a state at least as great as the Wisconsin I grew up in. 

More than 162 years ago, our ancestors approved Wisconsin’s constitution.  They believed in the power of hard work and determination and they envisioned a new state with limitless potential. 

Our founders were pretty smart.  They understood that it is through frugality and moderation in government that we will see freedom and prosperity for our people. 

Now is our time to once again seize that potential.  We will do so at this turning point in our state’s history by restoring fiscal responsibility that fosters prosperity for today – and for future generations. 

Thank you for joining me tonight. May God richly bless you and your family and may God continue to bless the great State of Wisconsin. 

Editor’s note: Gov. Scott Walker sent the following e-mail to state employees last week.

Thank you for your service to your state and your fellow citizens.  I know that you have worked hard during this economic downturn to ensure that our citizens continue to receive great service, despite our state having fewer and fewer resources.  I, like all Wisconsinites, am grateful for your professionalism and commitment to public service. 

Like almost every state across the nation, our state faces some very serious and undeniable financial challenges.  Over the last three months, I have worked diligently to review the status of our state finances and to put forward a plan that balances our budget now and will create stability in future budgets. 

Many of you are aware of the immediate challenges facing our state.  In the current fiscal year which ends on June 30, 2011, we face a budget deficit of $136.7 million.  We also owe more than $200 million to the Injured Patients and Families Compensation Fund.  Failure to immediately address this shortfall could result in the state being unable to pay for health services to thousands of children and families in Wisconsin’s BadgerCare program.

Looking to the future, our challenges are even greater. Over the next two years, the State of Wisconsin faces a biennial budget deficit of $3.6 billion.

While some of these financial challenges may be attributed to the slowing of our economy, the reality is that these problems were exacerbated by poor budgeting decisions approved and promoted by past elected leaders, Republicans and Democrats alike. By relying on the use of one-time money, segregated fund raids, and increases in taxes and fees, past leaders have focused on short term solutions without looking toward the future.

While these decisions may have appeared to be the easiest solution, or the path of least resistance, the bills for these decisions have come due and the path to long term financial solvency for our state requires shared sacrifices from everyone.

Today, I am introducing a Budget Repair Bill to address our current fiscal year deficit of $136.7 million.  Later this month, I will introduce my 2011-2013 Biennial Budget proposal to address the pending $3.6 billion deficit.

The Budget Repair Bill will include a number of reform measures focused on bringing government employee benefits closer to the private sector, including:

• Pension Contributions – Currently, state, school district and municipal employees who are members of the Wisconsin Retirement System contribute very little toward their pensions.  The bill requires that WRS employees, including myself and my cabinet officers, as well as employees of the City and County of Milwaukee, contribute 50 percent of their monthly pension contributions.  This amount is estimated to be 5.8 percent of salary for 2011, which is about the national average for private sector employees.
• Health Insurance Contributions – Currently, state employees pay approximately 6 percent of annual health insurance premiums. This bill requires that state employees, again including myself and my cabinet officers, pay at least 12 percent of monthly premiums, which is still less than half of what the private sector pays.  In addition, the bill directs the Group Insurance Board to implement changes to health insurance plan designs to further reduce premiums by 5 percent and will implement health risk assessments for all state employees beginning on January 1, 2012.  Local employers participating in the Public Employers Group Health insurance program operated by the state will be prohibited from paying more than 88 percent of the lowest cost plan.
• Collective Bargaining – Given the above changes, the bill also makes various changes to limit collective bargaining to the base pay rate. Total increases cannot exceed the Consumer Price Index (CPI) unless approved by a referendum.  Contracts will be limited to one year and wages will be frozen until the new contract is settled.  Collective bargaining units will have to take annual votes to maintain certification as a union.  Employers will be prohibited from collecting union dues and members of collective bargaining units will not be required to pay dues.  These changes take effect upon the expiration of existing contracts.  Local police and fire employees and State Patrol Troopers and Inspectors are exempted from these changes.

Collectively, these changes will result in savings of approximately $30 million in the remaining few months of the current fiscal year.

In the days ahead, some may attempt to misrepresent these reform measures, spreading inaccurate or misleading information.  To ensure that you know the facts, I would like to proactively address these issues.

Editor’s note: The following is the text of Wisconsin Gov. Scott Walker’s first State of the State address, as prepared for his speech on Tuesday.

Speaker Fitzgerald, Speaker Pro Tem Kramer, President Ellis, Majority Leader Fitzgerald, Minority Leader Miller, Minority Leader Barca, Supreme Court Justices, Constitutional Officers, tribal leaders, members of the Cabinet, distinguished guests, members of the Legislature, and most importantly, fellow citizens of Wisconsin, it is an honor to be with you tonight to report on the state of our state.
Yesterday, Trooper Gary Markowski was struck by a vehicle in the line of duty and seriously injured.  I spoke to his wife this afternoon, and am grateful to report that tonight he is resting in the hospital on his way to recovery.  Let us pause for a moment to offer our thoughts and prayers to the Markowski family, and all those who serve to keep us safe…
In the gallery, we have the First Lady of the Great State of Wisconsin, my wife, Tonette Walker and our sons Matt and Alex, my parents Llew and Pat Walker and my brother and sister-in-law David and Maria Walker.  Next to them is General Donald Dunbar and several members of the Wisconsin National Guard. 
General Dunbar, we cannot thank you and the brave men and women from Wisconsin who wear our nations uniform enough.  Not only do you defend our nation abroad, but you work on the frontlines during our state’s natural challenges, like tonight’s storm.  Even before I declared a state of emergency you were ready to assist Wisconsin citizens and now you are mobilized to help our state respond.
To you, your families and to all of our other veterans, we say a hearty thank you.
Every year the Governor of Wisconsin comes before this body to report on the state of the state.  This year the state of the state is – well – pumped up about our Packers. 
I’ve asked a representative of the Packers to be with us live from Arlington tonight, so that we can wish them well.
We’re honored that Packers President Mark Murphy could be with us tonight from Texas. 
Mark, thank you for taking the time to join us, I know you’re busy preparing for the big game against the Steelers, so we won’t keep you long.  Congratulations on making it to the Super Bowl, what a tremendous victory you had on the road two weeks ago. 
Mark, on behalf of the state of Wisconsin, I want you to know that the entire state is rooting for you and we wish you the best of luck.  Win or lose we’re proud of you.
Here in Wisconsin, we don’t need a seating chart to bring Republicans and Democrats together – all we need are the Green Bay Packers. 
In fact, we are sitting under evidence of that right now.  Thanks to the help of Senators Risser and Hansen, we worked together to illuminate the dome of this Capitol tonight with green and gold lights. 
Over the course of this season, our pride for the Green Bay Packers has brought this state together.  I believe we need that same unity to get Wisconsin working again. 
Tonight, I will layout a clear picture of the state of our state.  We will be realistic about the challenges we face while optimistic about our solutions. 
First, let me be clear: we have an economic and fiscal crisis in this state that demands our immediate attention.  The solutions we offer must be designed to address both job creation and our budget problems. 
Wisconsin’s once strong economy is in need of repair.  Too many of our people are hurting and too many of our employers are struggling. 
The unemployment rate in December dropped to 7.5% but that is still 3 points worse than it was just three years ago at this time.  We must do better.
As I travel the state, I hear too many stories of families struggling to put food on the table; I see too many young people who can’t find a job having to move in with their parents; and I learn of too many small businesses who are forced to layoff workers because of the economy. 
Coach Vince Lombardi once said, “Success demands singleness of purpose.”  We are defining success for this administration by our ability to shape an environment where 250,000 jobs are created.  Every action of our administration should be looked at through the lens of job creation.   
That is why – moments after taking the oath of office as your Governor – I called a special session of the Legislature to focus on jobs.  Already, we are sending a clear message that Wisconsin is open for business! 
That singleness of purpose is why we hit the ground running on our very first day and why by our second day we had already introduced legislation to improve Wisconsin’s economic environment.
All told, we introduced 8 pieces of legislation to instill in our state an environment that encourages job creation, and to send the message to employers that now is the time to start hiring.
We challenged the Legislature to move swiftly and decisively on our Jobs Plan.  Speaker Fitzgerald, Senate Majority Leader Fitzgerald, Senator Darling, and Representative Vos, you and your fellow legislators, like Senator Cullen, accepted that challenge– in many cases with bi-partisan support.  On behalf of the people of Wisconsin, I say thank you.
Creating jobs shouldn’t be a partisan issue.  These are not Republican or Democrat jobs, these are Wisconsin jobs.
In less than 30 days, I have already signed four pieces of legislation into law that will help the private sector create jobs. 
And on my desk is another bill giving tax relief to small businesses that I intend to sign on Friday.
The first act I signed as governor eliminated the taxes on health savings accounts, making health care more affordable for small business owners, blue-collar workers and family farmers.  I want to thank Representatives Kaufert, Ziegelbauer and Stone and Senators Darling, Olsen and Vukmir for their leadership on HSAs.  This change was a long time coming for Wisconsin and brings us into line with the rest of the nation.
Our second act reduced frivolous lawsuits in Wisconsin.  The litigation environment in a state is one of the key drivers for business and unfortunately we were once known as “Alabama North” because of our poor lawsuit climate. 
Now, we’ve turned the page on lawsuit reform and offer one more sign that Wisconsin is open for business. 
Thanks to Senator Zipperer and Representative Jim Ott for their leadership on this important issue. 
Yesterday, I signed an expansion of our relocation and economic development tax credits.  These measures will help our state attract and retain businesses and jobs. 
More thanks to the Legislature for your swift action – and particular appreciation to Representatives Klenke, Williams, Knilans, and Al Ott and Senators Lazich, Moulton and Wanggaard for your leadership on these bi-partisan measures. 
Although we have accomplished a lot in a short time, we should not celebrate too much the bills that have already passed.  We are under no illusion that simply calling a Special Session and passing legislation means that all is better in Wisconsin.  The fact that we needed to call a special session at all is a sobering reminder of all the work we have left to do.
We still must change the regulatory environment in Wisconsin.  From talking with families and businesses across this great state, I sense a spirit that we can grow again when our people are freed from government mandates, rules, regulations and taxes; freed to create jobs, to grow their businesses, to live their lives.
That is why I introduced, and you are working on, regulatory reform legislation.  The smallest change in a rule can have unintended consequences that drive up costs for businesses and stand in the way of job growth.  Our regulatory reform bill will help get government’s hands off our job creators and make it easier for employers to put people to work in Wisconsin.
Two weeks ago, the Assembly Speaker and Senate Majority Leader joined me in writing a column for the Chicago Tribune.  We made the case that employers in Illinois should escape to Wisconsin, not only because of Illinois’ massive tax hike, but because of the two opposite directions our states are heading. 
You see, businesses make decisions based on trends.  Before locating a facility or adding jobs somewhere, they look to see what the future there looks like.
That’s why the budget and budget repair bills we will introduce in the coming weeks will be even more important than our Special Session legislation. 
It is in those budgets where rhetoric meets reality, where we will show that we will make the tough decisions now to lay the foundation for future economic growth. 
During the present downturn, Wisconsin’s proud tradition of responsible budgeting gave way to repeated raids on segregated funds, excessive borrowing for operations and an addiction to one-time federal dollars. These are no longer options, and their use has only delayed and worsened the difficult decisions we must now make. 
These factors, along with the decline in the global economy that started several years ago, have combined to create a 3 billion dollar deficit for the state budget that starts on July 1.  And they are contributing factors to why the state government faces more than a 200 million dollar shortfall for the rest of this fiscal year. 

Like Wisconsin, states across the nation are facing major fiscal challenges.  States face immediate budget shortfalls totaling 26 billion dollars this fiscal year, with an even larger shortfall over 120 billion looming next year.
Nationwide, states face an over trillion dollar funding shortfall in public-sector retirement benefits.  814 billion dollars of one-time federal stimulus funding is going away.  States face a total mandated growth in Medicaid of 51 billion dollars.  And state and local governments have a collective 2.4 trillion dollars in debts. 
As the Governor of New York said, “there’s no Democratic or Republican philosophical dispute here.  The numbers have to balance, and the numbers now don’t balance…it’s painful but it is also undeniable.”  He is right.
Wisconsin is facing those same undeniable challenges that states across the nation are facing; both in this year’s budget and in the next two-year budget.
Throughout Wisconsin’s history we have faced many great challenges. Each time it looked like we might falter and lose our way, we turned back to our Constitution’s call for frugality and moderation and marched forward.
It is time to return to our founding principles yet again.  We can no longer afford to turn a blind eye to the tough decisions ahead. 
Without swift corrective action, entitlement programs and legacy costs will eat up more and more of the operating budget.  Failure to act only makes the problems worse in the future. 
Last week, our Secretary at the Department of Health Services, Dennis Smith, testified before Congress on some of the challenges we are facing in Medicaid.  In that program alone, we face a more than 150 million dollar shortfall over the next 6 months and, over the next biennium, the shortfall exceeds 1.8 billion dollars.  These are challenges that cannot be ignored.
In addition to the deficits facing these critically important areas of state government, bill collectors are waiting on the doorsteps of our capitol. Due to a past reliance on short term fixes, one-time money, delayed payments, and fund raids, we owe the State of Minnesota nearly 60 million dollars and we owe the Patient’s Compensation fund for a past raid of $200 million.
The decisions we face are not easy and the solutions we must approve will require true sacrifice.  But, the benefit of finally making these tough decisions and being honest with the citizens of this state will help us to balance the budget in a way that creates a permanent, structurally sound state budget.
If we are going to move our state forward, we have to be honest and agree that we no longer can afford to rely on short-term fixes that only delay the pain, compound the problems, and lead to ongoing financial uncertainty.
States, like Wisconsin, are left with two choices: one is to raise taxes, continue to hinder our people with burdensome regulations, and kick the difficult choices down the road for our children and grandchildren; the other is to do the heavy lifting now and transform the way government works in Wisconsin.  
Some states will choose the easy way out.
As I mentioned, our neighbors to the south chose to deal with their budget crisis with major income and business tax increases. At the same time, they pushed the most challenging decisions off for another day – and, probably, another tax increase. 
We quickly saw the result of their actions.  States, including our own, which are committed to holding the line on spending, began circling Illinois as soon as the tax increase passed.
Their lack of action will ultimately lead to fewer jobs and higher taxes. 

But there is another way. 
We can use our budget challenge as an opportunity; an opportunity to reduce government and to increase flexibility.  To ensure that all sectors of our economy contribute equally, so that the entire state benefits.  We are Wisconsin, we will lead the way.
In the coming weeks, I will introduce a budget repair bill focusing on the most immediate fiscal challenges our state must address to avoid massive layoffs or reductions in critical services. Our budget repair bill will lay the foundation for a structurally sound budget that doesn’t rely on short-term fixes and other stop-gap measures that only delay the pain and create perilous uncertainty.
This is the right moment in time, our moment in time, to refocus government to better serve the taxpayers of this state.  To do this, we must provide flexibility to our leaders at all levels. 
One area we will have to look at is public employee benefits.  Now let me be clear: we have good and decent people who work for government at the state and local level.  As Coach Lombardi said, “the measure of who we are is what we do with what we have.”  For years, our employees have been asked to do more with less. 
However, the difficult reality is that healthcare costs and pension costs have risen dramatically and that has created a benefit system that is simply unsustainable. Government benefits have grown while so many others in the private sector have seen their benefits adjusted in order to protect jobs. 
Currently, most state employees pay next to nothing from their salaries toward their pension, while the state’s taxpayers pay more than $190 million each year on state employees’ behalf.
Similarly, most state workers only pay about 6% of their premium costs for their health care plan. 
Asking public employees to make a pension payment of just over 5% (which is about the national average) and a premium payment of 12% (which is about half of the national average) would save the state more than $30 million over three months. Most workers outside of government would love a deal like that – particularly if it means saving jobs.
Private sector workers have already responded to the tough economic times.  When Mercury Marine was on the verge of moving nearly 2,000 jobs to Oklahoma, the company said that “comprehensive changes to wages, benefits and operational flexibility [were] necessary for Mercury to effectively compete in a smaller and fundamentally changed marketplace.”
After a difficult struggle, the workers agreed to major concessions. 
It wasn’t easy for the workers, but the jobs stayed in Wisconsin.  In fact the company said it would move some new jobs from Oklahoma to Wisconsin.
I took special note of the words of one of the workers who had lost his job during the economic downturn and who had the opportunity to gain it back.  He said, “They have treated me and my family more than fairly over the years, and now they are in difficult times.  I understand it’s time to give back so that we can keep all of the jobs here in town.”
That worker was one of 350 returning workers and new hires by Mercury over the last two years; a company which is now positioned to emerge from the downturn stronger and remains based here in Wisconsin.
While state government can’t pick up and move, I hope that our state employees feel as if they’ve been treated fairly over the years, but - like all of us - they should recognize that we are in difficult economic and fiscal times.
Our upcoming budget is built on the premise that we must right size our government.  That means reforming public employee benefits – as well as reforming entitlement programs and reforming the state’s relationship with local governments. 
Most importantly, our budget will focus on items that will help create an environment where the employers of this state can put 250,000 people to work. 
The state’s facing a fundamentally changed marketplace to which we have to respond.  Like Wisconsin companies, our competition isn’t just next door in Michigan, Illinois, or Minnesota but also across the world in China, Germany, and India.  As a result, we must transform our government and business environment to compete globally.
With global competition also comes global opportunity.  For instance, 96 percent of the world’s population live, purchase and consume products outside of the United States.  Wisconsin businesses who want to grow, expand and create new, good-paying jobs need to be able to get their products out to the world in a cost-effective manner.
That means a strong transportation network in Wisconsin; re-prioritizing our transportation investments.  I challenged the Wisconsin Department of Transportation to look at new ways to reconstruct our state’s busiest interchange – the Zoo Interchange – which is used by 350,000 people a day.
Our transportation leaders met the challenge and developed a plan that will start the project ahead of schedule and save the taxpayer’s 600 million dollars.

And while we’ve done big things and we’ll continue to do big things to help business grow jobs in Wisconsin, the quiet things matter too. In today’s global economy small changes, even on the margins, matter.  We’ll continue to pursue the big and small changes necessary to get Wisconsin working again.
In my inaugural address, I quoted Article I, Section 22 of the state constitution which reads, “The blessings of a free government can only be maintained by a firm adherence to justice, moderation, temperance, frugality and virtue, and by frequent recurrence to fundamental principles.”
Our new budget and government will affirm these values and fundamental principles.  As I said when I was sworn in, “it is through frugality and moderation in government that we will see freedom and prosperity for our people.”
That’s really what this administration is all about: frugality and jobs.  It is only through a more frugal government, that our economy can grow faster than others across the nation and around the globe.  I want Wisconsin to lead the economic recovery.
That’s why our special session Jobs Plan is important. We want to lower the cost of doing business in this state – through lower taxation, regulation and litigation costs and more relief from health care costs - so that more employers are able to create jobs for our people. 
And it’s why our budget repair bill, and then our budget are even more important.  Each will demonstrate to the nation that Wisconsin is ready to meet the challenges of today and capitalize on the opportunities of tomorrow.
By making the tough choices we will send a message loud and clear thoughout our state, in Illinois, across the rest of the nation and around the world: Wisconsin is open for business.  We are ready to grow. We will tackle the big issues.  We will lead the way.
Recently, a national news organization did a story about how fast we are getting to work in Wisconsin.  They asked why. 
The reason is simple: I spent the past two years in a job interview with the people of Wisconsin telling you what I would do as your next CEO to get this state working again. 
As you all know, I was pretty specific on our plans and even on the day I’d start implementing those plans, so I saw no reason to wait a year, or six months or even a month to get to work.  Now is the time to take action.
You hired me to put Wisconsin back to work.  I love this state and I know that you do too.  I know that we can transform our state and – in turn – become a national leader in fiscal and economic reform. 
It won’t be easy, but the past 30 days have shown that we are ready to turn this state around. 
Throughout the football season, the Packers were able to unite the people of our great state.  Now, we need to use that same unity to show that we are ready to get Wisconsin working again.  Acting together, I know we can…because I believe in Wisconsin.
Thank you.  God bless you, God bless our Armed Forces and may God bless Wisconsin.