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July 25, 2005

The Biennial Budget Bill now stands as vetoed unless the Legislature, through a two-thirds vote, acts to override the Governor’s action. Time will tell if the nature of the vetoes and the redirection of funds to other appropriations results in any other type of Legislative response.

Budget Alert!

Governor Doyle Signs State Budget
On Monday, July 25, 2005 Governor Doyle signed the 2005-07 State Biennial Budget as Wisconsin Act 25.  As projected, the Governor made substantial use of his veto power to redirect funds to increase state funding for K-12 education.

In summary, the Governor redirected roughly $324 million in transportation revenue, and $92 million in medical assistance funding, to provide an additional $330 million in general equalization aids and an additional $74 million in school levy tax credits, compared to the bill sent to the Governor by the Legislature.

In addition to the funding, the Governor’s partial veto action also retained his version of a property tax freeze. As a result, property taxes next year are estimated to decline by five dollars on average, compared to $119 on average increases over the last five years (according to the Governor’s message).

Transportation Vetoes
The Governor captured roughly $324 million in segregated transportation funds and directed the money be used for K-12 and property tax. In the process, the Governor generally maintained major transportation funding levels but relied more heavily on borrowing.

• Cut $52 million in segregated funding for the Marquette Interchange and $66 million for Southeast Wisconsin projects, and instead relies on 20-year bonding for project work;

• Cut $35 million of the total $38 million appropriated for the Zoo Interchange;

• Forced an additional $159 million lapse from the segregated transportation fund to the general fund, resulting in a total of $427 million to be transferred from the transportation fund to the general fund;

• Vetoed a $10 million increase in the local road improvement program.

Medical Assistance

• Reduced general fund support of the Medical Assistance Program by $32.5 million;

• Cut $42.5 million GPR from nursing homes by deleting rate increases and continuing the requirement that $13.8 million in bed-tax revenue be deposited in the General Fund;

• Reduced funding by $13 million for pharmacy reimbursement and dispensing fees; through partial vetoes effectively directed AWP minus 16 percent as opposed to AWP minus 13 percent, and reduced dispensing fees by 50 cents, as originally proposed in his budget;

• Cut hospital funding for outpatient services by $5 million.

Taxes
The Governor signed several tax reduction provisions adopted by the Legislature, but vetoed in full or in part several others. Tax vetoes included complete elimination of the Private and Home School Tax Credit, changes to the Adoption Expenses Credit, Health Savings Account, Sales Tax on Service Provided by Temporary Help companies, and the Insurance Premium Tax Credit for HIRSP assessment.

Other tax vetoes included an increase in the school levy credit by $74 million in FY 2007, and partial veto of the Tax Exclusion for Social Security Benefits to begin the full 100 percent exclusion one year earlier than provided by the Legislature.

Other Vetoes

• PECFA: Vetoed the reduction in bonding authority and the requirement that the Department of Commerce develop a proposal for program phase-out in the next budget;

• Restored the Smart Growth Program and $4 million in funding for local planning grants;

• Eliminated decreases in Tipping Fees;

• Rejected a number of changes to the Stewardship Program, including the use of Stewardship funds for the purchase of land currently owned by the Board of Commissioners of Public Lands;

• HIRSP: Vetoed the transfer of HIRSP from the Department of Health and Family Services (DHFS) to a private entity and indicated the proposal should be advanced as separate legislation;

• Deleted the requirement that non-represented state employees contribute 1.5 percent of earnings under the state retirement system;

• Deleted a provision to change Utility Shared Revenue Aid from a mill rate calculation to a capacity-based calculation.

Budget links:

2005 Wis. Act 25 (Large PDF file - Not yet published at time of this writing.)

Governor's Press Release

Full Veto Message (114 page PDF file)

Budget in Brief – Feb. 2005 (100 page PDF file)

Short Budget Summary – “Protecting Taxpayers and Investing in Priorities” (13 page PDF file)

Budget News

Doyle rearranges spending with 139 vetoes: Milwaukee Journal Sentinel, July 25, 2005. Changes he said will boost state spending for public schools by $861 million over the next two years and ensure that property taxes won’t rise for homeowners.

Governor uses veto pen to put $400 million more into schools: Milwaukee Journal Sentinel, July 25, 2005. Used his vast veto authority to find more than $400 million more than Republican lawmakers had wanted.

Schools get $400M as gov signs budget: Madison Capital Times, July 25, 2005. Despite his veto of the Republican tax "freeze," Doyle credited Republicans for working with him.

Doyle tinkers with property tax limits in Republicans' budget: Milwaukee Journal Sentinel, July 24, 2005. Vetoes will hold line on burden, he says, but GOP doesn't buy that.

Doyle promises property tax cap: Appleton Post-Crescent, July 24, 2005. Governor’s plan freezes 2006, cuts $5 year after.

Senators praise Doyle veto: Janesville Gazette, July 24, 2005. Senate Assistant Majority Leader Neal Kedzie, R-Elkhorn, applauded Gov. Jim Doyle's decision on Friday to phase out state income taxes on Social Security benefits.