5:53pm

Tue March 1, 2011
Around the Nation

'Wisconsin's Broke,' Governor Says, Unveiling Budget

After focusing for weeks on his proposal to strip public employees of collective bargaining rights, Wisconsin Gov. Scott Walker unveiled his full budget proposal Tuesday — a plan that cuts $1.5 billion in aid to governments and public schools and government but avoids any tax or fee increases, furloughs or widespread layoffs.

Walker said the cuts could be paid for in large part by forcing government employees to pay more for their pension and health care benefits. But his proposal to do that — and to eliminate most collective bargaining — remains in limbo after Senate Democrats fled the state to prevent a vote.

"Wisconsin is broke and it's time to start paying our bills today – so our kids are not stuck with even bigger bills tomorrow," Walker said.

Walker's proposals have stirred a national debate over public-sector unions and drawn tens of thousands of protesters to the Capitol for three weeks.

The governor released his two-year budget in part to support his argument that public worker concessions are essential to confront a projected $3.6 billion shortfall.

By eliminating most collective bargaining, Walker says, state agencies, local governments and school districts will have flexibility to react quickly to the cuts he outlined during a joint session of the Legislature.

Even though Walker isn't ordering immediate layoffs, his budget will put tremendous pressure on schools and local governments, which will be asked to shoulder huge cuts without raising property taxes to make up the difference.

Walker's budget includes a nearly 9 percent cut in aid to schools, which would amount to a reduction of nearly $900 million. The governor also proposed requiring school districts to reduce their property tax authority by an average of $550 per pupil.

One school official described Walker's budget to NPR's David Schaper as a "machete."

Since 1993, the state's property tax limits have gradually risen to reflect increasing costs, and reducing them makes it more difficult for schools to make up the lost money.

Additionally, cities would get nearly $60 million less in aid, an 8.8 percent cut, while counties would lose over $36 million, a 24 percent reduction. They would not be allowed to increase property taxes except to account for new construction.

Walker estimates that his controls on property taxes would save $736 over the next two years for the owner of a home valued at the median price of $161,300.

He's also proposing a $500 million cut to Medicaid, which would be achieved through a number of changes that include increasing co-payments and deductibles and requiring participants in SeniorCare to be also be enrolled in Medicare Part D.

Walker asked for $82 million in tax cuts, including an expanded exclusion for capital gains realized on investments made in Wisconsin-based businesses. The Legislature previously approved more than $117 million in Walker-backed tax cuts that take effect later this year.

The budget also cuts funding at most state agencies, by 10 percent, except for salary and benefits.

He would permanently eliminate 735 positions that have been vacant for more than a year. Some other jobs could be cut as Walker moved to consolidate juvenile prisons and make other changes, but no widespread layoffs were envisioned. State spending over the next two years would rise just 1.3 percent.

As expected, Walker proposed removing the flagship Madison campus from the University of Wisconsin system, leaving 12 other four-year campuses and 13 two-year universities. The system has been ordered to study a similar move for the Milwaukee campus.

In the hours before Walker's address, police roamed Capitol hallways and restricted access to the building.

Meanwhile, protesters who had been asked to leave the building took their battle to court to keep the Statehouse open without limitations.

Over the next several months, the Legislature will review Walker's budget and offer revisions, with the expectation that lawmakers would vote by early summer.

NPR's David Schaper contributed to this report, which includes material from The Associated Press. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.