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Gov. Scott Walker delivered his first budget address Tuesday evening. MIKE DeVRIES – The Capital Times archives

Education and local government bear the brunt of Gov. Scott Walker's first budget, a reform-minded plan that cuts about $1 billion in state aid and prevents officials from raising taxes to make up the difference.

In a prepared address to the Legislature Tuesday, Walker rolled out his vision of government for the next two years and promised the hardships facing Wisconsin will not last forever.

"Too many politicians have failed to tell the truth about our financial crisis," Walker told the crowd gathered in the Assembly chamber. "The facts are clear: Wisconsin is broke and it's time to start paying our bills today — so our kids are not stuck with even bigger bills tomorrow."

Wisconsin has a projected $3.6 billion deficit. The governor campaigned on a promise of fiscal discipline, and for the most part, he delivered a spending plan that matched his rhetoric.

The $59 billion budget — which includes federal revenue, fees and state taxes — represents a 6.7 percent reduction from the current budget. State funding makes up $28.7 billion in state funding, a 1.4 percent increase over the previous two-year spending plan.

At the same time, Walker said his plan also reduces the perennial imbalance between revenue and spending commitments — known as the structural deficit — by some 90 percent by 2013, from $2.5 billion to $250 million.

To accomplish this, the governor proposed reducing state aids to schools by $834 million over the next two years, a 7.9 percent reduction. Perhaps more significantly, the budget also reduces school district revenue limits by 5.5 percent, preventing local officials from using property taxes to make up the difference.

Walker takes the same approach to technical colleges, where he proposes to reduce state aid by $71.6 million but will not let the colleges raise property taxes above the 2010-11 level.

The UW System also takes a significant hit. Walker wants to cut $250 million from the System, to be split between UW-Madison and the other campuses.

"What the Governor has proposed is nearly $1.5 billion in devastating cuts to public schools, local fire and police protection, and the University of Wisconsin," said Senate Minority Leader Mark Miller, D-Monona, one of the 14 Democratic senators who fled to Illinois nearly two weeks ago to avoid voting on a precursor bill to plug a hole in the current budget.

That bill, which seeks to eliminate collective bargaining rights for most state employees, has been the focus of more than two weeks of intense protests, which have threatened to eclipse the even larger two-year spending bill introduced Tuesday.

Walker's budget also hits local municipalities and counties hard, reducing their local aid by $96 million, an 11.6 percent reduction.

Making good on promises

The proposal does not come as a surprise. Rumors of the harsh cuts have been whispered around the state for weeks. Walker himself has more than hinted at what he was planning.

"We ran on this for the past two years," said Assembly Speaker Jeff Fitzgerald, R-Horicon. "We said if we got back in power we were going to change things. We said we were going to solve a budget deficit."

Walker's controversial budget repair bill would allow local officials to save money by diverting more money from employees' paychecks for health insurance and pensions. Those changes would be the equivalent of a 5.2 percent pay cut for a public worker making $40,000 a year.

Walker said the changes in collective bargaining alone would more than make up for the cuts he proposes. But many of his critics predict his budget will actually result in job losses for public sector workers, the opposite of the governor's promise of bringing 250,000 jobs to the state.

"It changes the state motto to ‘Backwards,' said State Rep. Brett Hulsey, D-Madison. "There will be layoffs, thousands of them."

Rep. Tamara Grigsby, D-Milwaukee, likened it to war.

"Gov. Walker is officially waging war on Wisconsin families," she said. "Far from reform, this budget will only add to Republicans' ongoing assault on working families and Wisconsin values."

Spending up elsewhere

Not every department faces tough times. Some areas of state spending will prosper.

Walker sets aside nearly $200 million for the Wisconsin Economic Development Corporation, Walker's public-private hybrid replacement for the state Department of Commerce.

And the governor boosts transportation spending from about $5.4 billion in 2009-11 to $5.7 billion, and ends raids on the transportation fund for non-transportation-related spending.

The state has about $700 million in annual unmet transportation needs. Meanwhile, Wisconsin has in the past eight years raided its transportation fund for $1.3 billion to pay for other state programs. It has borrowed $1 billion to offset the loss, leaving a $300 million shortfall.

Senate President Mike Ellis, R-Neenah, praised Walker's proposal.

"It's the first budget we've had in 12 years that actually is going to be a balanced budget without any funny money," Ellis said.

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