Frederica Freyberg:
I'm Frederica Freyberg. Tonight on "Here & Now," the state budget deficit, red ink that's now $6.6 billion and growing. Deputy Secretary of Administration Dan Schooff is here. Members of the Joint Finance Committee are expected to get the governor's revised budget by next week. Republican member of that committee, Robin Vos, joins us. A UW public policy professor is here with some fixes of his own. Also a little comic relief with a brand new video essay from our Eau Claire correspondent Michael Perry. But we start with a budget deficit briefing from the Department of Administration. Ahead of that, just for a lay of the land on what the state spends most of its money on, public school aids are the biggest expenditure, followed by medical assistance, corrections, the UW system and shared revenue. With that, Deputy Secretary of DOA, Dan Schooff. Thanks very much for joining us.

Dan Schooff:
Thanks.

Frederica Freyberg:
The news keeps getting worse. An additional $51 million shortfall yesterday. And obviously the administration has been working madly to address this. We wanted to tick through some of the items and specifics. School funding, obviously the largest expenditure for the state of Wisconsin. What level of cuts and from where?

Dan Schooff:
Well, Gov. Doyle worked very hard in the budget he introduced in February to really still allow schools to increase to about $400 million. That's clearly on the table. There's going to be some cutback from that number, in the hundreds of millions of dollars. There's been sort of a marker put out there, superintendents, school districts, boards, teachers have been hearing numbers and I think they're probably somewhere in the 5 percent level back from where we are now.

Frederica Freyberg:
And how many hundreds of millions is that?

Dan Schooff:
That's going to be in the $300 to $400 million.

Frederica Freyberg:
And this comes out of categorical aids like special ed., transportation, what are those?

Dan Schooff:
It's yet to be determined. Special education funding is one place that the federal stimulus law doesn't allow us to cut back from because there's a maintenance of effort to get the federal resources, you have to agree to spend. Everything else is on the table. Like general equalization aids, aids that go to specific districts. Everything has to be on the table. It's something that Gov. Doyle has worked so hard to not have to say, but when he delivered his speech last week, that's really something that these sort of issues have to be part of the mix to get to the balanced budget.

Frederica Freyberg:
Which tells you just how bad it is.

Dan Schooff:
Right.

Frederica Freyberg:
Also the governor talked about at least 5 percent cuts to state agencies. Are these across the board or specified?

Dan Schooff:
Well, what we did in the governor's budget is we did across-the-board 1 percent cuts. Every appropriation got hit 1 percent. Most agencies got cuts much beyond that, hundreds of millions of dollars. So what we're looking at now is deeper across-the-board cuts, and then there is some thinking going on behind this so there are places you can't cut any farther because the number of nurses has to be a certain number in our institutions.

Frederica Freyberg:
Corrections?

Dan Schooff:
In corrections or places. There might be some efficiencies we can get, but there's only a limited amount there. So there's going to be deep cuts in agencies also.

Frederica Freyberg:
What do you know about state assistant district attorneys and whether or not they would realize any of those cuts?

Dan Schooff:
We haven't necessarily exempted one group or the other right now. I think those — you know, the state dollars that go into those folks are directly — they don't have buildings that are paid for, they don't have supplies, utilities. It just pays for their salaries, so any cutback would be a cutback in employees. We hadn't discussed at that level. It's fairly small. There's only 230 or so assistant district attorneys in the state.

Frederica Freyberg:
But they're not exempt.

Dan Schooff:
Nobody's exempt.

Frederica Freyberg:
What about provider reimbursement in medical assistance, cuts there? What do those look like?

Dan Schooff:
Yeah. Our medical assistance budget definitely is a place — most of our budget is corrections, UW, medical assistance and local assistance, both schools and local communities. So all those have to be on the table to try to come up with another $1.5 million to balance the budget. So there will have to be cutbacks in the medical system. Again, obviously Governor Doyle worked very hard with our congressional delegation and Congressman Obey to secure dollars. A big chunk of those state dollars were to put into the medical assistance program. That also requires you not to cut back from coverage.

Frederica Freyberg:
But he was talking about cutting providers.

Dan Schooff:
Provider rates you can cut back. You can’t cut back coverage to citizens.

Frederica Freyberg:
Do you know what the cuts would look like?

Dan Schooff:
No, but they'll be deep.

Frederica Freyberg:
And shared revenue. Milwaukee city and county are already doing their own furloughs. What's the number? What's the percentage cutback?  

Dan Schooff:
The governor has met with mayors and others have talked about preparing for a 5 percent cut, which is about $42 million total over the next two years. So people should be preparing for deep cuts.

Frederica Freyberg:
UW system, I understood that the governor or his people were meeting with chancellors today. What is the governor telling the UW system?

Dan Schooff:
That this is something that's affecting the entire state, that the communities that they serve are hurt and affected all over the state. And they know this. And that the actions that we've taken with employees apply to the university system. They're not exempt from trying to save dollars to balance the budget. And that this is going to be a really tough time. We're going to try to protect the greatness we have in all these universities.

Frederica Freyberg:
What does the administration tell families with kids here at the university, families who are already poised to spend more on tuition, about why they will get less for more?

Dan Schooff:
Well, these decisions aren't made yet on exactly what it will mean for tuition, what it will mean for the UW. Really the UW is — for example, the UW system has a deep cut in its current budget that they were managing through and were going to have reasonable five-ish percent tuition increases. They were going to be able to manage through the cuts across the entire system. They also had done some innovative things, like putting forward for the whole system and here in Madison, holding those families that are at $60,000 a year or less, holding them harmless for tuition increases. So Chancellor Martin, President Reilly, and all the comprehensive chancellors have worked hard to spare the impact on families to a great degree.

Frederica Freyberg:
Sorry we're speeding through this, but there's a lot to get through. All of these cuts, all of this pain, what about tax increases? What is the administration's position there?

Dan Schooff:
Well, the governor laid out last week, you know, he's very loathe to go there. He does not want to and will not propose new taxes to do this. He just feels in this time when so many people are out of work that to put it on the backs of folks that are in Wisconsin is the exact wrong direction he'd like to go. We have put forward revenue increases in this budget, reasonable ones. We were unable to propose a budget — we have 1 percent on those making over $300,000. But to a great degree and across the board we're protecting the middle class and those folks that can least afford to pay for it.

Frederica Freyberg:
So even with this latest deficit that apparently keeps growing, no inclination to increase taxes.

Dan Schooff:
We would prefer to do this through cutting back on our spending. We're going to head into a tough year or two in terms of programs that are run by the state. What we've heard from the governor, we've heard from the president and our nation is that there's glimmers of hope. We're going to recover. We want to be strong. We don't want to make foolish cuts here in Wisconsin, but we want to be able to grow out of this in the future.

Frederica Freyberg:
So it's your belief, the administration's belief that you can fix this without raising taxes.

Dan Schooff:
We're going to do our darnedest.

Frederica Freyberg:
As for rescinding state employee pay increases, the unions say they will not open their contracts and that means, according to the governor, 400 layoffs. Is there any way around that?

Dan Schooff:
That's one part of the proposal. We have put forward a series of actions that will put $220 million toward this problem. These are not symbolic cuts. We're going to roll back the 2 percent increases that were negotiated in good faith two years ago. We're going to roll those back for those that don't have union contracts. In addition, we're going to furlough every employee the equivalent of eight days a year for two years. Again, that saves $228 million total. If unions would like to come back and negotiate — you know, again, in collective bargaining table, negotiate the 2 percent raises —

Frederica Freyberg:
They would not like to.

Dan Schooff:
If they would like to, that would prevent more layoffs. Let me be clear. Even if they did that, there's still going to be layoffs in state government.

Frederica Freyberg:
What's the number of layoffs today? It was 1,100 last week.

Dan Schooff:
That's a good marker right now. We'll know when the budget is done and through the legislature, because really what this is will be each agency will have a target to meet and then they'll decide if they can make cuts or have to do layoffs.

Frederica Freyberg:
All right. Dan Schooff, thank you very much for your information.

Dan Schooff:
Thank you.

Frederica Freyberg:
As we mentioned earlier, the joint finance committee resumes work on the budget next week. Republican assemblyman Robin Vos is a member of the committee and he joins us from Kenosha. What's your initial reaction to the plan to deal with this latest deficit?

Robin Vos:
Well, I think they have some potentially good ideas. Republicans have been consistently saying that we need to make sure we have tax increases as a very last resort and that spending cuts should be what we discuss before we talk about anything else. Unfortunately, Gov. Doyle started out with the tax increases and he's finally getting around to the spending cuts. So the idea of having furloughs and pay freezes and asking employees to share in the sacrifice that taxpayers are seeing I think makes an awful lot of sense.        

Frederica Freyberg:
He's also talking about hundreds of millions of dollars out of school aids, 5 percent agency cuts, 5 percent out of shared revenue and a contribution from state employees, including yourself. Don't you think that's deep enough?        

Robin Vos:
No. I think that's just the beginning. When we balance this budget, we have to put our priorities on the table first. We need to start by saying, what's it going to take to grow the economy in Wisconsin, create good jobs and also do it in a way that does not impact families and small businesses? And that's my fear, that we're not just seeing Gov. Doyle's plan. Democrats in the legislature have already floated different tax increases that they want to put on the table. I hope that is something we do not go to because that will be a job killer and it will really hurt Wisconsin's economy.    

Frederica Freyberg:
So you think that Gov. Doyle's cuts are just beginning. Where would you cut?

Robin Vos:
Well, number one, we need to go and look at every single program that's been proposed by the Doyle administration in this budget. Spending is supposed to create by 7.7 percent under this plan. We need to take all of the new proposals the governor has on the table, such as increasing welfare and say those are probably things we can't afford. The next thing we need to do is look at some of the proposals that republicans have had over the years to cut spending and hopefully we can get the democrats to accept some of those. If the republican budgets of the last two years had been passed, we would have seen dramatically reduced levels of spending to start out with. So instead of having to increase spending and now cut it back, if they would have listened to our calls of trying to hold spending down over the last few years, we would have been in a certainly better situation.

Frederica Freyberg:
Now, the deputy superintendent of the department of administration said the governor — he told us earlier in this program that the governor will not raise taxes to fix this latest deficit hold. Do you believe that?  

Robin Vos:
I hope to believe it. Unfortunately, he doesn't want to talk about the fact that this administration has already proposed $3 billion in tax increases to deal with the budget as they put forward, even though there was that 7.7 percent increase in spending. So the last budget that they put forward had $3 in tax increases for every $1 in spending cuts. I certainly hope that is not the direction they go in to deal with it in the future.

Frederica Freyberg:
Our next guest coming up in just a moment talks about all kinds of ways to raise revenues, including the sales tax, beer tax, gas tax, capital gains, estate tax and income tax. What would be your response to those things?

Robin Vos:
Every one of those that you just mentioned has the potential to kill jobs, some in a greater way than others. When I talk to families all across Wisconsin, they are suffering. Small businesses are trying to figure out how to meet payroll, what they're going to do in the future. I am receiving calls on a daily basis that are frantic about what's in this budget. If there are liberal special interest groups who can't say no to spending, they're certainly not going to get support from republicans and I hope that my friends on the democratic side also realize that raising taxes in a recession is going to kill jobs and make it worse in the future.

Frederica Freyberg:
We'll see how it goes. Rep. Vos, thanks very much.