Capitol Connection
By State Senator Joe Leibham
September 24, 2008
Some Good News for the State Budget
Over the past couple of months, I have informed you about numerous problems with the 2007-09 state budget. As you may recall, I voted against the budget because of my concerns that the plan went overboard in the assessment of new taxes and fees, increased state spending at an excessive rate and contained a number of overly-optimistic projections and revenue sources that seriously jeopardized the stability of our state finances. The original budget was “revised” last spring but my fiscal concerns continue.
Fortunately, our budget has received some welcome good news over the past two weeks.
First, the Legislative Fiscal Bureau (LFB) is reporting that general fund tax collections for the 2007-08 fiscal year came in $173.1 million (1.3 percent) higher than what the legislature and the Governor had budgeted for in their revised budget plan. State tax collections for the first year of the budget totaled $13.04 billion. Revenues from nearly all tax sources exceeded the revised budget estimates, with particular strength in the individual income tax ($46.0 million higher than estimated), general sales and use tax ($59.1 million higher), corporate income and franchise tax ($31.4 million higher), and estate tax ($18.8 million higher). In addition, the state Department of Revenue (DOR), is due to “improvements in tax processing procedures,” resulting in an estimated $84.9 million in one-time revenues in 2007-08.
This positive tax revenue news demonstrates the strength of Wisconsin’s economy over the past year and helps improve the balance sheet for the entire state budget. To view a LFB memo further describing the higher revenue collections, please visit the following Internet link:
http://www.legis.state.wi.us/lfb/Misc/2008_09_17taxcollections.pdf
The second area of good news for the state budget comes in the announcement that the Doyle Administration has finally come to an agreement with the Ho-Chunk tribe on what the tribe will pay the state to be able to conduct gambling activities in Wisconsin. As you may recall, the compact has been in a stalemate since 2004, when the state Supreme Court invalidated an initial agreement between the Governor Doyle and the Forest County Potawatomi. As a result, the state was forced to renegotiate its agreement with the Ho-Chunk, a contentious process that ended up in state and federal courts. After court proceedings, the parties ended up in arbitration, from which the amended compact emerged.
A few of the major points of interest on the new Ho-Chunk agreement are:
- 25 years in length (the 2003 compact was never-ending);
- The Ho-Chunk will pay $60 million up front to settle old claims and “catch up” on payments that are past due (that’s $12 million less than what the state thought they owed);
- $1.5 million of the first $60 million will be used to pay state legal fees incurred during the process of negotiating the deal;
- Annual payments by the Ho-Chunk will be 5% if gross tribal gambling revenues are less than $350 million and 5.5% if gross revenue exceeds $350 million (The Ho-Chunk had been required to pay 6% under the 2003 compact but, according to the state Department of Administration, that number was reduced because the Ho-Chunk receive fewer benefits under the new agreement).
To a view the full text of the amended agreement, please visit the following Internet site: http://www.doa.state.wi.us/docs_view2.asp?docid=7349
While I have numerous concerns with the specifics of compact, it is good news that an agreement has been reached. Had the compact remained unsettled, the budget could have been shorted by $60 - $100 million.
With nine months remaining in this budget cycle, there are still potential fiscal problems that could jeopardize the final balance sheet. However, with today’s economic uncertainty, we will take any good news we can get.
Is there a state program, law or issue you would like me to address? “Just ask Joe” by calling me at 888-295-8750, writing to P.O. Box 7882, Madison, WI 53707-7882, or by e-mailing me at Sen.Leibham@legis.wi.gov. You can also log on to the 9th Senate District on-line office at
www.leibhamsenate.com.
As always, it has been a pleasure communicating with you. It is an honor representing the residents of the 9th District in the State Senate!