PLAN ALSO RELIES ON RETIREMENTS, KILLING BUSINESS TAX BREAK
Madison - State Senate Democrats voted Thursday to fix the biggest budget deficit in Wisconsin history by slashing funding for Milwaukee's school choice program, giving about 6,000 state workers an early retirement package that Republicans say is too lavish and killing a potential $156 million tax cut for businesses.

Democrats said the final, 90-amendment shower of changes they made - summaries of which were made public only minutes before - erases the $1.1 billion budget deficit facing state government by mid-2003.

The plan also balances the budget by using $794 million available from the one-time sale of future payments from cigarette manufacturers. Using that money would bring the total from the one-time sale used to balance this budget to $1.244 billion, or everything the state expects to collect from cigarette makers for decades.

Some major and minor changes Democrats loaded into their budget Thursday - ranging from a moratorium on hospital construction and expansions to $400,000 for a Green Bay public TV production facility - amounted to bargaining chips they can give up in future negotiations with Republicans who control the state Assembly. The Assembly passed its version of the budget adjustment bill last month.

"We're not writing the final document," said Senate President Fred Risser (D-Madison), referring to the special Assembly-Senate committee that must resolve dozens of major differences between the two parties. "This is taking the next step in the process."

Bill goes to full Senate

Democrats, who have an 18-15 edge in the Senate, quickly scheduled a full Senate vote today on their budget-repair bill. That means the special Assembly-Senate committee to resolve differences could meet as early as next week.

"This a budget that made tough choices," said Senate Majority Leader Chuck Chvala (D-Madison), who said the Democratic plan would continue to provide $1 billion in state aid to local governments in each of the next three years, and would protect public schools and the University of Wisconsin System.

But Republican Rep. John Gard of Peshtigo said Democrats "gutted" Milwaukee's school choice program, which lets poor children attend private and non-sectarian schools at state expense. Gard, co-chairman of the Legislature's Joint Finance Committee, also said continuing the $1 billion in aid to local governments would mean $813 million in additional spending by mid-2005.

Funding axed for choice

With no discussion, and no Milwaukee-area senator defending school choice, Senate Democrats voted to cut the $5,780-per-student state subsidy of poor students in private schools to $2,000 for students in kindergarten through eighth grade and $3,000 for students in grades nine through 12 next year - changes that would save $23 million.

In the 2003-'04 school year, the subsidy for choice students would be cut even more - to $1,000 for kindergarten through eighth-grade students and to $1,500 for students in grades nine through 12.

The vouchers, which let more than 10,000 low-income Milwaukee children attend private and religious schools, are worth up to $5,553 this year.

Democratic Sen. Russ Decker (D-Schofield) said he asked that choice spending be reduced because "I've never agreed with having public money going into private schools." Vouchers that subsidize private schools "suck resources out of Milwaukee Public Schools," he added.

Decker said $27 million more, including the $23 million from the cut in choice, would be distributed to public schools statewide for special-education programs. And, under the Democrats' plan, an additional $8 million would be given only to MPS, he said.

But the state's school finance formulas are so complicated that Milwaukee Public Schools officials couldn't immediately determine whether the plan would help or hurt their district.

Prominent choice supporter and former MPS superintendent Howard Fuller said Thursday that cuts of that magnitude could devastate the program and drive thousands of children back into MPS. If that happened, the state would be forced to spend millions of dollars more on school aid for Milwaukee - potentially outweighing any savings in the voucher program itself.

And Assembly Speaker Scott Jensen (R-Town of Brookfield) vowed to oppose any choice cuts, as he did when lawmakers worked on the state budget last year.

"I'm disappointed that they continue to attack the children of Milwaukee," he said of Senate Democrats. "We had to rescue them from the Democrats' attacks in the last budget, and I guess we'll have to do it again."

Gard: Tax boosts imminent

Gard said the Democrats' plan would guarantee a tax increase next year, after the November elections, when legislators must pass the 2003-'05 state budget.

"Taxpayers should hold onto their wallets with both hands, and Superglue it," he said.

Gard said Senate Democrats spent so recklessly that "not even local government officials can take it seriously. They know the math doesn't work."

Gard and a spokesman for Wisconsin Manufacturers & Commerce, the state's largest business group, also denounced the Democrats' plan to offer early retirement incentives to an estimated 6,000 state workers who have at least 10 years of experience.

The $421 million cost of the early retirement package that would let prison guards retire at age 48 and other state employees cash out at age 53 would be assessed to state agencies over the next 10 years. Democratic senators said it would save $60 million over the next 15 months - money badly need to balance the current budget.

But the WMC's Jim Pugh called the early retirement incentives "Tom Ament-style pension plans for government workers." Ament retired as Milwaukee County executive after disclosures about pension-plan changes that would have given him and other veteran county officials huge retirement payouts.

Gard vowed to make taxpayers aware that the Democrats' early retirement plan would give each eligible state worker $20,000 in sick-leave credits that could be converted into paid-up health insurance when they retire.

"When the light of day is shone on this thing, people will say, 'No, thank you,' " Gard said.

Business tax break killed

Democrats said they were finally able to balance their budget by stopping a potential $156 million business tax break, a change also approved by Assembly Republicans.

It was the first time the size of the potential business tax break had been publicly revealed, and it would work this way:

When they finally agreed on an economic stimulus package, Congress and President Bush changed federal depreciation laws to let businesses take an immediate 30% deduction to encourage manufacturing purchases. If Wisconsin changes its depreciation schedules to go along with the new 30% federal rule, it would have cost state government $156 million in lost income.

Not changing the state's rule would mean Wisconsin businesses would have to continue following current depreciation schedules, which vary based on the type of equipment involved, according to the Legislative Fiscal Bureau.

Gard said he refused to let Wisconsin businesses get a new $156 million tax break "when we've got a $1 billion problem." But Pugh said Wisconsin businesses "should be able to take advantage" of the 30% federal depreciation rule, because it was designed to encourage large purchases and protect or create jobs.

Sam Schulhofer-Wohl of the Journal Sentinel staff, reporting from Milwaukee, contributed to this report.