From his time heading the state Department of Public Instruction, Gov. Tony Evers said he knows what it is like to have to cut a certain percentage from a departmental budget. So the order to all state agencies to propose a cut of 5% to their current budgets is not one his administration makes lightly.
“There’s some flexibility, obviously. Different departments have different needs,” said Evers on Wednesday. “And we will respect that. We estimated, not too long ago that the revenue shortfall this next fiscal year would be approximately $2 billion.”
That is far away from the revenue projections before the pandemic that predicted a large budget surplus. Evers called the 5% cuts — combined with previous orders requiring tight travel restrictions and a hiring freeze for jobs not tied to the pandemic — a first step.
“These things are important,” said Evers. “We think it’s one of our ways to get to a better place financially. Cutting the operations budget by 5% is approximately $70 million in savings which is important for us as government going forward.”
In a letter sent out to state employees on Tuesday and posted by WisPolitics, Department of Administration Secretary Joel Brennan called for a 5% reduction in state operations for the 2019-20 fiscal year, due to the dramatic decline in general revenues that come from tax collections.
The money Wisconsin receives from the federal government can be used to combat COVID-19, but not for offsetting any lost revenue during the crisis.
“Given current economic indicators signal a national recession and weakness in state tax collections, the executive branch agencies will be making changes in fiscal year 2019-20 to best position the state financially for an unknown future,” wrote Brennan.
He added: “The impact of the crisis on the overall economic climate will reduce state revenues at the same time that we are facing dramatically increased costs to marshal all potential resources to fight COVID-19.”
In addition to the cut and other prior cost-saving measures, discretionary merit pay will also be suspended.
“People across our state – and in state government – are hurting, these are challenging days,” wrote Brennan. “We do not take these or any other steps lightly … but we also know that waiting any longer to institute cost savings could have an even greater impact on our state’s workforce in the months to come.
Speaker Robin Vos (R-Rochester) responded with praise for Brennan.
“I applaud the fiscally prudent action by Secretary Brennan. While we don’t know the complete picture for the state’s finances yet, we know it’s not going to be good. This is a smart, proactive move by the administration. As we begin work to manage this impending fiscal crisis in Wisconsin, it’s good to see that we’re already on the same page.
And Vos suggested collaborating on freezing the budget for the next fiscal year as well. “We believe another prudent move might be to freeze the second year of the budget so that Wisconsin can plan accordingly,” Vos said in a statement.
Evers responded to Vos’ idea by neither confirming nor rejecting the idea for the next year.
“It’s going to be difficult,” he said. “Certainly, we’re hopeful that the federal government will help us along with that and they’re considering it at this point in time. But we’re not wasting time. We’re taking care of what we need to take care of now and that’s the operations piece of the budget. And going forward, we’ll be continuing to make difficult decisions.”
One measure not mentioned in the letter is instituting furloughs.
Evers says currently it’s not determined whether there might be furloughs of state employees, as the UW System and many campuses are mandating.
“I’m not able to say that at this time,” says Evers. “We’re working hard to get this 5% piece done. As we go forward we will take a look at everything as it relates to our budget, and the revenues that are there.”