Budget burns a hole in pockets of taxpayers

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Sen. Neal Kedzie
Tuesday, October 30, 2007

For years, I have fought tax increases and expressed my concern with expanding the size of state government. Taxes need to be brought in line with our families’ ability to pay, and any new taxes are unacceptable. That is why I voted against the 2007-09 budget. I voted “no” to increased taxes, “no” to additional fees and “no” to raiding segregated accounts. Ultimately, the Legislature did pass the budget, which Gov. Jim Doyle has signed.

The governor initially offered a budget that increased state spending by 8.5 percent and increased taxes by nearly $3 billion. However, personal income growth is about 4 percent, which isn’t enough to keep up with those increases. The new budget increases spending by 6.6 percent and raises taxes and fees by $763 million; certainly much less than the original budget but still too costly for taxpayers. Wisconsin is consistently one of the highest taxed states, and the new budget does nothing to improve that.

The $763 million increase is composed mostly of the motor vehicle fees and the cigarette tax. Vehicle-related fees will increase by $273 million, including an $20 increase in annual vehicle registration, $10 driver’s license increase and $16.50 vehicle title fee increase. Fortunately, the gas tax increase was defeated.

The $1 cigarette tax increase accounts for $410 million in taxes. Whether you agree with raising that tax or not, consider a couple of things. First, any drastic price increase in tobacco products might lead to increased purchases from other sources or states with less tax. It has the potential to create “black-market” purchases.

This, coupled with purchases over the Internet, might reduce projected revenues. Second, there’s no guarantee the revenue generated will be used for health care. Segregated funds have been consistently and improperly raided to pay for other government programs.

One such account is the Injured Patient and Family Compensation Fund. The new budget will reduce that fund by $200 million. This account is funded by doctors to provide coverage from exceeding primary insurance limits for medical malpractice claims. A study by the Legislative Audit Bureau indicates a large transfer from the fund could create a deficit in the account and might trigger increases in medical liability insurance premiums, consequently adding to the cost of medical care. Insurance rates are also a factor in recruiting and maintaining high-quality doctors.

Further, the state might have to defend the $200 million raid in court. A 2003 law places the fund in an “irrevocable trust” protecting the money from being used for any other purpose. If a court determines the state cannot use the $200 million, the state will have to fill that budget hole.

I voted against this budget because nothing has been done to rein in taxes and fees, spending and borrowing, or the budget deficit. Wisconsin cannot continue on this path of creating more and more well-intended, yet costly, government programs if we’re serious about keeping our fiscal house in order.

Sen. Neal Kedzie, R-Elkhorn, can be reached in Madison at P.O. Box 7882, Madison, WI 53707-7882 or by calling 1-800-578-1457. He may be reached in the district at (262) 742-2025 or through a link on the State of Wisconsin Web site at www.wisconsin.gov.

Last updated: 10:42 pm Thursday, December 13, 2012

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