Staring at a state budget deficit of $5.4 billion, Gov. Jim Doyle said that cuts in state spending will be his first choice in balancing the budget, but there will also be tax hikes.
"My first obligation is to do everything we can through cuts," Doyle said to reporters from The Wheeler Report during a year-end interview.
He added that everything is on the table including closing some state institutions.
"You have to look at everything now in a very cold harsh light. Can we afford it and can we do it more cheaply," Doyle said.
However, the Democratic governor said that there will come a point where state leaders will have to decide how deep the cuts should go.
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"Deep means five, 10, 15, 20 percent in education - K-12. Are we ready to make massive cuts to the university so that tuition moves up to levels that ordinary citizens cannot afford, I'm not ready to go there. I don't believe the state should go there," Doyle said.
He said that he does plan on pushing through some tax increases as fast as possible.
One of those tax hikes will be a tax on hospital revenues.
In the last biennial budget Doyle attempted to push through a 0.7 percent tax on hospital revenues, but was blocked by Republicans who said it would increase the cost of health care. At the time the GOP controlled the Assembly, now both houses are controlled by Democrats.
Doyle says the tax will mean the state will get more federal Medicare funds.
"The hospital assessment, for example, that brings in hundreds of millions of dollars of federal money. The sooner we can get that done, the more federal money we get. I don't want us delaying it and losing federal money," he said.
Doyle also plans on pushing through a tax on oil.
In the last budget the GOP blocked Doyle's attempt to put a 2.5 percent tax on every barrel of petroleum sold in the state. They claimed that oil companies will simply pass the tax on to consumers - increasing the cost of gasoline.
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However, Doyle says the oil companies profit from Wisconsin roads and should help pay for them.
"It's because of the roads people drive and buy gasoline. I'm not asking the oil companies to pay for all of it by any means. I'm asking them to make a pretty small contribution to helping maintain the roads," the governor said.
In the past two biennial budgets the Doyle administration has transferred funds out of the transportation budget to fund education and other programs.
In the interview it was clear that Doyle plans to protect both K-12 and higher education funding as much as possible.
"Are we ready to make massive cuts to the university so that tuition moves up to levels that ordinary citizens cannot afford," he said.
"A kid in second grade right now can't come back and redo second grade when the economy gets better. We have to be able to provide a good second grade education and a good high school education for kids who happen to be that age right now," Doyle added.
The governor also said he doesn't plan on a hike in the beer tax as is being pushed by some Democratic lawmakers, but hinted there may be yet another hike in the cigarette tax.
"Beer is unlike tobacco, for which there is no healthy use. Tobacco is a substance which is harmful in and of itself," Doyle said. "Big jumps curtail use, but I don't think that's what anybody's talking about in the beer tax."
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To help the state make it through the coming fiscal storm Doyle is hoping for help from Washington in the form of a stimulus package for the states.
He said that he has been working with other governors, members of Congress and the Obama administration to help fashion an economic stimulus package that goes through the state's first.
Doyle said one of his priorities is to make sure that stimulus package does what it is supposed to do at the state level, "which is to get people to work, invest in projects and infrastructure that will really have positive value for the state in coming years."
The Wheeler Report is available online at www.thewheelerreport.com
