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GOP proposes constitutional amendment to curb state spending

MADISON - Spurred on by massive state budget deficits and skimpy reserves, Republican lawmakers want to rewrite the Wisconsin Constitution to force state government to save for hard times.

MADISON - Spurred on by massive state budget deficits and skimpy reserves, Republican lawmakers want to rewrite the Wisconsin Constitution to force state government to save for hard times.

The constitutional amendment, as proposed by Assembly Republicans, would effectively limit tax increases by state government and could eventually lead to some property tax relief for homeowners. But it faces a long and probably challenging road to becoming law - the earliest it could take effect is in 2013.

"This is a strong budgetary reform that we think people are asking for so we're not careening from crisis to crisis in the state budget," said the proposal's lead sponsor, Rep. Mark Gottlieb, R-Port Washington.

Wisconsin had one of the smallest rainy day funds in the nation last year as it confronted a more than $6 billion budget deficit, leading lawmakers to slash funding for schools and increase taxes on the wealthy and smoking to balance the state books.

To take effect, the rainy day fund reform would have to be passed by two successive Legislatures and then be approved by voters in a statewide referendum. Lawmakers won't return to consider new measures until January.

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Rep. Mark Pocan, D-Madison, co-chairman of the Legislature's budget committee, said the proposal was a gimmick and Republicans had failed to address the issue during the 14 years they controlled the Assembly.

"It's a little hard to have the 300-pound person tell you how to go on a diet," Pocan said.

Gottlieb's proposal seeks to boost saving by the state by capping taxes at 6.5 percent of personal income in Wisconsin -- or $13.65 billion for the current year. Any excess amount raised by taxes would have to go into a rainy day fund that lawmakers and the governor could tap into during a recession.

If state taxes came in below the personal income threshold, the state in good times would still have to make a small contribution equal this year to about $65 million.

That rainy day fund would itself be capped at 10 percent of the state's overall tax collections. That's about $1.28 billion this year, or enough to run the University of Wisconsin System for a little more than a year. After that, any surplus going into the rainy day fund would be used to provide property tax relief for homeowners.

If the proposal had been in place between 2003 and 2007 - the period before the latest economic downturn -- $723 million would have been placed into the rainy day fund going into the current recession. That would have been almost six times more than the $122 million the state actually had.

The constitutional amendment probably would provide some downward pressure on state taxes, which have averaged 6.78 percent of personal income over the past three decades -- slightly higher than the tax limit in the proposal. But the proposal would leave a little wiggle room for state officials - the limit could be changed with a two-thirds vote of the Legislature and the approval of the governor.

Assembly Minority Leader Jeff Fitzgerald, R-Horicon, said Republican lawmakers would campaign on the constitutional change this fall, calling it a common-sense proposal similar to what families use with their own finances.

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Patrick Marley of the Journal Sentinel staff contributed to this article.

Copyright (c) 2010, Milwaukee Journal Sentinel/Distributed by McClatchy-Tribune Information Services.

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