In a letter to all state employees, Evers’ administration secretary, Joel Brennan, said all of the state’s executive agencies will need to make the reduction in taxpayer-funded operating expenses by June 30.
In a media call with reporters Wednesday, Evers described the cut as a first step to begin addressing anticipated shortfalls in state revenue brought on by an economic recession and the administration’s efforts to reduce transmission of COVID-19 by closing nonessential businesses.
“These things are important,” Evers said. “We think it’s one of our ways to get to a better place financially. Cutting the operations budgets by 5% is approximately $70 million in savings, which is important for us as a government going forward.”
The reduction is in addition to restrictions on state-sponsored out-of-state travel, a hiring freeze with exceptions for COVID-19-related positions and those essential for business functions, and a suspension of discretionary merit compensation.
“People across our state — and in state government — are hurting, these are challenging days,” Brennan said. “We do not take these or any other steps lightly and will do everything we can to limit ongoing impact on all the state employees who continue to provide great service, 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.”
Evers added that departments will have flexibility in implementing the cuts.
In a statement, Assembly Speaker Robin Vos, R-Rochester, applauded Brennan’s proposal as 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,” Vos said. “With many difficult decisions ahead for state leaders, we would welcome an opportunity to discuss ways we can work together on the looming fiscal crisis. We believe another prudent move might be to freeze the second year of the budget so that Wisconsin can plan accordingly.”
In a virtual Assembly session earlier this month, GOP lawmakers proposed including a spending freeze in the second year of the state’s two-year budget with the state’s COVID-19 response legislation, but the item was ultimately cut from the bill.
Another proposal by GOP lawmakers included language to further weaken the governor’s authority by giving the state’s GOP-led budget committee the ability to unilaterally cut spending on schools, health care and employee pay, among other things. The language, which was lambasted by Evers, was later removed.
“When we tried to give the Legislature the ability to make cuts like these, the governor ran to the media and called it a power grab,” Senate Majority Leader Scott Fitzgerald, R-Juneau, said in a statement. “I’m glad he’s come around to our way of thinking with a fiscally responsible move for once.”
Evers has not ruled out a spending freeze, and on Wednesday noted additional adjustments may be necessary.
“We’re taking care of what we can take care of right now,” he said. “Going forward we will continue to make difficult decisions.”
Also on Wednesday, Vos announced the Assembly Committee on State Affairs will hold a hearing Thursday to discuss the economic impact of Evers’ “safer at home” order, which was implemented to reduce transmission of the respiratory disease, but also has forced businesses across the state to shut down and resulted in skyrocketing unemployment claims.
Those invited to the hearing include Melissa Hughes, secretary of the Wisconsin Economic Development Corp., as well as members of Wisconsin Manufacturers and Commerce and officials with organizations representing retail, grocers, taverns, the dairy industry, hotels and banks.
In a letter this month to President Donald Trump, Evers estimated COVID-19 will cause more than $2 billion in lost state revenue. He also noted “major job losses” estimated at roughly 15% of the state’s workforce.
Trump signed a $2 trillion federal stimulus package late last month, which includes more than $2 billion for Wisconsin. However, Brennan said in the letter those funds cannot be used to offset any lost revenue caused during the public health emergency.
Earlier this year, the state budget was projected to have $452 million in extra tax revenue through June 30, 2021. However, state lawmakers have now ruled out the likelihood of a surplus.
Officials with the nonpartisan Legislative Finance Bureau said last month it was too early to estimate how much the pandemic-induced recession could impact the budget.
At the time of the last budget projection in January, the Legislative Finance Bureau reported that about $409 million would be deposited into the state’s Budget Stabilization Fund, a rainy day fund to be tapped in times of recession or fiscal emergency. That would bring the fund to more than $1 billion by June 30, 2021.
During a recession, states face reduced income and sales tax revenue, which could force leaders to dip into reserves or seek federal loans, as Wisconsin did during the last economic downturn.
Wisconsin had almost $650 million in its rainy day fund last year — equal to a little more than 13 days’ worth of state operating costs, according to a recent report from The Pew Charitable Trusts.
“The key points for state leaders right now is they need to build in some flexibility into the budget, they need to create reserves that will allow them to manage through this crisis and they need to seek out good data as soon as possible on the size of the impact so they can prepare a response,” Josh Goodman, senior officer at The Pew Charitable Trusts, said last month.
New data released Wednesday by the Department of Health Services reports 187 facility-wide public health investigations and outbreaks in all five of Wisconsin’s public health regions.
As of Wednesday, the department had facility-wide investigations and outbreaks in 25 group housing facilities, 11 health care facilities, 93 long-term care facilities, 48 non-health care workplaces and 10 other settings.
Of the 93 investigations in long-term care facilities, 20 involve a single confirmed case of COVID-19 and 25 have fewer than five cases.
In addition, the Wisconsin National Guard has deployed specimen collection teams to Grant, Sheboygan, Brown, Kenosha, Milwaukee and Sauk counties to assist with the public health response.
As of Wednesday, DHS reported 6,520 positive cases of COVID-19 and 308 confirmed deaths. More than 66,000 Wisconsinites have tested negative for the virus.
A city changed: See photos of Madison before and after COVID-19
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