MADISON – Gov. Tony Evers’ administration is rolling out plans to cut many state operations by 5% as costs rise and revenue plummets amid the coronavirus pandemic.
Administration Secretary Joel Brennan said Wednesday his team is working out the specifics of how the cuts will be implemented and he expects them to amount to about $70 million. The cuts are being applied in the fiscal year that runs through June and are meant as a way to get on top of the sate’s budget as the economy craters.
“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,” Brennan told state employees in an email sent late Tuesday and posted online by WisPolitics.com.
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To help achieve the reductions, a hiring freeze will be maintained, merit raises won’t be given and employee travel will be limited. The hiring freeze will have exemptions for jobs related to the state’s response to the coronavirus outbreak that has sickened more than 6,500 Wisconsinites and killed more than 300.
The state has been awarded nearly $2 billion in federal aid to help respond to the pandemic, but those funds can’t be used to cover existing costs, Brennan said. In short, that means the state has funds available to fight the coronavirus but faces shortages for other functions.
The cuts apply to state operations, such as staffing prisons and other facilities, but not aid for schools and local governments. Brennan said the administration is still finalizing details on how the reductions will work and agencies are being given ways to make sure cuts in one area don’t drive up other costs, such as for overtime.
The cuts apply to state agencies, the University of Wisconsin System and technical colleges, Brennan said.
UW-Madison institutes furloughs
Rebecca Blank, chancellor of UW-Madison, announced Wednesday that most employees would be furloughed for three to six days between May and October, taking an approach similar to ones adopted by other campuses. Blank said she and other UW-Madison leaders would take a 15% pay cut.
Furloughs for other state employees are not being planned at this time, Brennan said.
The Democratic governor told reporters he believes the state had to act immediately on its budget woes.
“We’re not wasting time,” Evers said.
Praise, criticism from GOP
Assembly Speaker Robin Vos, who often clashes with Evers, called the governor’s move a “prudent action.”
“While we don’t know the complete picture for the state’s finances yet, we know it’s not going to be good,” the Rochester Republican said in a statement. “This is a smart, proactive move by the administration.”
Vos suggested the state freeze spending for the fiscal year that begins in July. Depending on how a freeze was structured, that could prevent schools from getting increases they are expecting in the fall.
State Senate Majority Leader Scott Fitzgerald of Juneau praised the move but also criticized Evers for his opposition to cuts Republicans proposed. The GOP plan would have allowed the Legislature’s budget committee to make unilateral reductions in state spending.
“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,” Fitzgerald said in a statement. “I’m glad he’s come around to our way of thinking with a fiscally responsible move for once.”
Brennan said it was premature to determine whether the state should freeze spending for the fiscal year that begins in July. He noted the extent of the state’s fiscal problems are unknown and Congress is considering providing more aid to help states shore up their budgets.
“We all are operating right now with imperfect information,” Brennan said in an interview.
On Tuesday, the U.S. Commerce Department reported the economy shrank 4.8% from January through March. It was the largest quarterly decline since 2008.
Evers told President Donald Trump in a recent letter that the state could lose $2 billion over the next year, but that figure was based on preliminary talks with budget officials and not a formal revenue projection, according to the Evers administration. The state has not conducted a revenue projection since the pandemic began, largely because the economic situation is so fluid that it’s difficult to get a handle on what is happening.
The cuts apply to spending from the state’s main account, which mostly consists of collections from income, sales and business taxes.
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