State Budget: Businesses Escape Sales Tax Nightmare

To many (mostly conservative) critics, the budget that passed out of the Legislature's Joint Finance Committee in late May is a fiscal abomination, but Wayne Corey has relatively few complaints. One would think the executive director of Wisconsin Independent Businesses would hop on the abomination bandwagon, but he says the budget is noteworthy for what it does not contain as much as for what it does.

Namely, it does not contain an expansion of the sales tax base, which was reportedly on the table. As Corey explained, an expansion of the sales tax base takes lawmakers, who faced a record $6.6 million deficit, to two places — business services and farm necessities.

"It did not happen," Corey noted with a sign of relief, "and that's the single most significant thing for small business in this budget. That would have been devastating."

Having been spared that barbarity, there is nothing in particular that Corey wants Gov. Jim Doyle to fix with his powerful veto pen. Some business interests believe the increase in income tax rates on our wealthiest citizens, to 7.75%, will make it harder to attract executive talent. Others decry increased taxes on cigarettes and oil companies and outpatient surgical centers, while others are appalled by porky spending like a $500,000 allocation for the Oshkosh Opera House.

Still others, including Corey, decry the lack of progress in addressing the "structural deficit," but he's realistic enough to know it wasn't going to be tackled in this economic environment.

"Is there a lot of stuff that I wish wasn't in the budget? Yeah, probably, but it's folly to think that somehow you can magically veto this into being a better budget," Corey said.

The budget increases spending about 7% when federal stimulus revenue is taken into account; in a major bow to reality, the spending of state tax dollars actually would decrease by 3.4%.

Corey observed: "I can't think of a time in my life, and I've been watching Wisconsin government for 38 years, when GPR (general purpose revenue) spending went down."

As a result, Corey has some cautionary advice for Wisconsin residents. They will discover some services they took for granted will be mighty slow in coming around: consumer protection, tuition to the UW System, and transportation. Corey, himself, is concerned that there will not be sufficient funding for the state's technical colleges to provide services to job seekers, but little is likely to change on the Governor's desk.

"We haven't seen the final version," he noted, "but what came out of Joint Finance is mighty close."