Here & Now; Governor's budget, 1985; 1314

[Countdown] [Pause] [Music Plays] [Male Announcer] Earlier today, Governor Anthony Earl presented his version of the state budget to a joint session of the Wisconsin legislature. In a speech, Earl outlined his plans for the 1985 to '87 biennial budget. After the speech, Senate minority leader Susan Engeleiter lighter and assembly minority leader Tommy Thompson will be in our studios to respond to the governor's proposals. First, the governor's speech. [Gov. Tony Earl] 2 weeks ago and I met with you and described the state of the State. I said I thought it was very very promising. The decisions that you make over the next 6 months will determine how we're able to capture that promise. I think that we are going to have a marvelous opportunity to do so. Let me first describe the budget by telling you what it isn't.

The budget is not a stand pat budget. The budget is not a status quo budget. The budget is not a document that's designed to avoid offense at all costs. And the budget is not a campaign brochure which offers a little bit of everything to everybody. Let me tell you what the budget is; first and most important, this is a budget which increases property tax relief by over $700 million dollars, the most historic increase in property tax relief in the history of this state. [Audience applause] [Audience applause continued] [Gov. Tony Earl] This is a budget which reduces the personal income tax by over $130 million dollars. [Pause] [Audience applause] [Gov. Tony Earl] And this is a budget which returns Wisconsin to its progressive traditions of reform not only in the area of taxation, but in education, in human services, in local

government, and in environmental protection. The budget that I present to you today is a document which seeks to secure a strong economy and which makes the economic future of Wisconsin our first priority. The budget reflects a recovery that is stronger than some of us anticipated, but it more importantly reflects a dynamic private sector which has been responsive to the changes in that economy and which has taken advantage of them more quickly than many of their counterparts in other parts of the country. This budget is very very different from the one that I presented to the legislature 2 years ago. Yet there are some remarkable similarities. Like the last budget. I believe that it can be accurately described as conservative. It will leave more money in the till than the statutes authorize or direct. There are some increases in expenditures and I'm sure that you will look at them carefully. But I have scrutinized every request for increased expenditures and every request for positions. If you enact the budget substantially as I presented to you

today there will be fewer state employees at the end of the biennium June of 1987 than there were after my election in November of 1982.[Pause] [Audience Applause]. [Gov.Tony Earl] As I said there's more property tax relief in this budget. Than we have ever enacted in a budget in history of the state, but more than just the additional dollars. It's worth noting that we are distributing this money differently. This budget begins an historic shift away from the automatic growth that we've experienced in the shared revenue program toward increased support for schools. However it's a budget that keeps faith with people and local government. Shared revenues are not frozen or cut back. As a matter of fact they will increase by ninety two million dollars. This is an amount, which I believe will permit those who manage our cities and villages, our towns and counties, to begin to make

adjustments in our budgeting process, and to begin to. Accommodate themselves to the fact that there will not be the kind of growth there was in shared revenues, all the while we can keep faith with the equalization principle which is so important in all of our property tax relief programs. There's been a great deal of confusion about who pays what and who is responsible for what share of the property tax bill. I seek to end that in this budget by requiring full disclosure on every property tax bill. This budget will mandate that every unit of government use a truth and taxing property tax bill that tells what your school taxes are, what state support is, and what the net cost of the taxpayer is, what General Government costs are, what state support is, and what the net to the property tax payer is. In this way, we should avoid these constant wranglings about who is responsible for what share the property tax bill. The property tax payer himself or herself will have that opportunity by taking

a look at a property tax bill that makes it crystal clear. [Audience applause] [Audience applause] [Audience applause] [Gov. Tony Earl] This budget contains a small, but I think very important initiative, which will touch only some of you. But it is important you take a look at it. For many years we have operated on the premise that the best indicator of value for the distribution of school aids is property wealth. In most instances that's true. But there are too many cases, it seems to me, where property tax value alone is not an adequate measure of the ability of people within a district to pay. So in this budget, I begin to move away from zero aid, especially in those areas where there is a great disparity between property tax wealth on the one hand and median income on the other. I think this is an important departure and I hope those of you who do not live in those 0 8 districts will recognize the concern of those who

do and support them and me in this effort to begin this new initiative. Accountability. [Pause]. [Audience applause]. Accountability is a theme in this budget. By accountability I mean people ought to understand which level of government is responsible for which kind of services so they know where to direct their concerns and I attempt to move toward that accountability in 2 ways. First, I believe that the state most appropriately is responsible for a larger share of the cost of education, constitutionally we have that responsibility. That's why I've added nearly $400 million dollars in new aids in elementary and secondary education, at the same time, it should be noted that we're making other important shifts of other functions off the property tax onto the state tax base. General Assistance, for example, welfare programs were never meant to be supported by the property tax, I don't believe. And the criminal justice system, the result I hope, is an arrangement in which the property

tax will be used more and more to support those functions which are related to the ownership of property. And there will be a greater focus of accountability on city hall in the county courthouse and greater focus of responsibility in these chambers in the Senate chambers and my office for those functions that we're responsible for. I'd like to spend the bulk of the time I have left with you talking about two parts of the budget. There are many significant areas in it and I know that the budget in brief is uh has been out or is being passed out, and I hope you'll take a look at uh many of the initiatives that are there but there are two areas in particular I want to elaborate on today in my remarks to you because I think there are not only. Key issues but they also will give you an opportunity to see how I am proposing we change the way we have gone about doing some things in the past. Those two areas are economic development and education and they are of course inextricably linked to one another. This budget

represents many many hours of analysis and decision making, meeting with other people I began almost as soon as your predecessors adjourned last year and uh. A great deal of time has gone into it. The decisions in the budget are mine and that's as it ought to be under our tradition the buck stops at the governor's desk. Luckily this time around a few of them start there also. Uh [Audience laughter] There is a. [More laughter]. There is a little bit of disagreement as to how many, I have put my budget together using economic assumptions which have been reviewed by the Council on Economic Affairs I put together shortly after I came into office and some of you know them the rather diverse group of economists representing a diverse point of view. Uh If there is anything that is similar about them they're prudent, and I've relied on their judgments in putting the budget together. I respect greatly the Legislative Fiscal Bureau. They've suggested that uh things might be a bit better.

We might have a bit higher revenues than anticipated and a I'm willing to recognize that that may happen. But let me make this clear to you and I hope you will join me in this, if indeed the projections of the Legislative Fiscal Bureau are accurate and we have more revenues than are anticipated by this budget, we should resolve here and now, that those additional revenues ought to be used to either: A) Address are consistent or persistent cash flow problem or B) Be used to uh avoid getting further in debt and replace some general obligation debt. Or C) Be used to implement further tax cuts. None of those extra dollars, if they materialize, not one of them ought to be used to be added to the spending level proposed in this budget. [Audience applause over sppech] And we all commit ourselves to that. [Pause as applause continues]. There is no reason, no reason at all, why the prosperity of our private

sector automatically translate into higher state spending. As far as I'm concerned there should be no increase in spending over the level I've proposed. Now I know that you'll not agree with each and every decision I've made, and I know that there may be some reallocation, a bit more money here a bit less there, but let me urge you if you reallocate; reallocate, do not add to the spending level contained in the budget. As we deal with the questions that are before us perhaps uh none is more important overall to our prosperity than economic development and we have got to maintain the momentum that we've built up over the last two years and our efforts to revitalize our economy. We have to remind ourselves that the economic crisis which bedeviled us was not just a state phenomenon, it was regional. It was national. We didn't invent the recession here in Wisconsin we just paid the price for it. As difficult as things have been for us, they've been even more difficult for our colleagues in

Illinois, Indiana, Michigan, and Ohio. All of us here in the Midwest, have been caught in the switches of an economy that's changing before our very eyes. The national economy especially the manufacturing side is moving away from a system of mass production to a system of specialized products and specialized services. In the next economy, the economy that is rapidly evolving. Quality will count more than it ever has before. This is an opportunity that's made to order for us here in Wisconsin because we're knowing we're known for quality and we're knowing known for doing things right. Whether it's how we train our workforce or the agricultural commodities we produce they call the manufactured goods that we uh manufacture or the kind of good government that we have here. Generally Wisconsin enjoys a very fine reputation in all those areas. I'm convinced that from Wisconsin's perspective the worst is behind us and I am persuaded that the

opportunity for economic renaissance here is far better now than I would have dared to hope. When I was elected two years ago we're beginning to see the dividends now of the long term investments we've made in this state. Investments in our educational base investments in a decent environment investments and progressive social policy. I think that Wisconsin's greatest days are ahead of us and they're coming on very soon. Our task has to be to seize the opportunities that are presented by the changing economic rules. Let me emphasize what I mean by seizing the opportunities and what I suggest we do. As I have said to you before and will say again I think we can do nothing that will be more significant than making important change by reduction and reform in the personal income tax. Every business climate study that has been done. Every conversation I have had with business people in

this state indicates, that the number one problem we have with making us less attractive and less competitive than we should be, is our current personal income tax. And let me repeat some of the things I said to you in the state of the state address. There will be many who represent special interests who will oppose these changes. I'm not suggesting that special interests are evil. They aren't but special interests are not the same as the public interest and the public interest is not the sum of every special interest who will come here before you to urge changes in this proposal. Keep the public interest in mind. [Audience Applause] [Audience Applause] [Gov.] When you are being urged to make changes in the proposal, ask yourself this one question. Should two people in the same circumstances with the same income, pay the same taxes. If your answer to that question

is yes, then you ought to support the proposal that I presented to you. And finally when you are urged by some not to change, recall this. The vast majority of our citizens stand to gain under this proposal. There are few measures that will come before you that will benefit a larger percentage of Wisconsin's citizenry than this one. This bill is in the public interest. This bill is a fair bill which provides same that people pay the same taxes if they have the same income. And this is a proposal which benefits the vast majority of the residents of our state. All the while. Greatly improving the tone of our business climate and giving our business people the opportunity to compete as they have not been able to before by getting that albatross of our high tax reputation off our backs. That is the most important step.[Pause] [Audience applause] There are other steps we can take as well and we began some of them in the last session and I'm going to

encourage you to expand upon them. I'm proposing that we make new investments in our efforts to retain and enhance the businesses that we have. Obviously, we want to attract new business here and we do everything that we can uh in that regard. Lieutenant Governor ?Flandand?, and uh Mr. Le Sage of Ford Wisconsin I spend a great deal of our time on that, but we don't want to take our base for granted. We had a couple of programs last time around which worked very well for us. One was the QuickStart labor training fund. I'm suggesting it be tripled to the extent of 3 million dollars. And I want to add to the Technology Development Fund I want to double that to the tune of two and a half billion dollars. Let me just remind you of two examples of what those uh programs did in the last biennium and I should tell you that when we started in the last biennium, we started them rather conservatively we didn't know whether they'd work or not. We've been oversubscribed, the QuickStart labor training fund provided training for 600 workers for Harley Davidson and kept them on their

jobs. The technology development fund opened the door for a billion dollar hearing aid program for Nicolay instruments. Those are only two examples, many of you know of others. And I think that those initiatives begun in the last session ought to be given more resources so we can do even more with. Them I mention for Wisconsin a moment ago for Wisconsin has put us on the map in international competition for jobs and development. I'm proposing that we continue to fund our share of this unique private sector public sector arrangement, which has worked extraordinarily well in this very short history. Last year, we expanded our international trade program by opening an office in Frankfurt West Germany. Next year we should look to the east. The far East and establish a trade office there, our positive experience of the past week and indeed of the past few months with our guest from China persuades me that this region has enormous potential for Wisconsin. Enormous

potential for both our manufactures and for our agricultural producers. And I think that an office in the far East is a sound investment for the future of agriculture and for the health of our manufacturing economy. We've made some significant strides in export promotion with our friends from China and I mention dairy cattle, Ginseng has developed, uhh breeding technology and others. Will- We can, do more if we build on this on a regular basis and our establishing a presence in the far East is a vital part of that. Let me, as an aside, mention again the uh importance I attach to this in so far as our agricultural economy goes. People who come here to protest make a case that is difficult to argue with. If we saw, what was happening in one city happen as dramatically as what's happening in the countryside without much drama uh it would be a front page story. We've lost over the past couple of years. Fifteen hundred or so farms.

Yet it's gone almost unnoticed. If a plant in the hometown of any one of you were to close tomorrow with a loss of 1,500 jobs we'd noticed, in a hurry, it would be a front page story. We have got to do what we can we can't right the farm bill but we can help with new markets and we can help with farm advocacy. And it seems to me in a- attempting to promote exports and opening an office for us in the far East we do some of the things we as state government can do to help this vitally important sector of our economy. All of us know that uh Wisconsin is a great place in which to live, in which to vacation, but we need to make sure the rest of the world knows it too. So I'm proposing to increase expenditures for tourism promotion by a million dollars over the biennium. This is a significant increase. [Pause] [Audience Applause] This is a significant increase and it will help us to tell people of this region of the nation ,indeed of the world that they ought to escape to Wisconsin every season of the year.

When they come, we want to be able to offer them more than great outdoor experiences. Those are fine, but we can offer them more. We want to offer them an environment in which the arts and creativity flourish. Therefore, as I did last biennium, I am suggesting an increase in our support for the Arts. This is not only an investment in culture but it's an important element in a comprehensive economic development strategy. These policy initiatives will be complemented by other state activities which are crucial to our economic health. Among them, is our continuing commitment to the state's infrastructure. I am proposing that more than a billion dollars be appropriated for sewage treatment plants, highways, harbors, bridges airports, and new recreational facilities. These expenditures will set Wisconsin aside as a special place in which to work to earn a living and to run a business. Let me turn for a moment now to a subject that is of equal concern to me, that's the subject of education. The

1985/ '87 budget reflects a major shift in priorities. Nowhere is the need greater or the opportunity more compelling than in education. And our primary and secondary schools our university system and our vocational schools. We have an opportunity to set partisan concerns aside and questions of control aside to pursue a common goal. Schools that provide quality education for all of Wisconsin students. As I said in the state of the state address I want to commit more resources than ever before in the history of our state to primary and secondary education. This budget provides three hundred and ninety million new dollars for that task. Three hundred and twenty five million dollars will be in general AIDS in 65 million dollars in categorical aids. Dollars that are used to build a better educational opportunity for our children and a better break for our property tax payers. We know what happens when we fail our children educationally. They suffer

and society suffers. We see them on the general assistance roles in court or in jail. Or on the unemployment rolls. We will pay a price. The question is will we pay now or pay later. And will that payment be an investment or will it be a penalty. I say for our children's sake, for our economy's sake. There's no time like the present. There is no better time than now to take a hard look at our education programs and build the framework for effective schools in every community in this state. There is no better time than now, to tell those who are responsible for our schools exactly what we expect of them and give them the resources to get that job done. [Pause] [Audience Applause] [Audience Applause] The 1985/ '87 budget, includes a series of standards that will be phased in between 1986 and 1988. I'll be asking school officials to do many

things. I'll ask them to provide regular instruction in the basics, in the elementary and middle grades. I'll ask them to spend more time on direct pupil instruction. I will ask them to test reading by the third grade so at that early age we can identify those students who are having problems and provide for remedial programs immediately rather than waiting until they get farther on and get farther behind. I will ask school uh of a of a authorities to provide programs which address deficiencies in reading, and language arts, and in mathematics. I'll ask them to be accountable to the public to describe to the people in their districts how they're meeting the needs of the children in those districts, through the course offerings that they're making, through testing programs they had, through remedial programs they had, to tell people what they are doing in the local districts. I'll ask them to develop programs for children who are at risk dropouts, those who are habitually absent. Those who are behind their age group or those who have some developmental problems that hinder their educational advancement.

I'll be asking school administrators to develop programs for education for employment, programs that address the needs of those 60 percent of young men and young women who never go on to formal education once they leave high school. I'll be asking for your support in these efforts not because I want to wrest control away from local school boards but because I believe deeply and from the response I receive from you at the State of the state message I understand you do as well I believe deeply that a diploma from a Wisconsin high school ought to be a passport to something greater, a job or moving into higher education. [Audience Applause] [Audience Applause] Our elementary and secondary schools have to be the places where children get the tools they need to make the transition, from school to the marketplace. They must be the places that recognize the world of work. The world of competition and economic achievement

into which every youngster will graduate. They must be places that prepare all young people especially those who aren't going on to either the vocational system or the university to be in the words of the Parker project: the finest, most skilled, best educated workforce in America. Our high schools must change the focus of vocational education and integrate work experience into a sound education for employment program. This is an important undertaking and our financial commitment to it. $10 million dollars in categorical aids underlines the importance that I attach to it. In this budget there are several initiatives also for students whose educational potential has not yet been recognized or realized. Each of these proposals is designed to give both the students and school officials that little bit of extra support they need to make it, in an increasingly competitive society. Believe me, I know they can succeed if we give them that little bit of help.

I've seen it first hand. Not long ago I had the opportunity to spend the better part of a morning in an elementary school in Milwaukee. It was a school which not very long ago, had been rated at or near the bottom in student achievement. Now it's near the top. It was a school where those responsible for it, put aside the conventional wisdom about inner city students and took seriously the responsibility of improving educational opportunity for each and every one of those boys and girls. It was a school where everyone the principal, the teachers, the parents, and the students felt they had a stake in the operation. There was a real, almost tangible feeling, of a sense of purpose there and a sense of accomplishment. This is a school that without changing the student population, dramatically improved the attitudes and the learning ability of those students. I went from classroom to classroom, met at a number of teachers, met a number of the youngsters. I saw them drilled in

mathematics and uh, in reading, in English, and social sciences. And I could not help but think, when I left, that we've been cheating too many of our children for too long because our expectations of them have been too low. We have written them off too early and in the process we have helped foreclose their future. We can't do that anymore. There have to be more Franklin schools and we have to do whatever we can to help those people who make that extra bit of effort and that extra bit of commitment succeed because they can succeed, if we will give them the help they need. [Pause] [Audience Applause] [Audience applause] But whatever we do in a way of improve programs in the way of additional funding we won't reach all of our objectives in education unless we do something about the essential ingredient education

that is the teacher. We have to ensure that we have well motivated teachers in our classrooms. We have to attract the best of our young people into the teaching profession. All too often, moving into education is a career choice that is second best somebody moves into it indirectly. I think it ought to be a career choice that is a first option for our bright young men and young women. So I'm proposing several steps to improve the quality of teaching in our schools. 1st, I propose that as of June 1st, 1987. Only those who are in the top half of their sophomore class will be eligible for admission to a teacher education program. 2nd, Once they're in it they have to maintain a B average. 3rd, they have to [applause] compete some field experience, I'm suggesting 18 weeks. Fourth, They have to complete an economic minor, if they're going to teach elementary or middle schools. That's not required now and an aca- an academic major if they're going to teach in the high

schools.[ Pause, paper rustling] [Audience applause] [Audience applause] [Gov.] In exchange for these standards, I want to make teaching more attractive in- in a material way as well so I am proposing that beginning in 1988 we establish an $18,000 entry salary for new teachers, but the tail goes with the hide. No tougher standards, no minimum salary at entry level. If we get the tougher standards, we'll be making a wise investment in 1988, but if we do not get the tougher standards, then I will not support the minimum entry level salary of $18,000. [Audience applause] [Audience applause] [Gov.] Now with this talk of higher standards in a specialized programs better pay for teachers. Let's not lose sight of another very very important reason that we're committing so much new

money to fund elementary and secondary education. That reason is of course the property tax payer. While some of the new expectations of our schools will cost some additional money, some will not. In fact I think that many of these provide an excellent opportunity for re-allocation of current dollars. I've spent a lot of time with the people in the educational establishment talking about some of my suggestions on increased support for elementary and secondary schools and I have assured them all, that unless they can provide significant amounts of property tax relief with the dollars that I am asking you provided them they will find that this legislature will lose enthusiasm in a hurry for moving in that course. I think however, that they will provide additional property tax relief let me tell you what it means in terms of percents. People like to follow the percentages, as some of you know right now, the state provides 39 percent of the support of elementary and

secondary education. The dollars I have suggested will move us to forty 1.5 percent in fiscal year '85 /86 and virtually 43 percent in '86/ 87 when in addition to that, those aids, we add that portion of the Wisconsin state property tax relief that is attributable school levies and that's over half, 54 percent. Then state assistance by 1986 becomes 48 percent. That moves us rather dramatically in the correct direction. But let me add another point. As we increase our level of support for education, it's time the taxpayers learn more about how education is financed here in Wisconsin. So I'm suggesting that the $325 million in additional school age be distributed as a credit using the general education aid formula and that, as a credit, it join WSPTR below the line on our property tax bills. Not only is that where it ought to go it will show where the credit is due

and I think it is appropriate that any additional aides go on the credit side from this time forward so people know what the state is doing [Audience applause begins over speech] to support education. [Pause] [Audience applause continues]. [Audience applause continues.] [Audience applause continues and then dies down.] [Gov. Tony Earl] Well our commitment to primary and secondary education is great, we can have no less commitment to the university system in our vocational system. In the university system I'm proposing that we begin a 10 year program of improving instructional facilities and that we make faculty salaries more competitive. I'm asking that we target research dollars towards those projects which have special benefit for Wisconsin business and industry. And I'm asking that we provide greater assistance for minority and disadvantaged students.

Of course, I'm anxious that we do all we can to improve and enhance our great universities reputation. But one of the most essential things we have to do is also one of the most controversial and that has to do with competitive salaries for the faculty. There is no doubt, by any objective measure, that we've fallen behind similar institutions around the country not just in the Big Ten, but around the country as a whole. Now a great deal of time has been spent addressing this problem. Last year, President O'Neil and I appointed a committee to take a look at it with the members appointed from all around the state from a wide variety of points of view. They came up with a proposal. They submitted that proposal to the Board of Regents the Board of Regents has modified it somewhat and submited it to me and I've included it in my budget. At uh, that it is unnecessary for me to say that hasn't been popularly received in all quarters. But the fact is and all of us know this that no pay plan for the university

system could meet the needs of every diverse element within the university community. And for those who suggest that this ?Amma? reflects a fatal flaw in merger, let me just ask you to speculate if you would what kind of a fight we would be having on our hands if we had the old chapter thirty seven universities and the end the university going at it with one another no matter how long one wrestles with this. Two things it seems to me become clear. The first is that there is a difference between the University of Wisconsin Madison and Milwaukee on the one hand and the other university cluster institutions. And that difference to some extent is going to be reflected in differential pay levels. The next point it seems to me that is obvious. It is obvious to me and I hope it is to you is that determining what that difference ought to be. Is not the task of a political body like this legislature. I think that the decisions ought to be

made within the university community. And let me tell you as emphatically as I can, I think the university community, and by that I mean students, parents, faculty, administrators, the university community needs a break from the political wars and needs to get back to their basic mission of education. That's why I urge you to accept the region's judgment as to the most equitable solution of this problem. Let's resolve it and get it behind us for once and for all. Are vocational and technical institutions have an equally crucial role to play in improving on Wisconsin's competitive advantage. They have to prepare our students for jobs some of which are barely visible on the horizon right now. They have to be forward looking and innovative. So I've put together a budget proposal which respects the strengths of our vocational system balances the competing demands between the state in the districts and avoids funding crises. The budget proposals relating to funding and governance will strengthen the position both of the

state and of the local districts. I want a vocational system to be the very best. Not the best in the Midwest, not the best in this country, but the very best and I think that we're capable of achieving that. To begin this process of improving, I think we have to take a hard look at governance. I think that the state board must be far stronger than it has been in the past. The state board has to be tougher and more decisive. It has to lead. It has to improve coordination between the districts and it has to advocate more effectively on behalf of vocational education. So to that end I'm suggesting that we eliminate the current board and replace it with a new board in which 6 of the 9 board members will be appointed without any concern to meeting any particular criteria other than, their commitment to vocational education. This reconstituted state board will need some new tools to address state priorities. I've suggested two I'm proposing a two and a half million dollar fund for

emerging occupations which will promote new program development and new equipment purchases. When a district has to take a risk as to whether or not they should invest in an enterprise that may or may not be coming into their area. The second initiative addresses the critical needs of adult learners who don't have adequate basic skills. People we call displaced uh homemakers are dislocated workers. The vocational opportunities fund which I will set up with two and a half million dollars will encourage districts to provide these nontraditional students with the basic skills they need in order to enable them to get back into the world of work. At the district level, I'm proposing a $15 million dollar increase in general aids which reverses the trend in recent years of declining state support. I'm at the same time proposing that we elect local district boards. [Audience applause] [Audience applause slowly dies down]. [Gov. Tony Earl] I believe

accountability, visibility, and accessibility make a strong argument for election, but the strongest argument for election is this. And each and every one of you have heard it. People who have taxing authority ought to stand before the electorate to justify their decisions. I think that these changes in governance at the state level and at the local level together with the new programs that we are providing, will prepare our vocational system to meet the challenges of responding to our changing economy. In the last 2 years since I came here with a budget message we've seen some remarkable changes in this state. We've moved from a strong recession to a strong recovery. We have moved from the largest deficit in our state's history to a position of fiscal strength. We've made significant progress in job creation and improving our business climate, and we've gained nationwide attention for the efforts we made to bring down the cost of health care. We've been immersed in a sea of change yet we've managed to keep our heads above water and make some

significant progress at the same time. We did so, because we made some very politically difficult uh choices and on some occasions we were even even able to be bipartisan. We did so on unemployment compensation a very difficult task uh 2 years ago, one that will be no less difficult this time and will require the same kind of bipartisan support we're able to do so on economic development. We didn't simply trade wis- wish lists of what one party or the other would do. We put together an agenda that crossed partisan lines and put together a good proposal. So we've had some good bipartisan successes. It's worth comparing them to the bipartisan failures we see coming from the nation's capital and those failures do not bode well for us. And they should serve to remind us how important it is that we try wherever possible to work together. Consider if you will with me what's going on in Washington now. The Democrats say absolutely no to any suggestions that there be

cutting entitlement programs. The Republicans say absolutely no to any increase in revenues, any tax increases. And the president says absolutely no to any cuts in defense. Anybody knows, that that's a prescription for disaster. Everybody understands that. And it, it not only the devil's uh he that they persist in this but it concerns me when in face of this gridlock they see the way to get healthy is to take a look out not what the states have done but the results of what the states have done. The surpluses that the states have been able to put together. I am very concerned about that. I think that the federal government the Democrats and the Republicans, the Congress and the president would do far better to emulate what the states have done than to suggest getting well at our expense. They would do well to make the same kind of decisions that we have made, 2 years ago. Not just Wisconsin not just all the great lakes states but almost 40 states in the

nation had to cut expenditures and raise taxes. Those states had Democratic governors and Republican governors, they had Democratic legislatures and Republican legislatures but they did what they had to do. They did exactly what the Congress and the president now refuse to do. And now in the Congress the president look at the states and look at their relative fiscal health and say that's the way for them to get well. I think we ought to resist. I think we ought to send a message to the Congress and to the president. The Congress and the president ought to expect massive, not passive resistance. If the federal government tries to get well at our expense. [Pause] [Audience begins applause] [Audience applause] [Audience applause] [Gov. Tony Earl] We're willing to do our share and we realize that there is uh no cornucopia there but we will not go quietly on our way and accept more cuts

while the Pentagon goes on buying $700 screwdrivers and super weapons that don't work.[Pause] [Audience begins applauding]. [Audience applause] [Audience applause]. [Gov. Tony Earl] We won't let our programs and economic revitalization for all our people go down in flames while entitlement programs in Washington continue on ?ecan? on automatic pilot.[Audience applause briefly]. [Gov. Tony Earl] But beyond talking about what is happening or not happening in Washington D.C. we can do something more positive here. We can won't do more than just decry the failures in Washington we can try to build on those successes we've had in bipartisanship in the past and we can try to set a tone of bipartisan cooperation.[Pause] I've had an opportunity to speak with all the leadership in both parties uh both houses. And there is genuine talk about bipartisanship. I've been around here long enough to know that it's easier to talk about than to achieve. But I think we

do have a chance. But let me say to my Republican friends that bipartisanship is important on the tough issues as it is an easy one. It - [Audience applause]. [Audience applause]. [Gov. Tony Earl] I won't regard it as bipartisan if you vote for more in school aides or more in income tax cuts by telling us at the same time to bring down the level of state spending. I think that we have to be honest with one another responsible with one another. If we're going to be bipartisan, I look forward to the opportunity to do that. But the proof will be in the pudding. I accept what you have said fully and openly and I hope that you will respond the same way and we can get this session off to a good start on bipartisan cooperation. You have my pledge that we will give it every effort. [Audience applause begins]. [Audience applause] [Audience applause] [Gov. Tony Earl] I said during the State of the state address that I regarded ourselves as being at a

crossroads and I truly think that's the case. We can either take a look at ourselves as an aging, industrial state that is sliding the way some commentators say the entire upper Midwest is or are we can say that there are new opportunities presented to us by this changing economy. And grab hold of those opportunities and make the most of them. This budget seeks to make the most of those opportunities. We do it by seeking to change the very way we think about the basics of government how we tax how we spend how we educate how we deal with local units of government. If we're to succeed in making the most of the opportunities that present themselves to us, we have to be prepared to resist not only the claim of narrow interest, but also the inertia of the status quo. And at the same time. We have to be willing to pay the price of change. And sometimes that price is a painful one. It seems to me in closing this particularly appropriate

that we've been joined today by our friends from China. Their presence here manifests a willingness to change to put aside old prejudices and biases that was unthinkable a few years ago. The Chinese have demonstrated themselves willing to change and willing to respond to a new world in new ways. We have to do the same. We have to demonstrate a willingness to change. And a willingness to respond to a new world in new ways. I am asking every one of you here, of both persuasions, to join me in the effort to return Wisconsin to its historical role, as a leader in innovation and reform. This is a task. That is worthy of the best of our abilities and of the people who has who have sent us here. We must not fail them. Thank you. [Audience applause] [Dave Iverson] Good evening, I'm Dave Iverson. You've just watched Governor Earl's biennial budget message and now we will go for a Republican response to that. Joining me to do that, are 2 of the governor's Republican

friends, as he just called them, state representative Tommy Thompson, who is of course, the Republican leader in the assembly and also Senator Susan Engleiter who is the Republican leader in the Senate. Tough speech to criticize is it not Representative Thompson? It seems like something Republicans in, some measure at least, would be supportive of. [Rep. Tommy Thompson] Well there is no question about it Dave in fact uh. As I've told you before I'm s' very happy that Governor Earl came to dinner and picked up a lot of the Republican themes. Property tax credits. There's no question about that. That's been an issue that the Republicans have been talking about for many years. And uh he certainly is going to embrace it a expand on it. I think that's fantastic. Second thing, Income Tax Reform and income tax reduction. Another issue Republicans have been harping about and talking about for oh many years and finally we get the Democrats to listen. So those two issues are very important to Republicans and ones in which I think are good for the state. [Dave Iverson] The governor's proposing about a 6.6 percent income tax reduction. Um Is that enough, Senator Engleiter, or would you have liked to see him go further.

[Sen. Engleiter] Well I don't think it's really enough uh to make a big difference. I think it's a start but I really don't think it's enough. The major drawback I see to the governor's tax plan is that there are 16 percent of the population in the state who don't experience any cut and another 17. Many of whom are two wage-earner families who have a large interest deduction. Couples who, both are working in order to pay their house payments, were losing that deduction who are going to pay more and some of them are going to pay significantly more. And I think when we have a three hundred seventy five million dollar permanent surplus to work with, there really is no reason we can't design a tax plan that prevents any family from having to pay a significant increase in personal income taxes. [Dave Iverson] What would the design of that plan perhaps be. The governor talked a lot about this being a bipartisan effort, however I assume that will keep [Sen. Engleiter: Clear throat] you both from proposing some of some changes in that. What, what might you try to do to change that tax cut plan. [Sen. Engleiter] Well I don't think it would be that difficult to make some changes. The governor's plan that's in his budget that came out of the Strategic Development Commission, has a positive feature, in that it benefits people at all income

levels. Increases the standard deduction, lowers the top rate, and helps people across the board and that's that's good. There simply isn't enough money uhh devoted to it. Uh We if we added uh some additional funds we probably would have to go up to about $200 million dollars, rather than the $130 that the governor is talking about and we could accommodate uh those problems that are being created for people who are losing deductions and credits. If you lower the rates enough you can get rid of deductions and credits, without having people pay more, but unless you put enough money into it you're going to have people paying more. [Dave Iverson] What kinds of things will you be looking at in the assembly Representative Thompson? Where will you be pinpointing the governor's budget in terms, of the kinds of things you'd like to really change. [Rep. Thompson] I think 5 areas Dave. #1, the income taxes, as Sen. Engleiter has pointed out, we feel $200 million dollars, a 10 percent reduction is much more important. We, as Republicans, look at it as reductions. Governor looks at it as reform. We feel it needs to have more reduction. 2nd thing, we're going to be looking at is the property tax credits. We don't think that he's put enough money into property tax credits. We're going to look at it. We compliment him and as

how far he went, we would like to make sure that we put enough money in there to stabilize property tax increases in the States so they don't, the farmer and the small business person in the state, doesn't experience this ever increasing, increase in property taxes. The 3rd area is - [Dave Iverson talks over Rep. Thompson as he is speaking] ?Before we-? Before we go on to the other three let's talk about property tax credits, just for a moment. [Rep. Thompson: Yeah]. Do you like the idea of his of funneling more of that as he indicated in a speech today, to school aides and on the tax bill so that people can see exactly what's going on. Seem like a good idea to both of you? [Rep. Thompson] It It does to me I think it's uh good public policy to let the taxpayers know who's a raising his taxes and where the money's coming from and I think it's just good public policy. [Dave Iverson] You share that ?judgement?. [Sen. Engleiter] I sure that there's are some details that that I think need to be discussed. Um He's distributing that additional money through the vehicle of the school aides formula and we have a a tube directly to the property tax payer but if you're if you live in a school district that doesn't get any school aide, you're not going to benefit from that increased money in the credit. And since there's a growing number of communities many of which um you wouldn't think of as wealthy communities that aren't

benefiting from the school aides formula. I think we ought to perhaps look at the way the money is distributed so all areas in the state can benefit. [Dave Iverson] You were on number three ?I believe? [Rep. Thompson talks over Dave Iverson] Three of the size of the budget expenditure increases, 20 percent increase from uh last biennium to this biennium. Way too much spending. Before there is comparable worth $17 million dollars for a new initiative. The people don't want it, I haven't received one letter from anybody saying that, we have to have comparable worth in the state. And the 5th one, is the university disproportionate pay plan or the discriminatory pay plan, however you want to call it, the catch a ?plane?. These are the five areas that Republicans are going to be looking at with a very much of a much of an eye to improve each and every one of these areas. [Dave Iverson] What about that pay plan let's, let's spend some time on that. That's gotten enormous publicity and and it has received lots of ink in the press as well. Um What's wrong with it, in your view. Why wha what is wrong with the governors, or actually the regents proposal, as he called it. [Rep Thompson] Well first off, I don't think it's wrong. I think the reason his pay plan is as is as good as we're going to be able to come up with the only problem is there are no faults in the assembly nor the Senate either

Republican or Democrat. That can pass it in the present form. [Dave Iverson] So you're supportive of it, you just don't think there are enough of your colleagues who will. [Rep. Thompson] That is correct. [Dave Iverson] Same story in the Senate? [Sen. Engleiter] I supported it also I think it has a lot of merit uh and concur with the the governor's position on it. I, don't think that the majority of Republicans in the Senate probably agree with me or the majority of senators agree with me. So that's the problem. [Dave Iverson] It's a essentially, because it is a parochial issue in the end and the areas that people represent they're concerned about, well what about my guys in Stevens Point. [Rep. Thompson] Or La Crosse or Eau Claire. It's where you come from, your geographic location, your constituents they're are going to formulate just about every, your opinions on this particular issue and I just don't see it uh passing. I don't see any consensus out there, any middle ground we can, we can strive to attain. [Dave Iverson] You made the um the the usual I guess you'd have to say, Republican criticism of a Democratic budget which is that it spends too much what is it spent too much on? What kinds of things are in that budget that you don't think the state of Wisconsin ought to be supporting to the level that the governor proposes. [Sen. Engleiter] Well we haven't seen the budget yet, other than a brief uh summary of it, that was handed out this morning as the

governor was giving his speech. But if all state programs were going to continue with an inflation adjustment over the next biennium we'd automatically have a $845 million dollar increase in spending. Um I think that's a starting place to look at what's reasonable to continue on the cost of government perhaps, trimming back in some places and maybe adding uh in a few such as the UW faculty pay catch up. Um The governor is going, well beyond that, up to $1.1 billion dollars and as Representative Thompson said a 20 percent increase over the last biennium. Um not having seen the details of the plan. I can only speculate that some of the areas where I I would perhaps disagree or we would are some of the areas that have been highlighted by the governor's Strategic Development Commission. They've done some outstanding work in pinpointing some areas where our spending in programs such as Aid to Families with Dependent Children in Medicaid. Where our spending is much much higher than most other states in the country and I would have liked to have seen some creative uh thinking on the part of the the Department the Department of Administration the governor as to how to trim those back a little bit. And we're not talking about cuts from current

levels, we're trying to slow the growth of the increases. [Dave Iverson] The governor spent quite a bit of time today and we've mentioned it already briefly on the idea of bipartisanship. In fact he really concluded with quite a a a eloquent plea to that order. You smiled some and your reactions to that is bipartisanship a reality in 1985. [Background: Rep. Thompson chuckling]. [Rep. Thompson] I think it is. I think that this is the year that we're going to set aside our uh partisan differences and really pass a bipartisan budget. I think the fact that the governor has given it to the assembly first, is an indication that he wants to try it. You have to realize that the Republicans have 47 members in the Assembly and the Democrats only have 52. So there's going to have to be some give and take and some compromises. And just the fact that the budget bill is going to start out in the Assembly I think gives a a leg up on trying to have a bipartisan budget and I'm going to work towards that I've told the governor that Speaker Loftus and Senator Engleiter has told the same thing to the governor and to Senator ?Kyl?- and I think that all the leadership on both sides want to see if we can't put together a bipartisan budget and I think it's certainly in the realm of possibility.

[Dave Iverson] Quick last uh question. What what to you is the the worst thing, I guess about this budget or the thing that that put another way that the governor will have the toughest time accomplishing first in the Senate and then in the assembly. [Sen. Engleiter] For me personally the the biggest problem is the increase in spending um a [Coughs] and the governor said it himself a to those fancy manufactures and commerce today that until you can get a handle on revenue increases, you can't get a handle on spending. And which to me means we've got to reduce the personal income tax more than we are so that we can can control state spending I think that's the biggest overall challenge. [Rep. Thompson] The biggest challenges [Sen. Enleiter: Clearing throat] pulling out comparable worth [pause] passing some sort of a consensus on the university catsup pay and holding down as Senator in the letter said the tremendous increase in governmental spending and expansion of programs. [Dave Iverson] Lemme follow up just for a brief moment on comparable worth because we've mentioned that a couple of times, that's the controversial plan that would that proponents say would reduce sex based panic ?equities? among state employees. Why don't you like that so much? [Rep. Thompson] Well it's in the subject that should not be in the budget bill. If it's going to pass it should have to pass on its

own individual merits, it should not pass because it's part of a budget package. It should have to be articulated and debated on its own individual merits in a separate bill, on the floor of the assembly in the state Senate and that's why, most legislators in the Assembly and I and I say most I would say 60 percent of the legislators are going to vote to pull it out of the budget bill. [Dave Iverson] All right. State Representative Tommy Thompson, Republican leader in the assembly. Thank you for joining us Senator Engleiter thank you for joining us as well. [Pauses] [Thompson- Thank You David] And that concludes tonight's coverage of the state budget message you've just been hearing from two Republicans on their views and earlier, of course Governor Earl's, budget mess-enge uh message rather I'm Dave Iverson. Thanks for joining us. Good night.