State agencies will stop all non-essential hiring, travel and lease renewals, according to a memo released Friday, yet another sign the Wisconsin economy faces difficulties.
State Department of Administration Secretary Michael Morgan sent the memo to curb state expenses, largely in response to a recent report from the state Legislative Fiscal Bureau that said the state budget may face a shortfall of $300 to $400 million.
Linda Barth, spokesperson for the DOA, said the memo, like the one sent Thursday is typical when it looks like revenues are going to be lower than expected.
The state budget was written assuming funds from income, sales and corporate taxes would increase at a rate of 3 percent each year. The report from the LFB said sales taxes in December 2007 decreased by one percent and income taxes decreased by 1.2 percent when both were compared to December 2006.
Barth said it was important to remember the fiscal report was only preliminary and not a full analysis. The last time a memo was sent stopping travel and other expenses was 2003, when Doyle first took office and the state was facing a record deficit, according to Barth.
Bob Lang, director of the LFB, said the decision to wait until February for a full recommendation to Legislators would allow analysts to see if the poor December economic indicators were part of a trend.
Lang said waiting until February would also let forecasters see how a drop in interest rates may affect the economy.
The current trends are unlikely to improve, according to Lang, but he said any upcoming recession would be probably less severe than previous state recessions in 2001 and the early 1980s.
Gov. Jim Doyle said in a statement his fiscal agenda would not include raising taxes to pay for any deficits.
State Rep. Kitty Rhoades, R-Hudson, said in a release the LFB report showed the need to stimulate the economy and reduce government spending. Rhoades is co-chair of the Joint Finance Committee that works on the state budget.
We must identify efficiencies in state operations,"" Rhoades said, ""[We must] maintain our commitment to providing the '¦ core functions of government service while living within the means of our taxpayers.
