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LEGISLATURE APPROVES BUDGET--SENDING IT TO GOVERNOR
From The Associated Press and LaCross Tribune

MADISON - The Legislature on Thursday approved a state budget that would ease spending caps on school districts, raise cigarette taxes, give businesses an array of tax breaks and set priorities for spending state money over the next two years.

Under the budget, senior citizens would get help paying for prescription drugs, municipalities would receive more money, future spending increases would be limited and the state would sell its 25-year tobacco settlement payments to investors.

"We wanted to limit taxes, restrain spending and continue our efforts at education reform, and in all three of those areas I think we can declare success," said Assembly Speaker Scott Jensen, R-Waukesha.

The Legislature approved the budget after several weeks of partisan wrangling between Democrats who control the Senate, Republicans who control the Assembly and the Republican governor.

The Assembly voted 73-22 Thursday evening for the $47 billion bill, which covers the two-year period that started July 1. The Senate then voted 25-8 to approve the bill. It now goes to Gov. Scott McCallum for consideration.

"I think we have achieved the best possible compromise that we could with the fiscal restraints that we had, with the split in the partisan bodies the way we have," said Senate Majority Leader Chuck Chvala, D-Madison.

McCallum must sign the budget in order for it to become law. McCallum has the power to veto any portion of the budget.

"We're beginning to live within our means in the state," McCallum said.

One key budget provision would allow school districts to exceed the spending limits by 0.78 percent with a two-thirds vote by the school board.

School administrators have been lobbying legislators to give them a way around spending caps, which the state imposed in 1993. Designed to hold down property taxes, the caps limit the amount of money school districts can raise and spend annually on a per-pupil basis.

In return, the state pays two-thirds of education costs. The proposed budget would provide $45 million more to state schools over two years, making the state's contribution to public school operating costs more than $5 billion a year.

Raising more money from local property taxes requires voter approval in a referendum. Under the proposed budget, voter approval would no longer be required.

"We need this and we're glad to have it," said Ken Cole, executive director of the Wisconsin Association of School Boards. "Does it make our lives marvelously better in school districts? No, it does not."

The impact of the budget also would result in a property tax increase. The state does not set property tax levels, but its actions influence the local governments that do. The Legislative Fiscal Bureau estimated the increases would be between 2.64 percent and 3.49 percent in December and 3.8 percent and 4.57 percent in December 2002.

The budget bill also contains McCallum's proposal to sell the state's 25-year tobacco settlement payments, estimated at $5.9 billion, to investors for a one-time lump sum of $1.3 billion. Most of the money would be invested, but legislators agreed to use $450 million from the sale to help balance the budget.

Rep. Sheldon Wasserman, D-Milwaukee, predicted the state would blow the money within a few years to pay for a hodgepodge of programs.

"This is blood money," Wasserman said. "This money is sacred money. For us to just spend it on potholes and legislative quirks is wrong."

The proposed budget also would:

Increase the cigarette tax from 59 cents a pack to 77 cents a pack, which would raise an estimated $130.5 million over the next two years.

Create a prescription drug plan covering 260,000 seniors paid for with some of the money raised by the increased cigarette tax. Single seniors making up to $20,616 and couples earning up to $27,864 would be eligible.

Keep income taxes the same.

Increase current funding levels for local governments by 1 percent statewide.

Increase state spending by 3.6 percent in the first year of the 2001-03 budget and 2.1 percent the following year, which McCallum said was the lowest increase in 30 years.

Limit future increases in taxpayer-supported spending to the rate of growth of personal income for Wisconsin residents.

Create a $2.5 million a year property tax break for Wisconsin-based airlines Midwest Express and Air Wisconsin.

Delay until the 2005-06 school year a requirement that high school students pass a graduation exam to earn their diploma.

The Assembly and Senate passed competing budget bills last month, and a conference committee of legislative leaders spent almost two weeks in closed-door meetings crafting a compromise budget bill.

Democrats have an 18-15 majority in the Senate, while Republicans have a 56-43 advantage in the Assembly.

After passing the budget, the Senate and Assembly adjourned until October when they can take up any vetoes McCallum may issue.

The budget was supposed to be done July 1, the beginning of the new fiscal year. But state law allows the government to continue running at funding levels set in the last budget. Two years ago, the budget wasn't signed into law until October.