Mr. Speaker, Mr. President, Lieutenant Governor Lawton, Supreme Court justices, constitutional officers, members of the Cabinet, distinguished members of the Legislature and fellow citizens of Wisconsin:
In a spirit of deep honor and urgent purpose, I have come here today to fulfill my obligation under the Wisconsin Constitution to report to you on the condition of our state.
And I can summarize that condition simply. The state of our government is profoundly troubled. The State of Wisconsin is as vibrant as ever.
The state of our government and the condition of our people are, to be sure, inextricably intertwined. But the true measure of Wisconsin's health lies not in our fiscal deficit but in our families' determination -- not in red ink on the budget's bottom line, but in the green expanses of our farms and forests -- not in the halls of state government alone, but in the living rooms, classrooms and workplaces across our great state.
In those places and more, the vistas and values that define Wisconsin are thriving.
But here in Madison, we face a crisis -- a budgetary deficit that imperils state government -- one so severe it will, if we do not address it, imperil our people too.
The source of this problem was a departure from Wisconsin values -- and the only solution is a return to them.
Wisconsin's budget is complex. Wisconsin's beliefs are anything but.
We embrace, rather than avoid life's toughest tasks. We spend what we have, and if we have a little to spare, we share it with people who have less, or we put it away for a day when we might fall short. We don't take what belongs to others -- certainly not our children -- and use it to indulge ourselves.
And most of all, we tell it like it is.
I can't promise you'll be pleased with all I have to say today -- or with me for saying it. All I can promise -- and I do -- is that I'll level with you.
Our challenge -- here in this room -- is to prove Wisconsin's government worthy of Wisconsin's people.
Let that challenge begin today. And let it begin with me.
This won't be an ordinary State of the State Address. Speeches delivered from this podium on this occasion are typically a time for unveiling a litany of new programs, lists of new priorities and loads of new promises.
But this is a moment for protecting what's most important rather than launching a host of new undertakings. I wish that wasn't the case. This isn't the kind of speech I wanted to give, nor, I'm sure, is it the kind you wanted to hear.
There's a lot I'd like to do that we can't -- and a lot we'll have to do that I'd rather not -- and both of those circumstances trouble me greatly.
But we are going to get through this together. And Wisconsin will emerge a stronger state on the other side.
As I said in my inaugural address, it's a new day in Wisconsin. There's a can-do spirit shining across our state -- an ethic of relentless innovation and limitless possibility. All you and I need do is harness it. And harness it we will.
I want you to know the budget has occupied nearly every minute of my Administration, and it will be the subject of almost every minute of this address. In a few weeks, I'll return to present my proposals for the budget. In the interim, I hope to have the benefit of your ideas -- and somehow I feel pretty sure I will.
Today, though, I want to explain where we stand, how we got here, and the principles I believe we should follow on the road ahead.
The people of Wisconsin are entitled to know how this problem developed -- not so they can allocate blame; we need to pull together, not point fingers -- but so we can chart where we're going with a clear understanding of where we've been.
Right now, Wisconsin faces a $452 million deficit. For the next two years, we're looking at a shortfall of $3.2 billion. It is the worst deficit that any Wisconsin governor has ever faced.
The economic slump hasn't helped this problem, but neither was it the sole cause. The simple fact is this: We're spending too much -- and we have been for a long, long time.
Over the last 15 years, state government spending more than doubled. The state workforce grew by more than 11,500 people.
We can no longer rely on the economic boom to mask spending growth. More than 166,000 of our people are out of work. Revenues to the state are down by more than $900 million. All the while, government has continued to spend more and promise more.
Other states have patched their shortfalls by tapping into rainy-day funds. The one I found upon taking office contained $201. Even at the height of the boom, Wisconsin was one of only five states that failed to set revenues aside for a rainy day. Now a storm has broken out, and we're left without an umbrella.
Wisconsin sold off its nearly $6 billion tobacco settlement for pennies on the dollar to plug a one year budget hole. As a result, we must now find an additional $600 million this year alone -- just to stay even.
That's a tragedy for our people -- and it's especially heart-breaking for me. We took the tobacco companies on when everyone said they were invincible. The settlement we won was Wisconsin's opportunity to invest in smoking prevention for kids -- health care for our people -- and so many other needs.
In this budget, the settlement would have provided $250 million in new revenue -- not a dime of it from taxpayers' pockets. Without it, services as basic as police and fire protection are in jeopardy.
Meanwhile, the combination of soaring spending and dubious bookkeeping resulted in our bonds being downgraded. Only two states' ratings are worse.
I wish we weren't in this mess. I believe firmly that we shouldn't be. But we are. We must get out of it. And we can.
The picture seems bleak. And our situation demands tough choices. But I'm bullish on Wisconsin.
I've looked this problem in the eye -- and I've looked each of you in the eye -- and I know we can solve it together.
As we do, I'll seek your help -- not simply because I want your support, but because I need your creativity and ideas. The answers are as likely to come from where you sit as from where I stand.
And we need to start today. Every moment we delay, government spends more and the deficit deepens. For this reason, I have asked the Legislature to convene a special session to cut immediately this year's budget by $161 million.
I wish we could eliminate the entire deficit in the five months left in the fiscal year. Unfortunately, without cutting essential services like health care or taking away funds that school systems and localities have already budgeted, we can't.
But we can make a serious down payment on the tough work that awaits us. Every dollar we don't spend this year is one we won't have to cut next year. So here's my challenge: Let's act quickly. And by all means, disagree with what I propose -- but answer by suggesting cuts of your own. Each of us has that responsibility.
No doubt parts of the budget process will be contentious. Allow me to propose a few principles to guide the way.
The budget is an undertaking of immense importance -- the fullest single expression of our priorities as a people. I fully expect those from different parties to espouse different principles. That's what democracy is about. And I imagine there'll be a few times when Republicans and Democrats in the Legislature unite across party lines in mutual irritation with me.
But let's never forget that Republicans and Democrats got into this fix together, and that's the only way we'll get out. In lean times, we can't afford luxuries -- least of all the mindless extravagance called politics as usual.
This crisis is too big -- too deep -- too firmly rooted for any one part of our state or segment of our society to shoulder the burden alone. We can't pit one group against another. As a matter of morality and mathematics, everyone must share in the difficult decisions that lie ahead.
During my budget listening sessions across the state, and during my first three weeks in office, nothing has had as profound effect on me as the number of people, from all walks of life, who have come up to me and said, "Governor, we know how big this problem is. We are all going to have to sacrifice. And we are all in this together. Go to it."
The people of Wisconsin are ready for action. Now it is time for us to lead.
To say we should cut spending thoroughly is not to say we should do so thoughtlessly. If we slash education, we risk undermining the asset that makes our state most attractive. We must also protect the most vulnerable of our people. And if we walk away from our obligations to local government, those who depend on essential services like police, fire protection and emergency personnel will pay the price.
Ultimately, what we owe our citizens is a government we can afford -- and a government that works. We can make state government more efficient, and we should.
We will eliminate duplication by consolidating departments or divisions with overlapping responsibilities. Just because an agency or board once served a purpose doesn't mean it still does -- or that its purpose is more important than other needs that are being cut. And we will review every program to ensure it still makes sense -- not just its proposed increase, but the base level of funding too.
Going forward, my mind will be open to every solution -- except one. We should not -- we must not -- and I will not -- raise taxes.
Wisconsin's problem is not that we tax too little. It is that we spend too much.
If common sense doesn't lead us to that conclusion, simple arithmetic will.
Wisconsin is already one of the nation's most heavily taxed states. Adding to the burden would make it virtually impossible to attract new jobs while destroying more than 50,000 of the ones we already have.
By costing us jobs, raising taxes would trigger an economic spiral that would cost us revenue too. In the long run -- and perhaps in the short term too -- raising taxes will make the deficit worse, not better.
Working families are already stretched to the limit. They're paying more for groceries – housing -- utilities -- gasoline -- and other basic needs. It would be unfair -- and it would be wrong -- to raise their taxes too.
Finally, let's solve this problem once -- and let's solve it right.
For too long, Wisconsin has budgeted for today without thinking about tomorrow. We've allowed structural problems to accumulate that make each budget more difficult than the one before. In the past, government resorted to easy, cosmetic fixes rather than making the tough calls.
Behind this problem, like most, there's a possibility -- a chance to streamline our government, reorder our priorities and embrace our shared future.
Steep, serious spending cuts are the only way out of the crisis for now. But just over the horizon, opportunities abound -- including the long-term budget solution: education and jobs policies that reduce the deficit by growing the economy.
You know, the budget shortfall is serious, and we'll have to make painful cuts to overcome it. But let's not lose our perspective. We're still going to spend more than $22 billion over the next two years -- and that's enough money to make a real difference in a lot of people's lives.
We'll have to set priorities -- and find creative ways to do more with less -- but we can. We can do a great deal even in the short term to make Wisconsin a better place -- and even more once we get the budget crisis out of the way.
We can make Wisconsin's schools -- which are already the nation's envy -- even better.
We can improve health care.
We can strengthen Wisconsin's economy and attract the very best jobs to our state.
We can preserve and protect Wisconsin's great natural resources.
And we can restore integrity to state government
These are my priorities and let me spend a moment on each.
First, the key to great schools has always been great teachers. We're fortunate to have as many as we do -- but we're also losing more than we can afford. Last year, one out of every seven teachers left the profession. Their salaries are lagging. Their health care costs are climbing. If we want to keep them, we need to treat our teachers like what they are: professionals who are highly trained and deeply committed to our kids.
And while we close the budget gap, let's not forget the achievement gap. In Milwaukee, only a third of African-American eighth graders go on to graduate from high school. That's a terrible, tragic waste. It's unacceptable. And it must change.
We owe all of Wisconsin's children -- no matter where they come from -- a great education. But today, we spend twice as much on our richest schools as on our poorest.
It is time to reform the way Wisconsin funds our children's education. That is why tonight I am announcing that I will form a Governors Task Force on Education Financing.
This is too important of an issue to squeeze it into a budget proposal or devise a new plan in just a few weeks.
To do it right we need to do two things. First, all views must be represented. Parents, taxpayers, teachers, community leaders. Urban districts, rural districts. Wealthy areas, poorer areas.
Second, the meetings must be open, in full view of the public.
What is also very clear given our current budget condition is that we must look for new ways to harness the creativity, experience, resources and talents of our communities to make our schools even better.
We all know the importance of early education in getting our kids off on the right start. And we all take great pride in our university and technical college system. But, perhaps because I am the spouse of a middle school educator, I have come to believe that the middle school years are some of the most crucial in determining our children's future. I have heard experts say it, I have read statistics to support it, but also seeing my sons and their friends grow up, I know how true it is.
Jessica and I have decided that we together are going to lead the effort to establish the Community Connections initiative to encourage greater community commitment to our middle schools.
We want people to get involved – serving as mentors, participating in after school activities, rebuilding playing fields, providing apprenticeships, or working with a troubled child during one of the most difficult periods of life. From a senior citizen who brings the wise perspective of time to an auto mechanic who can provide a helping hand in shop class, we all have something to offer.
But our goal should be not only to get our communities more involved with our middle school students, but also our students more involved in their own communities. The results: greater civic responsibility, enhanced skills for the new economy, improved academic performance.
Beyond education, another important priority is health care.
We've always had great health care in Wisconsin. But right now, the system isn't working well for anyone involved. Individuals are paying more and getting less. Health care costs are crippling schools and small businesses. Prescription drug costs are climbing, especially for seniors. Not only do rising health care costs hurt individuals and businesses, they are a major cause of our state's fiscal problems.
We need to search for creative solutions to these problems.
Throughout the state, small businesses have told me they want to do the right thing for their employees, but the rising cost of insurance premiums is making it harder every day, especially in troubled economic times. Farmers tell me of the fear of being one accident or illness away from financial ruin.
The health care crisis won't be solved in Madison alone. And in these difficult budget times, we are even more limited in what we can do. But we can take important steps forward.
I am directing state government to develop a Health Insurance Purchasing Pool to allow small businesses and farmers to take advantage of the buying power of state government to purchase more affordable health care coverage for their employees and their families.
This is a perfect example of how state government can extend a hand and make a real difference in people's lives without establishing an expensive government program.
I have also directed our government to find new ways to pool our prescription drug purchases, with those of local governments and even other Midwestern states, so that we can increase our bargaining power and obtain lower costs for prescription drugs.
And while we look for new ways to tackle the health care crisis, we must also protect those programs that help so many Wisconsin citizens receive the health care they need. We have to stand by those who need our help the most because this isn't just about quality of life; it's a matter of life and death.
Third, we must get our economy moving again.
People in Wisconsin earn about 13 percent less than the national average. We've been falling behind the rest of the country for 30 years. Over the last 10 years, we've lost more than 50,000 college graduates to other states.
For too long, state government has acted as though the best jobs program was hiring more people in the Department of Commerce. I believe it's creating an environment hospitable to innovation. I believe it's creating the best educated work force in America. I believe it's helping small businesses with the crippling cost of health care.
We can't run Wisconsin's economy from this room, and we shouldn't try. Our job is to unleash the innovative spirit of our people. Today, I am announcing that I will bring government, labor and business together to craft and implement a single, focused strategic plan to grow Wisconsin's economy.
Here in Madison, the University has always been an engine for economic growth. For example, the cutting edge research in biotechnology at the University will provide not only dramatic medical breakthroughs, but also millions of dollars in new investment, new jobs and new opportunities for our people. But we also must take advantage of the resources and expertise of our other university and technical college campuses to foster economic growth throughout the state.
But there is probably nothing we can do to help economic growth more than to balance this budget without raising taxes.
Some have suggested that we should just do as many other states are doing and raise taxes. But you know what, if we were to try to solve this problem through tax hikes, we would have to increase income taxes 37% this year or increase the sales tax by 51%. Obviously, raising taxes is not the answer.
Holding the line on taxes helps our businesses grow, makes us more competitive with other states, and creates job opportunities for our families.
To be sure one of things that makes Wisconsin such a wonderful place to live is our natural resources – our lakes, streams, and forests. It is one of the reasons I love Wisconsin.
For 12 years as Attorney General I worked to protect our environment and that will be a major focus of our efforts for the next four years. One example from just yesterday:
After years of deadlock and fighting, we are moving forward to cleaning up the dangerous toxic chemicals that have polluted the Fox River. Yesterday, the state, the EPA and one of the paper companies announced a down payment to start what may become the largest cleanup of a river in North America. It's a step – and we have many more to go – but we're moving in the right direction towards a cleaner Wisconsin.
It's a good start for this, "the year of water."
Finally, public integrity is Wisconsin's proudest tradition, and it's time to bring it back.
That starts with this challenge: Let's enact a campaign-finance reform law, and let's do it this session. A number of legislators, including Republican Senator Ellis and Democrat Erpenbach have offered ideas of how to solve this important problem. I can't guarantee we'll agree on the details, but I do promise I'll do everything I can to find common ground.
And let's pass the Impartial Justice Bill so campaigns for our state's highest court are not controlled by big money and special interests.
And let's continue Wisconsin's historic commitment to open government by passing legislation to restore openness and let the sun shine in.
We can make real progress on all these priorities right now. And we can make even more once the budget crisis is out of the way.
Our problems are deep, and our challenge is difficult. But it can be done. It's a new day in Wisconsin -- a bright, beaming hour brimming with possibility.
From Merrill to Madison … Oshkosh to Eau Claire … Peshtigo to Prairie du Chien … great things are happening in Wisconsin. And we shouldn't forget it.
For example, if anyone doubts Wisconsin's determination in the face of adversity, just ask a five-foot-eight-inch kid from Tony, Wisconsin, population 180. He walked onto the UW football squad rather than accept a scholarship out of state. His name is Jim Leonhard. Today he's an All-American who holds the school record for interceptions and punt return yards.
If anyone questions our commitment to kids, just ask Carol Hooker, a star fifth-grade teacher at Franklin Pierce Elementary in Milwaukee. Carol became a teacher through the Milwaukee Teacher Education Center, or MTEC -- a not-for-profit teacher certification program that provides qualified, diverse educators for the Milwaukee public schools. MTEC helps career-track professionals become certified teachers through on-the-job training.
Carol is one of thousands of teachers in Wisconsin who are serving our kids, even though other lines of work might offer more glamour or financial rewards. They're committed to our kids, and we should be just as committed to them.
If anyone wonders about the value of public service, just ask Lieutenant Michael "Woody" Woodzicka from Appleton, Wisconsin. Last year, he and his partner were nominated to the Fire and Police Hall of Fame for forcing open the second-floor door of a burning building and carrying an unconscious 18-year-old woman to safety. If these heroes could brave thick smoke and blazing fire to save a woman's life, the least you and I can do is brave controversy and political costs to balance the state budget.
If anybody thinks we cannot provide health care to our communities, just ask Gus Frank, Tribal Chairman of the Forest County Potowatomi Tribe. Folks in Forest County used to have to travel all the way to Rhinelander for health care. Not anymore. The Potowatomi Tribe built a $10 million health care center in Crandon that's open to every member of the community. In fact, 60 percent of its patients are non-Native American. More than 70 percent of kids are now immunized. Pregnant women are getting exceptional prenatal care. And the clinic is serving 4,000 patients.
If anyone questions Wisconsin's readiness to sacrifice for a better tomorrow, just ask the 1,650 members of the Wisconsin National Guard who have been called up to active duty since 9/11. No matter where you stand on foreign policy, I know every person in this state joins me in saluting these brave men and women for their service.
These people -- and so many more across our state -- are proof of what Wisconsin can achieve. And I'm not asking state government to do anything the people of Wisconsin don't do every day.
Would you join me in thanking them for what they do every day for Wisconsin.
I believe the people of Wisconsin have chosen representatives who can rise to the greatness the moment demands. Just like the people we serve, we know what sacrifice is. We understand the right choice can be painful. But we also know, in equal measure, how meaningful hard work can be.
Lately, people have asked why I'd want this job in these times. My answer is simple. Because I'm a son of Wisconsin.
Whenever today's problems seem like too much to bear, I remember what my parents' generation faced. They overcame a Depression -- fought a world war -- and returned to farms and factories and built an economy that, for all its challenges, remains the envy of the world.
When I remember what they accomplished, and I look at what we face, I think: We can do this, and we can be better for it.
All we need is a government worthy of its people. The state of our government is troubled. But the State of Wisconsin is as vibrant as ever. Thank you and let's get to work.