Framework for a Budget Solution

$5B Deficit Permanent
One-half of solution, since at least one-half of deficit is structural

Spending
70% of solution

Revenue
30% of solution

$2.2B Permanent Cuts
Focus on spending reform and economic growth

$0.7B Revenue Increase
$250M human service surcharge $140M alcohol (inflation index) $330M tobacco (increase tax to Wisconsin level)

Temporary
One-half solution, since about onehalf of deficit is due to recession. Buys time for longterm reform

Postpone Repayment of $1.4B K12 Shift

$0.7B Temporary Income tax surcharge (4% increase
on everyone) with sunset after 2012-2013 to prompt long-term reform in spending and sales tax (broaden base, lower rate)

Recommended 2012-13 Budget 2012Revenue Beginning Balance Projected Revenue Subtotal New Permanent Revenue New Temporary Revenue Total Revenue Spending Projected Spending Permanent Spending Cuts Postpone K12 Shift Repay Total Spending Cash Flow Account $39,000 (2,200) (1,400) $35,400 $250 millions $940 33,300 $34,240 700 700 $35,650

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