Mailbag; Rep. Davis writes:

80th Assembly District Update - February 18, 2008
Action Needed to Jump-Start Economy and
Close Budget Shortfall


On Wednesday, February 12 the Director of the Wisconsin Legislative Fiscal Bureau (LFB) briefed the Assembly Republican Caucus on the status of our state's economy and its impact on our state budget. While there was some positive news about the economy in the first part of 2007, the overall picture is sobering. In short, due to the downturn in the national economy, the state is facing a $652 million shortfall. Governor Doyle, as required by state law, is expected to introduce a budget repair bill in the coming weeks.

Click here to access a copy of the LFB memo that I received at the briefing. According to the LFB, despite the weakness in the housing market, high energy prices, and disruptions to credit markets, the national economy continued to expand throughout 2007. In addition, LFB noted the labor market was very resilient in 2007. LFB stated personal income grew by 6.2% compared to last January’s estimate of 5.1%, which reflects higher than anticipated growth in both jobs and wages. That's the good news.

The bad news is that economic growth slowed significantly in the fourth quarter and the current forecast assumes that the economy has begun to contract. Positive growth is expected to resume in the third quarter of 2008, in part due to the effects of interest rate cuts and the federal stimulus package; however when the federal stimulus package wears off, economic growth is uncertain.

Now more than ever, Wisconsin residents need both sides of the political aisle to come together and work in a bipartisan fashion to fix this serious budget issue. I applaud Governor Doyle for taking a significant first step by asking state agencies to cut an additional $111 million. In addition, I am encouraged that the Governor has stated he is committed to working with the State Legislature to solve the problem without raising taxes.

Ultimately, it is important we are proactive as a state to pass a number of measures designed to stimulate economic growth. As I stated in last week’s column, Assembly Republicans are reaching across the aisle and working with Governor Doyle to pass a series of family and business friendly policies, which include reforming our tax structure and providing incentives that will encourage in-state research and development.