Wisconsin’s new governor focuses on small business
By Steve Jagler, of SBT
As the state’s new governor, Jim Doyle is making two promises to Wisconsin’s businesses: 1) He’s not going to raise your taxes and; 2) He’s going to do what he can to limit your costs for employee health insurance.
If Doyle is successful, those objectives would provide welcome relief to business owners, who repeatedly identify their tax burdens and employee health insurance costs as two of the largest impediments to economic growth in Wisconsin.
Doyle, who was inaugurated as the state’s governor Jan. 6, acknowledges his task won’t be easy. As a Democrat, he has always subscribed to the notion that government can help people. Yet, with the reality of inheriting a projected state deficit now estimated at $4.3 billion, his options for social programs are limited, at best.
In a recent interview with Small Business Times executive editor Steve Jagler in Madison, Doyle insisted he will keep his campaign pledge to hold the line on taxes and will find a way to create a pool for Wisconsin’s small businesses to join with the state and negotiate for lower employee health care insurance premiums.
Doyle, who actually lived for a time on an Indian reservation, also intends to enlist the help of Wisconsin’s Native American tribes to help build some of the state’s infrastructure. The tribes told Small Business Times in 2002 they would like to spend $600 million in economic development in Wisconsin, but they need longer gaming compacts and a handful of other concessions from the state to make that happen.
Doyle’s cabinet has more of a Milwaukee flavor than the cabinets of recent administrations: Marc Marotta, a partner at the Foley & Lardner law firm in Milwaukee, is Doyle’s nominee for secretary of the Department of Administration; David Riemer, a former City of Milwaukee employee, is Doyle’s nominee for budget director; Michael Morgan, a former City of Milwaukee employee and officer of Milwaukee’s Helen Bader Foundation, is Doyle’s nominee for secretary of revenue; Frank Busalacchi, a Teamster and a member of the Miller Park and Summerfest boards, is Doyle’s transportation secretary nominee; Antonio Riley, a Democratic Assemblyman from Milwaukee, is Doyle’s nominee to oversee the Wisconsin Housing and Economic Development Authority; and Cory Nettles, an attorney at Quarles & Brady, Milwaukee, is Doyle’s commerce secretary nominee.
The following are excerpts from the SBT interview with Wisconsin’s new governor:
SBT: Marc Marotta, David Reimer, Michael Morgan, Frank Busalacchi, Antonio Riley and Cory Nettles — these are people with credibility in Milwaukee. You’ve got to be thrilled with the level of competence you’ve been able to bring on board here.
Doyle: Well, I am. We’re still in the process of putting together a very strong team. It certainly is a team that is tuned in well to business. I understand that it’s not going to be in the state government that we’re going to be creating jobs in the state. It’s going to be in the private sector. In fact, I want to reduce the number of state jobs, so I want to really be working with businesses to expand the job base and (the base) of good-paying jobs in the state, and I also understand that small businesses really are the lifeblood of that.
SBT: I’m sure you’re aware there are many business people who don’t like the notion that ANY Democrat is in the governor’s office. What do you think your administration can do to bridge that gap, that perception that people might have in the business community?
Doyle: (Laughs) Well, I would assume and I would hope the appointments I made would send a pretty clear signal of how I regard our need to grow and develop our business base here. And there are some people who have voted Republican and are never going to vote for a Democrat, but I think people in Wisconsin realize this is a time we really have to pull together.
I’ve inherited a $4.3 billion deficit. So, business fighting labor, and Democrats fighting Republicans, big cities fighting rural interests. … Maybe in flush times you can have all those fights, but in the times we’re in, you can’t have them. We really all have to pull together.
I have a very strong belief that there is no social program that is better than a job, and that’s what we should really be focused on — getting this economy growing and growing in a way that’s producing good jobs. The only real long-term answer to this is economic growth, and I’m going to be very focused on that.
SBT: Can this budget be balanced without raising taxes?
Doyle: Well, sure. I believe it has to be done without raising taxes. I just read that we are the fourth-highest taxed state in the country, so I don’t think we have any more room to go. So, it has to be done.
Now the question is can it be done painlessly. The answer to that is no. There are going to have to be some very difficult decisions made. This is not going to be business as usual. We are going to have to reverse the trend where the government spends more year after year, even if the revenues aren’t there.
I’ve been elected governor. Those are the circumstances we’re in. My job is to be the leader of this state as we get our spending back in line and budget back in balance.
SBT: Internally, will it be somebody such as Marc Marotta who will be really focused on maximizing efficiency and making cuts where there need to be cuts?
Doyle: He’ll play a very key role. As the head of the Department of Administration, he’s in charge of putting together the state budget. He is the person I selected for one of the most important jobs in the administration.
SBT: Some people are skeptical, that although you might not raise taxes, you’ll instead raise fees. There already are many government fees imposed on Wisconsin businesses. Many people simply consider them taxes. Will fees be increased?
Doyle: Well, I have no intention of trying to figure out how to "trick" people into paying higher fees to help balance this budget. I don’t think that’s appropriate.
If there would be any fees raised, it would only be because over the years, the costs of running a program perhaps have grown significantly and the fees have not.
But I think you have to adhere very closely to the purpose of the fee. It should not be a disguised tax. It shouldn’t be a way of, "Oh, we need more money, can’t we up that fee?"
SBT: What about the notion of repealing the personal property tax? Is that on the table?
Doyle: Well, not right now. I’ve got to balance this budget. So I don’t think this is the time to go through major changes of our tax policy. I’m always open to new ideas (about shifting tax burdens), but frankly, between now and this budget I have to put together by June, I think what we basically should do is keep our tax structure as it is and say, "OK, this is the income we have. Now, we have to figure out how to get our spending in line with that income."
SBT: The two issues that business people talk to me about every week are: 1) taxes and, 2) employee health care costs. We’ve already talked about taxes. Is the notion of establishing a pool for small businesses to link with the state government to get more bargaining power for lower premiums a priority for your administration?
Doyle: Yes, it’s a very high priority. What you’ve just described, I’ve heard it constantly for the last two years. I hear it all across the board. I hear it from small business. I hear it from farm families, which really are small businesses. I hear it from labor, where they’re going to the bargaining table, and they’re finding the employer saying, "Look, you’re going to have to give back on wages to cover your health insurance," and they know the employer isn’t lying to them. It’s not the employer who’s making the money here.
I would like to help, and I think the place to start is with small businesses and farm families to be able to get the benefit of the state’s bargaining power. I hope what we’re going to be able put together by the time the budget is finally passed is a pool in which small businesses and farm families can sign up, and when the state bargains for health insurance coverage for the state workers, it can bargain for better prices. It wouldn’t be the state paying for the insurance.
Doyle: It would be the state using its leverage to try to bring those insurance costs down for people.
You know, it really pains me, and I’m sure you do hear it too, when a small business (owner) will say to me, "You know, we’ve prided ourselves in providing health coverage for our workers, and we’re not able to do it anymore. With 15, 20, 25 percent increases in health premiums, the choice is between going out of business or cutting the health insurance."
I know that these employers just feel terrible about it, because it’s something they’ve prided themselves in taking care of their employees, and it’s just getting tougher and tougher to do.
So I hope we can use the state’s leverage to try to bring some of those costs down for small businesses and farm families.
SBT: Is there anything else that comes to mind that can be done to help control health care costs?
Doyle: Part of it is, I hope the market really goes to work. Some insurance companies are now developing different-tiered systems. I think you’re going to find that more and more people are going to choose those second and third tiers, and it’s going to make the high-end providers have to come down.
In prescription drugs, if small businesses and others are able to purchase through buying pools that the state has established, we can bring down prescription drug costs. And maybe it’s true with hospitalization costs as well.
I don’t know if we can get all of that done in the first six months here. … But over my four years as governor, believe me, I’m going to be very much focused on how we try to make health insurance more affordable for ordinary men and women, whether they’re employers or employees. They’re all facing the same crunch right now.
SBT: Switching to Indian gaming — I know your life experiences when it comes to Native American issues, tribes and compacts. The tribes recently told Small Business Times they can "rebuild" this state. At a time when the state is essentially broke, is the notion of longer compacts and some of the concessions they are pushing for in return for that investment in the state an appealing idea?
Doyle: Yes. I hope we can go into these negotiations with a win/win kind of attitude here. I have no problem negotiating longer compacts with the tribes. These enterprises are here to stay. Potawatomi isn’t going to shut down in Milwaukee.
So I think the tribes make a good argument that they are able to finance their operations better and make better long-term investments in their businesses and in surrounding businesses if they have longer-term compacts.
I’ve also indicated that I’m more than willing to talk about increasing the kinds of games. I’ve never quite understood the logic that said, "You can go play Black Jack, but there’s something wrong with roulette."
So I think there are things the state can do for the tribes and things the tribes can do for the state. Our interests in many ways are very much aligned, if we can strike the right deal.
SBT: Does the right deal involve the state taking a larger percentage of the tribes’ gaming revenue?
Doyle: Yeah, if you look at what the state needs right now, it needs money. And this is a source of money that is not a one-time deal. This is an ongoing deal. But I want to make it clear. I really want to work closely with the tribes on this. I think we’re at a spot right now, where we have some very common interests in getting these compacts done and getting them done very quickly.
SBT: To switch gears again — I saw Frank Busalacchi in the hallway before I came in here, and I asked him whether we are going to build freeway lanes or railroad tracks. Would you consider the Marquette Interchange the highest priority of transportation issues in the state?
Doyle: It’s the highest, single-most visible one. Generally, making sure we have good roads that allow raw materials to be brought into the state and manufactured products to be taken out of the state, and good roads for farm products to move on and good roads for the people to move on. … It’s very, very important.
Now, the Marquette Interchange is clearly the most visible immediate need. It clearly is, not only for Milwaukee, but for the eastern part of the state and even coming out of the west from Madison. So much of the commerce in this state comes out of that Marquette Interchange, so it’s very important we take care of it.
At the same time, we can’t just say all of our road money is going into the Marquette Interchange. We have a lot of very important road needs all around the state.
We have other very important transit needs. This is a massive balancing act that we’ve got to accommodate all of these needs with shrinking dollars. It’s one of the significant challenges that’s been handed to me.
I wish in the 1990s somebody had been putting money away for the Marquette Interchange, but they didn’t. So now, we’ve got what almost everyone agrees is an outdated road system, and its life is coming to an end, and we’re going to have to do something about it.
SBT: Wisconsin Energy Corp.’s Power the Future Plan — What is your take on that? Is it the answer to the state’s energy needs?
Doyle: I think the general notion of trying to get a plan on the books that people can look at … is very important. Whether this is exactly the plan — the Public Service Commission still has to make some major decisions on it.
SBT: Wisconsin tried to jump on the dot-com bandwagon in the 1990s, and so much of that economy collapsed. How important is the state’s high-tech economy?
Doyle: I see the high-tech economy as not only being the stand-alone dot-com companies, but it’s how we’re making sure that our long-time manufacturing base has the best production technology and is using the Internet and other technology to find market for its products.
I also hope that we’re really going to work to develop the sort of higher-octane, smaller businesses that are information-based. I think that is one of the real strengths of our state — the level of education of the workforce.
We have fallen behind in this area, and it’s not right that we’ve fallen behind. When you look at what we have in this state, we should really be a high-tech, biotech center. We have one of the greatest research universities in the country.
This is Wisconsin’s great strength – our educational system.
SBT: There’s so much to do. And such a limited pool of money with which to do it, even with the best of intentions. How can we as a state and you as a governor accomplish all of these things, given the current economic reality?
Doyle: Well, it’s going to be tough, but I liken the position that I am in very much to someone who’s brought into a company that’s a good, solid company. The state of Wisconsin is a wonderful place. The basic, the most important building blocks are all here — the educational system, the environment, the work ethic of the people, the intelligence and creativity of the people. This is really a great, great place.
We are in unprecedentedly difficult economic times. So, just as someone coming in taking over a sound company that is having some real serious problems, we’ve got to get to the other side of these problems. We’ve got to address them honestly. Clearly, it’s going to call for a reduction in spending to get our budget back in line with our revenues. It’s going to call on us over four years I am governor in this term to see what we can do to get businesses growing. There’s no doubt about it, we’re going to suffer some real pain, more than Wisconsin is used to.
I believe, once I do deliver an honestly balanced budget that is going to put Wisconsin back on the track of having a sound financial picture, that we’re going to be much healthier and we’ll be much more able then to concentrate on the things we really want to do — good education, good business development, protecting the environment, helping young people get into the business world. Those are all things we want to do.
Jan. 24, 2003 Small Business Times, Milwaukee