Democrats Consider Hospital, Estate Taxes To Plug Budget Gap

MADISON, Wis. -- State Democratic leaders are considering a tax on hospitals and a plan to continue collecting the estate tax to help deal with a projected budget shortfall.

Gov. Jim Doyle and Senate Majority Leader Russ Decker said the ideas could be part of an emergency package to cope with tax collections that are running $650 million short of projections.

Doyle said the hospital tax would mean more than $400 million in federal Medicaid reimbursement funds, which would then free up state tax dollars to offset the growing deficit.

"I think most people in the state would sort of shake their heads, saying, 'You mean, the federal government is ready to send $400 million to the state, and you're not out there trying to get it?' So, to me, that's obviously something we should be looking at," Doyle said.

Assembly Republicans killed the same idea last year, warning it would drive up health care costs.

As of Jan. 1, Wisconsin went along with a federal law that suspended collection of the estate tax until 2011. The Legislative Fiscal Bureau said reversing that decision would bring in $90 million over two fiscal years.

The governor said that state agencies will have to cut $300 million by mid-2009.