The Wisconsin Legislature, which convened its spring session on Jan. 6, has some financial, albeit temporary, breathing room. The Badger state is in better shape than its neighbor to the west because, in addition to cuts, the Legislature raised income tax rates in 2009 for its wealthiest residents. The target was households having incomes exceeding $250,000.

Still, Wisconsin is all but certain to face another fiscal crisis next year unless it reduces spending now for the second consecutive year. Here’s why.

Each state is receiving about $3 billion from the massive federal stimulus plan (the American Recovery and Reinvestment Act of 2009), which they’ve used in part to balance their 2010-11 budgets. Public ire is growing over mounting federal debt, and any further federal help this year will be relatively spartan as an anxious Congress looks to the mid-term election on Nov. 2.

If that anti-big government, anti-incumbent mood spreads, state lawmakers will feel the heat, as well.

Superior Mayor David Ross, a Republican candidate for state lieutenant governor, already is fanning that anti-spending flame. He wants the 2010 Wisconsin Legislature to wield the budget knife again to eliminate a $2.25 billion structural deficit, now hidden by the federal stimulus money.

“Reducing spending now is the best way to avoid local property tax increases in 2011-12,” he said, reflecting a presumption the next Legislature will further reduce state revenue sharing and state K-12 school aid, just as lawmakers did to balance the 2010-11 budget.

State Sen. Robert Jauch, D-Poplar, who minimized state revenue sharing cuts last year to the two biggest cities in his district — Superior and Ashland — said Ross sounds more like a partisan candidate than guardian of his city’s interests. The legislature and Gov. James Doyle used federal stimulus money to offset one-third of the budget shortfall, he said. The remaining deficit was offset with spending cuts and new taxes.

“Without the federal stimulus money, we would have had to shut down the (UW) campuses,” he said.

Meanwhile, pressure is mounting on lawmakers in both states to help create private sector jobs, and reduce unemployment. In Wisconsin, the emerging priorities are stabilizing the state’s manufacturing sector and jumpstarting the state’s entry into the green energy economy.

On Jan. 6, Governor Doyle introduced his green energy development plan, the proposed Clean Energy Jobs Act, to the Legislature. The bill embodies recommendations by the Global Warming Task Force that Doyle created in 2007 to find ways to combat predicted climate change in Wisconsin, including drought, damage to forests and wetlands, and already historically low Lake Michigan water levels.

“This bill will ensure Wisconsin is on the leading edge in capturing green jobs,” said state Rep. Nick Milroy, D-Superior.

It calls for weaning the state of its dependence on fossil fuels by increasing the use of renewable fuels, and even invites a debate over potential new nuclear power development.

The bill would mandate that 25 percent of energy be generated from renewable sources – including wind, solar and biomass – by 2025. The state’s current goal is 10 percent by 2015, and at the end of 2008, Wisconsin was just less than 5 percent.

Even though Minnesota and other surrounding states already have adopted the “25 by 25” goal, Wisconsin Manufacturers and Commerce, the largest business lobby, immediately pilloried the initiative as a jobs killer, not creator.

It would increase energy costs and hurt manufacturers, especially large electricity users, according to the lobby group.

It cited a study by the Wisconsin Policy Research Institute — since discredited as flawed — predicting the Clean Energy Jobs initiative actually would result in the loss of more than 43,000 jobs statewide by 2025.

A day after Doyle introduced his plan, he said the research institute study’s conclusions were based on a provision in an earlier version of his bill — since removed — that would have regulated carbon dioxide emissions from major sources.

The governor’s Office of Energy Independence instead has concluded the bill would create 15,000 new green energy jobs by 2025.

Jauch is a member of the special Senate committee created to guide the bill into law this session. He said Wisconsin exports too many of its energy dollars to neighboring states.

“We’re overly reliant upon coal. It’s better to produce energy products in Wisconsin, and this bill addresses that. We have the forests and fields to contribute energy to Wisconsin and the U.S.,” he said.

Jauch predicted passage if some onerous provisions are removed, or clarified. One is a proposed low-carbon standard for fuels if agreement can be reached among nine surrounding states. The largely symbolic statement poses a potential problem for Murphy Oil USA, which operates the state’s only refinery in Superior.

“It’s wishful thinking, and it doesn’t need to be there,” Jauch said.

He said the bill’s hardest sell will be opening the door further to nuclear energy development.

The Clean Energy Jobs proposal imposes no additional state spending, but will build upon the investment state taxpayers have made to promote green jobs development, he said.

Jauch noted two projects slated in Northwestern Wisconsin that will make better use of its woody biomass resource, and reduce dependence on fossil fuels.

Xcel Energy is spending $58 million to convert and upgrade its Bay Front Power Plant in Ashland to operate solely on wood waste. When operational in 2012, the project will produce enough renewable electricity to serve 40,000 homes.

And a $250 million planned expansion by an affiliate at the Flambeau River Papers mill in Park Falls would create an estimated 40 new jobs there and give the region’s struggling loggers another new market. Flambeau River Biofuels plans to produce “green” diesel fuels and other energy products from wood waste.

“In the 2008-09 budget, we appropriated $30 million for renewable energy development, and $5 million of that went to Park Falls,” Jauch said.

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