With the continuing downward spiral of the nation’s economy, Gov. Jim Doyle announced Thursday that Wisconsin is now expecting a $5.4 billion budget shortfall over the next 2 1/2 years.

In a press conference held with media and his executive cabinet, Doyle not only talked about the continually increasing budget deficit, but also ways he hopes to overcome the deficit before he submits his budget to the Legislature in February.

Doyle blamed these deficits on declining retail sales and increased unemployment, among other causes. According to Doyle, the nation has lost 1.2 million jobs in the last year, with Wisconsin losing 27,300 jobs from October 2007 to October 2008. He also said consumer confidence is at its lowest since the 1980s.

“The result of these and other factors is that Wisconsin will experience a decrease in revenues for two consecutive years,” Doyle said. “This will be the first time this has happened in decades.”

Doyle has asked his cabinet to immediately cut spending by another 2.5 percent, or an additional $20 million. They have also cancelled $30 million in “unnecessary” grants and left 3,500 governmental positions unfilled. They also plan to sell 500 fleet vehicles and stop all employee bonuses.

Doyle said he is looking for the passage of the hospital assessment plan and federal assistance to help Wisconsin pull through this hard economic time.

“We have left hundreds of millions of dollars of federal money on the table because of some political rhetoric that have come out of the Republican leaders in the Legislature, and it is time that we move forward to get that federal money in a way that can improve health care in the state and can also help our state budget,” Doyle said.

When it comes to holding off on cuts, Doyle said education will be his No. 1 priority because Wisconsin’s successes have been and always will be based on a superior education system.

However, he added education will not be immune from cuts, and every sector in the state government will be receiving cuts of some kind to make up for the deficit.

“We could cut every single agency that is sitting here down to zero and we would not wipe out the budget deficit in this state,” Doyle said.

While Doyle told the press he is “going to try his hardest” not to raise taxes, Mike Mikalsen, spokesperson for Rep. Steve Nass, R-Whitewater, said the Democratic Senate is “giddy” to do so.

Senate Majority Leader Russ Decker, D-Weston, released a statement Thursday saying the state needs to grow its way out of the deficit, which Mikalsen said is a euphemism for, “I am going to tax the hell out of the people of Wisconsin and spend our way out of this mess.”

Rep. Scott Suder, R-Abbotsford, agreed, saying, “I think people should hold on to their wallets. The tax man is coming and his name is Gov. Doyle.”

As for the hospital assessment plan, which Republicans are calling the “hospital sick tax,” Mikalsen said Doyle is using it to “steal” federal money to balance the state budget.

“Those individuals who are going to a doctor are going to pay Doyle’s sick tax,” Suder said. “Governor Doyle can call it whatever he would like, but a tax is a tax is a tax, and he is trying to tax the sick.”

Nass, along with other Republicans, also think it is not within the federal government’s role to bail out state governments.

“It is not up to the federal government to bail out Doyle for bad budgeting … when we should have been setting aside money to deal with this all along,” Mikalsen said.