Editor’s note: This op-ed is by Tom Pelham, a former member of the Douglas, Dean and Snelling administrations, the former commissioner of the Department of Taxes and representative in the Vermont House.
It’s common knowledge that state budgets have been cut during the current recession, including deep cuts in human services. But is it true? Here’s the record.
Total State Budget
| Fund Type | Fiscal 2008 | Fiscal 2011 | Budget Growth | Annual Growth |
|---|---|---|---|---|
| All Funds | $4.544 billion | $5.203 billion | $658.9 million | 4.62% |
| GF, ARRA | $1.200 billion | $1.428 billion | $227.9 million | 5.96% |
Agency of Human Services
| Fund Type | Fiscal 2008 | Fiscal 2011 | Budget Growth | Annual Growth |
|---|---|---|---|---|
| All Funds | $1.608 billion | $1.945 billion | $336.3 million | 6.53% |
| GF, ARRA | $497.7 million | $609.9 million | $112.2 million | 7.01% |
The truth is that the total state budget grew robustly during this recession. From fiscal 2008 through fiscal 2011 the state budget increased by $658.9 million, or 4.62% per year while the Agency of Human Services budget increased by $336.3 million or 6.53% per year. Much of this increase was fueled by ARRA funds which supplanted recession depleted general funds. General funds are broad based state taxes including income, sales, meals and rooms, and corporate. ARRA funds are temporary federal stimulus dollars granted to states to soften the recession, but will end after fiscal 2011.
Whether to cut the budget or raise taxes is certainly debatable, but providing the public with factual reference points as to whether the budget has already been cut is fundamental to an informed debate. In this regard, the media has failed the public.
Yet legislators, news reporters, editors, advocates, and bloggers routinely reference state budget cuts as fact. In a Jan. 15 article, the Burlington Free Press quotes Martha Heath, House Appropriations Chair, as saying “Because this is our third or fourth year in a row making budget cuts, it just gets more and more difficult to find a way to cut the budget that won’t be painful to people….”. Whether to cut the budget or raise taxes is certainly debatable, but providing the public with factual reference points as to whether the budget has already been cut is fundamental to an informed debate. In this regard, the media has failed the public.
During Gov. Madeleine Kunin’s administration, state general fund spending grew rapidly, by 12%, 13.7%, and 17.2% in fiscal 1987, 1988, and 1989 respectively. In 1990, these spending excesses hit the wall of a national recession, leaving a $65 million deficit. Gov. Richard Snelling and House Speaker Ralph Wright agreed to “temporary” tax increases to bridge the budget crisis. Following Snelling’s untimely death, Gov. Howard Dean pledged to follow Snelling’s plan of tight spending controls and sunsets of the temporary taxes.
Dean kept his pledge. From fiscal 1991 to 1994, state general fund spending grew meagerly, by less than a percent per year from $643.3 million to $656 million. For fiscal 1993, Dean signed a general fund budget that was cut by 2.15%. He understood that cycles of higher spending and taxes are a downward spiral, both fiscally and politically, and the fiscal house cleaning recessions force upon private enterprise and government provide the financial capacity for new and changing priorities.
After the “temporary taxes” sunset, Dean continued with tight budgets through the 1990s. With core budget increases around inflation or less, revenues generated by real economic growth funded the governor’s priorities such as Success by Six, Healthy Babies, expanded health insurance (VHAP) and housing and conservation programs. As the dot.com bubble economy ballooned, core spending did not and the extra revenues were directed toward one-time priorities. In 1999, for example, Dean directed $5.5 million to the conservation of the Northeast Kingdom’s Champion Lands, funded the purchase of Civil War era art for the State House, and sponsored integrated computer systems for designated agencies. Yet, ever the budget hawk, in 2000 Dean authorized a letter to Sen. Jeb Spaulding, then the Senate Appropriations Committee Chair, declaring “it appears as if the Committee’s budget might be as problematic as that of the House, causing the Governor to veto the budget bill in order to preserve the benefits of our sustainable spending policy.”
Both Dean and current legislative leaders had one-time funds to bridge recessionary budget gaps. Dean had the Snelling/Wright temporary tax increases – today’s legislative leaders the ARRA funds. Gov. Jim Douglas presented the legislature with budgets that followed a constrained spending path similar to Dean’s. But, with a supermajority, legislative leaders overrode a Douglas veto, a key factor in the unsustainable spending profiled above.
Now the Legislature and new governor must do in one year what should have been done incrementally over the past three – constrain spending to a sustainable level to avoid a $150 million deficit. If they are not up to the task, expect taxes to rise and political fortunes to fall as happened in the Kunin era.
