Speaker says House will reject most of governor’s new budget proposals

House Speaker Shap Smith listens to the budget address, Jan. 25, 2011. Photo by Josh Larkin

House Speaker Shap Smith listens to the budget address, Jan. 25, 2011. Photo by Josh Larkin

House Speaker Shap Smith says lawmakers will likely reject most of the $50 million in “new spends” in the governor’s budget proposal.

Smith says the state can’t afford to pay for new programs. He cited pending federal budget cuts as the primary reason for rejecting Gov. Peter Shumlin’s proposals to fund $17 million in childcare subsidies, $17 million in energy programs, $10.7 million in increased Medicaid subsidies for health care providers and $2.5 million for higher education.

Though the speaker philosophically supports many of the proposals, he said the Shumlin administration’s budget leaves “no room for error.” In order to fill about half of the gap between state spending and tax revenues this year, the governor eliminated about $33 million in human services caseload reserve funds. These reserves have traditionally used to provide a cushion for budgetary exigencies in the Agency of Human Services, which is the largest area of spending in the state’s budget. (In fiscal year 2013, AHS spending was $2.1 billion, out of total state expenditures of $5 billion.) The governor’s budget leaves about $68 million in the budget stabilization fund.

“There’s really no room for some sort of unknown event that might occur where we need some space within the budget to solve it and that’s problematic from my perspective,” Smith said.

The unknown events in the offing include the federal sequester, further cuts in the 2014 budget as part the continuing resolution discussions later this month, and the debt ceiling debate in May. Not to mention $15 million in annual new spending for the health care exchange that will come down the pike in 2015.

“The thing is, we haven’t built into this anything for the sequester,” Smith said, “and we don’t have any reserves set aside.”

The prospect of federal cuts to state programs that will begin this year and continue for at least eight years as a result of the sequester gives Smith pause. The $15 million in federal reductions between now and the end of the federal fiscal year on Oct. 1 won’t all hit the General Fund bottom line in fiscal year 2013, he said, but it could be a harbinger of deeper cuts to come.

“The thing is, we haven’t built into this anything for the sequester,” Smith said, “and we don’t have any reserves set aside.”

The speaker said he hasn’t “gone through the numbers yet” with his committee chairs, but in concept, they have discussed the difficulty of following a number of the Shumlin administration’s budget recommendations.

“I think we will try to be deliberate in the way that we do it,” Smith said. “I’m not sure we’ll do it across the board.”

The only “new spend” that will remain unscathed, he said, is $4.5 million for cost share and premium subsidies for Vermonters in the Catamount Health and Vermont Health Access Plan programs which will be eliminated when the state health care exchange goes into effect in October.

The rest of the governor’s new spending proposals will get a serious haircut — if they survive the House Appropriations Committee’s budget scrubbing at all. The 3 percent increase in provider subsidies is out of the question this year, Smith says. That $17 million for childcare subsidies? Not an option, in his view. Many members don’t support Shumlin’s proposal to shift $17 million in Earned Income Tax Credits for low-income workers to the childcare subsidy program.

Cutting $6 million from the state’s welfare to work program has also been privately panned by House members, though Smith says lawmakers have not yet come to a decision about how to handle the governor’s proposal to cut more than 1,000 families off the Reach Up program on Oct. 1. “We haven’t reached any consensus there,” Smith said. “Nobody has explained to me what a middle ground looks like.”

Broad investments in thermal efficiency, which the speaker has supported in the past, will also get tabled. He said it may be possible to bolster weatherization programs for Vermonters who receive fuel assistance, but he said he didn’t think there would be any money available to further expand the program. (Businesses will have access to a new loan program for thermal efficiency projects, however.)

The speaker said the House will look at new revenues outside the governor’s budget. “We’re not constrained by what the governor’s proposed,” Smith said.

Expect to see at least one of the governor’s revenue proposals also fall by the wayside. Break open tickets? “There doesn’t seem to be a lot of enthusiasm from the Ways and Means Committee for the break open tickets,” Smith said. “I think that the enthusiasm for the funding source is directly related to how much money it raises so I think that we’ll look at a bunch of different things around revenue.” The 10 percent tax on raffle tickets for nonprofits would generate about $6 million, according to the Joint Fiscal Office — not $17 million as originally projected by the Shumlin administration.

The gas tax, however, will survive. Smith says the state has to find a way to make up for lost revenues in order to pay for repairs to roads and bridges. The House Transportation Committee just advanced a phased-in sales tax on gas to help shore up the Transportation Budget.

The speaker said the House will look at new revenues outside the governor’s budget, though he didn’t elaborate. “We’re not constrained by what the governor’s proposed,” Smith said.

Smith told reporters at a recent an impromptu press availability that he would, for example, support lifting a sales tax exemption for soda and candy. The 6 percent tax would raise about $6 million. A sugar sweetened beverage tax, which was approved by House Health Care, would raise about $27 million. Shumlin adamantly opposes the measure.

Smith, who has staunchly supported the governor (both politicians are Democrats), says he expects blowback from Shumlin on the House counter proposals.

“People tend to really like their own ideas, and they tend to not be as enamored with other people’s ideas, so it wouldn’t surprise me if there was some resistance to things that we propose,” Smith said. “But I’ve been in that boat before.”

“You can have pretty wildly divergent viewpoints about what you think should be on the table, but if you keep the lines of communication open I think you don’t have to have it be a huge confrontation,” Smith said. “It is what you want to make it. I would expect that there will be times along the way where the rhetoric will become heated, but at the end of the day, I think we’ll figure out a way to come to an agreement.”

At a recent press conference, the governor rebuffed the notion that lawmakers — the majority of whom are fellow Democrats — weren’t happy with his budget and wouldn’t say whether he would veto a budget that doesn’t include the elements of his package.

Whether Smith and Shumlin agree to disagree, the speaker says “the reality is we cannot fill every federal hole that is created so that means to me we have to be especially disciplined about decisions that relate to spending.”

A $5 million increase to working landscape programs has been put on a wish list.

That discipline was on view on the last day of the session before the Town Meeting Day break. Members of the House Appropriations Committee have been agonizing over every detail of the budget and on that Friday afternoon, things briefly came to a head.

Lawmakers were disgruntled by a letter signed by 66 lawmakers urging the committee to approve $5 million for the working landscape program, or about $1.5 million more than what was approved last year.

The committee members also grumbled about House Agriculture supporting the new spending. One lawmaker asked if the policy committees understand the pressure House Appropriations is under because it appeared they have no reason to show fiscal restraint. Another said, “$5 million is a lot of money when you don’t have it.”

In the end, the committee put the $5 million for working lands on a “wish list,” along with $17 million in additional childcare subsidies.

Correction: The total amount proposed for working lands is $5 million. We originally reported that the $5 million was in addition to the $3.5 million for forest and agricultural programs approved last year.

Anne Galloway

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29 Comments on "Speaker says House will reject most of governor’s new budget proposals"

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David Usher
2 years 10 months ago

Thanks, Mr. Speaker, for speaking clearly to the Administration, the Legislature and to Vermonters that fiscal restraint is essential. It’s long overdue. The spending binge cannot be supported by this economy.

2 years 10 months ago

David,
You have it right. Vermont has been living off the federal government for decades, instead of educating and training the workforce to attract companies with high-paying, good-benefit jobs, such as Hypotherm. See my below comment.

2 years 10 months ago

Should be “Hypertherm”, West Lebanon, NH

Carl Werth
2 years 10 months ago

After reading this – I sure wish Smith was Governor instead of Shumlin.

2 years 10 months ago

Anne, “Gov. Peter Shumlin’s proposals to fund $17 million in energy programs” 1) $6 million to thermal efficiency initiatives 2) $6 million to shore up Vermont’s Low Income Heating Assistance Program 3) $5 million for the state’s Clean Energy Development Fund. 1) Klein & Co live in a government-activism bubble, which has led to increased aggrandizement of state government operations that are crushing struggling households and businesses. Vermonters do not need more “Klein” taxes on their already-expensive fuel to heat their homes. Efficiency Vermont, a state-protected entity reporting to the VT-PSB, budget about $45 million/yr, a 175-person staff to deal… Read more »

John Greenberg
2 years 10 months ago

Willem Post likes his little fibs.

“Hydro Quebec and Vermont Yankee about 5.5-6 c/kWh; 24/7/365 energy, all CO2-free.”

First, nuclear power is not “CO2 free.” Milling, mining, enriching, fabricating and transporting nuclear fuel all produce C02, as does building and decommissioning plants, and removing and storing their waste.

Second, the Hydro-Quebec contract is NOT 24/7: “the new Hydro-Quebec contract will provide on-peak energy for 16 hours per day, seven days per week …” (Declaration of Seth G. Parker, p. 8, US District Court, May 23, 2011)

Third, Vermont utilities no longer purchase power from Vermont Yankee.

2 years 10 months ago

John, “First, nuclear power is not “CO2 free.” Milling, mining, enriching, fabricating and transporting nuclear fuel all produce C02, as does building and decommissioning plants, and removing and storing their waste. IWTs require the same milling, mining, etc. At greater annual wind energy on the grid are less effective at reducing CO2 emissions, as proven by 1/4-hour real-time operating data of the Irish grid, which has a large component of gas turbines, similar to NE. EXCERPT from below URL A summary of wind energy CO2 emission reduction effectiveness versus annual wind energy percent, for various grids is shown below: 1.0… Read more »

John Greenberg
2 years 10 months ago

Willem: 1) Even if another power source, in this case wind, ALSO creates CO2, your statement that nuclear power is C)2-free is still false. I’ve responded to you and others by correcting this point numerous times. The responsible thing to do is stop making the statement. 2) “They are not buying for political reasons” They’re not buying because they could not arrive at a contract after 2 years of negotiation during the politically friendly Douglas administration. Entergy’s Mark Potkin likes to blame Peter Shumlin for Entergy’s current situation vis-a-vis Vermont’s utilities, but Shumlin wasn’t governor when the negotiations failed. The… Read more »

2 years 10 months ago

John, You are of course correct, nuclear energy is not CO2-free, it is near-CO2-free, as is hydro. As an aside, I looked into this and was surprised PV solar had a higher lifecycle CO2/kWh than I thought. Apparently, making panels in China is a dirty business: mining, refining, energy from inefficient coal plants, etc. “(During the period in question, Jim Douglas was still governor, and David O’Brien still ran DPS.)” Both gentlemen were disgusted and stymied by veto-proof majorities in the legislature. Most of the above narrative you relate is true. The atmosphere was poisonous, as some people were saying… Read more »

John Greenberg
2 years 10 months ago

Willem: If what I write is, as you acknowledge, “of course correct,” then why do you keep repeating claims that you now acknowledge are NOT true??

phil baker
2 years 10 months ago

I second the above statement. As for the gas tax proposal I could go for that provided it is guaranteed to remain in Transportaion & not “transported” to the Gen. Fund.

John Burgess
2 years 10 months ago

The Speaker deserves the total support of real Democrats as he shows the leadership and courage to speak common sense to Vermonters of all parties
John A. Burgess, SR.

2 years 10 months ago

John, Speaker Smith sees the handwriting on the wall. He cannot lead, if no one will follow. The legislators have heard lots of hard-scrabble comments from struggling households and businesses. They do not dare raise more taxes, lest they kill the goose, i.e., the private sector, they pluck year after year. The Governor acts as if he lives in an Alice-in-Wonderland, La-La-Land where money grows on trees. He must know there are only a few Vermonters who earn more than $1 million/yr. In a low/no-growth economy, if the government sector percent of the state gross product grows, it can do… Read more »

Nicole LeBlanc
2 years 10 months ago

Thank you. Shap! Please Keep Standing Up to Shumlin and Tell him to Raise his own taxes and taxes on the wealthy! The poor Cant afford a Tax Hike!!! Cutting the EITC is Bad Economic Policy!!!! Also Please Stop the 2.5 million dollar cut to the Developmental Services Waiver program.

2 years 10 months ago

WE recently heard that VT has received a $1M fed grant to rehab the WAterbury complex damagedby Huricane Irene.Per the governor’s office,following the rehab, the building will contain 27 affordable housing apartments and the building will then be GIVEN to CVCLT-Central Vermont Community Land Trust. Why do we have to have a beverage tax ad a gas tax when the State is getting a free ride from the feds, with a trillion dollar deficit to then give the building away? I was not asked about this and I am a taxpayer. Is VT now a middleman for developer projects witin… Read more »

2 years 10 months ago

should say are NOT recipients of grant money.

Tony Lolli
2 years 10 months ago

Stand firm Mr. Speaker. Don’t spend what you don’t have.

Ralph Colin
2 years 10 months ago

Well, at long last, the lightning finally hit the bunny rabbit and woke up the whole family.

Walter Carpenter
2 years 10 months ago

“They do not dare raise more taxes, lest they kill the goose, i.e., the private sector, they pluck year after year.”

Many segments of The private sector are not being “plucked,” too hard, considering that some of them, like GE, pay no taxes at all; others like IBM receive nice tax breaks. This forces smaller business and us to make up for their gain.

Nicole LeBlanc
2 years 10 months ago

Shumlin/Smith need to raise taxes on the wealthy by 1 billion and stop cutting services to people with disabilties

Craig Powers
2 years 10 months ago

Did the amazing Montpelier money tree not get enough water?

Bob Stannard
2 years 10 months ago

What seems to go unnoticed by the regular responders here is that this Speaker and at least two legislatures have made cuts in the budget totalling roughly $300 mil. Considering the state budget is rougly $1 billion these cuts have not been insignificant. It’s always convenient to bash the legislature and politicians, but they ALL deserve credit for making tough choice and balancing our budget. After the past 4 or 5 years they are down to brass tacks; just in time for our friends in Washington to hand off to the states a sequester. The sequester is going to have… Read more »

Tom Pelham
2 years 10 months ago

Bob… It might be helpful for you when you have some free time from your lobbying duties to go over to the JFO and research your above statement. There you will find this JFO spreadsheet documenting the state budget from 2009 to 2013 (pre-budget adjustment). The tally for the entire budget, all funds and individual funds, can be found on page 31. http://www.leg.state.vt.us/jfo/education/FY2014%20Ed%20Fund%20Outlook%20H265%20Rates.pdf Contrary to your statement, you won’t find cuts. The total state budget grew from $4.374 billion to $5.011 billion. That equals a greater-than-inflation annual rate of growth of 3.5%. The 2013 budget grew by 6.3%. The share… Read more »

2 years 10 months ago

Tom, You did a great service for Glasnost and reality. The state government sector has been growing and on a spending binge far in excess of private sector growth for the past few years. As a result, the government sector of the economy grew at the expense of the private sector, which shrank, and many households and businesses are over-stressed. One cannot have a viable government without a thriving private sector to pay for it. Some folks, as you say, make statements with “zero back-up”, disconnected from facts, as you just proved. In a low/no-growth economy, if the government sector… Read more »

Tom Pelham
2 years 10 months ago

Thanks Willem….I’m just trying to help Mr. Stannard avoid compromising his credibility as a lobbyist by pointing him in the direction of the JFO’s definitive fiscal facts that unarguably contradict the flights of rhetorical fancy upon which he often embarks.

Bob Stannard
2 years 10 months ago

Not unlike as the days get longer the hibernating creatures reappear, I guess my words have awakened the sleeping Tom Pelham. I should have clarified my comments better. The General Assembly has been faced with deficits in recent years and have made cuts in recommended spending to ensure that they have a balanced budget. I think it’s safe to say that in his capacity as Finance Commissioner under the Dean Administration and Tax Commissioner under the Douglas Administration the budget was not cut either. Recommended spending may have been reduced back then, I don’t know. I do seem to recall… Read more »

Tom Pelham
2 years 10 months ago

Hi Bob: If you read this document http://campaignforvermont.org/cms-assets/documents/95246-114634.01.21.13-cfv-budget-paper-final.pdf you’ll see that, contrary to your above “safe to say” observation, we actually did cut the budget in 1993 and the state budget grew by only 7/10ths of one percent from 1992 through 1994. This period of constrained spending set the table to reverse in 1998 the bond rating downgrade Vt. received in 1991 and its further increase in 2000, both of which occurred during my terms as Finance Commissioner. All this historical information is available in the appendices of the document linked above. As Tax Commissioner, I had little to do… Read more »

Bob Stannard
2 years 10 months ago

“But, it seems this extended period of relative budget peace from the mid-1900’s until 2009 maybe be coming to an end.” Yes, I would suggest, Tom, that our “budget peace” has come to an end beginning in ’07 when the housing bubble burst and all the bad loans that were made, bundled, insured and resold caused the global economy to retract. Our country and countries around the world are now paying the price for the mistakes that were made by lenders and politicians alike. I think we would both agree that Vermont has always put forth a balanced budget and… Read more »

Bob Stannard
2 years 10 months ago

Darn the luck. I replied to your last post, Tom, but it appears as though when I hit post comment it dissolved into cyberspace. I won’t rewrite it, but here’s what I will say. I don’t know Bruce Lisman and I doubt that he caused the collapse of Bear Stearns. Was he in a position as CEO of Global Equities to have the ear of those who did collapse B.S. and offer input as to changes that could/should be made? I don’t know the answer to that question either, but I would think that he would’ve been in a better… Read more »

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