Budget-writers have finalized a fiscal year 2015 spending plan for state government.
The House Appropriations Committee, in a painstaking process of elimination, has scrubbed Gov. Peter Shumlin’s budget and come up with $8.8 million in reductions to the state spending proposal. Another $900,000 is available in other savings. That leaves a $4.4 million gap the House could address by raising a tax on cigarettes or eliminating a tax exemption on soda or supplements. All three proposals are on the table.
The governor’s $1.444 billion budget for next year represents a 5 percent increase over the fiscal year 2014 budget and banks on $30 million in one-time funding.
In addition, Shumlin’s budget includes $14 million in new revenues from a “claims assessment,” a fee assessed on every health insurance claim.
The Legislature’s tax-writing committee, House Ways and Means, rejected the claims assessment and has opted instead to raise $4.4 million through alternative revenue options in order to balance the budget. The committee is considering the elimination of the 6 percent sales tax exemption for soda and supplements (which would raise $7.3 million) or hike cigarette taxes by as much as $1.25 per pack ($14 million). House Ways and Means will vote on the miscellaneous tax bill on Monday.
House Speaker Shap Smith says they will only raise as much as they have to, and he prefers a cigarette tax increase. “I think it’s a better idea to tax things that cause health care problems than the provision of health care,” he said. Though Shumlin has repeatedly rejected plans to raise the cigarette tax, Smith says he isn’t deterred: “I’m willing to have that argument with the governor.”
House Appropriations meanwhile has been reducing increases in the governor’s budget.
Last year when the Legislature proposed new income and sales taxes to fill the gap between revenues and state spending, the governor dismissed the proposals. Burned by last year’s experience with Shumlin, lawmakers are determined to limit the need for new revenues. To that end, they have been cutting budget increases in the governor’s recommended budget. As Rep. Martha Heath, chair of House Appropriations, put it: “We couldn’t do the things the governor proposed, because we had to close the budget.”
House Appropriations reduced the total by $5 million early on in the budgeting process. Most of the savings came from shifts in Medicaid ($3.6 million) and a lower estimate for the cost of providing health care for inmates ($725,894).
The House panel then created a wish list of items lawmakers wanted to fund, but didn’t know whether they would be able to pay for. As part of that effort, legislators reduced the governor’s 2 percent increase to Medicaid reimbursements to providers to 0.75 percent; reduced a 2 percent bump in higher education to 1 percent; and sliced a 9 percent hike for the Vermont Housing Conservation Board, Regional Planning Commissions and Municipal Planning Organizations to 6 percent.
House Appropriations is counting on $400,000 in savings on anticipated expenditures for the Vermont Veterans’ Home in Bennington. The Shumlin administration and the Vermont State Employees Association recently agreed to allow 14 part-time employees to relieve full-time workers who were accruing hefty overtime pay amounts.
Items that were not funded by House Appropriations include:
$640,000 to hold harmless Vermonters who have been fined as a result of food stamps error rates
A $34,000 Agency of Human Services increases for field directors
An additional $50,000 for the Kinship Care Program Grant
Another $10,000 for Prevent Child Abuse Vermont
$100,000 for the state’s needle exchange program
$180,000 for approved substance abuse providers
Here is a link to the final wish list.
Editor’s note: This story was updated at 7 a.m. on March 21.