The Vermont Senate gave preliminary approval to a nearly $5.5 billion state budget Monday afternoon.
The chamber will have one more chance to amend the so-called Big Bill before H.885 is hashed out in a conference committee of House and Senate members.
“I realize anything of this magnitude may have … provisions that may not be what we would necessarily prefer,” said Sen. Jane Kitchel, D-Caledonia, who as chair of the Senate Committee on Appropriations oversaw the changes to the House-passed bill. “But we weighed it, and we feel that as a package the budget addresses many many areas, and uses our resources in the most effective way forward.”
The Senate version would raise General Fund spending by 3.7 percent and overall spending by 4.2 percent.
Highlights include:
- $28.6 million to fund health care for retired teachers. Most of this money is now being borrowed for the teachers’ pension fund. The up-front hit of funding health care fully from General Fund and other sources will save hundreds of millions of dollars down the road, says Treasurer Beth Pearce.
- Restructuring the “waterfall” plans for any surplus revenue from the current fiscal year. Senate version sets aside the first $500,000 for an entrepreneurial lending program, and the first $4.5 million after that goes into a new Enterprise Investment Fund. Any remaining money would be split equally between the “rainy day reserve” and repayment of an interfund loan that’s planned to jump-start the retired teachers’ health care fund.
- Raising the Medicaid reimbursement rate for health care providers by 2 percent. This matches the governor’s original proposal, which had been slashed to 0.75 percent by the House. Kitchel said this was important because it reduces pressure on private premiums, which may otherwise be raised.
The Senate suggested several organizational shifts, as well:
- Move the Alcohol Drug Abuse Programs from the Department of Health to the Department of Vermont Health Access. Kitchel says this is part of an effort to better align programs structurally.
- Create a new Health Care Reform Oversight Committee to monitor the economic and financial aspects of health care reform.
- Move the Vermont Center for Geographic Information to the Agency of Commerce and Community Development. VCGI had asked to be moved to the Department of Information and Innovation, but legislators preferred to place it with ACCD, where the organization’s mapping services would not be exclusively directed “internally” to assist state government agencies.
Enterprise vs. Weatherization
Though Gov. Peter Shumlin’s proposed Enterprise Investment Fund accounts for less than 1 one-thousandth of the budget, the $4.5 million business incentive became the center of an extended debate. Another $500,000 would be directed to an entrepreneurial lending program.
Sen. Anthony Pollina, P/D/W-Washington, suggested scrapping the initiatives to fund more weatherization projects.
“We wonder what we get in return when we provide these incentives,” Pollina said about the enterprise fund. “What does a half a million dollars or a million dollars mean to some multinational corporation?”
Shumlin and many leaders in the Statehouse have acknowledged that the IBM plant in Essex Junction would be a prime candidate for the funds. But Pollina proposed that funding weatherization improvements are a better investment because they save money on heating fuel at the same time they keeps people warm.
“If you don’t have a job, you’re not only going to be cold. You’re going to be hungry,” Sen. John Rodgers, D-Essex-Orleans, responded. “We need to find another source of funding for weatherization, because in my area, if a big business goes out, a whole bunch of other businesses go out behind them.”
Some senators testified that they were torn by Pollina’s proposal because they support the weatherization program for many reasons, but only four ended up voting for the amendment. That leaves the weatherization program with about $10.9 million — $1 million more than Shumlin had asked for.
Sen. Peter Galbraith, D-Windham, joked during a recess that he was considering his own amendment regarding the enterprise fund: only giving it to a company if its top executives don’t make the same amount of personal income in two months or less.
The chair of the IBM board, Galbraith noted over some objection on the Senate floor, made $37.1 million in 2012. The company ended 2013 with $11.1 billion cash on hand, according to corporate reports.
Galbraith suggested the enterprise investment money — should it materialize through a surplus in FY 2014 funds at the end of June — might be better spent elsewhere.
“Investing in the education of our children will bring about jobs,” he said.
Education
To that end, the state is committing more than $1.5 billion for public education, and about $89 million more for higher education.
Sen. Bobby Starr, D-Essex-Orleans, said the Legislature is prepared to transfer almost $296 million next year from the General Fund to the Education Fund.
“It’s going to be most important in the future to try and get a handle on our overall spending so that we can keep this number as reasonable as possible to help with the General Fund expenditures,” Starr said. “Because everything else, whether public safety or human services, all these other things have to wait and we can’t deal with them if we’re giving all the money to one silo, you might say.”
For higher education, Shumlin and the House had proposed increasing appropriations by 1 percent for the University of Vermont, the Vermont State Colleges system and the Vermont Student Assistance Corp. But the Senate is taking a different tack.
The governor’s proposed increase in funding amounted to little more than $500,000, said Sen. Richard Westman, R-Lamoille. He argued on the Senate floor Monday that that amount would be better spent in a more targeted way.
The Senate budget directs $400,000 to be spent on a pilot program designed to encourage college aspirations among students in schools with chronically low “continuation” rates, meaning few of the students who graduate go on to pursue higher education. Another $100,000 would provide need-based stipends for low-income students in the dual-enrollment program.
VSAC’s College Aspiration initiative is designed to help reverse declining enrollment for the colleges by encouraging new students to enter post-secondary programs. The two-pronged approach also will help address low educational attainment in families in which parents have not attended college, Westman said.
Westman has been employed by VSAC.
