The “Big Bill,” as it’s called, also known as the General Fund budget, was unanimously passed out of the House Appropriations Committee yesterday, 11-0. The bill is expected to be debated on the floor of the House later this week.
Members of the committee, including four Republicans, agreed to a $1.074 billion budget balanced through cuts, government restructuring, labor savings, retirement savings and changes in revenue. The Douglas administration’s proposed budget is $1.18 billion.
Both budgets began with the same starting line – a deficit of $154 million and $38 million in banked savings from Challenges for Change, the government restructuring plan — but they ended up in somewhat different places.
Rep. Martha Heath, D-Westford and chair of House Appropriations, said: “It’s amazing to me that we started out with a $154 million problem and we have come to the end of the process with a balanced budget that restores cuts for the elderly, the disabled and children with special health needs and we are able to present a balanced budget that spends less in General Fund dollars than the governor proposed.”
The committee met two fundamental challenges: One was financial; the other was human, according to Rep. Mark Larson, D-Burlington and vice chair of the committee. “How do you ensure Vermonters’ needs are met in the worst economy since the Great Depression?” Larson said.
Though Heath said they accepted many of the administration’s $54 million recommended budget reductions for the Agency of Human Services, the committee restored $8 million to support what it deemed essential programs for seniors, disabled Vermonters and children with special health needs.
Heath credited the administration with offering sound proposals in most instances, but she said these particular cuts were “penny wise, pound foolish” because they would erode programs that save money for the state. Heath said home-based care programs enable Vermonters to stay at home and keep relatives who are taking care of an elderly or disabled family member in the workplace.
While Jim Reardon, the commissioner of the Department of Finance and Management, expressed concerns about some of the items in the budget to reporters, he graciously congratulated Heath and gave her a hug after the bill passed out of committee.
“(The budget) clearly shows you have been working hard and have made a great effort,” Reardon said. “I appreciate all the good work.”
House Appropriations also decided, on the day of the vote, to restore $6.89 million in special education Medicaid funding to the Education Fund.
Heath said they were able to fill the state’s $154 million budget gap through a combination of cuts and revenue gains. In addition to the $38 million in Challenges savings, they counted on a $15.3 million reduction in teacher retirement payments (negotiated last month); a contribution from state employees of $10 million in pay cuts (agreed to in January); $26 million in “redirected revenue” from sources such as abandoned property and insurance money; and $13.3 million in “clawback” money from the federal Medicare Part D prescription program (the state had paid more into the system than necessary).
The Agency of Human Services savings came to a total of $46 million. Committee members cut $30 million in programs, used more than $15 million in additional Medicaid money held over from last year, and banked $1.12 million from beefed up eligibility “integrity” units (suggested by the agency) that will police abuses of the system. The committee also accepted many of the administration’s recommendations for caps on Medicaid services for patients who make a high number of emergency room visits in a given year or who over utilize certain treatments like occupational and physical therapy.
The Committee has proposed setting aside $62.5 million in additional Medicaid money the state is expected to receive from the federal government through an extension of stimulus funds. The money would go into the human services caseload reserve (essentially a savings account for the Agency of Human Services). Heath said the bill includes a clause that requires that $13.5 million of the reserve be spent on the Medicaid match for fiscal year 2012. The remaining $49 million could be used for Vermont State Hospital replacement proposals or for agency services in the event that the economy worsens.
“We hope it turns around, but this gives us a cushion at a time of great financial instability,” Larson said.
House Appropriations also decided, on the day of the vote, to restore $6.89 million in special education Medicaid funding to the Education Fund; the governor had proposed using this money for the General Fund budget.
Reardon, who wrote the governor’s budget, appeared to be pleased by the Committee’s work, though he said he would reserve judgment until he had a chance to review the budget bill.
“I do appreciate the effort and hard work by House Appropriations Committee members,” Reardon said.
His praise was quickly followed by concerns, however. First and foremost, he said, the budget doesn’t include “a step back from the previous year’s tax increase.”
“Vermonters deserve tax relief, given that they’re struggling,” Reardon said. He pointed to increases in estate taxes and the elimination of the capital gains exclusion as examples of harmful tax policies.
The Douglas administration’s tally included a loss of $9.9 million in “tax changes” based on the assumption that the Legislature would bring back the 40 percent capital gains loophole. The House Appropriations Committee did not include this item in its budget.
Reardon also had reservations about a $3.5 million transfer of transportation funds to the General Fund.
Lastly, he said the state’s tax revenues were revised downward in January and February by $15 million. The budget developed by House Appropriations was based on current revenues, and if tax receipts continue to decline, Reardon said, spending, particularly in the Agency of Human Services, may have to be reduced further.
“I don’t want these concerns to be taken as criticism of the budget at this time,” Reardon said.
Even if administration officials agreed with the House on the numbers though, he said there could be language in the bill that the administration might object to.
A language insertion that might catch his attention? A provision that would require the administration to ask the Joint Fiscal Committee for approval of budget changes that would lead to more than a 1 percent layoff of state workers (about 70 employees).
