The devil is, as they say, in the details, and never more so, perhaps, than in a government budget.
The Vermont House’s budget bill, H.789, passed last night after five and a half hours of a detailed reading and heated debate (each member of the House Appropriations Committee literally reads the section of the bill they have researched on the floor of the House). The hottest discussion centered mainly on what wasn’t even in the appropriations bill – the $38 million removed from the document via the Challenges for Change government restructuring plan.
House Appropriations spreadsheets, explainers
In the end, the budget did pass – even after a fifth of the lawmakers present pushed for a delay in the vote due to the Challenges’ omission. Now, as the bill heads to the Senate for consideration, the numbers are in.
The deficit for fiscal year 2011 at the beginning of the General Fund budgeting process, which began in January, was $155 million. The House Appropriations Committee whittled that down to zero in less than three months of deliberations.
“It’s a mistake to raise taxes,” Douglas said. “They should have moved in the opposite direction.”
Its total expenditures came in at $1.074 billion — and under the governor’s recommended budget of $1.118 billion.
The governor, however, in his weekly press conference was not moved. He chided the lawmakers for raising taxes. (The House passed a tax bill on Thursday that blocked an increase in a federal deduction for corporations and placed a sales tax on supplements, raising $5.6 million in revenues.) “It’s a mistake to raise taxes,” Douglas said. “They should have moved in the opposite direction.”
The governor’s recommended budget, which calls for restoration of the 40 percent capital gains tax exclusion for money obtained through the sale of a business, home or stocks and bonds and $20 million more in cuts to human service programs and supports for low-income Vermonters, shows a fiscal year 2012 deficit of $112 million. The House Appropriations Committee brought next year’s deficit down from $250 million to $94 million.
How did we get into such sorry shape to start with? In short, the recession. Tax receipts have declined precipitously over the last three years as the economy has declined, and though revenues flattened last fall, they have dropped again recently, falling $15 million below the state economists’ forecasts for January and February.
Meanwhile demand for government services has also gone up. And this year the federal government didn’t offer to bail out states with additional economic stimulus funds as it did last year, though it did extend the higher Medicaid matching funds. The Appropriations Committee has put $62.5 million of those funds in a caseload reserve, or savings account, for human services. (Douglas said he approved of this move.)
Here’s how the gap formed for fiscal year 2011: Medicaid and health care costs grew by $70 million; the state had to make up for $25 million in retirement investment losses; other pressures in state government added up to $39 million; and revenues were down $20 million after general fund growth was offset by declining stimulus funds.
The House bill, H.789, balances the FY2011 budget through the following reductions:
$30 million in cuts to human services (most of the governor’s recommendations)
$15 million in teachers’ retirement savings;
$10 million in savings from state workers who took a 3 percent pay cut, plus a freeze in steps and the long-term effect on retirement costs from layoffs and pay cuts;
$38 million in Challenges for Change restructuring;
$1 million in cuts to the judiciary system;
$1.36 million in cuts to the Agency of Natural Resources
It also counts on funds from the following sources:
$15 million in Medicaid money held over from last year
$26 million in “redirected revenue” from sources such as abandoned property and insurance money
$13.3 million clawback in prescription funds from Medicaid Part D
$4.88 million carryforward;
$2 million from tax changes.
The Appropriations Committee restored $8 million for programs for seniors, disabled Vermonters and children with special health needs that were eliminated or reduced in the governor’s recommended budget.
