The House Appropriations Committee approved a $1.3 billion fiscal year 2013 General Fund budget Monday evening on a 7-4 vote along party lines.
Democrats lauded the Big Bill as a fiscally responsible plan; Republican members rejected the expenditure proposal because they said it accelerates state spending.
Rep. Martha Heath, chair of Appropriations, is proud of the work of committee members who try to reach consensus on tricky details of the money bill. She pointed to the $16 million set aside in reserves as evidence that the budget prepares the state for future uncertainties with regard to federal funding and possible revenue downgrades. Last year, the put about $10.88 million in reserve for changes in revenues, and the state spent about $7 million of the total.
Heath is unhappy with the partisan split.
“I am disappointed in the vote,” Heath said. “I think we did a good job. I think we have room for the future. I understand my definition of planning for the future and can be different from others’ definition of planning for the future.”
The General Fund budget pays for the state’s government operations from the prisons and preschool subsidies to game wardens and social workers. The governor submits the original budget proposal after asking each department in state government to make an appropriation request. The House and Senate then each take up the Big Bill and tweak the administration’s proposal.
The governor’s budget and the House proposal are just $7 million apart, with lawmakers budgeting the slightly higher amount. The biggest factor is the $5.1 million in set-asides for federal cuts. In addition, the governor wanted to reduce Temporary Assistance for Needy Families by $927,000, but it turns out the plan to count Social Security payments to individuals as part of the program formula was illegal. There were $700,000 in other changes due to Medicaid costs going down and debt service bonding going up.
Total spending would increase by 5.8 percent in 2013, if the measure is approved. In 2012, General Fund spending went up by 6.1 percent; in 2011, the total was 6.9 percent above 2010 expenditures.
The state would have an operating deficit of $8.73 million.
The budget includes a number of new/reinstated positions. A breakdown of just how many and how they are classified was not made available.
The budget-writers set aside $75 million in reserves, but several members of the GOP felt the spending bill didn’t go far enough to protect taxpayers from future economic uncertainties, including recent revenue downgrades totaling $14 million, federal cuts to state programs, further reductions to the Low-Income Heating Assistance Program that could run between $6 million and $12 million, and a mistake in the corporate tax economic forecast calculation that reduces revenues by about $5.8 million this year and next.
All of these factors caused Rep. Joe Acinapura, R-Brandon, who has over the last few years voted with the Democrats on the budget, to reject the 2013 plan. He could accept the revenue downgrades, the corporate tax mistake and the fact that the federal government will likely take a bite out of state programs, but Acinapura couldn’t abide the idea of increasing state spending by 5.8 percent. What bothers him most is the way the Joint Fiscal Office plans for budget increases. JFO typically projects a 3 percent or 3.5 percent bump in expenditures when, Acinapura says, spending goes up by at least 5 percent annually.
The projected budget gap for fiscal year 2014, for example, is $22.3 million, he says, when it could be at least $26 million higher, if JFO’s base spending increase estimate was 5 percent, not 3 percent. JFO estimates show a $39 million base rate growth at 3 percent.
“So next year, we’re going to have to find more money by raising taxes or cutting dramatically,” Acinapura says.
The 2014 budget projects $83.2 million in tax revenue growth. The estimated expenditures for that year include $45.5 million in one-time budget fixes carried over from 2013.
Steve Klein, chief of JFO, explained to lawmakers that the percentage increase in this year’s budget would have been 2 percent lower but for a change in the enhanced Medicaid match increase of $20.5 million, additional state pension contributions for teachers and state workers of $13.6 million and a shift in $6 million toward the tobacco fund.
“You’re not just paying for growth in spending,” Klein said. “You’re also paying for things like federal FMAP declines.”
Heath said Vermont’s Medicaid match has increased because the state’s unemployment rate has dropped.
“The FMAP can swing both ways, it’s a calculation done every year, one that doesn’t have anything to do with what’s happening in Washington, it has to do with how well we’re doing.”
The Big Bill goes on notice tomorrow, portions of it will be read by each member of the committee on Wednesday and it will be taken up by the House for second reading on Thursday.
Other details:
Appropriations has put $2.1 million into the budget for the working landscape bill, which promotes agricultural and rural economic development.
The Legislature’s budget goes down by $500,000. That’s because lawmakers went home in 17 weeks last year instead of the 18 it budgeted for and it looks like they’ll leave early again this year. A week costs the state about $250,000.
Other direct applications and revisons in the budget includes a $80,000 reduction from the Sargent at Arms office, $25,000 from Legislative Council, $25,000 from the Agency of Agriculture, $900,000 from the Department of Banking, Insurance, Securities and Health Care Administration and $2.7 million in new funding from the Attorney General Office’s mortgage settlement windfall.
The committee’s wish list for cuts that could be restored in the budget when it reaches Senate Appropriations includes: $22,000 for agricultural fairs, $100,000 for conservation districts; $33,000 for Vermont Legal Aid (leads to equivalent cut in federal funds), $165,000 to lift a cap on dental services for Medicaid patients (comes with $208,000 federal match).
Editor’s note: This story was updated at 6:15 a.m. March 20.
