Health Care

House panel approves budget bill in partisan vote; five year cap on welfare benefits supported by lawmakers

The state’s budget-writing panel approved a General Fund budget proposal in a 7-4 vote on Monday. All four Republicans on the House Appropriations Committee voted against the Big Bill.

Rep. Martha Heath, D-Westford, chair of House Appropriations, thanked Republicans and Democrats on the committee. “No matter how you voted, you’ve all contributed 100 percent to this process, and I appreciate that,” she said.

The House budget proposal increases state General Fund expenditures by 4.7 percent over last year. Gov. Peter Shumlin’s plan pushes up spending by 5.8 percent. The governor’s recommended General Fund budget is $1.376 billion. In 2013, the General Fund was $1.3 billion. A spreadsheet detailing the House budget changes was not available at press time.

The governor’s budget wiped out all but $1 million in internal cash reserves; the House budget restores roughly $7 million to reserves. (Neither budget touches the budget stabilization fund, a $62 million pool that functions like a cash management account for the state.)

“We’re spending less than he [Shumlin] did, and we put money into reserves,” Heath said.

The governor proposed 79 new positions in state government. The House budget includes 62 new positions, some of which are temporary. Seventeen of the jobs will go online when the Berlin psychiatric hospital opens in April 2014.

The vote follows the committee’s difficult vetting of a “wish list” of $63 million in proposed expenditures from the Shumlin administration and committees of jurisdiction to $35.9 million.

Speaker Shap Smith described the House proposal as “more restrained” than the governor’s budget. “It spends less, it raises less revenue, and we leave more on the bottom line in case we have some sort of unanticipated event or further federal cuts and I think we leave ourselves in better shape for 2015,” Smith said.

On Friday, the House Ways and Means Committee approved $23 million in tax increases for fiscal year 2014, including a 50 cent hike on cigarettes, a 0.5 percent increase on restaurant meals and new sales taxes on soda, candy, vitamins, supplements, bottled water and clothing purchases of $110 or more. A package of $5 million in tax increases for fiscal year 2015 includes a cap on itemized deductions (starting at $15,000 and 2.5 times the standardized deduction) that would raise about $25 million; the 0.5 percent tax on meals and a $15 million employer health care assessment would be repealed that year.

“Anytime we have a revenue bill there are people who will not like it, and I think that people understandably are concerned,” Smith said. “Most of the taxes identified in the bill are discretionary items.”

“With the tax changes that happen in 2015, also ask people who do better in Vermont to contribute more money,” he said.

The tax bill is drafted in tandem with the budget. The advancement of both pieces of legislation set the stage for a debate and vote on the Big Bill this Thursday and Friday.

A cap on welfare

As part of the package, the budget committee approved a five-year cap on welfare benefits for participants in the Reach Up program, which is designed to help single mothers find work. The controversial cap was recommended in a split vote from the House Human Services Committee on Friday.

Details of the proposal were tweaked on Monday, but the overarching purpose — to limit access to welfare benefits to a 60-month period — was kept in tact. The cap applies universally to beneficiaries, regardless of whether participants in the program are following the Reach Up work plans. The section in statute titled “Obligation to assist eligible families with dependent children” was changed to “term limits on Reach Up Family Financial Assistance.”

Lawmakers have adopted the governor’s original proposal in concept, but they extended the deadline for the 60-month cap to April 2014, softened Shumlin’s plan somewhat with more intensive “wraparound services,” a child only benefit for families that are sanctioned, and ongoing support for disabled beneficiaries, mothers under the age of 22 and participants who have been affected by domestic violence. The proposal also gives the commissioner of the Department for Children and Families the discretion to waive the cap for families as needed. The draft bill includes an evaluation component for the efficacy of the Reach Up program.

Rep. Anne O’Brien, D-Richmond, who negotiated the deal with House Human Services, was satisfied with the final compromise on the Reach Up changes. She said the welfare system, which allows recipients to stay on the program indefinitely, keeps children in poverty. O’Brien supported the governor’s recommendation, which would have cut benefits for about 1,200 families as of Oct. 1, but she said it was harder to persuade other lawmakers to accept the cap because of a “lack of supports in his proposal.”

“Some of us believe that having a deadline is actually more beneficial … than not having a deadline,” O’Brien said. “It’s not healthy for children to live in poverty but it is poverty. It’s not enough money to be successfully surviving.”

About 700 families would be affected next year by the House cap, she said.

O’Brien said the child-only grant, which is worth on average about $300 a month, also enables children to continue with case management services and give their families access to the state’s 3SquaresVT program and housing.

“It’s not a lot of money and it’s hard to imagine living with that low level of support,” she said.

The governor’s budget earmarked $6 million in savings in fiscal year 2014. Under the House proposals, any cost savings next year would be reinvested in services for beneficiaries. In 2015, the state could see a $4 million reduction in spending as a result of caps on the Reach Up program.

The Shumlin administration package was tied to a $17 million child-care subsidy that officials touted as the best way to move single mothers from welfare to work. The House proposal sets aside $3.3 million for child care.

Advocates say that’s not enough to give Reach Up recipients adequate access to child care, which they say is the No. 1 barrier to employment for single mothers.

Karen Lafayette, a lobbyist for the Vermont Low Income Advocacy Council, said a number of families that have been receiving the benefits for 60 months are following the work plans set out by the state, but have been unable to find gainful employment. She says this is an indication that “there’s something wrong with the plan or the supports are not there or they still face tremendous barriers to work.”

“We have not made the investments in child care, in transportation and in some of the other barriers that exist for people to go to work,” Lafayette said. “The administration was very adamant in every single committee that they testified in suggesting that they absolutely could not do time limits on Reach Up without the child-care subsidy, and now we have the time limits and no subsidy.”

Christopher Curtis, an attorney with Vermont Legal Aid, says the cap is arbitrary because it cuts off parents that have played by the rules but still cannot find work.

“We oppose arbitrary time limits based on the evidence and the experience of other states that demonstrates harsh outcomes for families with children, and negative consequences on state and local budgets and the non-profit service community,” Curtis wrote in an email.

He cites a 2002 report that examined the state’s welfare restructuring project, which went into effect in 1996. The author of the study, Susan Scrivener of the MDRC Corp., found that Vermont’s welfare-to-work program was more successful than that of other states because the benefits were not capped. The program also saved the state money, according to the study.

Curtis says 30 organizations — public housing groups, parent-child centers, shelter providers, low-income advocacy organizations, legal services providers, and community action centers — have signed off on a letter to House Speaker Shap Smith outlining the “disastrous consequences to the poorest Vermont families with children, to other areas of the state budget, and to their sister agencies if these cuts are enacted.”

Vermont is the only state that does not have a time limit for welfare benefits, lawmakers say. Reach Up should be a temporary program, Heath says. The state shouldn’t let “people stay on forever,” in her view. Case workers told the committee that they think a deadline will help beneficiaries achieve their goals and find work.

“If we can’t be successful in five years in getting people to work then I think we need to rethink how we’re serving them,” Heath said.

The budget committee chair says the change to the Reach Up program is not about saving money. “We’re doing this to make the program true to what it should be,” she said. “If it doesn’t save as much as we think it will in 2015 and we have to spend money in other places that concerns me less than allowing people to continue on a program that is meant to be temporary.”

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Anne Galloway

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  • Wendy Wilton

    Unfortunately working Vermonters won’t see a 4.7% wage increase to support the state’s budget growth and the taxes about to be implemented to pay for this budget increase. If there were ever a time to pass a level funded state budget or even reduce it by 1%, this was it. Next year at this time the legislature will be facing a huge task with repeat deficits in the major funds and no excess cash left to mitigate the problem.
    The state treasurer seems to have gone missing in this discussion, despite the impacts to the state’s fiscal strength. Why?

    • Peter Everett

      Don’t worry about tax increases like we’re getting this year to happen next year. Next year is an election year. Those in office are counting on the voter to “forget” the damage they are doing to us. They’re counting on us re-electing them again. If we’re stupid enough to do so, they will, once again “jerk us around” the first year of their new term. This will continue as long as we remain as “stupid” as they think we are (so far, they’re proven corect). As for me, each Incumbent will never receive my vote. Hope the majority of VT’ers see it my way. If not, don’t complain about having nothing in your pockets to spend on things you worked hard for.

  • Jim Christiansen

    Interesting that on the same day VT Digger runs a story entitled “Vermont college tuition increases outpace household income growth”, this story on state spending makes no mention of the total growth of state spending over the last 5 years.

    Remember, the General Fund is but a portion of the total monies spent by the state of Vermont each year.

    I’d like to read a story that examines the sustainability of total appropriations by the State of Vermont.

    • That would be because the information in its final form wasn’t available.

      • Jim Christiansen

        Thanks Anne. I look forward to reading that story when the data becomes available.

  • David Usher

    Nearly everything government at all levels touches these days increases taxes by more than the ‘increases’ in Vermonters’ incomes. Vermont has a low unemployment rate, but is creating a miniscule number of new jobs, except those associated with the EB-5 program and the foreign money it brings.

    The more pieces that surface, e.g., higher taxes, higher fees, higher electric rates, higher medical costs, and on and on, the closer we get to a definition of UNSUSTAINABILITY that even politicians can understand.

    Legislators should take no solace in a budget increase of 4.7%.