State agencies were directed Wednesday to find another $17 million in cuts for the current budget year.
That pre-Thanksgiving news comes on top of $31.3 million in summer rescissions after the state’s revenue forecast was downgraded. Now, four months into Fiscal Year 2015, revenues are another $12 million short, state officials say.
Jim Reardon, commissioner of the Department of Finance and Management made the announcement in a news release Wednesday.
As part of the cuts, agencies will have to absorb about $3.5 million of unexpected increases in the cost of health care and other benefits for state employees. Another $1.5 million in unidentified cuts were already baked into the state budget that passed in May.
In all, agencies will have to find $15.5 million of new savings — on top of the $1.5 million in unspecified reductions requested in May.
Jeb Spaulding, the secretary of the Agency of Administration, said the cuts will not trigger reduced benefits or services, which would require emergency rules to modify. He said service cuts may be discussed when the Legislature convenes in January.
Spaulding said in the news release the administration does not anticipate tapping the budget stabilization fund to cover the shortfall or cutting debt service or retirement contributions.
Legislators on the House and Senate’s Joint Fiscal Committee share the administration’s sense of urgency, but do not believe that the Shumlin administration has the legal authority to make most of the planned cuts. The Legislative Council, which advises lawmakers on legal matters, supports that position.
“The statute does not give them the authority to do this,” said Sen. Jane Kitchel, D-Caledonia, co-chair of the Joint Fiscal Committee.
The Vermont Attorney General’s Office affirmed the administration’s legal authority to reduce appropriations by $6.7 million immediately.
The Joint Fiscal Committee cannot take immediate action to stop the cuts. “The big problem here is the timing is so late relative to the startup of the session,” Kitchel said.
Spaulding told the committee at its last scheduled meeting of the year, on Nov. 12, that the Shumlin administration intended to make the reductions.
Kitchel said the statutory language Spaulding cites for the interim budget-cutting authority is vague. In the 2015 legislative session, lawmakers will likely look to tighten up the provision, she said. For now, there’s not much they can do.
Asking the state economists for a revised revenue forecast would be fruitless, Kitchel said, because there’s no time to pull one together before the January Emergency Board meeting.
Personal income tax receipts have dropped below expectations; Reardon expects an update soon from state analysts who are trying to figure out the cause of the shortfall.
