When lawmakers returned for the 2016 legislative session, they had a good idea of the budget challenge they would face.
Legislative and administration financial experts estimated that state spending in fiscal year 2017 would outpace total revenues by $58.5 million.
House and Senate lawmakers worked over several months to bring the spending and revenue trends in line with each other, and the Legislature finalized a financial package late last week.
The final total budget package for fiscal year 2017 — including state and federal funds — comes in at a total of $5.76 billion, representing an increase of 2.4 percent over the current year’s budget.
Spending from all state funds is up 3 percent over FY 2016, for a total of $2.46 billion.
State contract
While lawmakers tussled over the state budget at the Statehouse, the administration wrangled with the Vermont State Employees’ Association over the contract for state workers for the next two years.
Contract negotiations were particularly strained this year. After failing to come to an agreement, the union and administration turned to an independent fact-finder in January. They were still unable to reach common ground after the report was issued, so they went to the Vermont Labor Relations Board.
In April, days before the Senate Appropriations Committee finalized their work on the budget the board issued a decision siding with the union, calling for a 2 percent across the board raise for employees in FY 2017, and 2.25 percent the following year, in addition to regular “step” increases offered to employees recognizing longevity of service.
The decision put considerable pressure on lawmakers in charge of budgeting. The administration had put aside $4.7 million for step increases in the governor’s budget, but the increase spelled out in the VLRB decision came with a price tag of nearly twice that.
Ultimately, lawmakers were able to fully fund the contract by finding several other areas of savings, including directing the administration to find $550,000 in savings from exempt positions.
The final budget bill also counts on $500,000 of savings from privatizing the risk management office of the Agency of Administration that acts as an in-house claims adjuster for worker’s compensation claims.
The union has been an outspoken opponent of privatizing the risk management division; the move will result in the loss of about 10 state jobs, and, they say, will compromise the quality of service that state employees get in worker’s comp situations.
It remained a point of contention between the House and Senate through the committee of conference process and was one of the last things that the panel finalized.
Education
The Legislature did not fund one of the key initiatives Shumlin outlined in his budget — college savings accounts for all children born in Vermont. The governor called for $1 million to fund a program that would open a savings account for all children born in the state and give them a $250 contribution.
Lawmakers opted not to fund that new initiative, but the final bill does include some significant higher education changes:
• The state college system will get $700,000 to fund need-based financial aid for Vermont students.
• A state law that caps the University of Vermont tuition rate for in-state students at 40 percent of the rate for students from out of state has been repealed.
Child protection
As the rates of children coming into state custody have increased in recent years — a trend officials connect to high rates of opiate addiction — the child protection system has been taxed by heavy caseloads.
Last fall, Shumlin announced a plan to increase the number of social workers in the Department for Children and Families, as well as to beef up judicial and other resources that are involved with that system.
Lawmakers funded the initiative, which puts an additional $1.8 million in the budget to fund the higher caseload. The budget also funds a family reunification program through the Defender General’s Office with $140,000.
Mental health
Lawmakers did not adopt a proposal Shumlin put forward to boost Medicaid reimbursement rates for doctors and dentists, which would have involved imposing a 2.35 percent provider tax.
Mental health and substance abuse workers, however, did get a raise.
Designated agencies testified that a ceiling on Medicaid reimbursement rates over the past eight years has led to a staffing crisis. “Chronic underfunding” led to high staff turnover rates, because employees can get significantly higher wages for doing similar work with the state or in a hospital.
The budget that lawmakers approved last week include a 2 percent cost of living increase for designated agencies and Choices for Care providers, a program that offers long-term care for Vermonters who are older or have disabilities.
However, in conference committee, lawmakers pushed the effective date back two months to September 1. The savings from that delay will be part of a $1.2 million backup fund that will be available if needed to fund low-income heating assistance or for other purposes.
At the urging of the House Human Services Committee, the House budget did not include the administration’s controversial proposal to find $2.5 million in savings in the Department of Vermont Health Access by changing the policies around medicating mental health patients against their will.
The policy change would have streamlined the state’s process for involuntarily medicating psychiatric patients so it would take about two weeks, down from the current average of 60 days. Lawmakers resisted, noting that the law had been changed after considerable review just two years ago.
Other aspects of the budget
The 128-page budget bill includes a wide variety of other initiatives. A few are below.
• The budget includes a total of $11.6 million (a combination of state a federal funds) for home weatherization assistance.
• A $40,000 appropriation will go to funding a study and plan to reduce homelessness.
• $1.7 million from the transportation fund will go to paying for replacement of police cruisers.
• Lawmakers put some money into the Reach Up benefit program in order to reduce a cut to the monthly benefit program that impacted some families if an adult member of the household receives a federal disability benefit.
Budget writers also put aside $1.2 million that will serve as a sort of emergency fund. With consultation from the Joint Fiscal Committee, the administration will have the authority to spend that money in areas that might be under financed. That could include funding the low income home energy assistance program (LIHEAP), or it could go to the Green Mountain Care Board should the all-payer waiver move forward.
And though the budget has been printed, voted on, and sent off to the governor, it is not in its final form. Lawmakers will come back in January and take up the budget adjustment bill — an opportunity to alter state spending to reflect the pressures on state coffers.
Already, there is one major item on the agenda that needs to be addressed.
The energy siting bill, S.230, was one of the last bills to be finalized at the end of the session. In the last-minute hubbub, lawmakers forgot to include a section of the bill that would give $300,000 to regional planning commissions for planning purposes.
Rep. Tony Klein, D-East Montpelier, said Friday that he understood that the omission was a drafting error and the matter would need to be remedied by legislative action.
The state may have some funds available to initiate the program in the first part of the fiscal year, he said, before lawmakers come back for the next legislative session.
“There was absolutely no reason why that siting bill had to be finished at the last minute of the last hour,” Klein said.
