His administration says the full amount of state money needed to cover the cost of the consensus Medicaid forecast is present in the budget proposal. However, a small portion is held in reserve rather than positioned to be spent.
Scott said that gives the state flexibility in case of reductions in federal funding or other changes.
Under a process established in the 1990s, the chairs of the four legislative financial committees and the governor meet periodically to review and agree to analysts’ projections of revenues and the Medicaid caseload in the coming fiscal year.
Legislators wrote to Scott this week after legislative budget analysts reviewed his proposed fiscal 2018 budget and found that $10 million of the amount needed to cover the Medicaid projections was to be put in a reserve fund. They said he was not honoring the consensus the legislative chairs and the governor — meeting as the Emergency Board — adopted last month.
In a letter to the chairs of the four primary financial committees Wednesday, Scott said his budget is based on the Medicaid consensus adopted in January. The full amount of general fund money needed to cover the Medicaid consensus is accounted for in the budget, he said, but his proposal sets aside $10 million.
“By doing so the State maintains the funds needed to meet the estimate, should it prove accurate, while also maintaining flexibility to reserve any excess to guard against potential changes to federal funding or other unanticipated events,” Scott wrote.
The governor wrote that Medicaid spending in Vermont over the last 15 months has been lower than the estimates previously adopted in consensus. The Emergency Board will continue to monitor caseloads through the next fiscal year, and the reserved money is available if it is needed, he said.
“I remain committed to the consensus process and I know that it has served the State well over the years,” Scott wrote. “I also remain committed, however, to exploring every opportunity to protect the State from uncertainty at the federal level.”
In an interview, Scott said the proposal is “a different way of accounting.” He likened the proposal to putting part of the total in a checking account and part in a savings account.
“I’m hoping we don’t have to use the $10 million,” he said.
Finance and Management Commissioner Andy Pallito said the state has been spending lower than projections for Medicaid for more than a year and continued to have money left over even after going through revenue downgrades and covering the cost of the 53rd week.
Rather than ending up moving unspent money budgeted for Medicaid down the line, the governor’s proposal begins with it in reserve. Though the budget sheets look different, Pallito said, the administration does account for 100 percent of the general fund money needed to support the Medicaid consensus forecast.
“We have met the spirit of the consensus forecast,” Pallito said.
However, House Speaker Mitzi Johnson, D-Grand Isle, was not convinced by Scott’s explanation.
“This is a $10 million sleight of hand,” Johnson said.
Johnson said his proposal artificially depresses the growth rate and inflates the amount of reserves in the governor’s budget. If the House puts forward a budget that appropriates that $10 million so the consensus forecast is fully funded, the House’s budget will have a higher rate of growth.
Johnson noted that in Scott’s letter he acknowledges the state may need to use the portion of the consensus forecast put in reserve.
“It’s not reserves Vermonters can count on, because it’s reserves that he knows could very well be needed in a specific area that he underfunded,” Johnson said.
However, she said the bigger concern is that Scott’s proposal undermines “one of the very good nonpartisan budgeting practices that we have.”
In speaking with other legislators around the country, she said, she has heard from some who are jealous of the consensus approach Vermont takes.
“We’ve always had an agreement that you budget realistically and we stick to that,” Johnson said.
The consensus revenue process began under Gov. Howard Dean. Dean said Wednesday that establishing a process for agreeing to projections for the major components of the state budget was an improvement to the annual process.
He cautioned against changing the estimates after the Legislature and administration have reached agreement on forecasts.
“You can’t unilaterally change that agreement — otherwise you’re not playing with the same set of facts,” Dean said.
