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Vermont state budget

Vermont is the only state without a balance budget requirement. In Dec. 2011, Governor Peter Shumlin's administration proposed $25.5 million in adjustments to the General Fund spending plan that lawmakers approved when they passed the $4.8 billion budget in the spring of 2011, with $24.8 million of the new costs attributed to Tropical Storm Irene.^[1]

Vermont has a total state debt of approximately $6,043,582,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. ^[2]

See also: The Vermont State Budget on State Budget Solutions

[edit] Fiscal Year 2013 State Budget

The state face a $50 million gap between revenues and expenditures, one of the smaller gaps in the past few years. The state has set aside $13 million in the Agency of Human Services caseload reserve, $3.9 million for revenue shortfalls and $1.9 million for federal cuts. There is also $3 million in unanticipated revenue coming from the attorney general’s settlement with big banks.^[5]

Legislative Proposed Budget

The House passed a $5.01 billion state budget with a vote of 99-41.^[6] The budget spends about $124 million on recovery from Tropical Storm Irene.^[7] Gov. Peter Shumlin said he believed the House budget adhered to the priorities of his proposed budget.^[6]

The total budget spends 6.4 percent more than the FY2012 state budget.^[8] The general fund accounts for $1.3 billion of the overall spending plan and under the House budget general fund spending would increase 5.8 percent from FY2012.^[8] The transportation budget, which is up by more than $103 million, is the highest dollar increase.^[7]

New spending in the budget includes:^[8]

• $20.5 million to make up for a cut in federal support for Medicaid;
• $14 million to cover the increasing costs of government employee retirement programs;
• $13.6 million in pay increases for current state employees;
• $6 million to make up for dwindling payments under the state's share of a settlement reached between states and the tobacco industry 15 years ago.

Surplus

The House's budget plan takes a new approach to a state surplus, should there be one, and devotes half of any surplus to the state education fund to help reduce property taxes, and a quarter each to a newly established rainy day fund and to money set aside to offset federal cuts.^[8][7]

Revenue

Prior to considering the budget bill, the House had already passed revenue-generating legislation — namely a fee bill for the Department of Motor Vehicles that increases rates for driver’s licenses and vehicle registrations, a one penny increase to the statewide property tax and a provision that would push surplus funds toward the General Fund transfer to the Education Fund to make up for $27.5 million in “rebasing” that will have a 3-cent impact on local property taxpayers.

[edit] Fiscal Year 2012 State Budget

A mortgage foreclosure settlement between banks and states was announced in Feb. 2012, and Vermont plans to use $2.4 million from the settlement to help balance its budget.^[9]

Gov. Peter Shumlin announced when he took office in January 2011 that he would save $12 million in personnel costs, but he fell short of thatgoal by about $2.6 million, and Finance and Management Commissioner James Reardon said that shortfall will need to be filled in the FY2013 budget.^[10]

[edit] Fiscal Year 2012 State Budget

• See past state budgets

Vermont faced a FY2012 budget deficit that could reach $176 million.^[11] Gov. Peter Shumlin called for an immediate state government hiring freeze and said that requests to fill vacant positions must be cleared through Secretary of Administration Jeb Spaulding.^[12] He said another $2 million could be saved from the state employees’ retirement plan through "benefit recalibration," requiring a reduction in benefits coupled with increased contributions.^[12] Shumlin said he will also seek a 2% savings from the state’s personal services contracts.^[12]

In Dec. 2011, Governor Peter Shumlin's administration proposed $25.5 million in adjustments to the General Fund spending plan that lawmakers approved in the spring of 2011, with $24.8 million of the new costs attributed to Tropical Storm Irene.^[13] The $25 million in costs includes $690,000 for supplies and equipment used by National Guard personnel in responding to the emergency to $1.75 million for cleaning up spills of petroleum products caused by flooding. The state did not plan to raise taxes to cover the increased spending.^[14]

[edit] Legislative Proposed Budget

The bipartisan House Appropriations Committee unanimously approved its $4.8 billion budget bill on March 21, 2011. The bill is based on the assumption that the state will not have to pay the federal government $4.1 million in unemployment insurance interest due because President Barack Obama had proposed giving states a temporary break to help them weather the continuing economic downturn.^[15]

The House’s budget follows much of Gov. Shumlin's proposed budget, but does not mirror it exactly. For example, the Shumlin proposed budget would svae $5 million by transforming Catamount Health into a wholly state program, but the House committee disagreed and instead to adopted a savings plan proposed by insurers, hospitals and doctors.^[15]

[edit] Governor's Proposed Budget

On Jan. 25, 2011, Gov. Shumlin presented his proposed FY2012 budget, with $1.2 billion in general fund spending, which is a $25 million reduction from FY2011 general fund spending.^[11]

[edit] Cuts

The budget makes $83 million in cuts to the general fund, including funding cuts to mental health agencies, programs for children and money for adoptive children who don't qualify for Medicaid.^[11]

[edit] Revenues

The budget does not include new taxes, or increasing the sales tax and income tax and it also does not dip into a $60 million "rainy day fund" for relief.^[11]

the budget plan generates $36 million in addit-fish-ional federal funding through new or raised state assessments on hospitals, nursing homes, insurers and dentists by raising the "provider tax" on hospitals from 5.5 % to 6%, with the proceeds then used to leverage more federal funding.^[11]

[edit] Budget transparency

• See sample transparency legislation at the Sunshine Standard

Vermont currently has no statewide, official spending database online. However, the Public Assets Institute and the Ethan Allen Institute launched Vermont Transparency, which discloses information about state spending, state revenues, municipal spending, federal contracts, education finance, school spending and federal stimulus funds.

See also: Evaluation of Vermont state website

[edit] Fiscal Year 2011 State Budget

Vermont faced an estimated $150 million budget shortfall for FY 2011. In January 2010 lawmakers announced that they plan to impose a 5% cut on their own paychecks for the next two sessions.^[16] The Vermont General Assembly and Gov. James Douglas agreed on a budget on May 12, 2010.^[17] Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

Because the state's three main funds ended the year slightly higher than previously expected, the Emergency Board that periodically reviews Vermont’s finances and did so on July 16, 2010, increased the General Fund by roughly $3.8 million, the Transportation Fund by just under $500,000 and the Education Fund by $1.8 million.^[18]

Facing a budget shortfall of at least $38 million dollars, Gov. James Douglas and lawmakers engaged in a process they named "Challenges for Change."^[19] Challenges for Change was authorized by Act 68 (the Challenges Bill) of the 2009-2010 legislative session and is a budget initiative intended to "make Vermont government and services more effective so that better results are delivered at lower cost to taxpayers."^[20] The Challenges for Change process starts with the outcomes and it says, ‘what are the outcomes that we want to achieve', and lays upon those outcomes a budget constraint."^[21]

The Challenges for Change Progress Report issued on March 30, 2010, stated that joint public hearing would be scheduled within ten days after the report was issues and the legislative committees of jurisdiction would take testimony and receive public input immediately.^[20] The Challenges for Change Progress Report states: "Clients and taxpayers are better served by a few coordinated programs with more flexibility than a confusing morass of hundreds of programs. Service delivery needs to and can focus on clients rather than programs."^[20]

A progress report issues on March 30, 2010 stated that the goal was to use technology and new efficiencies to save $38 million from the state's over $1 billion budget, without hurting state services.^[20][19] One of the biggest cuts comes from Education. The proposal included reducing the number of school districts from 280 to less than 50^[20][19], and the majority of savings would come through staff reductions.^[21] Vermont currently has a ratio, with staff including everyone from custodians to district superintendents, of 4.55 to 1, one of the lowest in the country. State Education Commissioner Armando Vilaseca wants to increase that ratio to 4.75 to 1 to save $20 million a year but result of the loss of approximately 600 jobs.^[22] Some lawmakers were opposed to the plan and saw it as a loss of local control.^[23]

Other cost reduction measures include releasing low-risk offenders from state prisons.^[19] and consolidating 54 economic development programs and commissions into 9 regional offices.^[21] In January 2010 lawmakers announced that they plan to impose a 5% cut on their own paychecks for the next two sessions.^[24]

The Vermont State Employees Association agreed to a 3 percent pay cut for state employees, which will save the state government about $10 million in a year, as well as a pay freeze through 2012.^[25]

The House of Representatives passed a budget for FY2011 that counted the $38 million toward closing a budget gap that, at the beginning of the year, had been projected at $154 million.^[19] Public hearings on the budget cuts were held in the House chamber on April 6, 2010.^[26]

The State Senate passed its own version of the state budget on April 28, 2010, on a 23-6 vote.^[27] The Senate's budget amounts to $4.7 billion, including federal funds funneled through state agencies.^[27] The Senate's spending plan still needs $38 million in savings to be found through government efficiencies under Challenges for Change, and approximately half of those savings had not been found at the time the Senate passed the budget.^[27] Senators opted not to use $20 million from the state's so-called rainy day fund to fill the hole, with members saying it was hoped the remaining efficiencies can be found before lawmakers go home.^[27] Lawmakers said they would spend about $85 million on higher education in fiscal 2011, and $140 million on corrections.^[28] Lawmakers claimed to reduced the projected deficit for FY2012 to $113 million, down from a projected $250 million, due in large part to federal stimulus money.^[28]

The budget approved by the legislature and governor included a limited rollback of an increase in the state's income tax on capital gains that was passed last year.^[17] The FY2011 budget rollback of that tax was targeted mainly at businesses in the hopes of generating jobs.^[17] Lawmakers also agreed to pull back an increase in the estate tax.^[17] The legislature found ways to save $30 million, $8 million less than the $38 million shortfall. Legislators agreed to allow the executive branch to determine how to save the remaining $8 million so long as the the Legislature's Joint Fiscal Committee could review the governor's cuts of any agency's budget if the cuts were 5 percent or more.^[17]

While the legislature closed a $154 million gap, it warned that a $122 million deficit would likely crop up for FY2012.^[17]

The state will borrow about $71 million by issuing bonds to fund capital construction.^[17]

[edit] Prior State Budgets

In 2009 Vermont faced shortfalls of $28 million for FY 2010 based on the July 16, 2009 consensus revenue forecast. Gov. Jim Douglas proposed August 5, 2009 the $28 million needed in rescissions for the current fiscal year to keep the budget balanced,^[29] accepted by the Vermont State Legislature's Joint Fiscal Committee on August 18, 2009.^[30]

Vermont's General Fund FY 2010 revenue is below FY 2005.^[31] Gov. Douglas laid off 25 state workers and eliminated 50 vacant positions to hit the $7.4 million target as part of the $28 million in reductions. Gov. Douglas has been criticized for not accepting the Vermont State Employees Association's offer of 4 days of furloughs and give up 3 paid holidays to prevent this year's layoffs. The union also offered permanent elimination of a wellness program, dental coverage and tuition reimbursement to reach the $7.4 million figure. Gov. Douglas said he wanted permanent not temporary labor savings to explain his rejection of the union's offer.^[32] In December 2009, the state and the union agreed to a 3 percent pay cut for state employees as well as a pay freeze until 2012.^[25]

Vermont's state revenues for the period as of October 2009, 4 months into FY 2010, were $5.95 million, 1.72% above target as announced November 10, 2009. The month of October was only 0.16% down from estimates. Personal Income Tax was +5.67%, Sales Tax +0.71%, Room and Meal Taxes were 4.38% in the positive with the 4th major revenue category of Corporate Tax negative 18.81% for the month. Compared to FY 2009 Personal Income Tax was down 11.75%, Sales Tax declined 4.48%%, Room and Meal Taxes were negative 1.20%, and Corporate Tax was up 11.92%.^[33]

The Vermont Emergency Board in light of the current economic turmoil decided to meet quarterly instead of twice a year. They were told at their meeting on November 12, 2009 that FY 2010's most recent revenue forecast is up $1.6 million for the General Fund of more than $1 billion, but were warned unemployment in the state will continue to rise. The Emergency Board is composed of legislative money committee chairs and Gov. Jim Douglas.^[34]

FY 2011 budget instructions issued to Vermont state agencies on October 2, 2009 told agencies to prepare their budgets at 8% below FY 2010's levels (after the August 18, 2009 rescissions).^[35]

Vermont Fiscal Year General Fund Revenues Comparison:^[36]

Actions taken in FY 2009 and 2010 to balance the budget include:^[37]

• The number of active state employees today has been reduced from a high in July 2008 of 8,383 to an estimated 7,960 as of July 2009.
• Another 90 positions are likely to be eliminated as the result of the retirement incentive. At that point, the number of State employees in Vermont will reach 2003 levels, with more reductions possible.
• Tax changes included: Reducing the capital gains exemption to a flat $5,000 (with some exceptions), eliminating the state and local tax deduction, lowering tax rates, cigarette tax increases, an estate tax exemption set at $2 million, and a tax amnesty program.
• The current deficit projection for Vermont is:
  • FY 2011 ($ 82 million) = 6.4% shortfall
  • FY 2012 ($155 million) = 11.6% shortfall
  • FY 2013 ($127 million) = 9.2% shortfall
• Total ‘Real’ (once duplications are accounted for) FY10 Budget = $4.6 Billion, including ARRA, which breaks down by funding sources as follows:
  • Federal Funds $ 1.44 B 31%
  • Fed. ARRA Funds $ 373 M 8%
  • General Fund $ 1.09 B 23%
  • Education Fund $ 1.07 B 23%
  • Transportation Fund $ 215 M 5%
  • Special Funds $ 450 M 10%

[edit] Budget Background

Vermont's fiscal year 2010 began July 1, 2009 and ends June 30, 2010. In September and October instructions are distributed to each agency and department, with a budget allocation for the coming fiscal year. By December the Governor reviews agency requests, past expenditures and revenue data before ultimately compiling budget recommendations for the upcoming fiscal year. In January, when the Legislature convenes, the Governor presents the budget proposals with a formal address to a joint meeting of all House and Senate members. Once both the House and the Senate approve all of the appropriations and make any necessary changes the Governor makes the final approval before the new budget bill is accepted. Should any changes be necessary throughout the fiscal year the Budget Adjustment Act allows for the Governor to submit proposed changes. The House and Senate pass the final version of the Budget Adjustment Bill and the bill is forwarded to the Governor for final approval. ^[38]

Public hearings are held throughout the budget process, dealing with particular programs, but not according to a set schedule. The state constitution prescribes a biennial legislature; in practice, legislature meets annually, in regular and adjourned sessions.^[39]

[edit] Accounting Principles

Main article: Vermont government accounting principles

The Office of Vermont State Auditor is one of five constitutional officers in Vermont. The Office provides an independent and objective assessment of Vermont's governmental operations, publishing its audit reports online. Thomas M. Salmon was elected Vermont State Auditor in 2006 and he was reelected in 2010.^[40]

The Institute for Truth in Accounting (IFTA) rates Vermont “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Vermont's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[41] Vermont's CAFRs are a publication of the Vermont Department of Finance and Management. Jim Reardon is Commissioner of the Department and Management.^[42]

[edit] Stimulus

Vermont has received $0.48 billion in federal funding.^[44]

[edit] Public Employees

Main article: Vermont public employee salaries

Main article: Vermont public pensions

According to 2008 Census data, the state of Vermont and local governments in the state employed a total of 49,997 people.^[45] Of those employees, 35,463 were full-time employees receiving a net pay of $136,336,597 per month and 14,534 were part-time employees paid $12,340,190 per month.^[45] More than 62% of those employees, or 31,221 employees, were in education or higher education.^[45]

[edit] External links

[edit] Additional reading

• Congressman Peter Welch,"User's Guide to Economic Recovery Resources," retrieved March 30,2009
• Gov. Douglas,"Inaugural Address of Governor James H. Douglas," January 8,2009

[edit] References

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