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]

The state operates on an annual budget cycle.^[2] The budget year begins on July 1.

Vermont has a total state debt of approximately $$5,846,189,000 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.^[3] The FY2013 state debt is down from the prior year's total of approximately $6,043,582,000.^[4]

Vermont's total state debt per capita is $9,332.53.^[5]

See also: The Vermont State Budget on State Budget Solutions

Economic Freedom

A new Fraser Institute report on economic freedom ranks Vermont 47th in economic Freedom. Delaware ranks 1st and New Mexico ranks 50th. The study examines the impact of economic freedom on both the level of economic activity and the growth of economic activity. According to the study, the freest economies operate with minimal government interference, relying upon personal choice and markets to answer basic economic questions. More governmental restrictions on those choices curbs economic freedom. The study looks at three major categories per state – size of government, taxes and regulations. ^[6]

Federal Aid to State Budget

The chart below represents how much of the state’s budget comes from the federal government. The number is the corresponding ranking in relation to the rest of the nation (if #1, the state receives the highest percentage of federal funding in the nation):

Figures are calculated by dividing each state’s intergovernmental revenue into its general revenue. Data is available at in U.S. Census.

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.^[7]

The budget bill as enacted can be foundhere.

Legislative Proposed Budget

The House passed a $5.01 billion state budget with a vote of 99-41.^[8] The budget spends about $124 million on recovery from Tropical Storm Irene.^[9] Gov. Peter Shumlin said he believed the House budget adhered to the priorities of his proposed budget.^[8]

The total budget spends 6.4 percent more than the FY2012 state budget.^[10] 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.^[10] The transportation budget, which is up by more than $103 million, is the highest dollar increase.^[9]

New spending in the budget includes:^[10]

• $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.^[10][9]

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.

Governor's Proposed Budget

The Executive budget recommendations can be found here.

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.^[11]

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.^[12]

Fiscal Year 2012 State Budget

• See past state budgets

Vermont faced a FY2012 budget deficit that could reach $176 million.^[13] 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.^[14] 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.^[14] Shumlin said he will also seek a 2% savings from the state’s personal services contracts.^[14]

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.^[15] 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.^[16]

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.^[17]

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.^[17]

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.^[13]

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.^[13]

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.^[13]

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.^[13]

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

Multi-Measure Budget Transparency Profile

The Institute of Government and Public Affairs at the University of Illinois has created a multi-measure transparency profile for Vermont, which measures state transparency as of September 2011 using indicators from a range of organizations, including Sunshine Review. These indicators measure both website transparency and other recognized facets of governmental transparency. In addition, IGPA presents four unique indicators of non-transparency based on the observation that transfers or reassignments between general and special funds can obscure the true fiscal condition of a state.

In addition to the individual state profile, IGPA offers a 50-state comparison and profiles for other states.

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,^[18] accepted by the Vermont State Legislature's Joint Fiscal Committee on August 18, 2009.^[19]

Vermont's General Fund FY 2010 revenue is below FY 2005.^[20] 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.^[21] 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.^[22]

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%.^[23]

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.^[24]

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).^[25]

Vermont Fiscal Year General Fund Revenues Comparison:^[26]

Actions taken in FY 2009 and 2010 to balance the budget include:^[27]

• 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%

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. ^[28]

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.^[29]

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.^[30]

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.^[31] Vermont's CAFRs are a publication of the Vermont Department of Finance and Management. Jim Reardon is Commissioner of the Department and Management.^[32]

Stimulus

Vermont has received $0.48 billion in federal funding.^[34]

Public Employees

According to 2008 Census data, the state of Vermont and local governments in the state employed a total of 49,997 people.^[35] 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.^[35] More than 62% of those employees, or 31,221 employees, were in education or higher education.^[35]

External links

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

References

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