Budget Cuts Approved To Deal With Soft Revenue Projections

Aug 14, 2014

Credit WAMC/Pat Bradley

Several weeks ago, the state of Vermont’s consulting economists reported that projected revenues were not increasing as expected. On Wednesday, the Legislature’s Joint Fiscal Committee approved a revised package of budget cuts.

The forecast for revenue growth was adjusted in July from 4.8 percent to 3 percent. That downgrade meant the Joint Fiscal committee — consisting of five representatives and five senators who review the fiscal operations of the state when the Legislature is not in session— had to consider more than $31 million dollars in budget cuts.

Governor Peter Shumlin asked state agencies to recommend 4 percent cuts in their budgets, but shielded some areas. A public hearing was held this week on the plan that Governor Peter Shumlin offered to the committee. On Wednesday, the Joint Fiscal Committee approved a revised package, according to vice-chair Senator Jane Kitchell.  “One of the things that’s so important to understand: we do not raise revenues in the Joint Fiscal Committee. We had to figure out how to balance the budget and how to do it within that constraint of no additional revenues and within the current spending of the state government. We did look at where we could move some money around to mitigate some of the proposals.”

Vermont Commissioner of Finance and Management Jim Reardon explains that everyone knew a total of $31 million in revisions to the budget had to be met.  “The legislature did restore about $1 million of the reductions that we had recommended.  But they did it by offsetting some other places where they could take reductions.  For example, the governor and the legislature had worked this past legislative session to establish a Vermont enterprise fund which had funding of about $4 ½ million. The legislature reduced that by an additional $707,000 beyond the recommended reduction by us of $250,000.  In addition to that they were able to offset about $310,000 of the $1 million that they added back with some carry-forward funds that were available in our health care program.”

Because some areas were shielded from cuts, Reardon explains that most cuts were targeted.  “We tried to be strategic. We did have some across the board reductions.  Most notable there was supposed to be a 1.6 percent increase in Medicaid reimbursement effective January 2015.  We are not going forward with that increase. That’s the one that does effect many providers. It is unfortunate but it was necessary for us to get our books back in balance.”

Vermont Council of Developmental and Mental Health Services is the trade association for the community mental health agencies in Vermont. Executive Director Julie Tessler says the council faced a $6 million reduction, but the committee revised it to $5 million.  “The committee only had 48 hours to figure out some alternatives without raising revenues. They were able to put money back in for one time expenses. What they were not able to do was put back the 1.6 percent Medicaid rate increase that is due to take effect, or was due to take effect, in January. But I think they heard the needs loud and clear. I think many of the members of the Joint Fiscal Committee were frustrated that they couldn’t do more. So we ended up with a $5 million reduction instead of a $6 million reduction. We’re thankful for that. But we still have enormous challenges that grew because of these budget cuts.”