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New England News
Wed August 6, 2014
Republican Leaders Discuss Vermont Revenue Predictions
During a meeting in Montpelier Tuesday, state Republican leaders responded to a recent downgrade in revenue growth projections by the state’s economists.
In their biannual report last month to the Emergency Board, a special committee empowered to review budget issues when the legislature is not in session, state economists reported that general economic conditions have hurt Vermont's collections of personal income and sales-and-use taxes. Jeffrey Carr — the economic advisor for the administration — revised the forecast for revenue growth from 4.8 percent to 3 percent. "It looks like the economy hit a pothole during the first quarter and what it’s done is slowed the rate of growth from the expectations that we had back in January of 4.8 percent revenue growth to now 3 percent revenue growth. What’s that done is, for fiscal year 2015 anyway, that resulted in the overall reduction in the total amount of revenues we expect to collect by $28.8 million. Which I think transfers over to a little bit more than that in the budget.”
Governor Peter Shumlin, a Democrat, responded by asking state agencies to recommend cuts in their budgets averaging 4 percent. But he will shield certain areas from cuts, including the education, retirement, and debt reduction funds.
Lieutenant Governor Phil Scott says requesting 4 percent across the board cuts will be difficult for some agencies. The lone Republican in statewide office is also concerned should the revenue forecast continue a downward trend. "What if there’s another downgrade three months after? Where do we go then? I’m just looking forward to seeing what the proposals are and what programs are going to be cut in the different agencies.”
House Minority Leader Don Turner says for the last three years, he’s pointed out that the state has been spending too much. He’s working with the Joint Fiscal Office to assess possible cuts. "Our revenue stream is very volatile. We used up all of our reserves. We rely heavily on federal dollars. And we spend too much. So this point in time was inevitable. It’s going to be interesting to see how the administration deals with this. But in the meantime my caucus and my people in the money committees have been meeting. We’ve got some ideas from JFO. It’s not going to be easy. There’s going to be some difficult decisions the governor’s going to have to make. But it is going to be the governor’s responsibility. The legislature could have done that three months ago, when we should have been doing it. But now we’re having to look at it like this.”
Senate Minority Leader Joe Benning would like to see the legislature change tactics just once to deal with the state’s finances. "If I had my druthers I would take just one legislative session, just one, and have the leadership on both sides of the aisle and both sides of the building say for this one session we’re not going to introduce any new legislation. Instead we’re going to look at every single program we do and find out what is necessary. What can we do without or do in a streamlined way. That’s exactly what we’re now asking all of these state agencies to do by saying there’s going to be a 4 percent across the board cut. We should do that as well.”
The administration has noted that the revised report from the economists is backing off of the pace of growth in revenues. During a press conference in July, Governor Shumlin called the report “....a downgrade of an up year” and noting “This will be the biggest revenue year in Vermont history.”
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