The Legislature finally adjourned late Saturday night after passing a $4.5 billion budget. Governor Douglas had urged lawmakers to reduce appropriations to ease the tax burden during this recession. Legislative leaders countered that the recession itself was leading to greater demand on state services because of unemployment and that state spending, much like the federal stimulus plan intends, could help support the economic activity.
The House passed the Fiscal Year 2010 budget on a 91-52 roll call vote. The Senate had passed it last Thursday on an 18-10 vote. If Douglas vetoes the bill, the Legislature would have to come back into session, probably in June ahead of the start of the next fiscal year on July 1.
Another major issue left up in the air is whether the governor will layoff several hundred state workers. The administration has maintained that the state needs to cut payroll in the neighborhood of $17 million, again starting this next fiscal year. The governor cannot simply rewrite union contracts, however, he can only layoff workers, which could be as many as 650 state employees. The administration has been negotiating with the union to find a package of salary reductions/furloughs/health care premium cuts, etc, that would mitigate the need for layoffs. So far, the two sides have failed to reach agreement and time is running out.
As for the budget, Speaker of the House Shap Smith said, This budget makes difficult cuts, closes tax loopholes to cut taxes for middle and lower income Vermonters and sets us on a track for greater sustainability in the future, said House Speaker Shap Smith.
Some Vermonters will see fewer services, some higher income Vermonters will pay higher taxes, but we are all in this together.
Vermonters are struggling through this economic crisis and now more than ever they need creative solutions to our most pressing challenges, said Senate President Pro Tem Peter Shumlin. I am pleased that during these tough economic times our budget will give Vermonters making under $200,000 a tax cut. None of the choices we made were easy but the package we put together will help all Vermonters get through this crisis and emerge stronger in the future.
To solve the $281.5 million budget challenge, the legislature cut $59.3 million from state programs and services, collects $4.8 million in unpaid taxes, generates $21.3 in new revenue, reduces the General Fund transfer to the Education Fund by $18.4 million, uses $3.2 million in rainy day funds and applies $174.5 million in federal stimulus funds.
All together, the budget reflects a nearly $80 million reduction in General Fund obligations. The new revenues in the package amount to around 7.5 percent of the construct to solve the budget challenge.
The Senate took its final vote on the budget on Thursday, May 7.
A detailed breakdown of the major components of the budget is attached.
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BudgetCuts.pdf12.49 KB
BudgetSummary.pdf50.35 KB