by Anne Galloway vtdigger.org March 22, 2012Lawmakers faced a much smaller gap between tax revenues and expenditures on government operations ‘ about $50 million this year, or a half to a third of the amount they’ve had to find in previous years through budget cuts, efficiencies and one-time spending since the advent of the Great Recession.
The reprieve from axe-wielding mode, however, didn’t lighten the workload of the House Appropriations Committee. Two issues have dominated lawmakers’ attention this session: The financial impact of repairing the damage from Tropical Storm Irene to critical state infrastructure, including highways, bridges, the state office complex and the Vermont State Hospital; and finding a way to reserve funds to cover anticipated federal cuts of $12 million to state programs that will begin to take effect in fiscal year 2014.
The solution? Spending federal disaster funds wisely and salting away money for a rainy day, House budget-writers say.
In order to do the latter, the House has created a ‘real’ rainy day fund that combines several existing setasides, including the Agency of Human Services caseload reserve and an emergency fund.
House Speaker Shap Smith told reporters in a press conference on Wednesday, the day before lawmakers too up the $1.3 billion General Fund spending bill, that the budget ‘rebuilds Vermont without raising broad-based revenues.’
‘It’s a testament of what we’ve done to reinvest in Vermont in a prudent fiscal manner,’ Smith said.
Last year the Legislature and the Shumlin administration left surplus monies in reserve for ‘unanticipated challenges.’ The reserves gave lawmakers, he said, ‘great comfort when we were hit with Tropical Storm Irene earlier in the year and allowed us to fill in the gaps when we needed to.’
Smith emphasized that the fiscal year 2013 budget, as proposed by the House, makes post-Irene investments in town and state roads and bridges, and plows $20 million more into the community mental health system. The state set aside $15 million for an emergency relief assistance fund and made a commitment to cover extraordinary municipal Irene-related road repair costs that exceed a 3 cent increase in local property tax rates.
‘Even with these investments, we’re making a commitment to leave money on the bottom line in anticipation of changes in the future,’ Smith said.
That bottom line leftover is destined for the ‘rainy day fund.’ The House created the fund in part to clear up confusion about the state’s budget stabilization fund, which many people assume is a ‘rainy day fund,’ or savings account. In fact, it’s a slush fund the state uses to pay bills as needed. The rainy day fund, by contrast, would be a true setaside.
The House plan has made a total of $6.6 million available for the rainy day fund, formerly known as the caseload reserve and emergency fund. If Vermont Yankee Nuclear Power Plant continues to operate, the rainy day fund would get an additional boost of $2.9 million, for a total of $9.5 million. (Last year the state put $64 million in these two funds.) In addition, the budget has $61.68 million in budget stabilization reserves and $7 million for federal cuts ‘in case the federal government sends us bad news,’ Smith said.
Going forward, instead of applying surplus revenues to the ‘waterfall,’ or a wish list of spending priorities, the money would go to one of three destinations: 50 percent would go toward fully restoring the General Fund transfer to the Education Fund; 25 percent to the ‘federal funds reserve appropriation’ for unanticipated federal cuts; and 25 percent to the rainy day fund.
Rep. Martha Heath, chair of House Appropriations, said the fund will enable the state to ‘save for the future.’
‘It’s where we can go when we have downturns in the economy if we need that short-term relief while we’re figuring out out long-term strategies,’ Heath said.
Budget changes for 2013
The budget is the document that perhaps best outlines the policy priorities of the governor and the Legislature. This year, though the state faced a $50 million gap between revenues and expenditures and other pressures, there were fewer cuts in state government and more selective infusions of cash into programs.
Some of the other pressures the budget-writers faced included a larger contribution to the pension system for state workers and teachers, and a $20 million reduction in the enhanced federal Medicaid match.
Rep. Mitzi Johnson, D-Grand Isle, said the Vermonters who came to testify on the budget included parents who wanted access to better quality daycare and elderly constituents who want to stay in their homes. The bill puts $2 million into child-care program quality improvements and expands the homemaker service program for seniors.
‘This budget takes care of people just living their lives here in Vermont,’ Johnson said.
After five years of budget cuts, the state has deferred maintenance and reduced services, according to Johnson. The committee, she said, struggled with determining what services the state really needs and how they can be funded.
‘In all sorts of areas in state government we did what we had to to get through the recession,’ Johnson said. ‘Now (the question is) how do we strategize to give Vermonters what they need.’
The budget-writers submitted a ‘wish list’ of about $1 million in programs it hopes can be funded, perhaps when the Senate gives the budget its once-over starting next week.
In some cases, the bill asks for funding to be redirected. The Vermont Housing and Conservation Board, for example, will receive $12 million in an annual appropriation and the state has asked the group to plow that money into affordable housing for Vermonters displaced by Irene and to help farmers clear fields now covered with deposits of gravel, rocks and sand from the flooding.
According to Heath, the budget includes about 20 new positions in state government; at the same time, the state cut 79 jobs associated with the former Vermont State Hospital.
The fiscal year 2013 budget is up 5.8 percent over last year’s appropriations.
House GOP members say the state is accelerating spending at an unsustainable rate.
Speaker Smith attributed about half of the increase in state spending to Irene expenses.
‘When you look at the all-in number of all state funds spent, a significant amount ‘ about half of the growth ‘ is related to Tropical Storm Irene expenses as well as expenses associated with other natural disasters we had throughout the year,’ Smith said. ‘We were just faced with the most tremendous natural disaster we have faced in the history of the state of Vermont and we’re tasked with rebuilding the transportation infrastructure, the mental health system and state infrastructure, and all of that costs money. We are doing it in a reasonable and responsible way.’
vtdigger.org March 22, 2012
Budget-writers create a 'real' rainy day fund, say state spending is up because of Irene
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