Vermont Budget Adjustment Act ready for a vote in record time

by Anne Galloway vtdigger.org Its only been eight business days since the opening day of the session and the Budget Adjustment Act the mid-year correction for the state budget is ready to go in record time.
Its going to be a busy week for the House Appropriations Committee. Not only are members of the committee bracing for Gov. Peter Shumlins much-anticipated budget address on Thursday, theyre also reporting the Budget Adjustment Act on Tuesday.
The BAA is poised for final passage on Wednesday the day the Shumlin administration hears the consensus revenue forecast from the states economists Jeffrey Carr (reporting for the governor) and Tom Kavet (the Legislatures analyst).
In a typical year, the BAA can take weeks, if not months to tee up for passage. But this year, lawmakers and the Shumlin administration are in a hurry because of concerns about the fiscal year 2014 budget.
What with an anticipated shortfall of $50 million to $70 million in the General Fund, a $30 million hole in state transportation funds, a pressing need to come up with an additional $20 million for state teachers health care retirement money, a $20 million shortfall in subsidies for VHAP and Catamount beneficiaries and upward pressures in human services programs for disabled and needy Vermonters, its going to be another tough budget year on top of five years of sharp pencil ledgering since the beginning of the Great Recession.
And then theres the little matter of building a new Waterbury State Office Complex and Vermont State Hospital. The capital bonding required for these big ticket items could be as little as $35 million and as much $75 million, depending on just how much the Federal Emergency Management Agency and Lexington Insurance pony up, and how much the Shumlin administration is able to scrub down other capital projects. Totals at this point still arent at all clear, but a number will emerge at the beginning of next month.
Legislative pressure to increase revenues at a time when Shumlin is anticipated to insist on managing to the budget again will likely be intense at least behind the scenes. But given the Democratic governors tight hold on the overwhelmingly Democratic Legislature, its unlikely many rebels in either body will emerge.
Expect to see more tradeoffs like the governors inaugural proposal to use the Earned Income Tax Credit to pay for state child-care subsidies. (Observers say if Republican Gov. Jim Douglas had made that move there would have been a hue and cry from Dems.)
Expect to see more proposals to hold the line on human services spending even though more Vermonters than ever are hurting as the economy limps along. And expect to see hidden levies as a way to spread the pain and generate more revenue.
We may even see, as the governor has hinted, a shift from the states reliance on taxable income to adjustable gross income. That would be one way to manage the kind of legerdemain that will be necessary to generate needed revenues.
Dont expect to see an overt proposal to tax the wealthy. Capital gains and estate tax increases? Forget about it. And big shifts in tax expenditures? Unlikely. A sugar-sweetened beverage tax? No way.
Meanwhile, one-time funds from the federal stimulus, tobacco settlement funds and the human services caseload reserve are all gone. On the plus side, we have about $62.5 million kicking around in budget stabilization funds (aka rainy day funds). But if you thought we were going to use that money in what appears to be an emergency, think again. The real emergency hasnt happened yet. We dont know, for example, just how much of a haircut the state will get from the federal government once Congress finally decides what to do about the debt ceiling. That news will arrive at about the time the House Appropriations Committee is finished with its vetting of the governors budget proposal in March.
But back to the BAA, and the fiscal year 2013 budget (the year were in now). In case you were wondering whats in it, there havent been many changes from the governors proposal. The bottom line is almost identical to the original spreadsheets passed out by Jim Reardon, commissioner of Finance and Management the first week of January. (House Appropriations actually started working on the bill before the legislative session started.)
The $1.3 billion General Fund will decrease by $1.8 million. The total state budget will increase by $7.8 million on overall spending of $5 billion.
The budget adjustment details, however, belie a troubling undercurrent of caseload growth in human services.
The state is spending $30 million more than anticipated on human services, including mental health, developmental services, child-care reimbursements, programs for needy families and elderly and housing for the homeless. What saved the 2013 budget for AHS was a reduction in Medicaid expenditures of $53 million.
Meanwhile, government receipts (i.e., taxes) are down about $10 million. The states economy, which has been stronger than most in the region, isnt exactly roaring back. Expect to hear a slow growth revenue forecast this week, thanks to the ongoing congressional wrangling and the European debt crisis.
In case you missed VTDiggers BAA redux, read our analysis on the 2013 spending ups and downs.
Rep. Martha Heath, chair of House Appropriations, said on Monday that her committee made a few tweaks to the BAA. The committee cut $220,000 from the Vermont State Police budget adjustment for a computer replacement plan (law enforcement have been asked to resubmit the proposal for fiscal year 2014); a $190,000 waterfront preservation fund for the city of Newport reverted to the capital bill fund instead of the General Fund; and $255,000 from the Emergency Relief Assistance Fund will be used for a volunteer coordinator and project manager positions.
Advocates for the elderly pressed the committee to invest more of the savings from Choices for Care in home care programs for Vermont seniors. Heath said the committee would consider the request in the fiscal year 2014 budget.
The House Appropriations Committee granted the Agency of Human Services request for $3 million more to cover an upsurge in Developmental Services programs, but pushed back on the administrations request for new language that would have allowed the executive branch to cut costs through means other than a rescission if there is a shortfall in funding.
January 22, 2013 vtdigger.org