by Anne Galloway March 11, 2013 vtdigger.org House Speaker Shap Smith says lawmakers will likely reject most of the $50 million in ‘ new spends’ in the governor’ s budget proposal.
Smith says the state can’ t afford to pay for new programs. He cited pending federal budget cuts as the primary reason for rejecting Governor Peter Shumlin’ s proposals to fund $17 million in childcare subsidies, $17 million in energy programs, $10.7 million in increased Medicaid subsidies for health care providers and $2.5 million for higher education.
Though the speaker philosophically supports many of the proposals, he said the Shumlin administration’ s budget leaves ‘ no room for error.’ In order to fill about half of the gap between state spending and tax revenues this year, the governor eliminated about $33 million in human services caseload reserve funds. These reserves have traditionally used to provide a cushion for budgetary exigencies in the Agency of Human Services, which is the largest area of spending in the state’ s budget (In fiscal year 2013, AHS spending was $2.1 billion, out of total state expenditures of $5 billion.)
‘ There’ s really no room for some sort of unknown event that might occur where we need some space within the budget to solve it and that’ s problematic from my perspective,’ Smith said.
House Speaker Shap Smith listens to the budget address, Jan. 25, 2011. Photo by Josh Larkin
The unknown events in the offing include the federal sequester, further cuts in the 2014 budget as part the continuing resolution discussions later this month, and the debt ceiling debate in May. Not to mention $15 million in annual new spending for the health care exchange that will come down the pike in 2015.
‘ The thing is, we haven’ t built into this anything for the sequester,’ Smith said, ‘ and we don’ t have any reserves set aside.’
The prospect of federal cuts to state programs that will begin this year and continue for at least eight years as a result of the sequester gives Smith pause. The $15 million in federal reductions between now and the end of the federal fiscal year on October 1 won’ t all hit the General Fund bottom line in fiscal year 2013, he said, but it could be a harbinger of deeper cuts to come.
‘ The thing is, we haven’ t built into this anything for the sequester,’ Smith said, ‘ and we don’ t have any reserves set aside.’
The speaker said he hasn’ t ‘ gone through the numbers yet’ with his committee chairs, but in concept, they have discussed the difficulty of following a number of the Shumlin administration’ s budget recommendations.
‘ I think we will try to be deliberate in the way that we do it,’ Smith said. ‘ I’ m not sure we’ ll do it across the board.’
The only ‘ new spend’ that will remain unscathed, he said, is $4.5 million for cost share and premium subsidies for Vermonters in the Catamount Health and Vermont Health Access Plan programs which will be eliminated when the state health care exchange goes into effect in October.
The rest of the governor’ s new spending proposals will get a serious haircut ‘ if they survive the House Appropriations Committee’ s budget scrubbing at all. The 3 percent increase in provider subsidies is out of the question this year, Smith says. That $17 million for childcare subsidies? Not an option, in his view. Many members don’ t support Shumlin’ s proposal to shift $17 million in Earned Income Tax Credits for low-income workers to the childcare subsidy program.
Cutting $6 million from the state’ s welfare to work program has also been privately panned by House members, though Smith says lawmakers have not yet come to a decision about how to handle the governor’ s proposal to cut more than 1,000 families off the Reach Up program on Oct. 1. ‘ We haven’ t reached any consensus there,’ Smith said. ‘ Nobody has explained to me what a middle ground looks like.’
Broad investments in thermal efficiency, which the speaker has supported in the past, will also get tabled. He said it may be possible to bolster weatherization programs for Vermonters who receive fuel assistance, but he said he didn’ t think there would be any money available to further expand the program. (Businesses will have access to a new loan program for thermal efficiency projects, however.)
The speaker said the House will look at new revenues outside the governor’ s budget. ‘ We’ re not constrained by what the governor’ s proposed,’ Smith said.
Expect to see at least one of the governor’ s revenue proposals also fall by the wayside. Break open tickets? ‘ There doesn’ t seem to be a lot of enthusiasm from the Ways and Means Committee for the break open tickets,’ Smith said. ‘ I think that the enthusiasm for the funding source is directly related to how much money it raises so I think that we’ ll look at a bunch of different things around revenue.’ The 10 percent tax on raffle tickets for nonprofits would generate about $6 million, according to the Joint Fiscal Office ‘ not $17 million as originally projected by the Shumlin administration.
The gas tax, however, will survive. Smith says the state has to find a way to make up for lost revenues in order to pay for repairs to roads and bridges. The House Transportation Committee just advanced a phased-in sales tax on gas to help shore up the Transportation Budget.
The speaker said the House will look at new revenues outside the governor’ s budget, though he didn’ t elaborate. ‘ We’ re not constrained by what the governor’ s proposed,’ Smith said.
Smith told reporters at a recent an impromptu press availability that he would, for example, support lifting a sales tax exemption for soda and candy. The 6 percent tax would raise about $6 million. A sugar sweetened beverage tax, which was approved by House Health Care, would raise about $27 million. Shumlin adamantly opposes the measure.
Smith, who has staunchly supported the governor (both politicians are Democrats), says he expects blowback from Shumlin on the House counter proposals.
‘ People tend to really like their own ideas, and they tend to not be as enamored with other people’ s ideas, so it wouldn’ t surprise me if there was some resistance to things that we propose,’ Smith said. ‘ But I’ ve been in that boat before.’
‘ You can have pretty wildly divergent viewpoints about what you think should be on the table, but if you keep the lines of communication open I think you don’ t have to have it be a huge confrontation,’ Smith said. ‘ It is what you want to make it. I would expect that there will be times along the way where the rhetoric will become heated, but at the end of the day, I think we’ ll figure out a way to come to an agreement.’
At a recent press conference, the governor rebuffed the notion that lawmakers ‘ the majority of whom are fellow Democrats ‘ weren’ t happy with his budget and wouldn’ t say whether he would veto a budget that doesn’ t include the elements of his package.
Whether Smith and Shumlin agree to disagree, the speaker says ‘ the reality is we cannot fill every federal hole that is created so that means to me we have to be especially disciplined about decisions that relate to spending.’
A $5 million increase to working landscape programs has been put on a wish list.
That discipline was on view on the last day of the session before the Town Meeting Day break. Members of the House Appropriations Committee have been agonizing over every detail of the budget and on that Friday afternoon, things briefly came to a head.
Lawmakers were disgruntled by a letter signed by 66 lawmakers urging the committee to approve a $5 million increase for the working landscape program. The additional money is on top of $3.5 million in new programs that were approved last year.
The committee members also grumbled about House Agriculture supporting the new spending. One lawmaker asked if the policy committees understand the pressure House Appropriations is under because it appeared they have no reason to show fiscal restraint. Another said, ‘ $5 million is a lot of money when you don’ t have it.’
In the end, the committee put the $5 million for working lands on a ‘ wish list,’ along with $17 million in additional childcare subsidies.