MONTPELIER — The Shumlin administration announced Wednesday it is seeking $17 million more in mid-year budget cuts to account for poor revenues.
The announcement follows a $31 million rescission in August. Administration officials said Wednesday that the state’s economic recovery is ongoing but revenue has not rebounded as economists had previously predicted. Democratic Gov. Peter Shumlin forewarned earlier this month that additional budget cuts were likely.
“Prudence dictates that our administration take steps without delay to ensure spending does not exceed available revenues,” Jim Reardon, commissioner of Finance and Management, said in a statement Wednesday. “The sooner we take action, the less painful the reductions will be.”
Outgoing Secretary of Administration Jeb Spaulding, who will step down in January, said the state does not plan to use reserve funds to cover the budget gap. State officials will also not look to cut its debt service or retirement contributions, he said.
Officials expect another revenue downgrade in January as revenue continues to miss projections. Through October, the general fund was $12 million off target, officials said, even after the $31 million budget rescission in August.
Increases in employee health care and other benefits has put an additional $3.5 million burden on the general fund.
Spaulding said further reductions will be challenging, but pledged the state will continue to provide services to Vermonters “in a fiscally responsible manner.”
Reardon said Attorney General William Sorrell has confirmed the administration’s assertion earlier this month that it can cut up to 1 percent of the state budget without legislative approval. As a result, the state is seeking $6.7 million in additional cuts. The administration did not specify Wednesday where it will seek the reductions.
The administration is also preparing to cut an additional $5.3 million in January through the annual mid-year budget adjustment that will be approved by lawmakers.
Another $1.5 million will be sought in “efficiency savings” that were already authorized in the current budget. Reardon said the administration is requiring agencies to account for those savings to ensure the full reductions are met.
And $3.5 million in reductions is “related to current-year health care and other benefit increases that occurred after passage of the FY 15 Budget last session,” according to the administration. The administration did not make clear how the savings will be achieved.
“The Administration is acting promptly and proactively to plan for all of these reductions to the current year budget,” Reardon said in a statement. “We fully expect to comply with legal requirements to accomplish this, and to work with the Legislature to meet these total planned reductions. Planning for further cuts is hard but necessary work in this environment of slower than projected growth.”
Reardon said agencies and departments have to submit reduction plans to the Department of Finance and Management by next Friday.
Officials expect to face another budget gap in the 2016 fiscal year budget of at least $100 million. Shumlin told reporters earlier this month that he hopes to address the shortfalls in the current budget and the 2016 budget without raising taxes.