Category Archives: Appropriations

House advances annual budget adjustment

MONTPELIER — The Vermont House gave preliminary approval by voice vote Thursday to the annual budget adjustment bill, which will lower state spending in the current fiscal year by $12 million.

The reduction in spending is needed following a revenue forecast delivered by state economists last week that projects lower revenues than initially thought. In fact, the current, 2015 fiscal year budget is has seen a downgrade of more than $41 million since January 2014 — a 2.8 percent reduction in funds available to support government operations.

The budget adjustment, unanimously approved by the House Appropriations Committee Monday, uses $10 million in spending reductions to cover the downgrade and sets aside $2 million for use in balancing the 2016 fiscal year budget. It brings available revenue in line with spending, and sets 2015 fiscal year spending less than 1.5 percent more than the previous year, said House Appropriations Committee Chairwoman Mitzi Johnson, D-South Hero.

“This budget brings general fund growth to under what average growth in the economy is,” she said.

Rep. Mitzi Johnson

Rep. Mitzi Johnson

The plan approved by the Appropriations Committee covers increased costs for Vermont Health Connect, the state’s online health insurance marketplace. Overall spending on the exchange is rising by $28.3 million, including $14.6 million in state funds, according to Finance Commissioner James Reardon. It is the first time state funds are being used for operations related to the exchange.

The budget adjustment also includes $2.15 million in additional funds for the Vermont Veterans Home in Bennington. And, it funds 110 new opiate treatment slots in Bennington County, which will free up space in Rutland County.

“Though overall spending is down, we were able to make some investments,” Johnson said.

There are several large reductions, too, including $ 1 million in the Low-Income Home Energy Assistance Program, $437,000 in mental health housing vouchers and $224,000 in cuts to the Judiciary, which is expected to decrease the availability of judges.

Johnson said a plan to cut $500,000 from the Judiciary presented by Gov. Peter Shumlin was scaled back. Instead, the committee sent a letter to the Judiciary asking officials to find ways to cut costs without diminishing services or slowing justice.

Floor action on the bill came to a grinding halt Thursday afternoon when Rep, Mary Morrissey, R-Bennington, sought to introduce an amendment seeking greater transparency in exchange spending. Republicans said the amendment was triggered because of new state spending on the exchange.

House Speaker Shap Smith called for a recess to allow the Appropriations and Health Care Committees to review the amendment and provide time for the parties to caucus.

Rep. Mary Morrissey

Rep. Mary Morrissey

Morrissey’s amendment called for halting the expenditure of funds included in the budget adjustment for VHC unless Lawrence Miller, the governor’s chief of health care reform, provides lawmakers with:

— A full accounting of the state and federal expenditures through 2014 for development and implementation of the exchange
— Projected remaining development and implementation of the exchange through 2015
— Remaining balance of any federal grants awarded to the state for development and implementation of the exchange
— Projected expenditures for fiscal years 2015 and 2016 for the operation of the exchange by funding source and department

House Minority Leader Don Turner, R-Milton, said the amendment will force the administration to become more transparent and will provide information to lawmakers that so far has not been forthcoming.

“I think it’s a very good one if you believe in transparent government,” he said.

The Appropriations Committee substituted its own version of the amendment, essentially stripping Morrissey’s fingerprints from the process. The Democratic version, which was approved by the House on a voice vote, removed the threat of halting spending.

“We’re prepared to take action should we not receive satisfactory information,” Johnson said in an effort to placate discontent among Republicans.

The House later agreed to add the amendment to the budget adjustment on a 135 to 0 roll call vote. Democrats said they have already asked the administration for the data sought in the amendment and have already received most of it.

Morrissey said she is “appreciative” that the Democratic majority choice “to copy” her amendment.

neal.goswami@timesargus.com

Casino bill to benefit the elderly proposed

MONTPELIER — A Republican representative has once again introduced legislation to allow for a casino in Vermont, this time with state revenue benefiting senior citizens.

Rep. Ronald Hubert, R-Milton, has introduced a similar bill each session for the past six years. He said the proposals have varied slightly. With the state facing a significant budget gap in the 2016 fiscal year, Hubert said it could help generate revenue for the state.

“We’re in such desperate need for taxes, how about some voluntary taxes? It’s something that most states have done and the numbers show that we could bring in annually somewhere between $8 million to $15 million to state coffers,” Hubert said.

Rep. Ronald Hubert

Rep. Ronald Hubert

The bill, which has 17 cosponsors, mostly Republicans, would require the Vermont Lottery Commission to issue a license for the operation of one casino in Vermont. The license would be good for six years and require a $6 million license fee that could be paid in full or split over six years.

The Lottery Commission would have the authority to create rules governing the casino, investigate applicants to determine eligibility and supervise casino operations. The bill calls for a $100,000, nonrefundable application fee.

Hubert’s bill would also create a 10 percent tax on the gross receipts of the casino that would go the general fund.

He said there are between 75 and 100 organized bus trips from Vermont to casinos in surrounding states each year.

“A lot of Vermonters are interested in going to a casino, and there’s more to a casino,” Hubert said.

A casino would also generate additional tax revenue for the state through rooms and meals, alcohol and food sales and the state’s sales tax, Hubert said.

This year Hubert’s bill calls for the 10 percent tax on the casino receipts to be used to help elderly Vermonters. The money generated would be divided by the number of people 65 and older that receive income sensitivity on their property taxes. Those people would receive a payment from the state under the legislation.

Hubert said the money would help elderly Vermonters on fixed incomes that are not keeping pace with inflation.

“These are people that no longer have children in schools and are generally on fixed incomes,” he said.

Hubert said he hopes his new plan for the revenue will draw additional support. He said lawmakers could even opt to use the money to help drawdown federal matching funds for the state’s Medicaid program.

“I’m certainly hoping so. With the gov looking to put a $110 million payroll tax out there, I’d certainly be open to using it for the Medicaid drawdown,” he said.

Don’t expect to roll the dice any time soon, though.

Scott Coriell, Gov. Peter Shumlin’s spokesman, said Monday that Shumlin is unequivocally opposed to casino gaming in Vermont.

“The governor is not in favor of building casinos in the state, period. As long as he’s governor, he’ll do everything in his power to stop casino gaming in Vermont,” Coriell said.

House Speaker Shap Smith is also opposed to the idea of allowing a casino in Vermont.

“I think that the experience of casinos shows that there’s an over-saturation and that moving in that direction is a bad idea,” he said. “I’m not a big fan of casinos at all as a way to fund state government.”

Smith was blunt about the legislation’s prospects.

“I don’t think that it’s going anywhere,” he said.

neal.goswami@timesargus.com

Read the proposed legislation below:

Capitol Beat with the Governor 1-23-15

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Gov. Peter Shumlin and Vermont Press Bureau chief Neal Goswami discuss a recent revenue downgrade, the president’s support for paid sick leave, gun legislation introduced in the Senate and legislators’ efforts to scuttle Vermont Health Connect.

 

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Economists: Revenue downgrade for general fund, despite drop in oil prices

MONTPELIER — Gov. Peter Shumlin and lawmakers crafting the 2016 fiscal year budget will have to dig a little deeper after state economists provided a downgrade to the general fund revenue forecast Tuesday, despite positive signs in the economy related to lower oil prices.

The Emergency Board, comprised of the governor and the chairs of the Legislature’s money committees, were told Tuesday that revenues are projected to be $18 million lower than previously expected in the 2016 fiscal year budget. The state was already facing a $94 million projected gap, which Shumlin’s proposed budget would close through a combination of cuts and tax increases.

Jeff Carr, left, and Tom Kavet

Jeff Carr, left, and Tom Kavet

Economists Jeffrey Carr and Tom Kavet, who provide revenue forecasts to the state twice a year, also downgraded revenues for the current fiscal year by $10 million. The Shumlin administration and lawmakers, anticipating that, are working to lower the current budget in the annual budget adjustment process by $17 million. That follows about $31 million in rescissions that took place in August.

The downgrade is projected despite an expected uptick in spending by Vermont residents as oil process drop.

“We’re looking at the economy finally starting to pick up like we haven’t seen in some time. A big part of that is the drop in oil prices,” Kavet told the board. “That’s something that’s very substantial to Vermont and other New England states.”

The Emergency Board receives an updated revenue forecast Tuesday inside Gov. Peter Shumlin's ceremonial State House office.

The Emergency Board receives an updated revenue forecast Tuesday inside Gov. Peter Shumlin’s ceremonial State House office.

Vermonters spend more than $2 billion annually on petroleum-based energy, mostly in transportation and home heating. With the price of oil around $60 per barrel, and projected to drop to around $40 per barrel this year before rising to $70 to $80 per barrel, Vermonters are projected to save about $600 million in 2015, according to Kavet.

“That’s a phenomenal stimulus to the economy and it really hasn’t been felt in full at all,” he said. “The projections right now are coming down not up.”

“To get an additional $2,500 (per family) in spending money … is bigger than any raise that anybody’s gotten for a long, long, time,” Kavet added.

Lower energy costs acts like a tax cut in the economy, without the corresponding decreases in government spending that actual taxes cause.

It also changes the psychology of residents and alters their spending habits, Carr said.

“The critical thing is it will help with psychology. Part of the reason that we really haven’t broken out of our funk is that people have been looking for some reason, there has got to be some catalyst,” Carr said. “I think that there still is kind of a residual hangover in households. Some of us now know what our parents and grandparents went through when we went through the Great Recession that they went through during the Great Depression. It changes you. It fundamentally alters the way that you approach things. You weren’t quite so aggressive in your spending.”

Oil prices in previous forecasts were projected at $103 per barrel. The current forecast projects prices at $63 per barrel, but prices will likely drop lower. As a result, the two economists boosted expected consumption taxes based on expected spending in their latest forecast.

Still, despite the relief in energy prices, unstable corporate income taxes and uncertainty surrounding some high-earning taxpayers has led to the near-term downgrade, according to the economists. Additionally, businesses are expected to hire, but profits will drop as they train and bring new hires up to speed, they said. That will likely lead to larger state refunds for businesses.

The state’s revenue growth should see improvements down the road.

“There is some good news. It’s a little farther out on the horizon than we might like,” Kavet said. “There’s some very good things happening right now.”

Shumlin said Tuesday that his administration anticipated a further downgrade in the current budget and moved to make cuts ahead of the annual budget adjustment in each January. He said a downgrade to the 2016 fiscal year budget was also expected, but the administration did not plan further efforts to patch it without knowing how much it would be.

“We didn’t know what to expect,” the governor said. “Obviously, we don’t guess. We have to actually build a budget based on the facts and we now have to work together with the Legislature to balance the budget, which is what I’ve done every term that I’ve been governor.”

He said he is “heartened” that the downgrade isn’t larger, and noted that the economists said there could even be revenue growth later in the year.

“I just heard a pretty upbeat report in terms of their hopes for their future, so we’re going to manage to the money but this is not an insurmountable challenge,” Shumlin said. “My job as governor is to roll with the punches and deal with the numbers as they come in. My job is to balance the budget and be fiscally responsible when we do it and we’re going to continue to do that.”

House Speaker Shap Smith laid the onus of addressing the $18 million additional gap in the 2016 fiscal year budget directly at Shumlin’s feet on Tuesday.

“Vermont joins other states in continuing to experience slower than expected revenue growth. The data presented today presents challenges for our money committees. I look forward to receiving a proposal from the administration on how they will address the additional shortfall,” Smith said.

Tuesday’s updated revenue forecast projected no changes to the transportation fund for the remained of the 2015 fiscal year, and a 1 percent increase in revenue, amounting to $2.7 million, for the 2016 fiscal year.

The education fund, meanwhile, is projected to see a revenue increase of $1.6 million, or about 0.9 percent, for the remainder of the 2015 fiscal year. In fiscal year 2016, the education fund is expected to see a 1.5 percent growth in revenue, which would amount to $2.8 million.

Capitol Beat podcast for 1-19-15

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On this week’s episode, Vermont Press Bureau chief Neal Goswami and VPB reporter Josh O’Gorman discuss Gov. Peter Shumlin’s budget, his education proposals and a study released Friday about legalizing pot in Vermont. Subscribe on the iTunes store to the Vermont Press Bureau’s podcasts.

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VIDEO: Gov. Peter Shumlin’s budget address

Watch Gov. Peter Shumlin’s budget address below:

PODCAST: Capitol Beat with the Governor 1-16-15

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Gov. Peter Shumlin sits down with Vermont Press Bureau chief Neal Goswami to discuss his budget proposal and a new study released Friday on legalizing marijuana in Vermont. Listen for the governor’s thoughts on tax increases, budget cuts and efforts to curtail health care and education spending.

Vermont hit with D-minus for transparency

Ouch. The U.S. Public Interest Group has graded all 50 states on government transparency. And Vermont is near the bottom of the barrel with a ‘D-’, according to the authors of “Following the Money 2012.”

Government here lacks the kind of “online transparency portals” through which modern-day bureaucracies ought to be transmitting data to the public, the study says.

In states with high marks, those portals offer a clear view of “the state’s checkbook – who receives state money, how much, and for what purposes.”

In the 10 states that received Ds, the study says, “online checkbooks are difficult to use,” and “rarely provide spending details for off-budget agencies, post information on state revenue foregone through tax expenditures, or link to city and county expenditure sites.”

The Legislature’s Joint Fiscal Office has worked in recent years to bolster transparency around the issue foregone revenue inVermont. Exemptions and tax loopholes, the JFO has found, amount to more than $1 billion annually. But apparently the analysts’ work isn’t as detailed or searchable yet as USPIRG thinks it should be.

New Hampshire, Maine and Rhode Island also got stuck with D-minuses. Massachusetts earned an A- for having a “user-friendly” portal with “comprehensive information on government expenditures.” New York got a B+.