Category Archives: Budget

Administration seeks $17 million more in cuts

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.

S&P revises outlook on state’s bond rating

MONTPELIER — Standard & Poor’s revised Vermont’s AA+ general obligation bond rating outlook Monday to stable, down from positive, based on the state’s economic outlook.

Robin Prunty, S&P’s lead credit analyst for Vermont, said the revision is due to the state’s slow pace of economic growth, despite above-average income levels and low unemployment.

“The outlook revision reflects Vermont’s slower-than-average economic recovery, which continues to pressure the budget, in our view,” Prunty said in a release.

A positive rating indicates expected economic growth over a two-year period, according to S&P, while a stable rating indicates little to no growth is expected in that timeframe.

StandardPoorsThe revision was made despite “strong financial and budget management policies that have contributed to consistent reserve and liquidity levels over time.” The S&P report outlining the revision also noted “significant pension and other post-employment benefits … which remain sizable relative to those of state peers despite some recent reform efforts.”

The report cites “weak” demographic trends in Vermont relative to the region and national trends. The estimated 2013 population in Vermont of 627,000 residents is just 0.1 percent more than the 2010 level, according to S&P.

Economic growth is lagging, according to the report.

“Vermont’s pace of economic recovery has been uneven and more recently, growth has lagged the U.S.; we expect this to continue,” the report states.

Vermont’s October revenues were $7 million, or 11 percent, off the mark. Democratic Gov. Peter Shumlin said his administration is considering further revisions to the state budget to balance the state’s budget based on the revenue stream.

“The October revenues were disappointing and we’re continuing to do well in the sales tax, rooms and meals tax, in fact they’re up. We had a lot of visitors come to Vermont not only last winter but throughout the leaf-peeping season,” Shumlin said at an unrelated news conference Monday.

But the state’s income tax continues to falter, he said.

“We continue to see poor performance in the income tax, and that’s really the concern. So, my job is not only to try to figure out what that trend means, try to figure out where it’s going and what’s driving it, but also to make any adjustments that might be necessary so that we balance the budget,” Shumlin said

The administration made a $31 million rescission to the budget in August, and another one will likely be needed, according to Shumlin. He said his administration is trying to determine if another rescission is needed before lawmakers tackle the annual mid-year budget adjustment early next year.

“I would be surprised if one is not necessary if the revenues continue to perform as they have for the last couple of months,” Shumlin said.

The report states that Vermont has “a very strong budget management framework,” and if that leads to higher reserve levels in the future, the rating could be revised upward. An improved position with pension and other post-employment benefits could also result in an upgrade.

Conversely, the report states that a worse reserve and benefits position could lead to further downgrades.

“Although we do not envision it at this time, given Vermont’s history of proactively managing its budget and recent actions to address post-employment liabilities, substantial deterioration of budget reserves or a deteriorating liability position could negatively pressure the current rating,” the report states.

UPDATE: The original headline and lede have been changed to reflect that the state’s bond rating has not been downgraded. Rather, the outlook on the state’s rating for general obligation bonds has been downgraded from positive to stable.

Read the report below:

Report finds single payer costs may be higher than thought

####_loc_WebHealthMONTPELIER — An independent report delivered to lawmakers Thursday found that the savings estimated by the Shumlin administration in a proposed single payer health care plan may not be as high as projected.

Avalere Health LLC, commissioned by Vermont Partners for Health Care Reform, studied a previous report prepared for Gov. Peter Shumlin’s proposed universal health care system that he hopes will be implemented in 2017. The analysis presented by Avalere Thursday found three main areas of concern.

The Shumlin administration, based on its own study conducted by the University of Massachusetts, found that it would cost about $1.6 billion to finance Shumlin’s plan. The Avalere report believes that cost could be as high as $2.2 billion.

Administration officials countered Thursday by arguing that it still provides significant savings from the more than $3 billion spent annually on health care now outside of federal programs.

The report also noted that payments to providers are likely to drop, creating a disincentive for doctors to practice in Vermont.

Additionally, the administration may be projecting too rosy a scenario in terms of administrative cost saves, according the the Avalere report. The administration is projecting a savings based on a projected 12 percent administrative cost. The report states that the state’s largest insurance carrier, Blue Cross Blue Shield of Vermont, is already delivering insurance below the administration’s projected 7 percent under the proposed health care plan.

Vermont Partners for Health Care Reform includes Fletcher Allen Health Care, the Vermont Association of Hospitals and Health Systems, the Vermont Medical Society, the Vermont Business Roundtable, the Vermont Chamber of Commerce, the Vermont Assembly of Home Health and Hospice Agencies and Blue Cross.

A full story will appear in Friday’s Herald and Times Argus.

In memo to department heads, Shumlin administration seeks level-funded budgets for FY15

Top officials in the administration of Gov. Peter Shumlin have directed the heads of agencies across state government to deliver level-funded spending plans for next year’s budget.

In a memorandum issued Sept. 24 to executive branch managers, the Shumlin administration asks for fiscal year 2015 budget proposals that don’t exceed allocations for the current fiscal year. Given contractual increases in compensation for state employee, the rising cost of health insurance, and inflationary jumps in the cost of doing government business generally, Commissioner of Finance James Reardon said Thursday that the level-funding directive would require either cuts to programs or services, or cost-saving operational reforms.

“We’re going to have (increases in the cost of employee compensation) and other upward pressures in the budget,” Reardon said. “But they’re going to have to come back with corresponding reductions in other areas in order to come back with a general fund appropriation that is equal to their fiscal year 2014 appropriation.”

Reardon said the exercise is the first step in a long budget process, and that the guidance issued to agency heads won’t necessarily result in the cuts that a level-funded budget would inflict.

“This is a starting point for having budget discussions with agencies and departments,” Reardon said. “And this may not reflect our ending point.”

But with Shumlin having made clear his refusal next year to raise the income, sales or other broad-based taxes, Reardon said, fiscal discipline will need to be rigorous.

For more on this story, check out tomorrow’s editions of The Times Argus and Rutland Herald

Single moms can’t afford Shumlin cuts, says Vermont Commission on Women

In a somewhat unusual public foray into legislative politics, the Vermont Commission on Women this afternoon issued a statement opposing Gov. Peter Shumlin’s plan for welfare reform.

The 16-member commission, which bills itself as a “non-partisan state agency dedicated to legislative, economic, social, and political fairness,” said it weighed the matter carefully before determining the plan would have a disproportionate impact on single mothers.

Shumlin has proposed a five-year cap on welfare benefits, a cost-cutting measure he says will encourage impoverished Vermonters to get jobs. The move would shave about $6 million annually in human services costs, and kick about 1,200 families off the welfare rolls beginning in October.

In a release, the Vermont Commission on Women said the “overwhelming majority of Vermont households receiving this cash assistance are women, and limits to this program will disproportionately affect female-headed families with children.”

A number of facts lead the VCW to this conclusion,” the release said. “The lives of these families are complex. They often include challenges, such as lack of transportation, education and child care; mental health concerns; care of a child with a disability; or trauma from having survived domestic violence.”

In a written statement, the commission’s executive director, Cary Brown, said Shumlin’s proposal targets those that can least afford it.

These are Vermont’s most fragile and vulnerable families,” Brown said. “The Commission believes that budgetary concerns should not be balanced on the backs of those least likely to be able to function without government assistance.”

As Shumlin sounds alarm over sequestration, GOP chairman urges calm

As Congress inches closer to the brink, lawmakers and administration officials in Vermont are beginning to sound the alarm over the financial impacts of sequestration. But Jack Lindley, chairman of the Vermont Republican Party, says it’s much ado about nothing.

“There’s very, very little evidence that would indicate the sky is going to fall,” Lindley said this afternoon. “I think things are being terribly overblown.”

A report put out by the White House last week enumerates the financial impacts of sequestration on Vermont. Across-the-board cuts to human services, public safety, education, health care and the military will see a reduction in federal revenue of at least $9 million over the next seven months, according to the White House projections. And that figure doesn’t capture the dollar effect of furloughs or job losses for the thousands of federal employees that call Vermont home.

For a complete list of the Vermont-specific impacts, visit:

But Lindley said Vermont can more than withstand the looming cuts. He said the “cuts,” after all, are actually reductions in rates of increase.

“There’s going to be very minimal damage,” he says.

Lindley said he’d like to see the D’s and R’s get together and cut a deal. But he said it needs to include at least as significant a spending cut as the one awaiting the country if they do nothing. If Vermont and the U.S. can’t absorb the kinds of spending reductions associated with sequestration, Lindley said, then we’re all doomed anyway.

“This is exactly what needs to happen if we’re going to get ourselves where we’re not borrowing 40 cents of every dollar we’re spending at the federal level,” Lindley said. “If we can’t get this accomplished, lord help us all in terms of what it means for our kids and grandkids.”

Administration makes scathing case against its own proposal

The most damning argument yet against the Shumlin administration’s plan to cap welfare benefits has come from, well, the Shumlin administration.

In his budget address last month, Gov. Peter Shumlin said “Reach Up” benefits, as they’re called, should be “temporary,” not “timeless.” He said the state should cap lifetime benefits at five years, a move that would save the state an estimated $6 million in fiscal year 2014.

But as is being reported today by VTDigger’s Alicia Freese and Seven Days’ Paul Heintz, the administration took a hard look at an identical proposal in 2012, and pretty much condemned it.

As Freese noted, a January report signed off on by Commissioner of Children and Families Dave Yacavone – the same guy urging lawmakers to adopt the plan now – concluded that capping benefits at 60 months “could leave families destitute and at risk and will create a large hole in the fabric of Vermont’s safety net for those most in need.”

In a passage pulled by Heintz, the report says that “the families who would be affected by this cut have three times as many barriers to gaining self-sufficiency as the general Reach Up caseload population.”

“They are families with limited abilities and resources to recover from such a loss. The elimination of their financial assistance may put their children at risk and force a cost shift to other programs.”

For the full stories, head over to and


Shumlin administration proposes new gas tax, says it’s open to suggestions

Saying it’s still open to other options, the Shumlin administration this afternoon unveiled its plan to raise $36.5 million in new revenue for upkeep of roads and bridges.

It’s a little complicated, but the proposal calls for an increase in one gas tax, a decrease in another, and a $9 million bond that would be paid for by an existing revenue stream.

A new, 4-percent tax on the retail price of gasoline would raise about $43.5 million in new revenue. The administration then would cut the existing 19-cent per gallon gas tax down to 14.3 cents, which would cost the state about $15.5 million in revenue. The $28 million in net new revenue, when combined with the $9 million bond, would raise the money that Transportation Secretary Brian Searles says is needed to maximize federal matching funds.

If the state fails to raise the cash, Vermont stands to lose out on more than $40 million in federal money next year.

Searles presented the plan to the House Committee on Transportation shortly after the governor wrapped up his budget address. Rep. Patrick Brennan, a Colchester Republican who chairs the committee, said it’s too soon to say whether the plan will fly in the Legislature. He did however say that lawmakers are united in their resolve to raise whatever revenue is needed to avert the loss of federal matching funds.

One thing Brennan said he liked about the governor’s plan is that it’s indexed to keep pace with rising petroleum prices. While the existing per-gallon tax would get cut to 14.3 cents, it would also get an automatic annual increase tied to the consumer price index. And by basing the new tax on a percentage, as opposed to a flat per-gallon tax, it too will rise with inflation.

“I’d like to see us fix this thing once and for all,” said Brennan. “If I’m going to go on the chopping block for raising gas taxes, I’d like to do it right and not have to come back to it year after year.”

A committee that met over the summer to adders the issue of flagging gas tax revenues issued a report recently detailing more than 20 options to raise revenue. Brennan said many of them, however, like taxes on tire sales, or what amounts to a property tax on cars, are nonstarters.

He said there’s some interest in a tax on vehicle-miles traveled, but cautioned that that tax won’t even be a viable option for at least five years.

“And we’ve got an immediate revenue problem that needs to be solved now,” Brennan said.

Cloudy revenue picture pushes back timeline for budget

This year’s budget address will come later than usual.

During a debriefing on the budget-adjustment act for members of the media Wednesday, Jeb Spaulding said the governor will wait until after the next revenue forecast to unveil his fiscal year 2014 spending plan.

The  updated forecast won’t come until Jan. 23. Spaulding said the budget proposal will be delivered to the Legislature on Jan. 24.

“And that is a little bit later than we’d like, but it’s something both the Legislature’s and the governor’s  economists recommended to us,” Spaulding said.

Spaulding said the extra time will also allow the final proposal to reflect as accurately as possible what Vermont can expect in the way of diminished revenue from the federal government.

State budget talks: Input wanted

State budget talks begin tomorrow, and the state wants your input. A draft copy of the presentation is available here, and an edited press release follows:

The first of two public forums occurs tonight to discuss the state budget process, revenues and expenditures.

As required by state legislation, public participation is required in the development of budget goals and general prioritizing and evaluation of spending and revenue initiatives.

“We hope to engage the public in a discussion about the goals, opportunities and complexities of putting together the State budget,” Finance & Management Commissioner Jim Reardon said in a statement. “We’ll discuss revenues and expenditures and conduct a budget exercise about priorities for how state funds might be directed.”

The meetings will be held from 5:15 p.m. to 7:30 p.m. today, at various sites around Vermont, through Vermont Interactive Technologies (VIT), including Montpelier and Rutland.

Another session will occur from 4:45 p.m. to 6:45 p.m. Monday.
For more information on Vermont Interactive Technologies, a list of all the sites, and directions, go to

Administration Secretary Jeb Spaulding will moderate the forums.

Reardon will begin each forum with a 15- to 20-minute presentation about funding sources, revenues and how funds are currently spent. He will also analyze budget challenges.

The public’s comments will be considered as the governor prepares the upcoming budget recommendations, which will be submitted to the General Assembly in January.

Both meetings will have live streaming. The link will be posted on the Department of Finance and Management’s main webpage,

Welch, Sanders to discuss budget and deficit

BURLINGTON — Vermont’s lone member of the U.S. House of Representatives is going to be talking about his priorities for the lame-duck session of Congress.
Rep. Peter Welch is planning to discuss the issues in his Burlington office on Monday before he returns to Washington.
The Norwich Democrat will outline his efforts to pass a farm bill and the need to avoid what is being called the looming fiscal cliff of tax increases and dramatic budget cuts.
Sen. Bernie Sanders, fresh off reelection, will also be holding a press conference at his Church Street office at 10:45 a.m. to discuss the budget deficits. Sanders as well will return to Washington in time for the start of ‘fiscal cliff’ negotiations between both houses of Congress and the White House, which are expected to start  Tuesday.

CVPS customers aren’t the only ones lawmakers are trying to get checks for

As procrastinating Vermonters rushed to meet IRS filing deadlines Tuesday, lawmakers mulled a plan that would give a whole new meaning to the term “tax refund.”

The Senate Committee on Appropriations is considering an unconventional approach to property-tax relief that could see checks for $30 or more sent to nearly 176,000 residential homeowners next year.

Under the terms of a still-developing provision in the annual budget bill, lawmakers would use 50 percent of any general-fund revenue surpluses in fiscal year 2013 to fund the giveback.

“If you want to take the grandchildren to McDonald’s, you can do that. If you want to use it to pay off some of your tax bill, then you can do that,” said Sen. Dick Sears, a Bennington County Democrat who sits on the appropriations committee. “The point is that it’sVermont taxpayers who paid the extra taxes, and so it’sVermont taxpayers that ought to get the money back.”

The Legislature has been abuzz this session with talk of whether rebate checks should be issued toVermont households. For once, however, the conversation has nothing to do with the proposed merger of Central Vermont Public Service and Green Mountain Power.

Check out the full story here:

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+.

Property tax rate likely headed up another penny

Look for the statewide property tax rate to jump another penny before lawmakers adjourn this year.

The House last month approved a 1-cent increase in the statewide rate, bringing the figure from 87 cents to 88 cents. But that was before Vermonters headed to town meeting. And the school budgets approved last Tuesday, lawmakers learned today, included much higher increases than legislators had projected.

The 88-cent property tax rate presumed a 1.7-percent increase in school spending. After Tuesday’s votes – budgets in all but seven districts were approved – the increase looks to be closer to 3 percent, according to legislative analysts testifying before the House Committee on Ways and Means.

Maintaining the 88-cent rate would bring the reserve in the education fund down to 3.5 percent, well below the 5-percent lawmakers tend to maintain.

“We probably need another penny, is my guess,” said Rep. Janet Ancel, chairwoman of Ways and Means. “But I think we anticipated that would happen.”

School districts also anticipated the increase – most based their budget and tax calculations on an 89-cent statewide property tax rate.

Brad James, finance guru at the Department of Education, said he directed inquiring business managers atVermontschool districts to go ahead and assume the rate would increase by another penny before the end of the session.

School budgets by and large won the support of voters Tuesday. Of the 226 budget votes, only seven went down. Districts collectively will spend about 2.9 percent more next year than they did this year. Twenty-two towns have yet to vote on their school budgets, though those districts aren’t large enough to impact the overall spending trajectory.

Gov. Peter Shumlin had urged districts to hold the line on school spending. Doing so, he said, would allow the state to likewise hold the line on statewide property taxes.

Controversy brews over mental health as Senate preps for vote

Senate lawmakers this morning are frenetically preparing for a floor session this afternoon during which leaders aim to pass out, at long last, the mental-health bill that Gov. Peter Shumlin says will alleviate the “crisis” unfolding in hospitals across Vermont.

It’s been a long road for the legislation, which lays out a replacement plan for the 54-bed psychiatric hospital flooded out in Tropical Storm Irene. Seven weeks of legislative debate have done little to quell dissent over the administration’s plan. And a spate of amendments on the Senate calendar today spotlights the major areas of disagreement.

The size of the replacement hospital remains the biggest sticking point. Shumlin has demanded a bill that calls for a facility, to be located somewhere in central Vermont, with no greater than 16 beds. Exceeding that number, Shumlin says, will cost taxpayers nearly $10 million in foregone federal revenue annually. That’s because new rules in place at the Center for Medicaid and State Operations, he says, prohibit federal Medicaid matches for facilities with greater than 16 beds. Continue reading