Governor, lawmakers make peace over $4.7 billion budget

first_imgUnlike last year when Vermont Governor Jim Douglas vetoed the budget the Legislature handed him, only to have lawmakers override his veto in a special session in June, the 2011 $4.7 billion budget was signed by the governor in May, with praise coming from him and his former antagonists.“The economic upheaval Vermonters have experienced has contributed to serious troubles in our state’s fiscal situation.  But despite these challenges, we can feel good about the work done here, under the Golden Dome, in 2010,” Douglas said in his adjournment address. “While other states are cutting programs and raising taxes in response to the fiscal crisis, Vermont, I am proud to say, is moving in a different direction.  We are looking toward the future and striving for economic success.”Speaker of the House Shap Smith had similar sentiments: “Vermonters can be proud of the work the legislature did this year under very difficult circumstances. The Legislature, working with the administration, put in place policies that will create new jobs and restore our state’s fiscal health while avoiding devastating cuts and new broad-based taxes.”Both sides early on agreed that the bitterness from last year had to be set aside this year in order to resolve what turned out to be a $170 million budget shortfall in the usually contentious $1.08 billion General Fund budget. That potential deficit included $113.2 in federal stimulus money.The hole was filled in large and small ways. Large: $38.9 million in Human Services, between cuts and a $12 million tax increase on hospitals, nursing homes and home health agencies; $37.8 million in Challenges for Change, by making government more efficient, many have wondered whether this will actually be achieved; $16.97 in state retirement savings ($15.2 million from teachers); $13.3 million in forgiven Medicaid expenses; $9.27 million in pay and benefit cuts from state workers negotiated last year with the administration; many millions transferred from other budgets, as insurance fees or Medicaid reimbursements for special education, and other monies moved around to and from other budgets, but not from new revenues or cuts. Small: Several items including $1.1 million expanding the tobacco tax, $5 million in a carryover from FY 2010, and $1.1 million in greater tax enforcement.The Legislature not only balanced the budget, it did not raise broad-based taxes and instead made cuts to the capital gains and estate taxes, which were raised last year. It was those taxes that more than anything prompted the governor’s veto last year.Having said all that, Vermont will face perhaps a dire situaton next year. As of now, there is no federal stimulus money earmarked for states. While it is possible, even likely, that Congress and the Obama Administration will renew its budget-relief effort for states, which is effectively a federal tax cut, Vermont cannot assume that it will be forthcoming. As things stand now, Vermont faces a looming $122 million General Fund deficit next year (fiscal 2012). As economic conditions change, that number could swing considerably for the better or worse.last_img read more