BRISTOL — As if health care reform weren’t shaping up as a tough enough challenge, lawmakers this session will participate in crafting a 2011-2012 state budget that is already facing a $176 million revenue shortfall.
Local legislators outlined some of the many looming budget challenges at a legislative breakfast on Monday at the Bristol American Legion headquarters.
House and Senate members are poring over a fiscal year 2012 budget draft that features a lot of cuts and some revenue adjustments.
“The governor has presented to us a budget that has something for every single one of us to hate,” said Rep. Mike Fisher, D-Lincoln. “It’s very challenging to make cuts.”
Fisher, vice chairman of the House Health Care Committee, said Gov. Peter Shumlin’s draft 2011-2012 spending plan includes cuts to a variety of human services, including reductions in long-term care and mental health services.
“We are going to look at (the budget) and figure out which parts we are going to accept and what parts we are going to change,” Fisher said.
Fisher added that Shumlin has also proposed new taxes on health care providers (see story, top of Page 1A).
Rep. David Sharpe, D-Bristol, is a member of the House Ways and Means Committee that is responsible for the state’s tax policy. He said the state is using $19 million in unanticipated federal revenues to backfill a portion of Vermont’s education fund shortfall. Sharpe added the Vermont Department of Education has recommended that communities count on 87 cents as the state portion of the education property tax rate and a base education (grant) amount of $8,544 perpupil— the same as last year. That would result in a 1-cent increase in both the residential and non-residential education property tax rates, according to Sharpe.
“The big concern with respect to education is in fiscal year 2013, with grand lists continuing to decline and education expenses continuing to grow — particularly in the area of health care,” Sharpe said. “But from the state perspective, fiscal year 2012 in the education fund looks reasonably secure.”
Rep. Paul Ralston, D-Middlebury, is a member of the House Commerce Committee. He said his committee is considering how the state’s budget problems might affect its ability to award tax credits — an important tool in stimulating economic development.
“(Tax credits) affect the budget because we don’t collect the tax in a number of different areas,” Ralston explained. “This is an area we really have to spend some time looking at.”
At the same time, the House Commerce Committee is working on a bill that would offer some tax abatement for returning veterans, many of whom are coming home without jobs.
“Thirty percent of our returning vets are unemployed and will not return to a job,” Ralston said. “This is a serious issue, and one where I think we will find a lot of support. We are going to stretch things a little bit, but we need to find some way to help this population get back to work.”
Rep. Willem Jewett, D-Ripton, noted Vermont’s budget planning will be rendered more difficult by the lapsing of federal stimulus money used to help states weather the past two recessionary years.
“Over the last few years, we have been the beneficiary of about $450 million of stimulus funding,” said Jewett, the House majority whip. “This funding propped up our economy, propped up our budget, propped up our programs that people have relied on during this recession. It looks as if we are turning a corner on revenues; however it looks like we are turning a corner on that federal support. The faucet there is shutting off, and that is our big challenge this year.”
Rep. Greg Clark, R-Vergennes, said he is concerned that the Legislature not enter into the budgeting process with the philosophy of, “We can do everything.”
He acknowledged that education, transportation and health care should continue to receive support from state government, but other services should be looked at carefully.
“My concern is that we will continue to overspend based on revenue projections coming in, and not take care of the problem — which is, ‘What is it that state government should be responsible for, and what is it we could let go by the wayside for a while?’ — at least in our current economic times.”
State employees remained concerned about another round of potential layoffs, given the magnitude of the revenue shortfall. Peter Garon, a Vergennes resident and field representative for the Vermont State Employees’ Association, urged lawmakers to rethink state government’s recent practice of laying off some workers only to replace them with contracted employees.
“In human services, there are private employees working side-to-side, in state office buildings, doing the same work as state employees do and earning a little more money,” Garon said. “Look at some of these contracts; it can save us a lot of money.”
Sen. Claire Ayer, D-Weybridge, is a member of the Government Operations Committee, a panel that specializes in state labor issues.
“Over the past eight years, in the previous administration, there was a great effort to decrease the size of state government to save taxpayers’ money,” Ayer said. She said there were times, however, when vacancies were filled by a contractor and not a new state employee.
“It showed the size of government decreasing while we were increasing our contracting budget,” Ayer said. “We are taking a look at that, but there are times when hiring a contractor is best for a short-term job.
“But we are looking at ways for more Vermont taxes to be spent on more Vermonters to do the work.”
While lawmakers must contend with a sizable revenue shortfall for the general fund budget, the state’s transportation budget “is about on track,” said Rep. Diane Lanpher, D-Vergennes, who is a member of the House Transportation Committee.
Still, Lanpher said she and her colleagues have begun to look at the prospect of reducing the transportation fund’s dependency on fossil fuels for tax revenues. She said the gasoline tax is not likely to generate as much revenue within the next 20 or 30 years.
“We’re going to have to look at that funding source in a different way,” Lanpher said.
Reporter John Flowers is at [email protected].