Lawmakers explain state budget cuts

BRISTOL — Local House representatives said on Monday they regretted having to make substantial cuts in the fiscal year 2012 state budget — particularly in the area of human services — but they added the reductions would have been a lot deeper had they endorsed Gov. Peter Shumlin’s spending plan.
The Vermont House last week passed a total state budget of $4.69 billion, representing a 3.6-percent decrease in total spending but a 7.3 percent increase in the proposed general fund appropriation. The big difference this year — no more federal stimulus money. Last year’s budget benefited from $158.8 million through the American Recovery and Reinvestment Act.
Loss of the economic stimulus money contributed to a $176 million revenue shortfall for fiscal year 2012, compared to 2011, that lawmakers have had to fill. The House budget bridges the shortfall through a combination of spending cuts (totaling $83.1 million), an assessment (tax) on health care providers, an increase in the tobacco tax, a $23 million reduction in the education fund transfer, a health claims fee, and some one-time revenues.
“A lot of hard work was done, and I think the House made some significant improvements over the budget presented to us by the governor,” Rep. Paul Ralston, D-Middlebury, told participants at Monday’s legislative breakfast, hosted by the Bridport Grange No. 303 at the Bristol American Legion hall.
Among the improvements, according to some House members, was reducing the administration’s proposed $43.8 million in human services cuts to $39.3 million. They noted the House restored half the administration’s proposed reduction in services for frail and elderly, half the proposed reduction for programs for the developmentally disabled, and half the proposed reduction for mental health services.
House members also declined to merge the Catamount Health program into Vermont Health Access Program, thereby mitigating what would have been a reduced reimbursement rate to doctors and hospitals. The House also replaced $1.7 million federal economic stimulus funding for homelessness prevention with general funds, and agreed to bankroll 300 additional subsidized childcare slots to better enable Vermonters to enter the workforce.
“I think we can be pleased for doing the best in a really difficult situation,” Ralston added. “It’s going to be tough, but it’s not going to be nearly as bad as we thought it would be.”
Rep. David Sharpe, D-Bristol, serves on the House Ways and Means Committee. That panel passed the “miscellaneous tax bill” to help balance the state budget. He said the committee had to make some tough choices in determining where to get some additional revenues to soften the blow of some of budget cuts.
Sharpe said the proposed health care-related tax increases are expected to raise around $24 million. But he added that $24 million will receive a federal match that will generate a combined total of $56.95 million that the state will spend to draw down Medicaid expenses. Sharpe said the state will use those added revenues to increase the hospitals’ reimbursement rate by a combined total of $10 million, as well as draw down the state’s $176 million revenue shortfall.
The net funding loss for hospitals as a result of the House’s proposed state budget is shaping up to be around $7 million, according to Sharpe.
“Do the hospitals like it? Not particularly,” he said. “But the House did a much better job that the governor proposed.”
Rep. Willem Jewett, D-Ripton, said he believes the House gave the Senate a budget that features something for everyone to like — and dislike.
“When we debated the budget from the floor, we had amendments from the right that said we should cut more deeply, and amendments from the left that said we should restore more of the cuts,” said Jewett, the House majority whip.
Ultimately, the House agreed to meet the Shumlin budget cutting plan about half way, according to Jewett.
“I would say that when we were done, we passed a budget that was both fiscally and politically balanced,” Jewett said.
Participants at Monday’s breakfast also discussed the other bit of heavy lifting the House performed last week — passage of a health care reform legislation.
The House passed H.202 by a 92-49 tally. The legislation sets the state on a course toward a single-payer health care system. Bill H.202 calls for formation of a five-member Green Mountain Care Board to oversee system changes. Legislators stressed, however, that it will likely take several years before a single-payer plan is finalized and put up for a vote. In the meantime, they said people will have a chance to weigh in on the health care debate.
H.202 now goes to the state Senate — specifically into the Health and Welfare Committee, chaired by Sen. Claire Ayer, D-Weybridge. Ayer said her panel will hold hearings in Montpelier during the next few weeks to gather testimony on what continues to be a very controversial topic.
Local residents on Monday voiced concerns about how much a single-payer health care plan would cost and whether it would supplant private insurance and/or state programs.
Ayer said plans call for the new system to provide “wrap-around” coverage for retired state workers. She added Vermonters would not have to give up their private insurance and people currently served by Medicaid and Medicare would maintain coverage.
Ayer said H.202 sets out a “set of principles” for improving a health care system that is currently costing Vermont $5 billion a year, with costs continuing to rise faster than the annual rate of inflation. She said lawmakers will not advocate for a new health care system that costs more than the current system.
“It is true we don’t have all the answers,” Ayer said, “but what is chasing us down the road is way worse than what we thought it would be 10 years ago.”
Rep. Harvey Smith, R-New Haven, said he is concerned the majority of his colleagues are passing single-payer health care legislation without having more answers about the potential impacts.
“I agree with the discussion about taking some time and answering the questions we have,” Smith said. “But in any other piece of legislation we come across, we have those answers before we pass the legislation.
“Knowing that this debate and discussion is going to take place over the next five, 10, maybe 15 years to get to where we think we want to be, without having a lot of the questions answered, we create a lot of uncertainly with people who want to invest in the state of Vermont,” he added. “It is going to have a major impact on our local economy. We all need to be part of the debate and we all need to be finding the answers, but we should be finding the answers before we start the train down the road that is going to be very difficult to turn around.”
Reporter John Flowers is at [email protected].

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