ADDISON COUNTY — State and local lawmakers are preparing for a 2014 legislative session that they said will include the familiar task of dealing with a sizeable general fund budget shortfall, as well as ironing out the kinks in the state’s transition to universal access health care, exploring education finance reform, helping citizens deal with drug addiction, and confronting pollution and nuisance aquatic weeds in Vermont’s waterways.
The General Assembly will return to the Statehouse on Tuesday to handle an agenda that, as usual, will be long on ideas and short on funds. And money will be a particularly scarce commodity this year, according to Vermont House Speaker Shap Smith, due to reduced federal funding commitments to the states.
In Vermont, that’s expected to mean an absence of budget-stabilizing American Recovery and Reinvestment Act assistance, an estimated $15 million reduction in Medicaid reimbursement money, and cuts to what Smith called a variety of “social safety net” programs, such as the Low-Income Home Energy Assistance Program (LIHEAP).
It will be up to Vermont to backfill these cuts to reduce the impacts on citizens, or ask people to get by with less.
And the state is not flush with cash to pick up additional expenses. State financial analysts are currently placing the state’s fiscal year 2015 general fund budget shortfall at $60 million to $70 million.
“It always starts and ends with the budget,” Smith said of the looming fiscal hurdles during a Monday telephone interview with the Addison Independent. “We will have another challenging year this year.”
Ironically, some of the state’s financial headaches are being induced by its own competency in health care management, according to Smith.
“Because we are doing better than other states for a variety of reasons, our Medicaid match rate is going down,” Smith said. “That puts us in a hole every year. This year, it amounts to around $15 million we are going to have to make up.”
REVENUE ISSUES
Balancing the fiscal year 2015 budget emerged as one of the top three tasks for the 2014 session, as compiled by a recent caucus of the 23 Senate Democrats, according to Sen. Claire Ayer, D-Addison. As chairwoman of the Senate Health and Welfare Committee and the Senate majority whip, Ayer will be a key figure in decision-making during the upcoming session.
“We will be looking at accountability in budgeting,” Ayer said. “If we pay $100 for a certain type of program, we will be asking, ‘What are we getting for that, and at the end of the day, are Vermonters better off?’ We want to make sure that Vermonters are getting value for the money we are spending.”
Both Ayer and Smith said they don’t expect the Legislature to call for broad-based tax increases this year, though Smith does believe the state’s education property tax will rise. He added education spending decisions are made at the local level, so individual taxpayers will get a chance to influence their public school bills at the ballot box or at town meeting.
Sen. Chris Bray, D-New Haven, is a member of the Senate Finance Committee and will therefore play a role in finding funding sources for the state’s fiscal year 2015 spending plan.
Bray said his fiscal strategy will include:
• Establishing policy goals first without regard to whether these goals increase, decrease or have no net impact on revenues.
• Identifying revenue streams “that are, above all, fair, and to ask Vermonters and Vermont businesses to contribute based on their ability to contribute.”
• Identifying revenue streams that are “transparent, that is, that avoid both opaque rationales or mechanisms for the collection of taxes or fees, or their forbearance through exemption.”
• Identifying revenue streams that are predictable and sustainable, “so that citizens, businesses and other entities can plan for their future without the burden or paralysis of uncertainty brought on them by the state.”
• And establishing “desirable goals, in the form of legislation, policy, programs or rules, and to support these goals through clear funding mechanisms, supported by appropriate revenues.”
Rep. Warren Van Wyck, R-Ferrisburgh, said lawmakers must work hard to limit general fund spending. He said the Legislature this past session passed a fiscal year 2014 budget reflecting a 4.7 percent increase, and then added 1 percent through the mid-year correction.
“These spending increases need to be reined in so that taxes are not raised,” Van Wyck said, adding the state must do more to keep the education property tax in check.
Van Wyck believes the General Assembly must make sure to adequately fund Vermont’s teachers’ retirement  and health care funds “so that the next generation is not burdened with the shortfalls.”
While there might not be a great appetite in Montpelier to raise taxes, there will probably be discussion about finding new revenue streams. Ayer said the Legislature is likely to at least begin a conversation about having nonprofit entities in the state — including colleges, universities and charitable organizations — make some sort of payment in lieu of taxes.
“I don’t think we’ll see anything pass on this in 2014, to be honest,” Ayer said. “But we are looking at the notion of people paying a certain percent and trying to balance that” with in-kind and other contributions the nonprofit entities are already making to the state and their host communities.
The first step, Ayer said, would be to order an assessment of nonprofit properties to form a basis on which financial requests might be made.
HEALTH QUESTIONS
Ayer’s Health and Welfare Committee should be kept quite busy with two other issues that made the Democratic caucus’ 2014 list: Continuing the state’s transition to a single-payer health care system and placing Vermont’s mental health system on firmer footing.
Tropical Storm Irene wreaked havoc on the state’s office complex in Waterbury, including the state hospital. System improvements have been ongoing since Irene hit in August of 2011. But more work needs to be accomplished, according to Ayer.
“We are still short on acute (care) beds and we’re behind schedule on the state hospital,” Ayer said. She also noted a movement to wrap substance abuse programing into Vermont’s mental health system.
Rep. Willem Jewett, D-Ripton, will also help set the Legislature’s agenda as House majority leader. He agreed that fighting substance abuse will be on the 2014 agenda. Jewett said he likes the emphasis on treatment, but is also concerned about the potential cost of such services.
“The price tag worries me,” Jewett said. “One of my colleagues said, ‘Not doing this work costs more.’ That’s probably true, but it does cost more through the budget.”
Local lawmakers agreed more work needs to be done to improve the rollout of Vermont Health Connect (VHC), the new federally mandated insurance marketplace. While thousands have registered for plans through VHC, many have complained about website glitches and other bureaucratic hurdles in selecting a health insurance plan.
“I am concerned about the roll-out of Vermont Health Connect, which cost a staggering $172 million to develop,” Bray said. “Though Vermont received this money from the federal government, that doesn’t mean it didn’t cost us anything. It cost $172 million, and regardless of the source of those funds, they are all, in the end, dollars from taxpayers, and we need to ensure that we spend our money wisely.”
With that in mind, Bray said the state needs to be careful to accurately spell out health care costs and the technology used in the administration of VHC.
“I have already spoken with the (Senate president) pro-tem and speaker about the need for strategic planning and development, across the board, including information technology projects,” Bray said.
OTHER ISSUES
Jewett predicted the state will need to organize a more comprehensive cleanup of its waterways, particularly Lake Champlain. If Vermont does not act proactively in this regard, he believes the feds will mandate a course of action. The state’s plan, he said, should focus on stemming pollution into waterways through storm water runoff, as well as eradicating nuisance aquatic weeds.
And Jewett said the Legislature is also likely to continue its discussion of a controversial shorelands protection bill aimed at regulating development along the shoreline as a way of maintaining buffers to erosion and runoff.
Van Wyck said he is not sold on the shorelands protection bill.
“Is it really needed?” he asked. “If so, it needs to allow more local control, less state-level regulations and not increased bureaucracy.”
Bray added the state must develop more low-cost energy initiatives. With that in mind, Bray this past summer unveiled a five-point energy plan focused primarily on natural gas. Vermont Gas recently received conditional approval from the state Public Service Board to extend its natural gas pipeline from Colchester to Middlebury and other Addison County communities.
Bray is proposing, among other things, to shorten timeframes for expanding natural gas distribution within Addison County, to maximize the number of low-income homes along the pipeline route so that they might take advantage of the lower-cost natural gas, and to create a Middlebury station at which consumers could purchase compressed natural gas.
Bray also pledged to introduce a bill to fund state and local renewable energy initiatives, with money set aside for each town that hosts a natural gas pipeline. He said he will also introduce a joint House-Senate resolution to ask Vermont’s Congressional delegation to develop appropriate regulations for the extraction and transmission of natural gas.
“We still need fossil fuels, and we also need to make steady progress to reduce our use of these fuels,” he said.
The following is a sampling of other legislative initiatives being entertained by state and local legislators:
•  A bill, spearheaded by Van Wyck, that proposes to give criminal court the authority to commit a criminal defendant who has been found to be incompetent to stand trial because of a traumatic brain injury. Charges against such defendants are currently dismissed if they are found incompetent to stand trial.
•  An effort to raise Vermont’s minimum wage from $8.60 per hour to $12 per hour.
“That’s probably the best anti-poverty initiative there is,” Ayer said.
•  A requirement that businesses offer employees the opportunity to accrue paid sick time.
•  Finding ways to fund college scholarship programs aimed at keeping Vermont’s youth working in the Green Mountain State after they graduate.
“Our population is skewing older,” Smith said of the demographic challenge Vermont is facing.
•  Making sure all Vermont families have access to pre-K education for their children.
•  Enhancing economic development opportunities in rural towns.
Reporter John Flowers is at [email protected].