Substantial state spending cuts loom

WHITING — Town officials hoping for some sort of financial life preserver this year from the state for ailing municipal and/or school programs had better learn how to tread water.
That’s because local lawmakers on Monday served notice they are trying to erase a $112 million shortfall in the fiscal year 2016 state budget. And unlike past years, there is no federal stimulus money, nor better-than-anticipated tax revenues to close the gap.
“It’s not going to be easy and it’s not going to be without a great deal of pain,” Rep. Diane Lanpher, D-Vergennes, told participants at Monday’s legislative breakfast at the Whiting Town Hall. “It’s not going to be without a lot of uncomfortable conversations about things we have valued for a while.”
Lanpher is having direct input in those difficult conversations as a member of the House Appropriations Committee, a panel that will have a big say in how the state’s limited dollars will be allocated. Lanpher and some of her colleagues described this year as the most challenging financial time they have ever seen at the Statehouse. And the challenge comes at a time when Vermont is being ordered by the federal government to clean up Lake Champlain, a task that will involve hiring new personnel to run programs aimed at preventing pollution runoff into the lake.
The financial news has gotten worse since the 2015 legislative session was called to order in early January. At that time, Gov. Peter Shumlin gave his plan to close what was then projected as a $93 million revenue shortfall. That forecast was downgraded a short time later by an additional $18.6 million, Lanpher explained. This has forced the Appropriations Committee to put some controversial cuts on the table, including closing the state’s veterans’ home to save $2 million, reducing Vermont Housing and Conservation Board funding by $2.1 million, making a 1 percent reduction in higher education funding to save $830,000; and reducing premiums assistance by $3.8 million through the state’s new health care exchange.
Rep. Harvey Smith, R-New Haven, is one of the county’s most senior lawmakers, and he said he has never seen the state in such a financial predicament.
“This is the biggest challenge on this effort that I have ever seen since I have served in the Legislature,” Smith said. “It’s a huge one, and all the other programs hinge around it.”
Lawmakers are also considering new fees and taxes to help balance the books, but those present at Monday’s breakfast said they recognized the extent to which many Vermonters are already being taxed to the breaking point.
“It is just as painful to increase taxes as it is to make incredible service cuts,” Lanpher said.
Lanpher spoke of an “all-in” sense among lawmakers — regardless of their party affiliation — that this is the year to make tough financial decisions that will set the tone for future years.
“With budget pressures consistently growing at 5 percent (annually) and revenues growing more slowly at 2.5 percent to 3 percent, we are working to bring long-term spending projections in line with long-term revenue forecasts,” Lanpher noted in her town meeting report that she distributed on Monday evening at gatherings in her Addison-3 district. “Creating sustainability requires very difficult conversations to redefine what state government can support and what people are willing to pay for.”
She noted some state agencies have already suggested some cuts. Among them: The Vermont Department of Public Safety, which has proposed closing two of its four Public Service Answering Points (PSAPs) — better known as E-911 dispatching centers — in Derby and Rutland. Those services would be consolidated within PSAPs in Rockingham and Williston. There are also four privately operated PSAPs in the state. The proposed dispatching consolidation would save $1.7 million and result in the loss of 20 jobs, according to Lanpher.
But Rep. Alyson Eastman, I-Orwell, said she is dubious as to whether closing the two dispatch centers would truly save $1.7 million.
“We’re going to eliminate 20 jobs and imagine there will be costs to consolidation, getting these individuals into Williston and Rockingham” Eastman said.
She believes a lot of budget meetings with impassioned testimony lie ahead.
“Our job as legislators is to listen to everyone’s story,” Eastman said. “It’s going to be a tough decision for everybody.”
Other discussion at Monday’s legislative breakfast keyed on bill H.361, a proposal designed to reduce spending, trim bureaucracy and encourage shared resources within the state’s public school system. Passed out of the House Education Committee last week by a 10-0 vote, H.361 calls for, among other things:
•  Passage of H.35, dubbed the “clean water bill,” which is to be the guiding force behind a federally mandated cleanup of Lake Champlain.
The bill, among other things, calls for creation of a total of 20 new positions spread between the Agency of Agriculture and the Agency of Natural Resources to help implement programs to prevent pollution runoff from farms and impervious surfaces from getting into Lake Champlain. The new positions include engineers, outreach/education workers, inspectors and legal personnel.
It also formalizes a certification process for small farms (less than 200 dairy cows).
The legislation would give the Agency of Agriculture the authority to assess civil penalties against farms proven to be discharging into Lake Champlain. Shumlin, in his state-of-the-state address in January, had recommended that offending farms be denied tax breaks under the Current Use program. The bill also gives state officials the ability to impose corrective actions on farms with flawed manure management practices that might lead to indirect pollution discharge into a state waterway.
Smith, a member of the House Agriculture Committee, said he voted for the bill, but — like other members of the panel — had questions about how it would be financed. The bill included $17.5 million in new taxes and fees, according to Smith.
“We took all the funding mechanisms out of the bill,” Smith said. A feed tax, a fertilizer tax and/or a farm certification fee remain among possible funding sources. The House Ways and Means Committee will now sort out financing options for H.35.
“The agriculture community has been very supportive about being part of the solution,” Smith said.
Eastman, also a member of the House Agriculture Committee, said Vermont is under a lot of pressure from the federal EPA to pass a lake cleanup bill. Barring a Vermont solution, she said the EPA will likely punish municipalities — which ironically are only responsible for a fraction of the pollution that makes its way into the lake.
“I’ll be following it like a hawk,” she said of the progress of H.35.
•  Unified education districts. In essence, supervisory unions as we know them would be eliminated in favor of expanded pre-K through grade 12 school districts (of at least 1,100 students) including multiple schools that would have a single school board and budget. For example, the Addison Northeast Supervisory Union would be consolidated into a single district comprised of Mount Abraham Union High School and the elementary schools in Bristol, Lincoln, Starksboro, Monkton and New Haven. This change would need to take place by 2019, though the State Board of Education would consider alternative local proposals that meet the objectives set forth in H.361.
•  A 2-percent cap on per-pupil spending would be in place until 2018.
•  Small school grants to be phased out within five years.
•  An alternative funding and delivery method for special education services, which would be developed by the Vermont Secretary of Education.
•  A prohibition on paying tuition for Vermont students attending school out of state, with possible exceptions for some students attending New Hampshire and New York schools.
Bill H.361 is already drawing a lot of feedback from Vermont teachers, school directors and school administrators. The proposed 2-percent cap on per-pupil spending is proving particularly controversial, as many teacher contracts have been granting annual raises in the 3-percent range. And personnel costs account for the vast majority of school expenses.
Brenda Fleming is business manager for the Rutland Northeast Supervisory Union.
“I would ask you to look very carefully about whether it is really feasible to put a 2-percent cap on,” Fleming said. She noted the 2-percent cap envisioned in H.361 does not relate to total spending, but rather is on top of already reducing for equalized pupils.
“When I calculated it for one of our districts, it was $500,000 (in cuts),” Fleming said. “Make sure you know that a 2-percent cap sounds great when you are thinking total budget, but when you are talking about education spending per equalized pupil and you put other increases or reductions on that, you are really asking for a lot more than 2 percent.”
Otter Valley Union High School Board member Ellen Kurrelmeyer of Whiting said a 2-percent spending cap would substantially erode educational opportunities for students who have already seen program reductions this year in such subjects as anatomy and physiology, oceanography and astronomy. The proposed 2015-2016 OV budget of $10,718,131 reflects a 1.83-percent spending increase.
“Each year it is harder to find items to cut in order to either reduce the budget, or keep an increase to a minimum,” Kurrelmeyer states in her budget report for the district. “We have cut over $1.75 million worth of personnel, programs and equipment from the OV educational budget since 2010.”
Lanpher said she recognizes the concerns of educators, but added those concerns have to be balanced with equally vocal appeals from those seeking property tax relief.
“Taxpayers have demanded of their Legislature to do something in containing the cost of education,” she said. “(H.361) may or may not get to it.”
Reporter John Flowers is at [email protected].

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