The Word in the House 4/2/2015 - Creating a Balanced Budget

I'm glad I don't serve on the Appropriations Committee or the Ways & Means Committee. The job that those committees have to do is the most difficult balancing act faced by the legislature. Vermont does not require a balanced budget by Constitution or by statute. However, the legislature has always, as far as I know, matched projected spending and revenues. The challenge this year has been to close a gap of $113M between projected spending and revenues for the next fiscal year beginning in July. The committees closed that gap by a combination of $53M in budget cuts, $35M of new tax revenues, and $25M of one-time funds. More importantly, through the cuts and tax structure changes, they put the state on a more sustainable path that should reduce the reliance on one-time funding for base budget needs, bend the rate of spending growth, and bring the expenditure pressures in line with revenue growth to end the cycle of annual budget gaps.

The two bills dealing with the fiscal responsibilities of the State of Vermont are H.489, the revenue bill, and H.490, the budget, also known as “The Big Bill." While both bills passed the House last week, their passage came with considerable floor debate, numerous amendments and drama. The revenue bill had been voted out of committee on an 8-3 vote, and the budget was voted out unanimously on an 11-0 vote. The latter unanimous vote was unprecedented, with Democrats, Republicans and Progressives in agreement. This reflects the considerable effort on the part of the Appropriations Committee to solicit and review input from everyone, and prioritize the programs and policies, and work with the Ways and Means Committee to determine the revenue capacity of Vermonters. Both committees knew that neither cuts alone nor taxes alone could close the gap.
A critical question in this exercise has been how do we prevent these budget gaps we've been seeing in the last few years from recurring over and over. One element of this fix is addressed by reducing spending on non-essential government programs and redirecting spending to areas with the potential to stimulate economic growth. Another element is to change the tax structure to make revenues more sustainable. I received many emails advocating to preserve various programs and grants, all of which are valuable in themselves. However, weighed against other needs, like the Department of Children and Families, many had to be trimmed or cut altogether.

Some legislators, I among them, felt that raising a little more revenue could save jobs of state employees and restore some of the cuts to the low income heating assistance and weatherization and working lands programs. Two amendments were offered to raise an additional $10M to do that. One would add a $2/night room charge for hotel rooms; the other would have added 0.4% to the top two income tax rates for those making more than $500K and $1M. Several amendments attempted to cut taxes and cut more spending out of the budget. Each amendment was accompanied by lengthy debate, some very passionate; but all of the proposed amendments were defeated. I am comfortable with this result because, even though I would have liked more support for what I consider worthy causes, I know that we have to get spending in line with what Vermonters can afford.

Now both bills go to the Senate. It is likely the Senate will make changes to both bills. If the changes they make are accepted by the House, the bills will then go to governor Shumlin. If the House decides not to concur with the Senate, the differences will be settled by a Committee of Conference. In addition, there will be two more bills dealing with spending and taxes: the Education bill and the Water Quality bill. So, keep your hats on; there's more to come.

Subsequent to the publishing of this article, I interviewed Rep. Mitzi Johnson (D-Grand Isle), Chair of the Appropriations Committee, on the Chittenden county Democrats Show to talk about the decisions that the committee made regarding the budget.

 I continue to welcome your feedback on this and other issues. I can be reached by phone (802-233-5238) or by email (