Vermont state budget (2008-2009)
- 1 Impact of budget woes
- 2 Budget background
- 3 Ideas about why the crisis occurred
- 4 Proposed actions
- 5 Budget transparency
- 6 See also
- 7 External links
- 8 Additional reading
- 9 References
Vermont was facing an $82 million deficit for fiscal year 2009. The Center on Budget and Policy Priorities projected a larger deficit for fiscal year 2010, $253 million. In response to the budget deficit Gov. Jim Douglas recommended several budget cuts. For example, the governor suggested cutting state employee pay by 5 percent for workers making more than $30,000. Despite steep budget cuts, the governor stressed that, "we must not raise broad-based taxes that can be avoided," referring to the gas tax, income tax, and property tax. Some state lawmakers argued to the contrary. In March 2009 lawmakers proposed raising the current gas tax 5 cents. In regard to the federal stimulus funds that the state was expected to receive, Gov. Jim Douglas said, "We must avoid the temptation to will our budgets on the promises of federal aid alone. As President Obama has indicated, this aid would be temporary and once the money is spent, Washington must begin to reform its spending practices to address our mounting national debt."
Impact of budget woes
- See also: State budget crisis, 2009-2010
- In March 2009, the Department of Labor reported that Vermont's seasonally adjusted unemployment rate for February reached 7 percent, up two-tenths from January. Construction jobs showed the largest decline; down 4.6 percent from January and down 22.4 percent from February 2008. The manufacturing sector also showed a decline; however, it was the leisure and hospitality sectors that showed job gains.
- On March 31, 2009 the Vermont House Appropriations Committee passed a $4.4 billion budget that was radically different than the governor's recommended budget. Instead of relying on cuts, the passed budget relied on $24 million in new taxes. The committee-passed budget had yet to pass through the full House.
- A bill had been proposed to raise the state gas tax. The tax increase was estimated to generate $20 million a year to pay for road and bridge projects. The increase would add 5 cents to the then-current gas tax of 19 cents a gallon.
- In light of the state's budget deficit the governor had proposed cutting state employee salaries by 5 percent for workers making more than $30,000. In total, the governor was hoping to make $17 million in reduced labor costs for the state work force, about 8,000 employees.
- In an effort to reduce budget expenditures the governor proposed to cut up to 660 jobs from the state payroll.
- At the University of Vermont the $1.1 million cut in athletics was part of a $10.8 million budget reduction for fiscal year 2010. The budget cut eliminated the varsity baseball and softball programs from the university.
- See also: Vermont state budget
Vermont's fiscal year begins July 1 and ends June 30 of the following year. In September and October instructions are distributed to each agency and department, with a budget allocation for the coming fiscal year. By December the governor reviews agency requests, past expenditures and revenue data before ultimately compiling budget recommendations for the upcoming fiscal year. In January, when the legislature convenes, the governor presents the budget proposals with a formal address to a joint meeting of all House and Senate members. Once both the House and the Senate approve all of the appropriations and make any necessary changes, the governor makes the final approval before the new budget bill is accepted. Should any changes be necessary throughout the fiscal year, the Budget Adjustment Act] allows for the governor to submit proposed changes. The House and Senate pass the final version of the Budget Adjustment Bill and the bill is forwarded to the governor for final approval.
- It was estimated that in FY 2010 there would be $734 million available for education, compared to $828 million for FY 2006. According to state officials, even though total General Fund revenues would be 4 percent below fiscal 2006 levels, the amount available for spending outside K-12 education would be 11 percent less.
The following table provides a history of Vermont's expenditures and gross domestic product (GDP).
|Fiscal year||Expenditures (billions)||GDP (billions)|
- NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.
Below is the breakdown of the spending for the 2009 fiscal year.
|Protection to Persons and Property||$237,178,217|
|Employment and Training||$26,296,354|
|Higher Education and Other||$80,364,162|
|Commerce and Community Development||$54,782,148|
Ideas about why the crisis occurred
- The General Fund revenues of $119.20 million for the month of January 2009 were $14.05 million, or 10.54 percent, below the $133.25 million consensus revenue forecast for the month. As of February 2009 total General Fund revenues for FY 2009 were $674.91 million, or 2.04 percent, below the consensus revenue forecast for the fiscal year.
- According to state officials, personal income tax receipts were the largest single state revenue source. Personal income tax receipts for January were $72.97 million, 9.51 percent below the monthly target. Personal income fell $5.09 million below the January target, while the state had to refund $2.83 million more in refunds than expected. In total, personal income tax receipts were $7.5 million below target.
Governor Jim Douglas
In response to state's growing deficit and economic climate, Gov. Douglas proposed SmartVermont, an initiative that he said laid down "the foundation for a 21st century economy." In the governor's proposal the state would invest $17.1 million in federal stimulus funds to leverage nearly $160 million in direct support to various companies in the state. “This is a truly exciting and groundbreaking initiative that will transform our economy,” said Governor Douglas. “By investing [federal stimulus] funds wisely to grow our economy, we will position our state to charge out of this recession ready to provide a world-class education to the e-generation of students and build strong companies that can compete in a competitive global economy." In order to close the looming budget gap the governor had suggested using $107 million in federal stimulus funds, but noted that using more might prove to be more harmful than beneficial. Additionally, Gov. Douglas had proposed freezing per pupil spending at 2009 levels in order to reduce costs.
Some lawmakers were looking towards new revenue for anticipated relief and the elimination of the looming FY 2010 budget deficit, but Republicans said that they were skeptical and expected to see more cuts. Rep. Howard Crawford said he wished the House committee had made more tough cuts. "I know we can't cut our way out," he said of the state's current financial crisis. Yet, he added that he preferred to balance the budget with cuts and stimulus money this year and only resort to new revenue from increased taxes next year. Rep. John Morley said he applauded lawmakers for modifying the governor's proposed budget to save some jobs from cuts, but added that he was uncertain about the source of additional tax revenue and the yet-to-be-agreed-upon labor savings. "I need to see more of a direction going toward cost containment for the future," Rep. Robert Helm said. "I just don't feel responsible hoping the economy gets better all of a sudden."
In February 2009 Democratic lawmakers proposed the reorganization of state government and raising $29 million in new state taxes to close the state's looming budget gap. House Speaker Shap Smith and Senate President Pro Tem Peter Shumlin argued that the state could close the FY 2010 gap with $153 million of federal stimulus funds, $33 million in new revenue and $28 million in budget cuts. According to Smith, additional state revenue would likely come from new taxes on income, sales, rooms and meals and property. According to House committee amendments to the FY 2010 recommended budget, the bill cut 51 state positions, relied on $162.5 million in federal stimulus money and required $24 million in new revenue from undetermined sources. Rep. Mark Larson said, "I've heard people say, 'Oh you are just relying on the federal stimulus money.' That is a very strange critique. It infers you would rather give up the dollars offered and goes against the whole purpose, which is to stabilize our state budget."
Economic stimulus package
Vermont was expected to receive approximately $950 million of the $787 billion dollar economic stimulus package. According to White House officials, the package was expected to create approximately 8,000 jobs.
According to preliminary reports, Vermont was expected to receive:
- $10.3 million for energy efficiency and conservation projects
- $14 million for early education
- $38.8 million for home weatherization projects and energy efficiency programs
- $96.1 million for education stabilization funds
- $25.6 million for special education
- $80.7 million for public safety stabilization funds
- $38.3 million for the Supplemental Nutrition Assistance Program
As of 2009, Vermont had no statewide, official spending database online. However, the Public Assets Institute and the Ethan Allen Institute launched Vermont Transparency, which discloses information about state spending, state revenues, municipal spending, federal contracts, education finance, school spending and federal stimulus funds.
- Vermont Joint Resolution 57 requested "the Agency of Administration to post all state contracts and grants in full text on the internet."
The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:
|State database||Searchability||Revenue source||Expenditures||Contracts||Employee salary|
Economic stimulus transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.
- Vermont was expected to receive an estimated $413,754,765.
- The economic recovery website to show how legislators and government officials in Vermont were spending Federal funds was available here.
Public employee salary information
- See also: Vermont state government salary
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Ethan Allen Institute
- Vermont Department of Finance and Management
- Vermont Agency of Administration
- Vermont state site
- Vermont Legislature
- Congressman Peter Welch,"User's Guide to Economic Recovery Resources," retrieved March 30,2009
- Gov. Douglas,"Inaugural Address of Governor James H. Douglas," January 8,2009
- Gov. Douglas,"Governor’s Budget Address," January 22,2009
- Center on Budget and Policy Priorities,"State budget troubles worsen," March 13,2009
- Associated Press,"Vt. state workers' union rejects pay cut proposal," March 25,2009
- Gov. Douglas,"Budget Address," January 22,2009
- WCAX,"Vt. House Committee Approves Gas Tax Hike," March 30,2009
- Burlington Free Press,"State unemployment rate inches up to 7 percent," March 28,2009
- WCAX,"Vt. House Committee Passes $4.4 Billion Budget," March 31,2009
- FOX 44,"People Rally in Montpelier Against Cuts," March 31,2009
- Burlington Free Press,"UVM trustees let cuts stand," March 26,2009
- State of Vermont,"State budget process," retrieved March 31,2009
- US Government Spending,"Vermont State and Local spending," retrieved March 30,2009
- Vermont Transparency, State Spending
- Vermont Business Magazine,"Vermont revenue figures fall 10 percent below target," February 4,2009
- Gov. Douglas,"SmartVermont," March 26,2009
- Rutland Herald,"Plan may close Vt. budget deficit," February 27,2009
- Burlington Free Press,"Budget emerges with only partial support," March 31,2009
- Associated Press,"House panel differs on budget," March 31,2009
- WCAX-TV,"Vermont Had Questions on Recovery Act," March 21,2009
- American Recovery and Reinvestment Act,"Estimated job effect," retrieved March 30,2009
- Burlington Free Press,"Sanders: $10.3M for Vermont energy efficiency, conservation projects," March 26,2009
- FOX 44,"VT Children Programs Get Big Boost From Stimulus Plan," March 16,2009
- FOX 44,"Vt to get $38.8 million for home weatherization," March 12,2009
- Congressman Peter Welch,"User's Guide to Economic Recovery Resources," retrieved March 30,2009
- Vermont Joint Resolution 57
- National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online," March 10, 2009
- Wall Street Journal,"Stimulus Spending by State," March 12,2009