Vermont state budget (2009-2010)

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Note: This article was last updated in 2010. Click here for more recent information on state budgets and finances.


Vermont faced an estimated $150 million budget shortfall for FY 2011. In January 2010 lawmakers announced that they plan to impose a 5% cut on their own paychecks for the next two sessions.[1] The Vermont General Assembly and Gov. James Douglas agreed on a budget on May 12, 2010.[2]

Vermont would receive approximately $59 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[3][4]

Vermont had total state debt of $2,872,679,072 when calculated by adding the total of outstanding debt, pension and OPEB UAAL’s, unemployment trust funds and the 2010 budget gap as of July 2010.[5]


2011 State spending & deficit in billions[6]
Total spending Health and human services Education Protection Other
$4.76 $1.3 $1.3 $0.55 $1.6
2011 Local spending & deficit in billions[7]
Total spending Pension Healthcare Education Welfare Protection Transport Debt
$2.7 $0.0 $0.0 $1.4 $0.0 $0.1 $0.2 $1.1

Fiscal Year Vermont State Budget

Because the state's three main funds ended the year slightly higher than previously expected, the Emergency Board that periodically reviews Vermont’s finances and did so on July 16, 2010, increased the General Fund by roughly $3.8 million, the Transportation Fund by just under $500,000 and the Education Fund by $1.8 million.[8]

Facing a budget shortfall of at least $38 million dollars, Gov. James Douglas and lawmakers engaged in a process they named "Challenges for Change."[9] Challenges for Change was authorized by Act 68 (the Challenges Bill) of the 2009-2010 legislative session and was a budget initiative intended to "make Vermont government and services more effective so that better results were delivered at lower cost to taxpayers."[10] The Challenges for Change process starts with the outcomes and it said, ‘what were the outcomes that we want to achieve', and lays upon those outcomes a budget constraint."[11]

The Challenges for Change Progress Report issued on March 30, 2010, stated that joint public hearing would be scheduled within ten days after the report was issues and the legislative committees of jurisdiction would take testimony and receive public input immediately.[10] The Challenges for Change Progress Report states: "Clients and taxpayers were better served by a few coordinated programs with more flexibility than a confusing morass of hundreds of programs. Service delivery needs to and can focus on clients rather than programs."[10][12]

A progress report issues on March 30, 2010 stated that the goal was to use technology and new efficiencies to save $38 million from the state's over $1 billion budget, without hurting state services.[10][9] One of the biggest cuts comes from Education. The proposal included reducing the number of school districts from 280 to less than 50[10][9], and the majority of savings would come through staff reductions.[11] Vermont had a ratio, with staff including everyone from custodians to district superintendents, of 4.55 to 1, one of the lowest in the country. State Education Commissioner Armando Vilaseca wants to increase that ratio to 4.75 to 1 to save $20 million a year but result of the loss of approximately 600 jobs.[13] Some lawmakers were opposed to the plan and saw it as a loss of local control.[14]

Other cost reduction measures included releasing low-risk offenders from state prisons.[9] and consolidating 54 economic development programs and commissions into 9 regional offices.[11] In January 2010 lawmakers announced that they plan to impose a 5% cut on their own paychecks for the next two sessions.[15]

The Vermont State Employees Association agreed to a 3 percent pay cut for state employees, which would save the state government about $10 million in a year, as well as a pay freeze through 2012.[16]

The House of Representatives passed a budget for FY2011 that counted the $38 million toward closing a budget gap that, at the beginning of the year, had been projected at $154 million.[9] Public hearings on the budget cuts were held in the House chamber on April 6, 2010.[17]

The State Senate passed its own version of the state budget on April 28, 2010, on a 23-6 vote.[18] The Senate's budget amounts to $4.7 billion, including federal funds funneled through state agencies.[18] The Senate's spending plan still needs $38 million in savings to be found through government efficiencies under Challenges for Change, and approximately half of those savings had not been found at the time the Senate passed the budget.[18] Senators opted not to use $20 million from the state's rainy day fund to fill the hole, with members saying it was hoped the remaining efficiencies can be found before lawmakers go home.[18] Lawmakers said they would spend about $85 million on higher education in fiscal 2011, and $140 million on corrections.[19] Lawmakers claimed to reduced the projected deficit for FY2012 to $113 million, down from a projected $250 million, due in large part to federal stimulus money.[19]

The budget approved by the legislature and governor included a limited rollback of an increase in the state's income tax on capital gains that was passed last year.[2] The FY2011 budget rollback of that tax was targeted mainly at businesses in the hopes of generating jobs.[2] Lawmakers also agreed to pull back an increase in the estate tax.[2] The legislature found ways to save $30 million, $8 million less than the $38 million shortfall. Legislators agreed to allow the executive branch to determine how to save the remaining $8 million so long as the Legislature's Joint Fiscal Committee could review the governor's cuts of any agency's budget if the cuts were 5 percent or more.[2]

While the legislature closed a $154 million gap, it warned that a $122 million deficit would likely crop up for FY2012.[2]

The state would borrow about $71 million by issuing bonds to fund capital construction.[2]

Prior State Budgets

In 2009 Vermont faced shortfalls of $28 million for FY 2010 based on the July 16, 2009 consensus revenue forecast. Gov. Jim Douglas proposed August 5, 2009 the $28 million needed in rescissions for the current fiscal year to keep the budget balanced,[20] accepted by the Vermont State Legislature's Joint Fiscal Committee on August 18, 2009.[21]

Vermont's General Fund FY 2010 revenue was below FY 2005.[22] Gov. Douglas laid off 25 state workers and eliminated 50 vacant positions to hit the $7.4 million target as part of the $28 million in reductions. Gov. Douglas had been criticized for not accepting the Vermont State Employees Association's offer of 4 days of furloughs and give up 3 paid holidays to prevent this year's layoffs. The union also offered permanent elimination of a wellness program, dental coverage and tuition reimbursement to reach the $7.4 million figure. Gov. Douglas said he wanted permanent not temporary labor savings to explain his rejection of the union's offer.[23] In December 2009, the state and the union agreed to a 3 percent pay cut for state employees as well as a pay freeze until 2012.[16]

Vermont's state revenues for the period as of October 2009, 4 months into FY 2010, were $5.95 million, 1.72% above target as announced November 10, 2009. The month of October was only 0.16% down from estimates. Personal Income Tax was +5.67%, Sales Tax +0.71%, Room and Meal Taxes were 4.38% in the positive with the 4th major revenue category of Corporate Tax negative 18.81% for the month. Compared to FY 2009 Personal Income Tax was down 11.75%, Sales Tax declined 4.48%%, Room and Meal Taxes were negative 1.20%, and Corporate Tax was up 11.92%.[24]

The Vermont Emergency Board in light of the current economic turmoil decided to meet quarterly instead of twice a year. They were told at their meeting on November 12, 2009 that FY 2010's most recent revenue forecast was up $1.6 million for the General Fund of more than $1 billion, but were warned unemployment in the state would continue to rise. The Emergency Board was composed of legislative money committee chairs and Gov. Jim Douglas.[25]

FY 2011 budget instructions issued to Vermont state agencies on October 2, 2009 told agencies to prepare their budgets at 8% below FY 2010's levels (after the August 18, 2009 rescissions).[26]

Vermont Fiscal Year General Fund Revenues Comparison:[27]

2004 2005 2006 2007 2008 2009 2010 2011 (est.)
$967 million $1.035 billion $1.112 billion $1.151 billion $1.200 billion $1.103 billion $1.025 billion $1.084 billion

Actions taken in FY 2009 and 2010 to balance the budget included:[28]

  • The number of active state employees today had been reduced from a high in July 2008 of 8,383 to an estimated 7,960 as of July 2009.
  • Another 90 positions were likely to be eliminated as the result of the retirement incentive. At that point, the number of State employees in Vermont would reach 2003 levels, with more reductions possible.
  • Tax changes included: Reducing the capital gains exemption to a flat $5,000 (with some exceptions), eliminating the state and local tax deduction, lowering tax rates, cigarette tax increased, an estate tax exemption set at $2 million, and a tax amnesty program.
  • The current deficit projection for Vermont is:
    • FY 2011 ($ 82 million) = 6.4% shortfall
    • FY 2012 ($155 million) = 11.6% shortfall
    • FY 2013 ($127 million) = 9.2% shortfall
  • Total ‘Real’ (once duplications were accounted for) FY10 Budget = $4.6 Billion, including ARRA, which breaks down by funding sources as follows:
    • Federal Funds $ 1.44 B 31%
    • Fed. ARRA Funds $ 373 M 8%
    • General Fund $ 1.09 B 23%
    • Education Fund $ 1.07 B 23%
    • Transportation Fund $ 215 M 5%
    • Special Funds $ 450 M 10%

Budget background

See also: Vermont state budget and finances

Vermont's fiscal year 2010 began July 1, 2009 and ends June 30, 2010. In September and October instructions were 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 was 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 was forwarded to the Governor for final approval.[29][30]

Public hearings were held throughout the budget process, dealing with particular programs, but not according to a set schedule. The state constitution prescribes a biennial legislature; in practice, legislature meets annually, in regular and adjourned sessions.[31]

Budget figures

The following table provided a history of Vermont's expenditures and gross domestic product (GDP).

Fiscal Year Expenditures (billions) GDP (billions)
2000 $3.8[32] $17.8[32]
2001 $4.0[32] $18.8[32]
2002 $4.2[32] $19.6[32]
2003 $4.5[32] $20.6[32]
2004 $4.8[32] $21.8[32]
2005 $5.2[32] $22.7[32]
2006 $5.4[32] $23.6[32]
2007 $5.6[32] $24.5[32]
2008 $5.8[32] $25.5[32]
2009 $6.0*[32] $26.5*[32]

Accounting principles

See also: Vermont government accounting principles

The Office of Vermont State Auditor was one of five constitutional officers in Vermont. The Office provided an independent and objective assessment of Vermont's governmental operations, publishing its audit reports online. Thomas M. Salmon was elected Vermont State Auditor in 2006.[33][34]

The Institute for Truth in Accounting (IFTA) rates Vermont “Tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA did not consider Vermont's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not included significant liabilities for the pension plans and for other post employment benefits, such as health care.[35] Vermont's CAFRs were a publication of the Vermont Department of Finance and Management. Jim Reardon was Commissioner of the Department and Management.[36][37]

Credit Rating Fitch Moody's S&P
Vermont[38] AA+ Aaa AA+

Budget transparency

Vermont had no statewide, official spending database online. However, the Public Assets Institute and the Ethan Allen Institute launched Vermont Transparency, which disclosed information about state spending, state revenues, municipal spending, federal contracts, education finance, school spending and federal stimulus funds.[39]

See also: Evaluation of Vermont state website

Economic stimulus transparency

  • Vermont would receive approximately $59 million from the federal government under HR 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[40]


See also

Vermont public pensions

Vermont state budget and finances

External links

Additional reading


Footnotes

  1. ↑ Brattleboro Reformer, "Budget balancing act named top priority for the year," accessed January 12, 2010
  2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 2.6 Business Week "Vt. gov, lawmakers agree on budget; session ends" May 13, 2010
  3. ↑ Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  4. ↑ H.R. 1586
  5. ↑ State Budget Solutions “States Hide Trillions in Debt” July 22, 2010
  6. ↑ Vermont Department of Finance and Management, FY2011 Executive Budget
  7. ↑ USA Spending, State Guesstimated* Government Spending
  8. ↑ The Times Argus "State budget writers expect good news" July 15, 2010
  9. ↑ 9.0 9.1 9.2 9.3 9.4 Business Week.com "Vermont budget process seeks new efficiencies" March 31, 2010
  10. ↑ 10.0 10.1 10.2 10.3 10.4 Challenges for Change Progress Report
  11. ↑ 11.0 11.1 11.2 Vermont Public Radio March 31, 2010
  12. ↑ Challenges for Change Progress Report
  13. ↑ Forbes.com March 31, 2010 (dead link)
  14. ↑ Timesargus.com "Vt. education chief wants control to cut staff, districts, close schools" March 31, 2010
  15. ↑ Brattleboro Reformer, "Budget balancing act named top priority for the year," accessed January 12, 2010
  16. ↑ 16.0 16.1 Waterbury Record "State Budget: What did it mean for Waterbury?" April 21, 2010
  17. ↑ Vermont Public Radio "Public Hearing Set On VT Budget" April 5, 2010
  18. ↑ 18.0 18.1 18.2 18.3 Wcax.com "Vt. Senate passes state budget" April 28, 2010
  19. ↑ 19.0 19.1 Battleboro Reformer "Senate passes budget" April 28, 2010
  20. ↑ Gov. Douglas' Office, "2010 Rescission Proposal to JFC," August 5, 2009
  21. ↑ Joint Fiscal Committee, "Committee Modifications and Comments," August 18, 2009
  22. ↑ Vermont Legislative Fiscal Office, "VT Revenue and Budget Picture," September 18, 2009 (dead link)
  23. ↑ Burlington Free Press, "Pressure grows on Vermont budget," October 29, 2009
  24. ↑ State of Vermont Agency of Administration, "2009 Revenue Results," November 10, 2009
  25. ↑ WPTZ, "Vt. Emergency Board To Get Revenue Forecast: Unemployment Expected To Rise Through Next Year," November 12, 2009 (dead link)
  26. ↑ Department of Finance & Management, Budget & Management Division, "FY 2011 Budget Instructions," October 2, 2009 (dead link)
  27. ↑ Vermont Legislative Fiscal Office, "VT Revenue and Budget Picture," September 18, 2009 (dead link)
  28. ↑ Vermont Legislative Fiscal Office, "VT Revenue and Budget Picture," September 18, 2009 (dead link)
  29. ↑ State of Vermont, "State budget process," accessed March 31,2009
  30. ↑ Budget Adjustment Act
  31. ↑ National Association of Budget Officers, "Budget Processes in the States," 2008 (dead link)
  32. ↑ 32.00 32.01 32.02 32.03 32.04 32.05 32.06 32.07 32.08 32.09 32.10 32.11 32.12 32.13 32.14 32.15 32.16 32.17 32.18 32.19 US Government Spending, "Vermont State and Local spending," accessed March 30,2009
  33. ↑ Vermont State Auditor Web site, accessed November 16, 2009
  34. ↑ audit reports
  35. ↑ Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  36. ↑ Vermont Department of Finance and Management Web site, accessed November 16, 2009
  37. ↑ CAFRs
  38. ↑ State of Indiana, “State Credit Ratings-as of June 24, 2009"
  39. ↑ Vermont Transparency
  40. ↑ Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  41. ↑ Wall Street Journal, "Stimulus Spending by State," March 12,2009
  42. ↑ H.R. 1586
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