State grapples with $66M budget gap
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By Louis Porter Vermont Press Bureau - Published: December 4, 2008
MONTPELIER — Managers in state government are beginning to come to grips with a $66 million budget gap that will require nearly immediate cuts in state services and changes in how government functions.
In what has become an all-too-familiar ritual, department heads were asked by top budget officials in the administration of Gov. James Douglas to prepare plans for how to cut roughly 8 percent from budgets for the current fiscal year.
Lawmakers and administration officials are expected to meet next week to figure out what cuts can be made and how much they will save.
It is only the most recent trimming of state spending. In all, nearly $100 million out of a $1.2 billion state General Fund budget will be cut this fiscal year.
The nearly $66 million budget gap is made up of two components. A recent revenue downgrade resulted in about $37 million less revenue than expected, while the remainder is unexpected spending that will force budget cuts elsewhere.
"We are asking departments to submit to us their proposals by the close of business on Friday," Commissioner of Finance and Management James Reardon said. "We are trying to spread it across state government."
"There will be an effect on services and programs," Reardon acknowledged. Although managers are being asked to work on 8 percent reduction plans, there may be certain programs or departments that take a greater or smaller hit, perhaps even complete elimination, officials said.
"The list will be public next week," said Sen. Susan Bartlett, D-Lamoille, the head of the Senate Appropriations Committee. "I think Vermonters will then begin to understand the scope of the problem we are facing."
"The sooner we act on issues, the sooner we begin to save money," Bartlett said. For years many governments have effectively lived beyond their means, she added.
"Just like the federal government, Vermont and every other state has structural issues and we still have to deal with those," Bartlett said.
Senate President Pro Tem Peter Shumlin said this week that lawmakers on the Joint Fiscal Committee — the "money committee" legislators who meet throughout the year — and administration officials must come to an agreement on how to make most if not all of the cuts before January.
"We hope to have an agreement with the administration before the Legislature comes back," he said, adding that if such an agreement is not reached soon "the problem becomes compounded."
But "Joint Fiscal has limited capacity to cut $60 million without the help of the Legislature," he acknowledged.
It is also a difficult time for such decisions. Joint Fiscal Committee members have been reluctant to make cuts that will result in changes in policy direction without the help of the rest of their colleagues who will return to Montpelier in January. At the same time, both legislators and administration officials do not want to delay the cuts. The deeper into the fiscal year — which began in July — the cuts come, the deeper they must be to make up the shortfall.
Meanwhile members of the House of Representatives do not yet know who the Speaker of the House will be, and another revenue estimate — perhaps another revenue reduction — is expected in January, as well.
Finally, the plans of the federal government, which will also have a new leader in Barack Obama come January, remain something of a mystery. Medicaid spending, transportation spending and other decisions that will have an impact on the budget of Vermont and every other state remain unclear.
Daniel Fogel, president of the University of Vermont, announced Tuesday that the school would likely have layoffs soon, in part because of reductions in state support.
Out of a $250 million general operating budget, UVM was slated to receive about $41 million this year from the state. That appropriation was reduced by $1 million earlier and will likely be cut an additional $3 million now, according to the college.
Then state managers will turn to drafting the fiscal year 2010 budget, which may be worse still.
"It is absolutely critical that you return a FY 2009 rescission plan and FY 2010 budget that reflects a serious and comprehensive review of your missions and reductions based on an assessment of priorities," Secretary of Administration Neale Lunderville wrote this week to the heads of the departments of state government.
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