Federal cuts haunt Vt budget process
By Peter Hirschfeld
Vermont Press bureau | February 27,2013
MONTPELIER — As the partisan finger-wagging on Capitol Hill intensifies, lawmakers in Vermont are bracing for federal budget cuts that many here say seem unavoidable.
A report put out by the White House enumerates the financial impacts of the sequestration process on Vermont. Across-the-board cuts to human services, public safety, education, health care and the military will mean a reduction of more than $10 million in federal money coming to Vermont over the next seven months, according to the White House projections. And that figure doesn’t capture the dollar effect of furloughs or job losses for the thousands of federal employees who call Vermont home.
“It certainly will make a difficult budget even more challenging,” House Speaker Shap Smith said Tuesday. “And I am concerned about what it will mean ... as far as trying to put together a budget in a timely fashion.”
The question of how this state should respond to the brewing fiscal storm will reignite a familiar debate in Montpelier over revenues. Gov. Peter Shumlin has said the state lacks the wherewithal to back-fill federal reductions.
“We do not have the capacity to do any substantial cushioning,” Administration Secretary Jeb Spaulding said Tuesday.
After allocating $9 million in state funds to supplement diminished federal heating aid especially, Spaulding said, “we don’t have any further pots of money that are waiting for a catastrophe like this.”
Smith said he isn’t ready to shut the door on raising new revenues. The advent of sequestration, he said, would require a re-examination of the state’s fiscal priorities.
“If there’s a hole caused by sequestration, we could make it up by raising revenue to account for the hole,” Smith said. “I think we need to understand how essential the services are that are being cut, and make a determination about whether to raise revenue based on that assessment.”
Lawmakers will soon depart the Statehouse for a weeklong Town Meeting Day recess. Barring a breakthrough in Washington, D.C., they’ll return to a gloomier revenue forecast than the one they left.
Sequestration-related impacts include $2.6 million less for public education, a $1 million cut to programs for clean water and air, and a $1 million cut to funding for the Vermont National Guard base in Colchester. The cuts aren’t necessarily a large percentage of overall spending; the cuts to schools, for instance, come in a $1.4 billion public education system. But legislators and policymakers say the effects will be real.
“If it were to take place, it would be tragic for many Vermonters,” Spaulding said.
Secretary of Human Services Doug Racine will see many of the cuts land in the agency that he oversees. A $52,000 reduction to child vaccine programs, for instance, would mean “760 fewer children would receive vaccines for diseases such as measles, mumps, rubella, tetanus, whooping cough, influenza,” according to the White House website. A $270,000 cut to drug treatment in Vermont translates into 500 fewer admissions to substance abuse programs. A cut to senior nutrition programs would mean $204,000 less for meals, and the Department of Health would lose $55,000 that had been slated to pay for 1,400 HIV tests.
Racine said Shumlin has been clear that raising new revenues isn’t an option. If Congress hasn’t negotiated a deal to avoid the cuts by Monday, Racine said, he’ll begin looking at whether the agency should reallocate money from programs to which it’s already been appropriated.
“What I would try to do is say, ‘How do these impacts stack up against other programs, and can we shift dollars around to cause less harm than if these cuts go through as is?’” Racine said.
He said his use of the term “less harm” is deliberate.
“Because if these cuts go through, there will be harm,” he said. “These are really vulnerable populations we’re talking about. … It’s not going to be a pleasant discussion to have.”
Smith said the House will be making similar calculations.
“In some areas, areas where we have new spending, we may end up needing to pull back,” Smith said. “Certain items may get funding or they may not get funding based on whether sequestration goes into effect.”
The full effects of sequestration wouldn’t be felt for months; furloughs at the Vermont National Guard, for instance, wouldn’t come until late April, according to a guard release Tuesday.
Jack Lindley, chairman of the Vermont Republican Party, says it’s much ado about almost nothing.
“There’s going to be very minimal damage,” Lindley said. “I think things are being terribly overblown.”
Lindley said he’d like to see Democrats and Republicans get together and cut a deal. But he said it needs to include at least as significant a spending cut as the one awaiting the country if they do nothing. If Vermont and the U.S. can’t absorb the kinds of spending reductions associated with sequestration, Lindley said, then the state is doomed to economic failure.
“This is exactly what needs to happen if we’re going to get ourselves where we’re not borrowing 40 cents of every dollar we’re spending at the federal level,” Lindley said. “If we can’t get this accomplished, lord help us all in terms of what it means for our kids and grandkids.”
Sen. Jane Kitchel, a Caledonia County Democrat and chairwoman of the Senate Committee on Appropriations, said it isn’t just the immediate budgetary impacts that concern her. She said congressional gridlock is at least partly responsible for the revenue downgrade issued by economists last month. Those downgrades will continue, she said, if the private sector is forced to contend with perpetual brinksmanship in Washington.
“Revenues are to a huge extent down because of uncertainty in Washington,” Kitchel said. “And employers’ unwillingness to hire and make investments won’t go away until they know what’s going to happen.”