Closing the $113 million budget gap

By Representatives Joan Lenes and Kate Webb

The budget process in this new biennium began with the recognition that we are in a new economic normal. Although short-term cuts and revenue changes had gotten us through previous recessions, it was clear that the gap between spending and revenue was continuing to grow. Long-term changes would be required. In January, the Speaker and leadership team shook up committee assignments, bringing in four new chairs and several new vice chairs, mixing and matching tri-partisan talents in new ways. These new teams were energized and productive.

Vermont was not alone in facing this new normal. Since the recession, revenue growth nationwide has slowed and federal funding for a number of important programs continues to shrink. Those on the political right wanted the gap closed only through cuts in spending. Those on the left wanted to close the gap only through new revenue. The bi-partisan House Appropriations Committee unanimously recognized that this year would require a bit of both. It also became clear that it would be ill advised to attempt to make all long-term structural changes in just one year. Future budgets will need to continue to trim away at this gap until closed. Expect another, but smaller gap next year.

The FY 2016 budget reflects a multiyear process to bring spending toward long-term sustainability. After four months of deliberation, the Legislature created a budget that closed the $113.2 million dollar gap with 50 percent coming from cuts, 28 percent in new revenue and fees, and 22 percent in one-time funds.

The budget includes initiatives to support cost-cutting changes to the criminal justice system; proposes two commissions to consider public-private partnerships and improve information technology; promotes efficiencies in State buildings, fleet and general operations and improves grant administration.

The budget sets five goals for long-term change: 1) Set budgets at less than 100% of expected revenue. 2) Explore movement toward a 2-year budget. 3) Reduce use of one-time funds. 4) Increase the use of multiyear analysis of program costs. 5) Include key outcome and performance measures comprehensively across programs.

Revenue raised to address this gap came primarily from removing exemptions to current tax code. Changes to income taxes are as follows: 1) No changes to charitable donations or medical exemptions. 2) Property tax and mortgage deductions capped at $15,500 for single filers and $31,000 for joint. 3) As some filers end up paying no tax at all, a minimum 3% will be factored in for those making over $150,000. The bill removes the food tax exemption for soft drinks, making them subject to the sales tax. Purchases made from vending machines will be subject to a meals tax, factored in at the time of purchase.

Over the next two weeks, we will present legislation passed on water quality and environmental issues; education; economic development and health care. We can be reached during the off session as follows: jlenes@leg.state.vt.us or kwebb@leg.state.vt.us.