Surprise Savings Allow Lawmakers, Governor To Close Budget Gap With Little Controversy

Aug 17, 2017

This year has featured some intense political battles over how to balance the state budget, but Vermont’s latest fiscal challenge wasn't one of them.

A revenue downgrade has forced elected officials to trim $12.6 million from the budget they passed only a few months ago. On Thursday afternoon, members of the Legislature’s Joint Fiscal Committee met in the Statehouse to vote on Republican Gov. Phil Scott’s revised spending plan.

The unanimous ‘yes’ vote, taken at the end of a hearing attended by only handful of spectators, marked the end of a surprisingly uncontroversial rescission process.

“I don’t think there will be a major impact that will be felt,” says Adam Greshin, the commissioner of finance and management for the Scott administration. “That was part of the challenge of finding $12.5 million that would not have a major impact on Vermonters, and I think we’ve done that.”

Greshin says the rescission plan adopted by lawmakers on Thursday will leave Vermonters who rely on government programs virtually untouched. He isn’t alone in that assessment.

“It seems that we have closed the revenue downgrade of the $12.6 million in a way that has very little impact, if no impact, on Vermonters,” says Caledonia County Sen. Jane Kitchel, the Democratic chairwoman of the Senate Committee on Appropriations.

"It seems that we have closed the revenue downgrade of the $12.6 million in a way that has very little impact, if no impact, on Vermonters." — Caledonia County Sen. Jane Kitchel

Kitchel says she’s been through far tougher rescission plans in the past.

“And there were times when we were actually having  to make very tough proposals relative to reduction of services in health care and other areas,” Kitchel says.

This year, Kitchel says, lawmakers got lucky.

A newly revised forecast says the state will spend $25 million less on Medicaid than lawmakers had previously projected. While the bulk of the savings will go to the federal government, Vermont will be able to use $4.5 million of that savings to offset reduced revenues elsewhere.

The state is also expecting $3.5 million more in fee revenue from the Department of Financial Regulation. Greshin says it’s the result an improving economy that has seen more brokerage firms registering to sell financial services in the state.

Vermont’s budget is by no means on safe ground now. Greshin says proposed cuts at the federal level could significantly reduce revenues on which this year’s spending plan relies.

“We like most states are anticipating, or we’re prepared, for news that we may not like from Washington. We don’t whether that will happen or not,” Greshin says.

The Scott administration says reductions in Medicaid spending are the result of fewer people being enrolled in the federal health care program. And they say benefits will not be reduced to meet the new spending target.

The total revenue downgrade, announced last month, was closer to $30 million. But lawmakers had been anticipating the bulk of that downgrade — it was a due to tax refunds for corporations — and made provisions in the fiscal year 2018 budget to cover the expense.