MONTPELIER — Gov. Peter Shumlin outlined his proposed $5.6 billion budget Wednesday, promising to boost funding for opiate abuse treatment, fully fund teacher and state worker pension plans and close a projected $70 million budget gap, all while avoiding increases in broad based taxes.
In his annual budget address inside the House chamber to a joint session of the Legislature, Shumlin said his 2015 fiscal year spending plan will not gut existing programs. Instead, it looks to curb the rate of growth, he said.
The $1.44 billion general fund, an increase of 3.56 percent more than the current year, reduces the use of one-time funding sources that the administration and lawmakers relied on during the heart of the recession, he said. The proposed budget represents a 4.7 percent increase in overall spending.
The proposal “matches Montpelier’s appetite for spending with Vermonters’ ability to pay,” the Democrat governor said.
In his nearly 40-minute speech, Shumlin declared great progress since he took office in 2011.
“Jobs have rebounded from the depths of the recession, with over 11,000 new jobs created since I first spoke to you three years ago. In the last year alone, we’ve seen 2,000 jobs created in our manufacturing and professional services sector, with our wages finally rising faster than inflation,” the governor said.
To close the budget gap, Shumlin plans to use about $30 million in one-time funds. That money includes increases in federal matching funds for various programs, a $5 million settlement with the Vermont Yankee nuclear power plant, $8.3 million in settlement funds from tobacco giant R.J. Reynolds, $3 million in cash from a separate tobacco settlement and about $14 million in additional funding provided by the federal Affordable Care Act.
Additional funding to close the gap will come from a $5 million reduction in anticipated need for debt relief, $8 million in nongeneral fund sources for IT projects within the Agency of Human Services, and $29 million in increases in special and federal funds.
Shumlin said he is not asking lawmakers to increase any broad base taxes such as income, sales or rooms-and-meals taxes. However, he is seeking an assessment levied on health-care claims. The 0.8 percent tax on health-insurance claims will generate about $14 million and cover the costs of the state’s online health exchange, Vermont Health Connect.
The tax, which was not mentioned by Shumlin in his budget address, is levied on claims as a group, not on individuals. Insurance companies will pass that cost back on to customers through premiums, though, aides said.
Rather than “eviscerate” existing programs, Shumlin said, his plan focuses on curbing the rate of growth in state government. No programs are eliminated or substantially cut under his proposal.
Shumlin said the declining use of one-time money used to patch the budget in recent years. His proposal uses about $30 million, down from $55 million last year. Growth in the state’s revenue is helping the state fill the gaps, he said.
“The president and Congress, and our great federal delegation, helped all the states through one of the worst downturns in American history by sending hundreds of billions of dollars in stimulus. That funding is now over,” Shumlin said.
He offered few new programs or spending initiatives, but did ask lawmakers to reconsider issues he raised last year. Among them is the Vermont Strong Scholars program, which would provide a full year of tuition to Vermont students who enter a math, science or technology-based job after attending one of the Vermont State Colleges or the University of Vermont.
And Shumlin again asked lawmakers to send him a universal pre-kindergarten bill that he can sign into law.
Shumlin decried a rise in the statewide property tax, which funds public education. Despite five- to seven-cent projected increases in rates, Shumlin said many school districts are contemplating increased budgets in March. He urged Vermonters to scrutinize local school budgets.
“Look hard to see if you can achieve savings for better outcomes at lower cost. Remember, you have the power to determine your school budgets, but you can’t make a difference if you don’t participate,” he said.
A 2 percent increase for the state colleges is included in the spending plan. Shumlin said it will be the second year in a row the colleges receive an increase in funding after five years of level funding.
And to attack one of the state’s biggest long-term issues, Shumlin is devoting $2.5 million in new funding to help develop a plan to fund health insurance for retired teachers. Costs have been covered to now by the teacher-pension fund. Shumlin said the administration and lawmakers must develop a better solution this legislative session.
Meanwhile, anti-poverty initiatives the governor announced several weeks ago, totaling about $3 million in new funding, will be paid for by growth in the property transfer tax. Shumlin said the funding will increase rental subsidies and funding for emergency housing, and will provide additional substance abuse and mental-health treatment for Vermonters on state assistance programs.
Last week, the governor devoted his entire State of the State address to Vermont’s struggles with opiate addiction. On Wednesday, he said his administration was devoting $10 million in new funding to increase treatment capacity by 40 percent and prevention efforts by 14 percent.
Much of the funding, about $6.7 million, will come in a transfer from the Department of Vermont Health Access. Funds previously incurred in the state’s Medicaid program for emergency room treatment will instead be used to fund more appropriate treatment programs. Another $1.3 million comes in increased federal matches.
The proposed budget includes funding for operation of a new, 25-bed mental-health facility in Berlin, Shumlin said. He urged lawmakers to review state policies and make necessary adjustments. According to Shumlin, Vermont is an outlier among states in that cases surrounding treatment of mental-health patients take so long to reach their conclusion in court.
Doctors and other providers will see a 2 percent increase in Medicaid reimbursements. The program, which includes state and federal funds, will see the higher payments take effect Jan. 1 of next year, Shumlin said.
The struggles with the federally mandated site, Vermont Health Connect, are a clear indication why the state should remain focused on seeking a universal, single-payer health-care system, Shumlin said.
“The difficult rollout of the exchanges here and across America should remind us one again that we need, we deserve and we can have simple, universal, affordable, comprehensive health care for all where costs are sustained and access to quality care is guaranteed just because you are a Vermonter,” he said.
Shumlin offered no new details on how his health-care plan, slated to begin in 2017, will be funded.
In a Republican news conference following the speech, Senate Minority Leader Joe Benning of Caledonia County slammed Shumlin for failing to offer details of his looming health-care plan.
“Unfortunately, I hear nothing more than campaign rhetoric. Vermonters are facing a very serious issue, and it is time for us to start asking the tough questions and incorporate those questions into an actual game plan for how to deliver a system that is bigger than anything any of us in our lifetime have seen instituted in the state of Vermont,” Benning said.
“Vermonters have a right to know. This is not a ‘nothing burger.’ Simply put, where is the beef? How much is it going to cost? Who is going to pay for it, and how are we going to pay for it?” Benning asked. “Those issues remain unstated.”
To maintain economic development efforts, Shumlin told lawmakers he is looking to expand apprenticeships and job training programs. The state’s Regional Development Corporations., which focus on recruiting and maintaining businesses, will see a 9 percent increase in funding.
Shumlin said the state’s growing technology sector, which includes companies such as Dealer.com and My Web Grocer. Shumlin said the state must compete with other states to maintain existing companies and recruit new ones. He offered no new initiatives, however, other than pledging that members of his administration will work with lawmakers on that task.
Shawn Shouldice, state director for the National Federation of Independent Business, said Shumlin offered no plans to help small businesses in Vermont that aren’t in the tech industry.
“While NFIB is a proponent of innovation and entrepreneurship, most of the businesses that are here now, which create most of the jobs and which support the state’s economy, are not high-tech companies. They need help, too,” she said.
The transportation budget includes an increase of $33 million, raising total transportation spending to $686 million. The funding will help the state replace or repair 100 bridges, pave 300 more miles of road and expand carpooling efforts around the state, Shumlin said.
The western rail corridor will also see continued funding in Shumlin’s budget. He said new investments will improve tracks between Rutland and Burlington, and help the state achieve its goal of passenger rail all the way to New York City through Burlington, Rutland and Bennington.
“My budget proposes $19 million to extend these improvements, bringing us closer to our goal of growing jobs and economic opportunity by delivering better freight and passenger rail service up and down the western side of Vermont,” he said.
House Minority Leader Don Turner of Milton said during the Republican news conference that his caucus is glad to see a reduction in the use of one-time money, a position they have been advocating for several years.
“We have for the last several years been calling on the governor to reduce the dependence on use of one-time money in the budget,” he said. “We’re happy to see this year the governor is moving in that direction. Although $30 million in one-time money is still a lot of money, it still does put us in a better direction.”
Still, the proposed budget is higher than Vermonters can support, Turner said.
“Proposing a budget that exceeds the growth rate of Vermont’s economy and … the paychecks in Vermonters’ wallets is bad policy and not financially sustainable,” he said.
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