Gov. Peter Shumlin proved Thursday that he knows how to balance a budget: cut spending and raise taxes.
Asterisks are required for two of those terms. In budget talk (and this applies in much of the private sector as well as government) to “cut spending” does not mean actually to spend less. Spending is slated to be higher in fiscal year 2017 (starting July 1) than in fiscal year 2016.
But, say the governor and his budget, spending would be some $38 million higher had the administration not proposed cutting some programs, implementing some savings, and eliminating at least one facility – the work camp at the St. Johnsbury Correctional Facility.
As to taxes, in Shumlin’s words, he was proposing only to increase certain assessments and fees.
The distinction may not be apparent to everyone, especially those whose fees and/or assessments would rise.
They would include doctors who are not affiliated with hospitals and all dentists who would pay a “provider assessment” (as hospitals and their affiliated physicians already do) which would raise $17 million and bring in another $20 million in federal aid. Another $13 million would come from doubling, to $1,200, the annual fee mutual funds pay to the state.
This is Shumlin’s sixth and last budget. They have all been balanced (effectively, if not legally, they must be), and as he reminded a joint session of the Legislature yesterday, they have been balanced without raising “the income, sales, or rooms and meals tax rates.”
What could be different about this budget is that the 3.1 percent increase in General Fund spending “is matched by an identical projected increase in revenues,” Shumlin claimed.
If that holds up, this budget could put an end to what has become an annual predicament for both the governor and the legislature, who each year have faced a situation in which projected revenues fall tens of millions of dollars short of required expenses.
If Shumlin’s arithmetic is correct, if he gets all the added revenue he asked for and if the projected savings and reductions are approved by the Legislature (and the savings estimates turn out to be realistic), that gap might be much smaller or perhaps even non-existent in coming years.
But those are all big “ifs.” Legislative Republicans didn’t even accept the arithmetic. House Minority Leader Don Turner said spending was still “outpacing revenue,” if $4 million of “one-time money” is added to the spending total.
That $4 million is far less than the “one-time” amounts used to shore up the budget in recent years, both during Shumlin’s tenure and that of his predecessor, Jim Douglas. And Shumlin said none of the $4 million would finance “ongoing state expenses.”
In addition, it is not at all certain that the Legislature will approve either the governor’s tax increases or his budget reductions.
Calling the provider tax an “assessment” is not likely to make it smell any sweeter by that other name to the doctors and dentists. Some of the additional revenue would be returned to health care providers in the form of higher reimbursements for Medicaid patients. Even so, on balance the doctors and dentists are likely to lose more than they earn, and legislative leaders expect opposition from the Medical and Dental Societies, who have a fair amount of clout with lawmakers.
So does the financial industry, which may fight the additional mutual fund fee, even after Shumlin reminded them that Vermont’s rate would remain far lower than its neighbors.
At least two of Shumlin’s proposed spending cuts could meet strong resistance in the Legislature. One would speed up the process under which some mental patients can be medicated against their will. The longer that process takes, the more expensive it is. But some advocates for the mentally ill oppose any involuntary medication at all.
And advocates for low-income women —a powerful bloc in the Legislature – are not likely to look kindly on a plan to reduce the income level by which needy pregnant women qualify for Medicaid. They now qualify if their incomes are 213 percent of the federal poverty level. The new budget would cut that to 138 percent, no doubt removing many of them from the Medicaid roles.
As for that planned closure of the St. Johnsbury work camp, it immediately met the opposition of Rep. Janssen Willhoit of St. Johnsbury. Willhoit, a lawyer who serves as a public defender, said he was motivated by his concern for inmates who might benefit from the work camp experience.
Legislators also tend to oppose closing any facilities in their district.
