Dear friends and neighbors,
This legislative report is the first in a three-part series that briefly summarizes some of the issues we, your state representatives, addressed during a challenging budget process. Our job as legislators is to make sure our decisions are informed, balanced, and thoughtful. We welcome your thoughts on these and other issues.
Joan and Kate
Rep. Joan Lenes
Rep. Kate Webb
For the seventh year in a row, the Legislature began the 2014 budget process with a projected gap between estimated revenues and expenditures. Each year, the Legislature has struggled to find the right balance between maintaining necessary services while making investments for the future. As in previous years, the Legislature balanced the state budget and made difficult choices. The following reflects a few highlights.
Health Care and Human Services spending is roughly $2 billion per year, or about 40 percent of the statewide budget. This includes Medicaid, Long Term Care, VHAP (Vermont Health Assistance Program), Catamount Health, 3Squares, Reach Up, and General Assistance. This year’s budget invests $18 million state dollars in Medicaid expansion to leverage $68 million in federal dollars, helping to transition Vermonters who are on state-sponsored VHAP and Catamount as well as uninsured or underinsured Vermonters to the new Vermont Health Connect. The final budget addressed the Medicaid cost shift by increasing the long overdue provider reimbursement by 3 percent. This will affect not only hospitals and doctors but also our direct care workers who serve the developmental services and choices for care populations.
Childcare is another important part of the human services budget. The Legislature invested an additional $4.5 million in childcare in 2014, expanding both who qualifies for childcare subsidies and raising the subsidy by 3 percent, a benefit to childcare providers.
For the first time, the State appropriated dollars for LIHEAP in the base budget; recognizing that what was for many, many years a federal responsibility must now be partially paid for by the state in order to keep Vermonters safe and warm.
The Legislature invested in housing by redirecting general assistance from crisis management to housing supports. Along with this, the Legislature added support for Vermonters with substance abuse and mental health issues. The funding for the new state hospital, Reach Up, supports with additional substance abuse focused case workers, and the addition of a manager for the Hub and Spoke initiative are a few examples.
Transportation spending is 12 percent of the statewide budget. In fiscal year 2014, the State of Vermont will leverage $260 million in state transportation funds in order to obtain $370 million in federal transportation money, for total combined spending on the maintenance and construction of Vermont highways and bridges of $630 million. A new tax on gasoline and diesel fuel will allow the state to maximize federal matching funds that would otherwise be left on the table, so necessary to fund essential road and bridge repairs. A driver using 40 gallons per month would pay an additional $2.36/month in taxes.
Agriculture and Forest Products remain an essential component of our rural character and economic future. The 2012 Act 142 created the Working Lands Enterprise, bringing a new commitment to agriculture and forest product businesses in Vermont. This spring, 20 applicants received awards from $3,000-$15,000 for processing equipment; facility upgrade and expansion; product development; technical assistance; and start-ups with another round forthcoming. The 2013 Legislature continued this commitment by adding an additional $250,000, for a total of $1.425 million, in Working Lands Initiative money for 2014. These funds will continue to help Vermont start new businesses, build on existing ones, while helping others diversify.
The Legislature appropriated funds to address Jobs & Economic Development in Vermont. We’ve taken steps to both build jobs and get people back to work. In addition to our increasing investments in working lands, by using further investment from the federal government to rebuild from Irene and supporting employers hit by that storm we are building industries and jobs of which Vermont can be proud.
Education spending is 34 percent of the $5 billion statewide budget. A $70 million increase in education spending statewide required an increase in the education tax rates for FY14. These tax rate increases prompted us to look closely at possible ways to curb education spending, particularly as our student numbers decline.
The establishment of Act 68 encouraged increased spending in property-poor communities but did little to suppress spending in high spending communities. The only real tool that was put in place was the spending threshold over which taxpayers in high-spending communities would pay double in per-pupil spending over the threshold. This session, the Legislature reduced the threshold from its current 125 percent to 121 percent of the previous year’s statewide average per pupil spending.
The legislature also created two studies: first, to look at the renter rebate program to analyze if the $8 million we are spending on this program is achieving the goal of helping low-income renters effectively; and secondly, a data collection and recommendation process, looking at our staff-to-student ratios to make recommendations about possible tax consequences for an excessive number of paid adults in the school buildings.
Over the next two weeks, we will provide updates on a variety if different actions undertaken this session. We are available by phone, email, or appointment in the summer and fall.