Campaign for Vermont: Restoring Fiscal Health First Step Toward Real Reform

To implement the big ideas that will help build an economy where everyone is secure and can prosper – transformational reforms – lawmakers must first restore the fiscal stability of the state budget.

That was the message Monday from Bruce Lisman, founder of the independent, non-partisan Campaign for Vermont when the organization released a thorough analysis of trends in the state budget.

“At this moment in time, the instability of our state budget is the biggest obstacle to the big ideas we need to build an economy where everyone is secure and every family can prosper, “ Lisman said.

“The need for bold new investments in vital areas like education, healthcare and human services is widely recognized,” Lisman continued. “But Vermont must first solve the chronic, recurring problem of large budget gaps, cost shifts and shortfalls which prevent meaningful reforms.”

Specifically, the organization called on Montpelier to limit this year’s budget increase to inflation, plus

population growth; move to a more effective human services management system; and reduce budget tricks known as “cost-shifts” that obscure the true costs of state mandated expenses by moving them onto the books of non-state entities.

“From 2009 to 2012, state leaders were seduced by the ‘one-time’ stimulus money from the federal government,” said Tom Pelham, a co-founder of Campaign for Vermont. “Since then, we’ve experienced difficult budget gaps filled by property tax and income tax increases and this year there’s another ‘budget gap’ of $50 to $70 million.

“We’ve let ourselves go, fiscally,” Pelham said. “And the first step to restoring our fiscal health is for lawmakers to acknowledge and understand the depth of the problem and to seek solutions beyond just spending cuts and revenue increases.”

Limiting spending increases to inflation, plus population growth—a basic and long-held principle of fiscal

sustainability advocated by governors like Snelling, Dean and Douglas—would be a logical step, Pelham and Lisman said. Under that formula, this year’s budget would increase by 2.55%.

“We need balanced leadership,” Pelham added. “While some advocate for more spending, others have to step forward and acknowledge that there are fundamentally unsustainable trends that are getting worse, not better. Like Washington, they have to stop kicking the can down the road and return the state to full fiscal health. From there, reforms can be made that will grow the economy, create jobs and put Vermonters who are struggling on a real path to prosperity.”

Lisman said the Agency of Human Services is perhaps the best example of the opportunity to better serve Vermonters.

“The Shumlin administration said recently that they don’t know why certain human service caseloads are growing. That’s revealing,” Lisman said. “There’s no better evidence of the need for change than when an agency doesn’t have management systems to understand the need for a $3 million budget increase.”

Since 2008, human services’ spending has increased 29%. During this period, the states’ population has grown by less than one-half percent per year. And, despite these expenditures, outcomes for low income Vermonters have not improved.

“We need to reform the systems we using to move Vermonters out of poverty, because they’re not getting adequate results,” Lisman said. “Vermont has created a system of ‘stove pipe’ services that is inefficient to manage, and complicated, inflexible and, in too many cases, ineffective for beneficiaries.”

Campaign for Vermont recommends a “shared-view-of-the-client” that groups each state benefit and service by client, including non-human service programs such as the EITC, income sensitivity and Efficiency Vermont. With this data base, public managers, the legislature and advocates would have a clear view of the flow of funds within the system and could redesign it to make better use of funds. Such a system would create an individual plan for each client that eliminates eligibility cliffs and includes a clear path to financial security and independence.

Campaign for Vermont also noted that ‘cost shifting’ – the practice of hiding the cost of state programs on the balance sheets of non-state entities – allows lawmakers to hide from the fiscal consequences of their decisions. “Cost shifting is the opposite of fiscal transparency,” Pelham said. “It’s a budgetary practice we should reduce and eventually end. If the service is valued and necessary we should fund it through legitimate and totally transparent revenue streams.”

Campaign for Vermont’s full analysis of the 5-year budget trends is available at: “Sustainability Today Brings Opportunity Tomorrow” or www.CampaignForVermont.org.

Campaign for Vermont (CFV) is an independent, non-partisan policy organization founded by Bruce Lisman, Mary Alice McKenzie, Tom Pelham and 23 Founding Partners from across Vermont. CFV’s mission includes advocating for practical and non-partisan solutions that result in greater government transparency and accountability, a stronger and more diverse economy with more and better-paying jobs, and an unwavering commitment to social responsibility and environmental stewardship. Through CFV, Vermonters from all over the state, and from all points of view, are working together to build consensus around ideas that will ensure every Vermonter is economically secure, no one lives in poverty and everyone has a chance to prosper.