Democrats wrestle with budget challenges

by Angela Chagnon

House Appropriations Chair, Martha Heath (D-Westford)

Montpelier – Speaker Shap Smith (D-Morrisville) addressed the first meeting of the Democratic House Caucus. “This is the week that the pomp and circumstance ends,” Smith began. “Reality sets in.” He spoke on the hard work ahead for the Democrats to fulfill Governor Shumlin’s expectations for the legislature, and set some immediate goals for the Democratic members to begin implementing Shumlin’s proposed policies. Smith ended by saying, “I think the vision the Governor articulated is very ambitious and we have a lot of work to do.”

A good deal of that work was outlined by Mark Berrault, an analyst from the Joint Fiscal Office, who gave a short presentation about budget adjustments and the $19 million Federal education grant. Governor Shumlin announced his intentions earlier in the week to use that money to bail out Vermont’s education establishment after 39 out of 62 supervisory unions across the state failed to meet their targets for savings set under Challenges for Change.

The $19 million in Federal money was specifically earmarked to prevent teacher layoffs, and Berrault told the caucus that the grant came with a Federal mandate requiring it to be used only to help pay for school staff salaries and benefits. This came as a disappointment to the legislative members who had wanted to use the money to help meet school budgets in their districts.

Berrault said that Governor Douglas attempted unsuccessfully to broaden the terms of the grant to include other education expenses. (Douglas wanted to use the money to shore up unfunded pension liabilities). He was successful in adding an amendment to allow the money to be spent over two years rather than the one year it for which it was originally intended.

“This money will be available to help reduce the [school’s] budget, and thereby reduce their education spending,” said Berrault. “If you use 50% of [the grant] each year, many districts will presumably come down to their targets by FY13 by applying this money to each of those two years.”

Rep. Linda Waite-Simpson (D-Essex Junction) questioned Barrault, “I’m trying to conceptually figure out how this is a bridge, because otherwise what would happen is when your revenues decrease, your spending goes up,”

Berrault agreed. “That would happen the following year…districts would be able to apply that money over a couple of years to bring their budgets down more slowly.”

Chair of the House Appropriations Committee Rep. Martha Heath (D-Westford) also spoke about budget adjustments, pointing out that $60 million of the $150 million deficit is from the Education Fund. Compounding the problem, predicted savings from the Challenges for Change legislation were taken out of the budget, only for those savings to never materialize. Heath was asked how that was being dealt with in the 2011 budget.

She did not lay out a specific plan to deal with the deficit, but instead mentioned an unspecified amount of money left over from last year that might be used, along with $10.5-$11 million downs “largely in the property tax rebate program.” Heath added, “We have some reversions of money that was appropriated originally from previous years that hasn’t been spent, and that comes into the budget.”

Heath did not elaborate on where the money for Governor Shumlin’s massive universal healthcare or pre-K programs would come from, or what the plan was to deal with the full deficit which is estimated to be between $150 and $180 million.