Governor Shumlin’s budget: Initial reactions

by Rob Roper

Montpelier — Planning for a $4.8 billion state budget, it is encouraging that Governor Shumlin reiterated his commitment to not

Peter Shumlin adjusts his teleprompter before the speech

raise broad based taxes to close a gap that turned out to be over $170 million. The bulk of filling that gap will come from $83 million in general fund reductions, mostly from human services programs. This is a budget that spends less, overall, than the budget that preceded it.

However, that doesn’t mean all Vermonters will be seeing more cash in their pockets in the future.   There is a very real chance that, due to the failures in the education sector to meet their cost reductions benchmarks under Challenges for Change, Vermonters will see a 2.5 percent property tax increase.

Shumlin’s recommendation to fold Catamount Health, Vermont’s last and much heralded attempt at reform to reign in health insurance costs, into VHAP (Vermont Health Access Program) is essentially an admission that Catamount was a failure. The change, if adopted, would mean that current Catamount participants would see their deductibles rise from $500 to $1200.

Doctors, dentists, hospitals and patients would also feel pain as a result of the change. Shumlin announced an $18.7 million increase the current provider tax on hospitals and nursing homes, and it expands that tax to health insurance companies and dentists, which will raise an additional $9.2 million.

Given Catamount’s failure and the necessity to raise taxes on hospitals, dentists, nursing homes, etc., Shumlin’s exuberant commitment to another iteration of health care reform as a source of future savings came across as naïve. His eager acceptance of Dr. Hsiao’s assumptions of $500 million in savings from a single payer system, estimates which even the Dr. admits have a margin of error of plus or minus 15 to 20 percent, seem to based more on hope than rigorous examination.

As Rep. Tom Koch pointed out during the Republican response, “The lesson as we look at health care reform for the entire system is we need to be very careful that we get the facts right… and that we don’t make a mistake as we made in Catamount that we create a system that is unsustainable and we have a $5 billion mistake on our hands.”

Shumlin also reintroduced his support of expanding Universal Preschool, a campaign promise that was conspicuously absent from his innagural address. Shumlin estimated that the expansion would cost an additional $14 million. However, there was no money allocated in the actual budget for this expense, which led some to call this just empty rhetoric. (We will examine Shumlin’s claims about Universal Preschool in more depth in tomorrow’s edition.)

Lastly, this budget for 2012 sets the stage for a $35 million shortfall in the 2013 budget – a decision that some lawmakers are calling “not fiscally responsible.”