Mental health agencies escape worst of cuts
Mental health and developmental disabilities agencies will see a 2.5 percent cut for the remainder of the 2009 fiscal year rather than the 4 percent cut called for in Gov. James Douglas' budget rescission proposal.
The change follows public hearings held earlier in the week in which several people who rely on state-funded outpatient services provided by the agencies testified.
"Vermont's a family. We're facing the toughest financial crisis that most of us have lived through. We're not going to desert the members of our family who need us the most just because it's tough times," said Senate President Pro Tem Peter Shumlin, D-Windham, a member of the Joint Fiscal Committee.
Incoming House Speaker Shap Smith, D-Morristown, said reducing cuts to the human service agencies will help prevent additional costs to the state in the future.
"We made these changes with an eye to the future," Smith said. "Without adequate mental health services, vulnerable Vermonters may end up on our streets and in our hospitals, which costs more in the long run."
Robert Pini, community relations director for United Counseling Service in Bennington, said a reduction in cuts is helpful, but will not eliminate hardships.
"We appreciate the thoughtfulness of the Joint Fiscal Committee and the administration, but it's still necessary to cut services," Pini said.
The state is trying to patch a $66 million budget deficit caused by declining state revenues and other upward budget pressures. About $37 million is from a downgrade in the consensus revenue forecast, and the remaining $29 million is from upward budget pressures across state government, according to the administration.
The cuts approved Friday by the Joint Fiscal Committee fall short of the amount needed to balance the budget. The full Legislature, which will begin its new session next month, will need to address the remaining budget deficit.
Douglas spokesman Stephen Wark said Friday that the governor "appreciates the efforts of the Legislature" in addressing the budget deficit, but "wishes they had gone further."
"Today's approval is a good first step, but we still have a $46 million problem that remains," Wark said. "We all know people will be impacted but our job is to minimize that impact by taking decisive action now."
The Joint Fiscal Committee also postponed until April 1 the implementation of child care income eligibility changes to low-income Vermonters and reduced by half cuts to the Individual Development Accounts and micro business lending program.
The three major changes mean about $1.8 million in aid will remain available to the state's most vulnerable residents, lawmakers said.
"Working parents rely on access to affordable child care and the micro businesses program is more important than ever as Vermonters pursue lasting economic opportunity in these difficult times," Smith said.
To account for the changes, the Joint Fiscal Committee reduced the state's expenditure of Vermont Housing and Conservation Board funds and unused Next Generation funds by $250,000 each. In addition, unused funds in an energy loan program will be transferred to the general fund, the Judiciary branch will take a 5 percent cut in funding and funding for drivers' education grants and technical center grants will be derived from the state's education fund rather than the general fund.
Lawmakers said the Douglas administration's proposal to have all executive branch employees exempt from state contracts and making more than $60,000 per year take a 5 percent pay cut will yield $165,000 more in savings than previously thought.
"We believe that $410,000 can be saved by the administration with those cuts," said Sen. Dick Sears, D-Bennington, a member of the Joint Fiscal Committee.
Lawmakers will also need to craft the 2010 fiscal year budget during the next legislative session. State officials are already expecting drastic revenue shortfalls, however.
Sears said the state will need to look beyond budget cuts to address the shortfalls and maintain essential government services.
"I don't see any choice but to talk about rainy day funds and increase some taxes," Sears said. "To get out of this we're going to have to look at all three ways."
Shumlin said he expects the Legislature to do three things to address the problem: Look for help from a federal economic stimulus package expected to be passed when President-elect Barack Obama takes office; find ways to deliver government services more efficiently; and, "work with Douglas to come up with a comprehensive plan to deal with the crisis."
Shumlin said he, too, believes tapping the state's rainy day funds will be needed to balance the 2010 fiscal year budget.
"There's no question that we're going to have to use the rainy day fund. It's raining, the question is when we're going to use it," he said.
Vermont's capacity to raise revenue through taxes or fees is limited, however, according to Shumlin.
Any effort by the heavily Democratic Legislature to use the state's rainy day funds or raise taxes to increase revenue could set up a showdown with Douglas, who remains steadfastly opposed to both measures.
"Generally speaking, the governor does not support new taxes or dipping into the rainy day funds," Wark said. "This cannot be solved through more taxes. Right now, the belief is that there's no capacity and there is not support from the governor for new taxes."
"The rainy day fund serves a purpose, but we don't believe it's reached that level yet. We'll all know it when we see it."
Contact Neal P. Goswami at firstname.lastname@example.org
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