Gov. Shumlin Delivers Sixth Balanced Budget to Legislature
MONTPELIER – January 21, 2016 – In his annual Budget Address, Gov. Peter Shumlin delivered to the Vermont Legislature today his sixth balanced budget that does not raise income, sales, or rooms and meals tax rates on hard working Vermonters. The Governor’s proposed budget closes a $68 million budget gap and is the first since 2009 that does not to rely on the use of one-time funds to pay for on-going state expenses.
The Governor’s budget proposal outlines a roadmap to achieve his top priority of making the lives of Vermonters more secure. The proposal includes funding for priorities he outlined in his State of the State Address two weeks ago, including a College Savings Accounts for every kid born in Vermont and a new Step Up Program to help Vermonters stuck in low wage jobs get back on the academic track and the path to success.
Overall, the Governor’s budget matches the projected 3.1 percent revenue growth for next year with General Fund spending increases. As with his six previous budgets, the Governor’s proposal today fully funds pension payments, does not raid rainy day funds, meets debt service obligations, and honors the statutory obligation to the Education Fund because Vermonters can’t shoulder additional property tax increases.
The Governor’s budget includes:
No One-Time Money for On-Going State Expenses
For the first time since the Great Recession, the proposed budget does not rely on one-time money to pay for on-going state expenses. Gov. Shumlin has worked to wean the state off the use of one-time money, which began in 2009 and reached a high point of $171 million in 2010 under the prior Administration.
Paying for Medicaid
Last year, Gov. Shumlin proposed a modest 0.7 percent payroll tax to pay for the expanded costs resulting from signing up Vermonters for Medicaid under the Affordable Care Act. The proposal would have drawn down $100 million in federal funds to shore up the state’s Medicaid program, addressed the cost-shift that causes private insurance premiums to rise, and reimbursed more adequately hospitals and providers who treat those on Medicaid. Failure to enact that proposal, or a long-term solution to pay for Medicaid, created a $55 million shortfall in Vermont’s Medicaid program this year.
To fill that gap, the Governor proposed today expanding to physicians and dentists the provider tax that is already paid by hospitals and nursing homes. Under the Governor’s proposal, hospitals and nursing homes would continue to pay 6 percent, while dentists and physicians would pay less than half of that, or 2.35 percent. The proposal would raise $17 million in state funds and draw down $20 million in federal funds, which will be used to increase Medicaid primary care and dental reimbursements for providers. Specifically, the funds will restore the ill-conceived cuts to reimbursement rates made by the Affordable Care Act at the end of 2014.
Doubling Down on Health Care Cost Containment with the All Payer Model
The Governor also announced today that next week his Administration, working with Chairman Al Gobeille and the Green Mountain Care Board, will detail the specifics of what Vermont is asking of the federal government to help transition the state’s payment model from one that relies of fee-for-service and quantity to one that focuses on outcomes and keeping patients healthy.
Said Gov. Shumlin, “The All Payer Model is about restoring the relationship between Vermonters and their family doctor or health care provider. It is no small irony that our future in health care is about restoring this decades old relationship that has been eroded under our current expensive, fee-for-service, managed care system.”
Investing in Education, Not Incarceration
Gov. Shumlin’s work to reduce its incarceration rate to the lowest point since the early 2000s has saved the state $20 million, money that is now being used to provide universal Pre-k, free school meals, and expanded dual enrollment and early college programs. The Governor today proposed continuing that work by closing the work camp at the St. Johnsbury Correctional Facility because of Vermont’s falling inmate population. Instead, the Governor is proposing to use most of the just over $1 million in savings to fund the Step Up program he announced in the State of the State, which will help those in low-wage jobs get back on the academic track and the road to a brighter future.
“Let’s use our tax dollars to educate, not incarcerate,” Gov. Shumlin said.
College Savings Accounts for Every Vermont Kid
In his State of the State Address, Gov. Shumlin called for the funding of a $250 child savings account for every kid born in Vermont, and a $500 account for low-income kids. Research shows that a college savings account can increase by three to four times the likelihood that low and moderate income kids will attend college. To pay for the program, the Governor is proposing to raise a registration fee Vermont charges to mutual funds selling products in the state. The current fee of $600 is the lowest in New England. The Governor is proposing to bring it up to par with other New England states by raising the fee to $1200, which will still be half of the $2400 Massachusetts charges.
Ending Family Homelessness by 2020
Gov. Shumlin and his Human Services Secretary Hal Cohen have set a goal of ending family homelessness by 2020. To help do that, the Governor is directing his Administration to develop a plan to ensure that 15 percent of taxpayer-funded housing in Vermont is dedicated to homeless families and those with special needs. The Governor’s Agencies of Human Services and Commerce and Community Development will work with the Vermont Housing Conservation Board, our non-profit housing developers, service providers, the Governor’s Poverty Council, and others to develop a pathway to make this happen.
More Resources to Combat Opiate Addiction and those on the Front Lines
Building on the call in his State of the State Address for more action to combat opiate and heroin addiction, the Governor’s budget will include $200,000 to make permanent the naloxone pilot program that has helped reverse hundreds of overdoses, an additional $150,000 to keep needle exchange programs operating across the state, and $420,000 to open a new treatment hub in northwestern Vermont that will treat an additional 400 Vermonters. The Governor’s budget also provides resources for those on the front lines of the opiate and heroin battle, including $9.9 million to fund positions for the Department of Children and Families, the Judiciary, the States Attorneys, and the Defender General, as well as $2 million to improve safety for state employees doing this important and difficult work.
Similar to his call two years ago to take the disease of opiate and heroin addiction out of the shadows, Gov. Shumlin today called for Vermont to talk openly about the those being lost to suicide. The Governor cited the recent tragic death of Betsey Catlin of East Montpelier, whose family took the courageous step of publicly acknowledging her suicide, which is the second and third leading cause of death for Vermonters ages 15 to 34 and 35 to 44, respectively. To help more Vermonters who are struggling, the Governor’s budget will almost double funding to the Vermont Suicide Prevention Center.
Here is a copy of the Governor’s Budget Address, as prepared for delivery.