By Anne Galloway, VTDigger.org
In a letter released Tuesday, Aug. 25, Justin Johnson, the secretary of the Agency of Administration, urged commissioners and secretaries to be “extremely cautious and restrained” as they develop budgets.
Typically, budget instructions are issued to secretaries and commissioners in October and budgets are submitted about a month later. This year budgets must be submitted by Sept. 25.
The state has experienced a gap between state spending levels and tax receipts every year since 2009. State expenditures have risen by roughly 5 percent annually, while revenues have risen about 3 percent. While the state is expecting a moderate increase in tax receipts, revenues won’t meet current state expenditure levels. Spending pressure continues to build in two major areas: human services and education.
Secretaries and commissioners are expected to absorb employee retirements and pay increases for state workers. They are also required to submit performance measures as part of the budgeting process.
In fiscal year 2016, state departments and agencies are required to find additional labor savings and make adjustments based on a new retirement incentive that is to lead to a reduction in force of 300 employees.
Jim Reardon, commissioner of the Department of Finance, advises commissioners and secretaries to estimate federal funds conservatively, and if there is reduced federal support for programs, they should assume they won’t be replaced “unless you can demonstrate they meet a critical state policy goal.”