On February 9, 2016

Budget summary: Shumlin proposes priorities

Shumlin delivered his sixth balanced budget to the Legislature on Jan. 21, highlighting the fact that it does not raise income, sales, or rooms and meals tax rate, while closing 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 budget proposal matches the projected 3.1 percent revenue growth for next year with General Fund spending increases. As with his previous budgets, it fully funds pension payments, does not raid rainy day funds, meets debt service obligations, and honors the statutory obligation to the Education Fund.

Highlights include:

No one-time money for ongoing expenses. For the first time since the Great Recession, the proposed budget does not rely on one-time money to pay for ongoing 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’s failure to enact Shumlin’s proposed 0.7 percent payroll tax to pay for the expanded costs of Medicaid created a $55 million shortfall. To fill that gap, the governor proposes expanding to physicians and dentists the provider tax that is already paid by hospitals and nursing homes — but to a lesser degree. Hospitals and nursing homes would continue to pay 6 percent, while dentists and physicians would pay just 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.

Doubling down on health care cost containment with the All Payer model. Vermont is asking the federal government to help transition the state’s payment model from one that relies on fee-for-service and quantity to one that focuses on outcomes and keeping patients healthy.

Investing in education, not incarceration. Shumlin has helped reduce incarceration rates to the lowest point since the early 2000s saving 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 is proposing to use newly saved $1 million 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. Shumlin has 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 $1,200, which will still be half of the $2,400 Massachusetts charges.

Ending family homelessness by 2020. Shumlin proposes a plan to ensure that 15 percent of taxpayer-funded housing in Vermont is dedicated to homeless families and those with special needs.

More resources to combat opiate 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 budget also includes $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.

Suicide prevention. Shumlin called for Vermont to talk openly about the those being lost to 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.

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