A record of fiscal responsibility

By Governor Peter Shumlin
One of the key responsibilities of governing is crafting a budget that reflects Vermonters’ priorities and lives within our means as a state. As we transition this important responsibility to the incoming administration, it’s worth reviewing the last six years of financial management.
Let’s remember where we started.
Before I took office, Vermont’s budget routinely grew at upwards of 7 percent. In 2004, the total funds budget grew by 7.8 percent above the year before. In 2005, it grew by 13.4 percent. In 2006 it grew by 7 percent. Then the Great Recession hit, decimating state budgets, just as it did family budgets, around America. Because of that economic contraction, the first budget I inherited as governor included a $176 million shortfall.
Six years later, by practicing fiscal discipline and making difficult choices, we have righted the ship.
We slowed budget growth and kept it in line with Vermont’s economic growth. During my tenure Vermont’s economy, defined as the Vermont Gross State Product, has grown at 3.1 percent. The budget that I submitted during the last legislative session grew by just 2.55 percent over the previous year’s budget adjustment. According to a Joint Fiscal Office Study, “for most of the last decade all state appropriations have risen at either about the same percentage as the state’s economic and income growth, or slightly less.”
Additionally, over the past six years we have weaned Vermont off one-time funds for ongoing state expenses. One-time funds aren’t always bad, but relying on one-time funds for ongoing state expenses is dangerous because it leaves the funding of important state programs at the whims of the federal budget process, which is unpredictable at best. The first budget I inherited in 2011 relied on $348 million in one-time funds, of which $159 million was used to pay for ongoing state expenses. I am proud that the last budget I signed did not rely on any one-time funds for ongoing state expenses, the first time in decades in which we were able to accomplish that.
We’ve also added to Vermont’s strong fiscal legacy by balancing six straight budgets while honoring our obligations to Vermont’s future. In each budget I signed we fully funded pension payments, refused to raid our rainy day funds, met our debt service, and honored our statutory obligation to the Education Fund. The result? We have maintained the best credit rating among the New England states and one of the best in the country.
We’ve gone even further in building Vermont’s reserve funds so the state will be ready if and when hard economic times return. Using existing earned funds from within the Agency, we have been able to set up a reserve of approximately $100 million.
We’ve done all of this—balancing six budgets, keeping budget growth in line with economic growth, eliminating the use of one-time funds for ongoing state expenses, and expanding our reserves—without asking Vermonters to pay higher incomes, sales, or rooms and meals tax rates. That is a promise I made to Vermonters when I ran for governor, and one I was proud to deliver on.
At the end of the day, the budget is about more than strong fiscal management. It’s about setting priorities and investing in things that matter for Vermonters. On this front, we’ve made incredible progress. Through investments in workforce, education, energy, health care, infrastructure, and much more, we’ve created a stronger Vermont than we inherited six years ago—the economy has added nearly 19,000 jobs; Vermonters’ incomes have grown above the national average each year since 2011, something that has never happened before; over 20,000 Vermonters who didn’t have health care coverage six years ago now do; and our investment in renewable energy and efficiency has reduced electric bills for over 80 percent of Vermonters three of the last four years. That’s a legacy I am proud of.