8-21-14 – Shumlin’s budget style

posted by John McClaughry

Last week Vermont Digger reported on Gov. Shumlin’s plan to cover the $31 million shortfall in state revenues expected in the current fiscal year.

The Digger story said  “The state has not reached a sustainable spending pattern in relationship to revenues since the Great Recession (and the federal stimulus funds that boosted state spending) ended in 2011. In the intervening years, the gap between spending and revenues, which has consistently been between $50 million and $70 million, has been filled with one-time money.”

Jim Reardon, commissioner of the Department of Finance and Management, says he’s running out of one-time pots to raid. “What we have been doing is taking the previous year’s one-time funds and propping up the budget,” Reardon said.

On Wednesday the Joint Fiscal Committee eventually approved almost all of the needed cuts – but Shumlin salvaged $3.5 million he wants to give to IBM to persuade it to stay in Vermont. The biggest money source – $10 million – came from reducing Medicaid payments to medical providers.

This last item is instructive. When Green Mountain Care imposes a global budget on the entire health sector in the state, what happens when revenue estimates fall? The Shumlin health experts will say that with “payment reform”, the state won’t need as much money to reimburse providers. That’s why they’re spending $45 million Federal dollars to figure out what they mean by “payment reform”. Lots of luck.

John McClaughry is vice president of the Ethan Allen Institute

{ 2 comments… read them below or add one }

paul hudson August 23, 2014 at 12:44 am

OK,
Does anyone in Montpelier know how to balance a checkbook?
PFHudson

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Jim Bulmer August 28, 2014 at 2:02 pm

If the Gov keeps cutting funds for the health care providers, he’ll wake up one day and wonder why the providers have left the state. Way to go Gov, the state isn’t broke yet, but you’re getting there. Keep up the good work!

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