FY04 Budget

For the past 24 months news accounts have indicated state governments across the nation are facing massive deficits. Over $200B in spending nationwide has been cut from state budgets since 2001. Shortfalls continue to force larger cuts in services state government provide.

In Vermont, the first budget rescission of $8.5M in spending occurred in FY02 and another $10.5M was added when revenues continued to decline. To close out that fiscal year without a deficit, $30M of reserves was used. During the FY03 budget process, an additional $31M was cut despite an increase in human services caseloads.

Thirty seven states have a budget gap between revenue and expenses of 5 % or greater for FY04. Vermont’s in an enviable position of not only being fiscally solvent but our budget actually increased less than one percent and our reserves are at levels established by law. The recent Bush tax cut provided additional $20B to states to help with budget shortfalls and Vermont’s share was $83M. The money was used to replenish our reserves and cover some one-time expenses such as upgrading the state’s financial management system and opening the new Springfield prison.

We’re probably the only state in the US that added to its reserve. The FY04 budget took care of people’s needs and was created in a bipartisan spirit using good process, compromise and influenced by the leadership of Governor Douglas.

In his first state of the state address, Governor Douglas insisted on a “balanced budget that protects our most vulnerable, increases our commitment to public safety, economic development and higher education” and without raising taxes.

Some of the key provisions of the budget are:

• 19 state police vacancies were filled
• Additional funds were added for the defender general, state attorney’s and sheriffs
• Springfield prison will come on line in October
• Medicaid financing for 40,000 beneficiaries are changed to income based premiums, eliminating deductibles and co-pays
• Reimbursement rates for hospitals, dentists and residential care facilities increased
• Meets child care and corrections pressures totaling $3.5M
• Funds substance abuse initiatives for more outpatient treatment, aftercare, an opiate treatment facility, residential programs, prevention programs and recovery centers
• Funds public education as required by the new education finance law
• Increases travel and tourism by $1M
• Funds 2% increase to higher education

No one person or legislative body can take responsibility for the fiscal discipline exhibited during these past few years. Former Governor Dean, Governor Douglas and the legislature all deserve credit. Reserves were maintained and used prudently and they resisted the urge to spend them prematurely.

A major reorganization of the state’s subsidized health care is one of the key highlights of the FY04 budget. The program will be fashioned after private insurance in that low and moderate income people will pay monthly premiums on a variety of state subsidized health programs. The current co-pay and deductible approach just didn’t work. Under this newly adopted system, the state pays for health coverage and collects a set amount from participants and the premium will be based on income.

Despite all this good work, the total budget appropriated for FY04 is $3.4 billion for the state and that equates to $5,484 for every person in Vermont. Though our spending growth in FY04 is more responsible than past budgets, our state spending per capita is still one of the highest in the country and about 33% higher than the national average.

While taxes are a fact of life, not all states are created equal. However, the trend shows Vermont spending this year to be more restrained and it’s hoped future fiscal policy decisions will create less tax burden and improve our competitiveness.

South Burlington is a Golden Egg

Recent state tax information indicates South Burlington ranks number two in personal income, meals and rooms, and sales and use tax receipts compared to other communities in the state. Over $38.7 million is raised for Montpelier.

The only community that contributes more personal income and meals and rooms tax is Burlington. Williston contributes more sales and use tax to the state than South Burlington does.

Thank you for your calls and notes. I can be reached at 658-3975 (home), 1-800-322-5616 or 228-2228 (State House) and via e-mail.

Rep. Frank Mazur
South Burlington

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