Finance Commissioner Adam Greshin and Gov. Phil Scott
Gov. Phil Scott's administration on Tuesday recommended wide-ranging cuts to state government next year in response to an expected decline in tax revenue.
In a budget proposal submitted to the House Appropriations Committee, the administration said that most agencies and departments should spend 8 percent less in the first quarter of the next fiscal year than they did this year.
"We're thinking that it's not going to be a major issue for any one department, but it will be, call it slight pain spread broadly," Scott's finance commissioner, Adam Greshin, told committee members Tuesday afternoon.
With the submission of its proposal to the legislature, the administration began the second of three budgeting processes taking place in a short period of time in response to the economic fallout of the coronavirus pandemic.
The first — a reworking of the current state budget — won preliminary approval in the House last Friday. The second would govern spending in the first quarter of the next fiscal year, which starts in July. The third, which is expected to be debated this summer and fall, would fill out the final three quarters of next year's budget and could include revisions to the first-quarter plan.
Greshin told committee members Tuesday that the goal of the first-quarter budget — or "skinny" budget, as legislators have taken to calling it — was to buy time to better understand the revenue impact of the coronavirus outbreak before finalizing next year's spending plan.
"I would just remind people that this is meant to get us through the summer," he said. "It's meant to keep the lights on, to keep our programs humming and to set us up for a more spirited and fully educated debate come late summer."
To that end, the administration made none of the typical policy recommendations governors often make when presenting budgets to the legislature. Instead, it proposed continuing all state programs as currently designed — albeit with less money. "This is as policy-light a document as I have ever delivered," Greshin said.
The proposal does not address how the state may spend the $1.25 billion it has received from the federal Coronavirus Relief Fund. Some of that money has been doled out through a separate process led by the administration and guided by the legislature's Joint Fiscal Committee. Scott is expected to announce a major proposal on Wednesday to spend a large portion of that funding on economic recovery initiatives.
According to the latest forecasts, the state now expects to collect $378 million less next fiscal year than it anticipated before the outbreak — a 15.3 percent reduction. That's 9.6 percent less than the state will collect this fiscal year.
To make up for the loss, the administration wants most agencies and departments that receive General Fund dollars to spend just 23 percent of this year's budgeted funding in the first quarter of the next fiscal year. That works out to an annualized cut of 8 percent.
The administration suggested that some state government entities, such as the Agency of Transportation, should be able to spend a greater portion of this year's budget in the first quarter. That's because AOT spends far more in the summer than in other months. Similarly, programs receiving Education Fund appropriations would be allowed to spend more because of seasonal variations in funding.
Having just received the administration's proposal, legislators generally avoided weighing in on it, though some expressed concerns.
Rep. Mary Hooper (D-Montpelier) noted that many agencies would be squeezed because they would have to absorb union-negotiated pay increases while spending 8 percent less. She pointed in particular to the Department of Corrections and the Department of Public Safety, which must maintain around-the-clock services and can't simply do less. "So this is going to be a real challenge," she said.
Rep. Bob Helm (R-Fair Haven), meanwhile, lamented that state workers would receive pay increases while many Vermonters were struggling to pay their taxes. "They don't ever seem to be held to the fire like the public is," he said.
The committee has little time to spare as it digests the administration's proposal and prepares its own budget. The House and Senate must agree to a spending plan and the governor must sign it before the next fiscal year starts on July 1.
Updated Wednesday, May 20, at 4:57 p.m. to clarify that the third budget lawmakers expect to consider this summer or fall could include revisions to the first-quarter budget.