House Democrats on Monday afternoon put the finishing touches on their fiscal year 2016 budget proposal. As they do most every year, members of the Republican minority say the spending plan is more than taxpayers can afford. But the House GOP now says it’s prepared to offer Vermonters a fiscal alternative.
Lawmakers began the 2015 with a vexing fiscal dilemma. The projected cost of government next year exceeds the revenues coming in to pay for it, and not by a small amount either: the gap between anticipated costs, and expected revenues, now stands at nearly $120 million.
House Minority Leader Don Turner says this gap is symptomatic of long-running fiscal mismanagement in Montpelier. And he says Democrats own responsibility for the problem.
“Vermonters need to know that the state is on a bad financial path, a path I believe was created by single-party rule, led by large majorities in the Legislature,” Turner said Monday.
Turner and six freshmen House Republicans invited members of the press to a small Montpelier conference room Monday morning to outline their vision for an alternative budget path.
Instead of budgets that rely on tax hikes to feed increased government spending, Turner and his GOP colleagues are calling for a zero-growth budget.
“Our budget problem we believe has been created a by a single-party rule, not by Vermonters,” said Bristol Rep. Fred Baser. “We don’t feel increasing taxes should be a part of the solution.”
The plan from Republican lawmakers includes promises to reform state government over the long run, using what they call “Plan for Prosperity” working groups that would, according to Turner and others, lower the cost of doing government business without impacting programs or services.
In the short term, however, the general-fund budget freeze proposed by House Republicans would require cuts – about $35 million worth of them. And the GOP on Monday outlined dozens of proposed reductions that would allow lawmakers to balance the budget without the revenue plan that House Democrats are expected to approve later this week.
“Excessive spending is the problem, and you can’t fix it by raising taxes,” Turner said. “Reducing spending is the solution, and we are prepared to work with the majority to achieve this goal.”
Democrats are considering a revenue plan that would raise $35 million by capping the value of the deductions that tax filers can claim on their income taxes. Though many middle-class families would pay more under the proposal, the plan would raise a disproportionate share of the new revenue from wealthy residents.
Households making between $75,000 and $100,000 in adjusted gross income, for example, would pay an average of $212 more per year under the plan; households reporting $1 million or more in income would pay, average, about $18,600 more in taxes annually.
The cuts Turner put on the table Monday include eliminating grants to substance abuse recovery centers, scrapping a childcare subsidy for poor mothers, cutting funding for state colleges by 1 percent, and taking $5 million from a fund that would otherwise provide college aid to Vermont students.
Republicans also say spending reductions on items such as the renter rebate, financial assistance for health insurance and the Vermont Women’s Commission are preferable to increasing revenues that would otherwise be needed to fund levels recommended for those programs in Gov. Peter Shumlin’s budget.
Turner says Republicans take no pleasure in proposing the cuts, but he says the fiscal environment demands it.
“We’re going to have to make some difficult choices and move forward,” Turner said.
The GOP call for austerity doesn’t mean Republicans support all budget cuts. Shumlin proposed a $1.7 million cut in his budget by consolidating police dispatch centers. But that plan would have led to the closure of dispatch centers in Rutland and Derby. And GOP lawmakers from those districts have been working diligently in recent days and weeks to spare the centers from the budget axe.
“If you look at the make up of our caucus, a large contingency comes from Rutland, and a large contingency come from the Northeast Kingdom,” Turner said, explaining GOP opposition to a Democratic proposal for spending reductions.
The fact that all four Republicans on the House Committee on Appropriations voted in favor of the budget that came out of that committee Monday afternoon doesn’t signal widespread GOP support for the plan, according to Turner.
Turner said the Republican caucus, on the whole, will formally oppose any plan that relies on tax increases to balance the budget. He said ‘yes’ votes from members of the appropriations committee will allow Republicans to continue to play a role in the budget process.
“[House Speaker] Shap [Smith] has been clear in the past – if you don’t vote for the budget, you’re not on the committee of conference. If we’re not on the committee of conference, we’re not at the table,” Turner said. “So I am being clear with you, with Vermonters, that we will expect to see some Republicans support the budget out of committee so … our caucus can stay engaged with this process as it moves through the rest of the session.”
Turner says his caucus also opposes the payroll tax and sugar-sweetened beverage tax that Democrats have proposed using to increase Medicaid reimbursement rates, and also for other health care reforms.
Turner said Republicans support the goal of increased Medicaid reimbursement rates. Low rates for providers, according to administration officials, have led doctors and hospitals to jack up prices on people with private insurance.
“Unfortunately, in tough times, we gotta do what we gotta do,” Turner said. “And that’s one of those unfortunates.”
General fund spending in the House budget proposal is up by nearly 5 percent next year, well outpacing the 3-percent growth expected in state revenues. But House Speaker Shap Smith says the proposal for overall government spending next year is up by less than 2 percent. And he says the proposal about to be put forth by members of his caucus already includes significant cuts.
“It’s always a tricky balance, and we are solving the budget problem largely through reductions in spending, and I think that the balance that we’ve found is the right one,” Smith says.
Members of the Progressive Party, as well as some Democrats, will argue during the budget debate later this week that lawmakers need to raise more revenues to preserve government support for various programs.
Turner said his caucus will have to weigh its opposition against the budget against the practical impact that opposition might have on the final spending plan. A coalition of Republicans, Progressives and left-leaning Democrats could conceivably unite to vote down the budget plan. But Turner said that outcome wouldn’t necessarily benefit the Republican cause.
“We don’t want this budget to fail, with the alternative that they’re going to go back and raise spending to get more liberal people on the vote,” Turner said.