Alison Clarkson's Legislative Update

For the Vermont Standard

16 May 2011

The big story going into our 2011 Legislative Session was the $176 million dollar budget gap we faced. The big story going out of our session was the passage of our 2011 Health Care bill. This week I'll address both of these legislative accomplishments.

Bridging the $176 million gap was one of the major successes of our legislative session. Unlike many of the states around us, we built and passed a balanced FY12 budget, a week early, saving Vermont taxpayers about $275,000. After four years of declining revenues and cuts, and a stubborn recession, this work was particularly difficult. Happily, revenues are beginning to pick up -- helped primarily by people's incomes rebounding, some large estate settlements, and a terrific ski season. Vermont's unemployment rate is the 2nd lowest in New England and 5th lowest in the country.

In closing this $176 million gap, we managed to avoid raising broad based taxes or making deeper cuts to services. In the last four years we have cut over $260 million and eliminated 660 state jobs. The $401 million of federal stimulus money has helped Vermont solve its recession challenges but that money stream is dry. Our FY12 budget of $4.69 billion represents a 3.6% reduction from last year. To fill this gap we continued to cut state expenditures, about $87 million. We benefited from permanent changes to teacher's retirement and $12 million in labor savings agreed to by members of the state employee's union and ongoing structural changes to government services. We used about $60 million in one-time revenues, $9 million in higher revenue projections from existing revenue and about $24 million in new revenues (provider taxes and an increase in the cigarette tax). Most of the budget cuts were in the Agency of Human Services, largely in the Department of Corrections.

In addition, we were able to put aside almost $17 million in anticipation of next year's likely budget shortfalls and possible federal funding reductions. This is real "rainy day" money and it will be used for next year's budget.

Although the bottom line for the budget is similar to the bottom line proposed by the governor, there were important differences in priorities. The governor proposed no money for the student assistance program, for example,and I am grateful that we were able to find sufficient money to restore half of the SAP funding, some of the funding for the tobacco programs, and more money for childcare subsidies. We also managed to meet funding needs for increased enrollment in Dr. Dynasaur and VHAP, and were able to improve support for Choices for Care, a program that allows seniors to stay at home rather than move to residential care.

The work that took center stage this session revolved around building a new Health Care system. You will recall that earlier this year the legislature heard Dr. Hsiao's (a leading health care expert from Harvard) report which outlined recommendations to reform Vermont's health care system. We weighed his recommendations and have proposed a single and unified administrative structure for Vermont's health care. By reforming our health care system we believe we can control health care costs, separate health care from employment and create an environment in which all Vermonters (patients, providers and entrepreneurs) will thrive. There is potential for significant savings to be achieved in such a system, from administrative efficiencies, cleaning up waste and fraud, and by focusing our dollars on the care that Vermonters need instead of support for the insurance industry.

With little drama, but a great deal of satisfaction at work well done and at ending our 2011 Legislative Session on time, Speaker Shap Smith gaveled us into adjournment at 5:25 pm last Friday. It had been a long week, full of the usual tense conference committee negotiations, occasional temper eruptions and long hours on the Floor of the House debating issues and passing bills. On Tuesday, Mark Mitchell put our work in perspective when he announced that, because of his cancer, he would be resigning after our session concluded. It was very moving. Mark has been terrific member of the House Natural Resources and Energy Committee for five years -- and it was with great sadness and deep appreciation that we all stood and applauded his contributions to our work and acknowledged the challenge he faces. I have loved sharing our legislative life together.

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Vermont's 2011 Legislative Session is scheduled to end in early May. With that in mind, both House and Senate committees are racing to finish up work on bills which they hope will be enacted this year. This is the time of year when things move fast - conference committees (between the House and the Senate) meet and compromises are made in order for legislation to move forward.

We have been working on health care reform for a long time in Vermont. Every year we tackle a piece of cost containment - Catamount, Blue Print for Health, health care IT – but we haven’t really redesigned the entire system. With H.202, the bill we passed out of the House and which is now being considered in the Senate, we have an opportunity to create a plan for solving our health care crisis in Vermont.