Gov. Peter Shumlin and Administration Secretary Jeb Spaulding said today that Vermont continues to recover from the deepest recession since the Great Depression.
In Fiscal Year 2013, Vermont's General Fund receipts were up $91 million over the previous year. This past fiscal year saw continued growth, with receipts $46.6 million higher than 2013. Since 2011, receipts have increased by a total of $179.6 million, helping reverse the trend of declining revenue brought about by the recession.
While that steady growth has helped Vermont recover, the rebound has been slower than economists had projected, reflecting a trend seen in other states, and forcing Vermont to issue an adjusted forecast reducing anticipated growth from 4.8% to 3% for FY "15. That rate of growth still marks a $45 million revenue increase over the previous year, but it falls short of approved FY "15 spending.
To ensure the state's budget is balanced, the Administration will propose trimming about $31 million from Vermont's $1.4 billion general fund budget -- a reduction of approximately 2 percent.
The Governor stressed that state government will meet this challenge of slower growth through decreased spending because he does not support raising additional revenue through tax increases to fill the gap. In addition, he said his Administration would adjust spending expectations for the foreseeable future to match the new revenue reality, ensuring any recalibration of base revenues is offset as much as possible by expenditure reductions.
"We'll meet the need by reducing spending, just as a family would do if they learned that a raise wasn't going to be as high as expected," Gov. Shumlin said. "While any reduction from the approved budget will present challenges, we are focused on delivering the best possible services to Vermonters within the means that we have. We hope to work quickly with the Legislature to make these changes in a fiscally responsible way that minimizes the disruption caused by the adjustments."
The Administration will provide a FY 15 rescission proposal for approval to the Joint Fiscal Committee to ensure that state spending fits the new 3% growth forecast.
"As we tighten spending to meet the new forecast, we will do it in a way that is fiscally responsible and ensures that critical services to Vermonters are maintained," Gov. Shumlin said. He said the state will not tap the budget stabilization fund to cover the shortfall, nor cut debt service or retirement contributions.
The Administration also will recommend keeping the General Fund transfer to the Education Fund whole, adding, "We will not support any cuts that would be made on the backs of already burdened property taxpayers."
Sec. Spaulding said his office will work with Administration agencies and legislators to
submit a plan to the Joint Fiscal Committee.
"We are taking immediate steps to meet the challenge," Spaulding said. He and Gov. Shumlin met with Cabinet members on Wednesday to discuss the updated growth projection, and directed departments across state government to begin immediately to manage to a budget of up to 4% lower than passed for FY 15. Spaulding sent a memo to all agencies and departments outlining instructions for creating the plan for savings.
"I've asked them to tamp down discretionary spending and look at their programs, delivery and staffing to ensure they meet the new number," Sec. Spaulding said. The Governor also issued an immediate hold on hiring, requiring Agency of Administration approval of any hiring for currently vacant positions.
"I am pleased that Vermont's economy continues to grow and revenues are climbing," Gov. Shumlin said. "I am also proud that, facing the national reality that growth is slower than projected, Vermont is immediately taking appropriate steps to control spending for this fiscal year, and ensure our budget needs match revenues in the years to come."