Public Assets Institute > Policy Areas > Vermont Budget > Final fiscal 2017 budget

Final fiscal 2017 budget

The legislature passed the final fiscal 2017 budget along with tax and fee bills raising approximately $49.0 million in new revenue.1 At $5.8 billion the new budget is $133.9 million (2.4 percent) above the current year blogchart051716with much of the growth going to pre-K to 12 education and human services. The additional expenditures for next year were paid primarily from federal funds ($41.3 million) and the state General Fund ($71.0 million).

Over the last five years, the total state budget increased an average of 3.1 percent a year.

State-only spending—that is, excluding federal funds—has grown 3.0 percent a year on average.

Expenditure changes
The final version of the fiscal 2017 budget included modest increases for the child care subsidy program, student aid at Vermont State Colleges, and community mental health agencies. The budget also reflects increased federal funding for job training, crime victims’ services, military facilities, and emergency management. Of the $24 million increase for the Agency of Natural Resources, $20 million is simply a technical accounting change involving a federal loan program and not new spending. While all sides have acknowledged the need to increase Medicaid reimbursement rates for health care providers, only primary care providers and ambulance services will see small bumps in fiscal 2017. The budget also includes $1.5 million in new dedicated funding to address opioid addiction.

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The final budget included pay increases for state employees, who won their contract dispute with the administration in a ruling by the Vermont Labor Relations Board this spring, and it will pay off the balance of the 53rd week of Medicaid payments from fiscal 2016.2 The deal contains one-time funding for the 2016 primaries and gubernatorial transition, and two studies: one on housing and reducing homelessness, and one on expanding Dr. Dynasaur, a health care program for children, to cover people through age 26.

One way that the Legislature has cut spending in recent years has been to book unspecified savings and instruct the administration to find them over the course of the year. In fiscal 2017, state government must find $550,000 in General Fund savings by eliminating exempt positions, which tend to be management employees.

Revenue Changes
While there were diverging proposals on how to do it (and by how much), the administration and Legislature agreed that some revenue needed to be raised without increasing broad-based taxes. While nearly half of last year’s $46.2 million revenue increase came from reduced income tax deductions, this year’s revenue package relies more on fees with a few minor tax changes. A number of fees either hadn’t been raised for a long time, or were not keeping up with similar rates in other states. Vermont will increase mutual fund fees paid by investment companies to $2,000 for an initial filing fee and $1500 for renewal, which is closer to what is paid in other states. Currently, Vermont charges $600 for an initial filing fee or a renewal. These changes will raise $20.8 million for the General Fund. Securities broker-dealers and investment advisors, whose fees were last raised in 2006 and 2008, will also pay about $3.5 million more. An increase in the tax on home heating fuel will bring in $2.9 million for the Weatherization Fund. The Legislature rejected the governor’s proposal to levy an assessment on dentists and independent doctors to cover additional Medicaid costs, but it did impose an assessment on ambulance services.

Some motorists will pay more as a result of increases in certain motor vehicle fees and other transportation-related fees, which will raise $10.9 million in transportation funding. And prescription drug companies will pay higher fees to support a $2.1 million increase for the Evidence-Based Education and Advertising Fund to fight prescription drug abuse.

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  1. The bills are H.571 (driver restoration), H.872 (fees), H.873 (tax changes), H.875 (appropriations), and H.877 (transportation funding). []
  2. Because of the way the calendar falls, every five to seven years Vermont is required to make an additional weekly Medicaid payment. The balance of $5.3 million is included in the fiscal 2017 budget. []
Posted by Stephanie Yu on May 19, 2016 at 9:04 am

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