Is the state budget meeting Vermonters’ needs?

‘Vermont’s budget process has become an exercise in making the numbers work.’

MONTPELIER—Vermont needs a better budgeting process, one that starts with a goal of meeting Vermonters’ needs rather than making the numbers work. That’s the conclusion of a new report that raises questions about the “manage-to-the-money” approach to budgeting that Vermont has been following for nearly two decades.

“The state budget should be spending Vermonters’ money for their wellbeing,” said Paul Cillo, president of Public Assets. “Can we honestly say Vermont is meeting its commitment to residents when more than 70,000 people are living below the poverty level?”

“Vermont’s budgeting process has gotten turned upside down,” Cillo added. “The state doesn’t start with an estimate of what it would cost to meet Vermonters’ fundamental needs. Instead the process starts with a revenue estimate—how much money the state expects to collect in the coming year—and then adjusts the services and functions of state government to match those anticipated funds. This approach makes it virtually certain that fundamental needs will not be met.”

According to the report, Vermonters can’t tell whether the budget passed by the Vermont House last month is too big, too small, or about right because there is no published estimate of what it should cost to carry out all of the functions state government is currently obliged to perform.  The report recommends that Vermont prepare a current services budget each year that provides such estimates so citizens can know whether budgets are adequate or not. But even before that, the report says, Vermont needs to make clear what it intends to accomplish with the budget.

The new report, “2013 Budget: Is it Adequate?” by Public Assets’ Senior Analyst Jack Hoffman, describes Vermont’s “manage-to-the-money” approach to budgeting. “This approach focuses on revenue and forces state government to cut back on services regardless of need,” said Hoffman. “It has led to budget cuts just when Vermonters need those services most—like during the Great Recession.”

If Vermont recognized that the purpose of the budget is to meet Vermonters’ needs, it would be doing more when times were tough and pulling back when the economy improved and the private sector was stronger, according to the report. In other words, it would do the opposite of managing to the money.

“The state should make a realistic assessment of Vermonters’ fundamental needs before it creates a budget,” Cillo said. “But even before that, there should be agreement on our goals for the state: What do we want to achieve with our $5 billion annual expenditure?”

The report recommends a more publicly accessible budget process, clear goals, and accountability for outcomes like those that used to be published annually in the Vermont Well-Being Report, last published in 2006.

The Vermont Senate is currently considering the fiscal 2013 budget that was passed by the House late last month.

Public Assets Institute is a nonprofit, nonpartisan organization that promotes sound budget and tax policies to benefit all Vermonters. Additional information is available at www.publicassets.org

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