Cuts loom without additional revenue

This is the 11^th year in a row that Montpelier has projected spending obligations will exceed state revenue projections going into the start of the legislative session. Maybe it’s time to acknowledge that the state’s revenue system isn’t keeping up with even modest budget growth.

Projected General Fund revenue for next year is $1,591 million. That’s about $34 million more than Vermont had available to pay for base appropriations for this year ($1,557 million). If this revenue growth were distributed evenly, there would be enough for an increase of just over 2 percent across state government.

But certain items in the budget will require more than a 2 percent increase next year. In fact, the administration has identified three items that will eat up all of the new revenue—and a bit more. The items include new spending for:

And there are other “pressures,” largely in human services and pay increases due to state employees. Currently, the estimated demand for new spending is $79 million. With only $34 million in new revenue to cover the new spending obligations, Vermont has projected a budget gap of $45 million. On top of that, there is the risk the federal funds will be cut to pay for the huge tax cuts Congress seems determine to lavish on corporations and their wealthy donors.

All this means that once again, as they’ve done for the last 10 years, the administration and the Legislature will head into a new budget season having to generate additional revenue or makes cuts throughout much of state government.

In the past, they have favored cuts rather than addressing the structural problems with Vermont’s revenue system. But federal tax “reform” may force them to act. Montpelier might have to decide it’s time to recoup some of Washington’s tax giveaways.