Rescissions aren’t just about the money
Will Vermonters be better off or worse off if this year’s state budget is reduced by $36 million? That question wasn’t addressed in the documents presented by the Shumlin administration Monday when it unveiled a plan to cut the fiscal 2015 budget. But that’s the question the Legislature’s Joint Fiscal Committee needs to consider as it assesses the governor’s recommendations. If the answer is worse off, legislators need to look for better alternatives—including looking for additional revenue.
Late last month, a new revenue forecast predicted the state would collect less money this fiscal year than everyone expected when the budget was passed in May. The shortfall was estimated at about $31 million. On Monday, the administration outlined its plan to cut roughly $22 million from the General Fund and find approximately $9 million more from various small funds the state administers.
But the lion’s share of the cuts will come from the Agency of Human Services, which receives matching federal funds for programs like Medicaid. The $22 million in General Fund cuts will result in a loss of about $14 million in federal funds, so the total reduction will be $36 million.
If the state budgeting process was simply an exercise in making the numbers come out even, then the Joint Fiscal Committee could just go along with the administration’s proposal, which matches estimates outflow to the expected inflow. But if the purpose of the state budget really is to address the basic needs of Vermonters and improve their well-being, as the Legislature declared in 2012, then the proposed cuts should be assessed with Vermonters in mind.
For example, how will Vermonters be better off if the state rolls back a 1.6 percent increase in the amount paid to doctors, hospitals, and other health care providers who treat Medicaid patients? The cut is projected to save the state $3.4 million, but it will cost another $4.3 million in lost federal Medicaid matching funds. What does the administration hope to achieve with such a cut—other than to make the budget come out even? If the Legislature insists on making cuts, it should not be looking at programs for Vermonters most in need, and it should avoid cuts that carry an additional $4.3 million penalty. Rather than reducing Medicaid services, might it make more sense to increase provider payments so the state could draw more, instead of less, in federal matching funds?
The Joint Fiscal Committee, which is scheduled to vote on the proposed cuts on Wednesday, also should ask what changed in Vermonters’ need for services since the budget passed in May. The administration lowered some caseloads projections, for example in the Department of Children and Families. But that won’t save $36 million, and wouldn’t Vermonters be better served by using any caseload savings to correct the staffing shortages and management problems in the department that have come to light this year?
The governor said that in the grand scheme of things $36 million is a small share of the state’s overall budget. That’s true. But by another measure, $36 million is even a smaller fraction of the nearly $30 billion in personal income that will accrue to Vermonters this year. One way or the other, Vermonters will pay for this revenue shortfall. It’s up to the Legislature to see that it’s not those least able to afford it who get stuck with the bill.
