Vermont has dealt with bigger budget gaps

Legislators are wringing their hands over the prospect of closing a $150 million budget gap. It’s a daunting task. But 20 years ago Vermont faced an even bigger challenge. The projected shortfall was more than $150 million when Gov. Richard Snelling was sworn in in January 1991—but that was on a General Fund budget half the size of today’s. Put another way, the budget gap Snelling confronted would be equal to a $300 million problem for Gov. Jim Douglas.

When it’s eventually over, this recession could well be worse than the recession of the early 1990s in how it’s affected Vermont’s budget. But unlike 20 years ago, there is federal stimulus money, which has reduced the size of the problem Vermont has to solve on its own. For next year, both the administration and the Legislature’s Joint Fiscal Office are projecting a budget gap—after accounting for the federal funds—of about $150 million. (The actual gap may be bigger, as we explained in our report, Reducing State Services: The Wrong Fix.)

But using the current consensus estimate, next year’s gap—$150 million on a budget of approximately $1,350 million—is about 11 percent of the budget. In 1991, the projected gap was a little more than $160 million on a budget of about $660 million—24 percent of the budget.

Twenty years ago, both the administration and the Legislature understood they couldn’t cut their way out of the problem. They did make cuts. But they also raised $90 million in new taxes, which would be more than $140 million in today’s dollars.