Public Assets Institute > Policy Areas > Vermont Budget > Vermont’s real budget problem

Vermont’s real budget problem

Vermont has a budget problem: the state budget is not meeting Vermont’s needs.

The major indicators of Vermonters’ economic wellbeing are moving in the wrong direction. Median household income is falling, poverty and homelessness are rising, and one in eight Vermonters needs food stamps to have enough to eat.

This is not the state that we aspire to be.

Nevertheless, each year the Legislature makes deeper cuts to state services to balance the budget. And each year more and more Vermonters are worse off than they were the year before.

It’s time to change the budget conversation, to understand what is actually happening—what Vermonters need and how well state services are working to meet those needs.

Currently, the budget conversation each year starts with how much revenue we think we will have and then focuses on how much to cut the budget to make it balance. The conversation is about budget numbers, instead of about improving Vermonters’ lives.

This year, state policymakers seem to have fixated on two numbers: 5 percent and 3 percent. From the governor we’ve heard that annual state spending has been going up 5 percent while the economy grows at 3 percent. The press reports a slightly different story: the budget has gone up 5 percent a year while revenue growth is 3 percent.

Regardless of which version you’ve heard, there are a couple of problems with the 5 percent-3 percent budget story. For one thing, it leaves the mistaken impression that the state is spending more than it takes in each year. It’s not.

The Legislature actually passes a balanced budget each year, unlike Congress. The budget “gap” we hear about before the start of each legislative session gets closed before the final budget is enacted—usually by cutting services, but also with temporary fixes and occasionally new revenues.

Another misperception that the 5 percent-3 percent comparison fosters is that the economy, spending, and revenues should all grow together. They shouldn’t and they don’t, as this chart shows.110415blogchart3

It is during economic downturns when people need state assistance the most. Demand for food stamps, unemployment assistance, and health care for the uninsured all go up when the economy slows, and incomes and tax revenues shrink.

The focus on the current year’s budget numbers is also shortsighted. When the Legislature or the administration makes cuts, they often don’t reduce the need for services, they simply push demand into the future, or they increase the caseloads of overworked staff. If they don’t pay to fill a pothole or to hire another social worker one year, the need doesn’t disappear. It comes back the following year as a crisis or a new budget gap.

Limiting the budget conversation to the numbers is a disservice to Vermonters and undermines the purpose of the budget, which the Legislature has put into state law: to “address the needs of the people of Vermont in a way that advances human dignity and equity.”

What are we trying to accomplish with the annual budget if not to meet Vermonters’ needs?

The state budget is not just an exercise in how to spend $5.5 billion each year, or at least it shouldn’t be. If legislators are serious about making Vermont a state that actually works for all its residents, they need to start with the budget process—regularly assess how Vermonters are doing and develop budgets that actually address their needs.


Posted by Paul Cillo on November 4, 2015 at 2:33 pm

2 Responses to “Vermont’s real budget problem”

  1. Alexandra Forbes says:

    Thanks for a more in depth perspective on the budget process and it’s impact on the real lives of our neighbors and friends.
    What committee can we start this conversation in with your question about improving Vermonters’l lives?

    How do we bring the vision you are proposing into view in a way that makes risking raising taxes a worthwhile, defensible proposal?

  2. I was really energized by your talks at VIA and at VT-ARA and hope to get a letter to the editor out soon and perhaps a town meeting petition to mandate that legislators and governor comform to their 2012 decision to start from a needs based budget making process, so we know what is needed in Human Services budgets as well as the Transportation budget, etc.
    Thank you so much for all you are doing to emphasize the fact that many of us are now having to receive food stamps just to get by. I am very grateful for my $106/per month. It took a lot of effort and time to qualify with all the paper work, but it is worth it. Food prices have gone up astronomically in the past few years!