Notes from Montpelier: Legislature working to reduce spending growth
As expected, long hours were spent on the Floor of the House this week as we worked our way through several of the year's most important bills – the FY2017 Budget, or Big Bill, and the bills that fund it, including the Executive Branch Fee bill and the Miscellaneous Tax bill.
If we do nothing else during a Legislative Session, these are must pass bills. The Big Bill is the job of the House Appropriations Committee; the Fee and Tax bills are the job of the House Ways and Means Committee. Both committees rely on input from the policy committees to make decisions about how to raise and spend the money.
The Legislature has been aware of and trying to reduce State spending growth for the last few years. Closing the "Alligator's Mouth" has been a top goal. If viewed on a graph, the spending growth line has been higher than and increasing at a greater rate than the revenue growth line, hence the "Alligator's Mouth." Our proposed FY2017 budget comes in at a growth rate of 2.7 percent, down from the five-year growth rate of 3.9 percent, so, happily, we see the "mouth" beginning to close.
Another goal has been to reduce our reliance on one-time funds. This year, we will eliminate our dependence on one-time funds to pay for on-going programs – we have $4 million in one-time expenses and $9 million in one-time funds.
We have made great progress using Results-Based Accountability (RBA). Each committee was tasked with looking at the programs offered at the agencies and departments within their purview and asking how much are we doing, how well are we doing it, and who is better off?
In the House Agriculture and Forest Products Committee (HAFPC), we went through that process and came up with a wish list of high-performing programs we thought deserved more money, if any was available. High on that list was the Working Lands Enterprise Initiative.
We know that the Working Lands Enterprise Initiative had been very successful at advancing entrepreneurism, developing business, and increasing the value of Vermont raw and value-added products in order to develop Vermont's agricultural and forest products economies.
Over the last few years, we have invested more than $3 million in grant funds to agricultural and forestry businesses and service providers. We have funded 112 projects that have had impacts that reach every county in Vermont. These investments have leveraged an additional $4.9 million in matching funds. For every $10,000 we invest, our gross income increases by a factor of 10 and one new job is created. Fortunately, a number of Windham County operations have benefited from Working Lands grants. In regards to RBA, this has been one of our shining stars!
Another positive investment for the future is the additional money for the Weatherization Program, which has been increased to $11.2 million, up from $9 million in FY2016. Funding is up by $800,000 for the Vermont State Colleges where many Vermonters attend college.
The St. Johnsbury Work Camp, slated for closure, will instead be repurposed to accommodate low-risk offenders so that we can bring more inmates back from out-of-state.
With this budget, we have been able to fill the General and Transportation Fund stabilization reserves at the 5 percent statutory amount and we are maintaining the General Fund Rainy Day money at $6.8 million. Another positive note is that we have fully-funded the State Employees' and Teachers' Retirement and retiree health care payments.
While the Appropriations Committee decides what we will spend money on, the Ways and Means Committee figures out how we will pay for it. One of the ways we fund the budget is through fees. Fees are paid for licenses, permits, and other services provided by State agencies and departments. The cost of the fee is meant to reflect what it actually costs to provide the service, license, or permit, but it is usually below the real cost.
Every three years the Ways and Means Committee reviews one-third of the State's fees so all fees are reviewed on a revolving basis. A while back this was done on a less systematic basis so Vermonters could see sudden significant increases in cost. Our current system in more likely to require small cost-of-living increases that are easier for folks to understand and accept.
This year the Agency of Agriculture, Food, and Markets had its fees reviewed so there will be increases in fees relating to consumer protection and other aspects of their work.
Over the last few years, members of the HAFPC have been hearing complaints about audits being done by the Tax Department. What we discovered was that manufacturing standards were being applied to agricultural production, which was not a good fit. For instance, in dairy farming anything used in the direct production of milk, such as milking machines, was exempt from the sales tax but other things, such as fencing, were not. It was clear that the employees at the Tax Department did not have a good understanding of agricultural production.
We discussed these problems with Tax Commissioner, Mary Peterson, and her employees who were willing to gain a better understanding of what should be tax exempt and what shouldn't. Working with the Agency of Agriculture, Food, and Markets, representatives of the Tax Department made two farm visits and came back to the HAFPC with suggestions on how to improve things. The result was an Agriculture Sales Tax Exemption bill that we were able to get through Ways and Means just in the nick of time to meet crossover. Our goal is to promote clarity and education so that everyone knows what's expected of them.
State Rep. Carolyn Partridge , D-Windham, welcomes emails at firstname.lastname@example.org.
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