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Vermont State Budget Lessons

In contrast to many other states in the nation, the Vermont state budget for fiscal year 2020 appears to be relatively healthy. What’s more, unlike most budget plans, Vermont’s budget was unaccompanied by rancorous partisan squabbling. That, in and of itself, is especially welcome news in today’s day and age. According to the state fiscal rankings provided by the Mercatus Center of George Mason University, Vermont ranked 9^th in the nation in terms of budgetary health for 2018. On other fiscal indicators, it ranked considerably lower, coming in at 39^th for overall fiscal health. Given the recent Vermont state budget, along with projected tax surpluses, there’s reason to believe that Vermont could improve on its ranking in the near future. 

In this post, we will review the development and passage of the 2020 Vermont state budget. Not only did the budget pass without much political battling, the budget itself goes a long way toward assisting vulnerable Vermont residents, instead of special interest groups. This is a welcome change from much of what commonly occurs at the state budget level. Though it’s not fiscally perfect, the State of Vermont has taken a big step toward increasing its overall financial health.  

Vermont State Budget Lacked Partisan Friction 

The 2020 budget amount totals approximately $6.1 billion. Here’s how the numbers break down: $2.5 billion is for human services, $2 billion for general education, $590 million for to transportation, $330 million to personal and property protection, $150 million to natural resources, $110 to general government, $92 million to higher education, and $66 million to commerce and community development. If we disaggregate these numbers, we can see more clearly how this budget addresses the needs of ordinary Vermonters. The legislation includes additional funds for the state’s childcare system, electric vehicles, and improved broadband access for rural citizens. These are areas which both Democrats and Republicans agree are high priorities.  

Larger than Initially Desired

Even though the final Vermont state budget is about $20 million over what Governor Phil Scott’s initial proposal, no delays or battles occurred before the signing took place. The budget was able to successfully address concerns of both parties. Perhaps the biggest puzzle the budget solves is the issue of funds for federally required water cleanup projects. The Vermont state senate decided to solve this issue not by raising new revenue but by redirecting funds from rooms and meals tax revenue.  

New Budget Focused on Human Services & Poverty 

Tim Ashe, Senate President Pro Tem from Chittenden, says that the Vermont budget helps all Vermonters. According to Ashe, most of the “budget are things that did not have lobbyists walking the halls pushing us to support”. Ashe said that they “were the right things to rebuild human services, help address issues like poverty.” Again, this is reflective of the hard numbers of the budget. A goal of both houses of the state legislature was to increase monthly benefits from the state’s “Reach Up” program. Reach Up is a financial assistance program helping low income Vermont families. The monthly benefit went from $640 to $700. This increase should cost approximately $2 million. The increase is long overdue, though, as monthly benefits had not moved since 2004. 

Medicaid Set Aside

An additional $1 million is also set aside for Medicaid benefits for senior Vermonters living in residential care facilities. These facilities are not nursing homes per se, but instead are facilities which provide some level of supervised care. There are more than 100 of these facilities in Vermont, some of which offer beds to seniors using Medicaid.  

Expected Tax Surpluses

As mentioned at the outset, part of the confidence in the Vermont state budget stems from expected tax surpluses. Analysts project that Vermont will see a tax revenue surplus of approximately $50 million. Of this $50 million, about $15 million is for future budgets. Another $35 million is for various other causes. This projected surplus is the primary reason why the new budget avoided new taxes on Vermonters. 

Call Us to Discuss

At Mackay, Caswell & Callahan, P.C., we firmly believe that the more up-to-date we are with even arcane financial data, the better off we will be. Focus on the Vermont state budget is representative of our approach. Examining how other states handle matters like state deficits, helps us predict what might happen here. That’s because what’s done in one state is often quickly imitated by another.

We New Yorkers don’t want to wake up to find we’re being saddled with even more state taxes. That’s why we need to pay close attention to what’s going on around us. If you have state tax debt, IRS tax debt, or another related issue, don’t hesitate to reach out. Here at Mackay, we have many strengths, and following news in neighboring states is just one of them. If you need to speak to a qualified tax attorney, get in touch with us today. Call us and one of our top New York City tax attorneys will respond to your needs. 

Image credit: Willow&Monk