Dean Will Ask for Spending Cuts During Budget Address

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Governor Howard Dean will deliver his budget address to the Legislature [Tuesday] afternoon at the Statehouse.

As VPR’s Bob Kinzel reports, Dean will unveil a spending plan that contains some significant cuts.

Dean believes the state can weather the current economic turndown if lawmakers adopt an austere budget for next year. The governor is looking at three principal areas to make spending reductions: transportation, health care and state aid to education.

Dean says the cuts are needed because his proposed budget for the fiscal year that begins on July 1 will contain no tax increases. Dean says he will definitely recommend a significant reduction in local transportation funding:

(Dean) “We’re going to see a huge drop in the amount of money going to cities and towns. Last year, I paid for half of that program by transferring the General Fund surplus into the Transportation Fund. We don’t have that surplus this year and it’s all state money. If you want to cut projects you can do that, but you cut 80% federal money for every 20% that you can save. The only logical place to cut is aid to cities and towns. That’s what we are going to do. I believe that the Legislature will make that up by adding revenue sources and I think that’s the proper thing to do.”

Dean will also propose some important cuts in health care. The governor will call for a scaling back of the benefits offered under the Vermont Health Access Program and the state’s prescription drug program.

Although Dean will not propose any tax increases in his speech, he is making it clear that he’d like to see the Legislature raise the cigarette tax to help offset some of these health care cuts:

(Dean) “I think the Legislature should be embarrassed that they didn’t raise the cigarette tax last year and I think they should raise it the full 67 cents I asked for. Now, we would still be nowhere near the highest tax in the country if we were to do that. And it’s going to come down to a choice of whether seniors get prescription benefits or whether they are willing to raise the cigarette tax.”

Dean will also recommend level funding state aid to education under Act 60. Dean says local spending on education has increased roughly 7% a year for the past few years and the governor says the state can no longer afford to finance these kinds of increases.

Dean says he does not want the Legislature to tap into the state’s rainy day fund to help balance next year’s budget. Currently that fund has roughly $100 million in it. Dean wants to save this money in case income tax revenues crash in the Spring:

(Dean) “If there’s a big drop in April, which I expect because that’s what’s happened every year we’ve had a bad time, we have a capacity to absorb that once you start spending. ¿ So that’s why it’s so important to me to present a balanced budget without dipping into the rainy day funds and waiting for the real catastrophic downturn to dip into those funds.”

Some programs will see an increase in funding under Dean’s budget plan. The governor says he has decided to boost spending for higher education because Dean feels it is important to maintain these services during poor economic times.

For Vermont Public Radio I’m Bob Kinzel in Montpelier.

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