Douglas budget would cut 660 state employees

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(Host) 660 state employees would lose their jobs under a budget plan unveiled by Governor Jim Douglas today. That’s about 8 % of the entire state workforce. Douglas says the layoffs are needed to help offset a $200 million gap in next year’s budget.

VPRs Bob Kinzel reports:

(Kinzel) Douglas told a Joint Assembly of the Legislature that this is the toughest budget in his 7 years as governor.

He says the state faces a massive budget shortfall next year because of declining revenues and increased spending pressures, caused by the recession:

(Douglas) "There’s no joy in making cuts at such a challenging time in our state’s history and I’ve agonized over many of the proposals in this budget I understand well the consequences of our action and can’t pretend that they will have no effect but the implications of inaction are far worse."

Douglas says the highly anticipated federal economic stimulus package will help eliminate a large part of the $200 million gap because the state is expecting to receive $90 million in additional Medicaid funds.

But the Governor says this still leaves a significant shortfall. That’s why he proposed cutting the state’s workforce by 660 employees by the end of June. This is in addition to the 400 jobs that were eliminated in the current fiscal year.

Douglas says the state’s contract with the state employees union doesn’t provide the option of offering pay cuts to help reduce layoffs:

(Douglas) "This leaves a single blunt instrument – reductions in force is the only option to reduce labor expenses for remaining state employees reducing our work force in the middle of a recession is not our first choice but the growth in payroll costs in the current economy make this difficult step a necessity."

Douglas also proposed a number of cuts in health care programs. He wants to reduce Medicaid payments to doctors and other providers, he proposed increasing individual premiums for Medicaid programs including Dr. Dynasaur and Catamount Health Care and he wants increase the state tax on hospitals by almost $8 million:

(Douglas) "At a time when health care premiums are rising and placing a strain on pockets of families and small businesses we must ask some of the 25% of Vermonters who receive Medicaid assistance to share more of the cost…these benefit adjustments and others are necessary in order to avoid drastic wholesale program eliminations."

Douglas also reiterated his plan to transfer the Teacher’s Retirement program from the General Fund over to the Education Fund. It’s a move he says will free up more than $40 million to maintain important human service programs:

(Douglas) "Without this money our choices for additional cuts would be dire."

In his speech, the governor also proposed a $100 million transportation revenue bond to repair roads and bridges. The bond would be financed by increasing all car and truck registration fees by $12.50 a year. To reduce costs to consumers, Douglas proposed moving the state’s annual motor vehicle inspections to an every other year schedule.

For VPR News I’m Bob Kinzel in Montpelier.

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