Douglas says budget cuts needed to boost economy

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(Host) Governor Jim Douglas presented his first budget plan to lawmakers on Thursday. The proposal calls for a very small increase in overall state spending in the coming fiscal year, and many departments will experience cuts. Douglas says the measure is needed to help revitalize the Vermont economy.

VPR’s Bob Kinzel reports:

(Sound of sergeant at arms calling the House to order.)

(Kinzel) There was great anticipation in the House Chamber as Governor Jim Douglas marched to the podium to deliver his budget blueprint for the fiscal year that begins in July.

Douglas proposed a 1% increase in state spending. Because the governor wants to increase spending for higher education, public safety and economic development, the plan will require most departments to cut their budgets by between 5-10%. Douglas says these changes are needed get the state on a sound fiscal track:

(Douglas) “We can do nothing and continue down a path that leads directly to deficits, a weaker economy and an uncertain future. We can continue to tread water, making only those adjustments that will get us through the fiscal year, while delaying more difficult choices for the future. Or we can confront the certainty of these challenges honestly and forthrightly now, so that we may begin to lay the foundation for a prosperous tomorrow. I choose the third approach.”

(Kinzel) Douglas made it clear that he’ll oppose efforts to raise taxes to offset some of his budget cuts. Creating new jobs is a major priority for the governor. Douglas proposed expanding the loan capacity of the Vermont Economic Development Authority by $100 million to make new lower interest loan money available to businesses and farmers:

(Douglas) “This jobs program is based on a simple premise: that the best way to achieve long term prosperity, maintain a balanced budget, protect our environment, provide necessary services and position ourselves to reduce the oppressive burden of taxation is to grow our economy. And the best vehicle to achieve our goals is the creative ambitions of the people of Vermont.”

(Kinzel) Douglas proposed two tax cuts in his budget plan. He says a surplus in the state’s education fund should be used to lower the statewide property tax rate from $1.10 to $1.07. And he wants to exempt farm and forestland owners who are enrolled in the state’s current use program from the statewide property tax:

(Douglas) “I am particularly concerned about the effects of property taxation on our struggling family farmers. In 1985 Vermont had over 3,000 dairy farms, 18 years later we have half that number. Vermont has lost one dairy farm every four days for the past decade. Today, many farmers find themselves literally having to sell the farm just to pay their property taxes.”

(Kinzel) The governor, as expected, proposed larger deductibles for Medicaid recipients who are in the higher income eligibility groups as a way to avoid a major deficit in this program in the next few years.

One of the few areas in the governor’s budget that would receive more money are drug treatment and enforcement programs. Douglas proposed a $4.5 million initiative – $2.5 million would be state funds, the remaining $2 million would be leveraged from the federal government:

(Douglas) “This is a compassionate program of education and treatment that teaches kids the truth about drugs, and offers a second chance to those who have gone astray. But there will be no compassion for those who target our children and our families for destruction. We need to send the strongest possible message to drug dealers that if they come to our state for the purpose of poisoning our children for profit, they will suffer the most severe consequences. Along with strengthening other penalties associated with drug dealing, I purpose that if you deal hard drugs to a child that dies as a result of using them, you should spend the rest of your life in jail.”

(Kinzel) Douglas also proposed a new Department of Information and Innovation to consolidate and reorganize the state’s technological programs so that Vermonters will be encouraged to interact with state government using the Internet.

The House and Senate Appropriations committees will now review the Governor’s budget proposal.

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

Budget Address online Read the text of the governor’s budget address, or listen to the speech online.

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