Douglas: Vermont has entered period of “economic uncertainty”

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(Host) In his annual Budget Address today, Governor Jim Douglas told lawmakers that the state of Vermont has entered a period of "economic uncertainty."

As a result, Douglas says that many state programs will have to be level funded or scaled back to help balance the state budget this year.

VPRs Bob Kinzel reports:

(Kinzel) The governor says his budget priorities reflect the difficult economic times that face both the state of Vermont and the entire country.

Douglas says that many Vermonters are worried that higher fuel prices, an increasing dependence on foreign investment and wild swings of the stock market "will impact our families and communities."

Douglas proposed a budget that increases at about the rate of inflation – just over 3% next year – and many programs will see no additional money:

(Douglas) "Until we get around this period of economic uncertainty, we will be required to make some very difficult choices among many important priorities. Some programs will be put on hold, others will be reshaped and everyone will be asked to share in the sacrifice. Expanding the size and scope of government would be a mistake, as would raising taxes on already struggling families."

(Kinzel) Several programs will receive most of the new money; Medicaid and Catamount Health Care, Corrections, the Education Fund and several programs in the Department of Children and Families.

In a controversial move to help balance the Medicaid budget, Douglas proposed "borrowing" $4 million from the state’s Housing and Conservation Trust Fund:

(Douglas)"We must use some of these precious state funds to save Medicaid for the most vulnerable. In these challenging times this is a better investment of our limited resources."

(Kinzel) Douglas also proposed raising an additional $4 million from Medicaid recipients by imposing higher premiums and co-payments.

The governor made another pitch for his plan to lease the state lottery to provide $25 million for a one time reduction in the statewide property tax rate. Although many Democrats at the Statehouse oppose this plan, Douglas said:

(Douglas) "In my view doing nothing is not an option."

Senate Appropriations chairwoman Susan Bartlett says she appreciates that Douglas is aware of the tough budget times that are ahead:

(Bartlett) "This is the first step – the governor certainly has got some valid ideas on the table, we’ll just all start working together and we’ll figure it out."

And Bartlett didn’t immediately oppose the plan to take $4 million from the Housing and Conservation Trust Fund to balance the Medicaid Budget:

(Bartlett)"When you go to Housing and Conservation that’s always been very near and dear to my heart but I’ve got plenty of years of budget experience to know that when times are tight and when you’re in a cash flow situation, you need to go look at where the money is."

Higher Education advocates will be disappointed with the Governor’s budget. Last week they lobbied for an 8% increase for UVM and the State Colleges – Douglas proposed 2½ %.

Both the House and Senate Appropriations committees will now review the budget.

For VPR News I’m Bob Kinzel in Montpelier.


Listen to the Governor’s Budget address and read the full text


AP Photo/Toby Talbot

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