Most state agencies face 2% budget cut next year

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(Host) The Douglas administration is asking most state agencies to consider a 2% cut in spending in the next fiscal year. The administration says the move is necessary because of slow revenue growth and required spending increases in the Human Services budget.

VPR’s Bob Kinzel reports.

(Kinzel) The administration is in the process of drafting its first comprehensive budget plan and the message surrounding the proposal is clear: money is tight and revenues are soft.

Administration Secretary Michael Smith, who’s heading up the budget process, says revenue growth for the first three months of the fiscal year is deceptive. The state is $11 million ahead of projections, but more than half of this amount is the result of several large settlements of Vermont’s estate tax and not a robust economy:

(Smith) “There are some clouds that are going to hit us short term here. The IBM layoffs in particular and the impact that that will have on the economy, so we’re very cautious of using or banking any of that money for inclusion in our budget preparation.”

(Kinzel) Smith says the governor is looking at a very modest increase in overall state spending next year.

Because the state must deal with rising welfare caseloads and increases in the Corrections Department budget, Smith says most other departments in state government may have to reduce their spending by as much as 2%.

(Smith) “So there are some budget pressures out there at the same time. We’re not seeing the revenue growth that we had expected, so it’s going to be a very tight budget year this year. I expect with this 2% reduction that we’re going to be again faced with some decisions that we’re going to have to make.”

(Kinzel) Smith says the administration will also recommend additional funds for the governor’s Lake Champlain clean up initiative and for efforts to improve services at the Vermont State Hospital in Waterbury. The governor will present his budget plan to the Legislature at the beginning of January.

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

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