State budget faces revenue shortfall

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(Host) Governor-elect Jim Douglas has warned that state government faces a serious budget problem. Douglas says his administration may cut programs and lay off state workers to avoid a budget deficit.

VPR’s John Dillon has more:

(Dillon) Douglas predicts that the next year’s budget faces a $30-40 million revenue shortfall. The governor-elect says he won’t allow the state to run a deficit. So he says his administration and the new Legislature may have to make cuts across state government.

(Douglas) “Just finding cuts around the margins won’t work any more. There are going to be very, very serious decisions to make. I’m not going to pass on budget decisions to other entities, other levels of government, which has been done in the past. We have to make some fundamental decisions. So no more Band-Aid tactics. We have to be very serious about budget choices.”

(Dillon) The economic recession has forced state governments around the country to deal with deficits and lower revenues. Vermont is no exception. Last year, state revenues fell by more than 7%.

The revenue shortfall comes just as the poor economy has increased demand for state services, such as the Medicaid health care program. Douglas says he may suggest changes in Medicaid to reduce spending:

(Douglas) “That’s an area where expenditures have been increasing significantly and the Joint Fiscal Office is projecting a deficit approaching $100 million over the next five years. So we have to look at all the possibilities.”

(Dillon) The governor-elect also warned that state employees could be laid off to trim spending. Douglas also says he doesn’t want to propose a tax increase. But he does not completely rule out new taxes:

(Douglas) “I have not said, ‘Read my lips.’ But I’ve made it very clear that looking at the revenue side of the ledger would be a last resort. And I’m not prepared to look at it at this point.”

(Dillon) Douglas says he’ll hold a statewide hearing via interactive television on December 12. He says he wants to hear suggestions from the public on how to balance budget and spending priorities.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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