State Ends Fiscal Year with $27 Million Surplus

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(Host) According to a new report, the state of Vermont will end the 2004 fiscal year with a $27 million surplus. Administration Secretary Michael Smith says there are definite signs that the Vermont economy is rebounding. But Democratic gubernatorial candidate Peter Clavelle says the new revenue report doesn’t tell the whole story about the state’s finances.

VPR’s Bob Kinzel reports

(Kinzel) The state of Vermont closed the books on the 2004 fiscal year at the end of June. Officials had predicted that overall revenues would grow by about seven percent during the year; it turns out that they increased almost ten percent, producing a surplus of roughly $27 million.

Administration Secretary Michael Smith says Vermont is in good fiscal health and that the state’s budget contingency funds are now filled:

(Smith) “The end of 2004 has been a pleasant surprise: a robust revenue picture generated primarily by a big increase in the corporate income tax, which was surprisingly healthy this year. And I think is sort of a harbinger of economic recovery and economic upturn that we have been seeing all year.”

(Kinzel) Democratic gubernatorial candidate Peter Clavelle says the state’s fiscal picture may not be as healthy as it looks. He says the Douglas administration is “ignoring some important storm clouds” on the horizon.

Clavelle is concerned about two issues. The first is Vermont’s Transportation Fund. Clavelle says the state faces a billion dollar shortfall over the next 10 years for essential transportation projects.

Clavelle also points to a projected shortfall in the state’s Medicaid budget. It’s now estimated that this shortfall could reach as much as $65 million next year. Clavelle is concerned that the Douglas administration will cut benefits to recipients in order to balance this budget:

(Clavelle) “I’ve heard the governor say too many people are on state sponsored programs. Is he speaking of Dr. Dynosaur and are we going to see further cutbacks in the Dr. Dynosaur program? We have seen a 1,000 kids that had coverage that no longer do. Are we going to cut back for state employees? There’s not a simple solution, certainly, but we need fundamental reform. We need a bold plan of action to fix Vermont’s health care crisis.”

(Kinzel) Administration Secretary Smith says benefits cuts are not inevitable. He says the governor will seek a consensus approach with lawmakers on this issue:

(Smith) “The governor has always said that we cannot balance the budget on the backs of the most vulnerable. I think what we need to do is become creative in thinking how we look at that.”

(Kinzel) Smith says a new Medicaid fee system that requires most recipients to pay a monthly premium to receive health care coverage has been successful in controlling costs for the program.

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

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