State Says Effects Of Federal Budget Cuts Are Months Away

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(Host) There are more questions than answers about how budget cuts in the new federal debt ceiling law are going to affect the state of Vermont.

Because the legislation sets target budget goals rather than identifying specific program cuts, Budget Commissioner Jim Reardon says it could be months before the state has a clear picture of what the impact is going to be.

VPR’s Bob Kinzel reports.

(Kinzel) The new law has two main sections and each portion could pose challenges for individual states.

The first part calls for a $1 trillion cut in spending over the next 10 years. According to information provided by senators Patrick Leahy and Bernie Sanders, spending on non security programs would be level funded for the next decade.

They say this development means that major cuts enacted a year ago will continue to be in place for the next 10 years and the new budget levels will not be adjusted for inflation.

This fall, Senate and House committees will make decisions about the funding levels for specific programs.

Vermont Budget Commissioner Jim Reardon says this means that it could be awhile before he can measure how any cuts will affect the current state budget:

(Reardon) "There is still a lot of uncertainty given the fact that we don’t have any details pertaining to the agreement that was made to avoid a default on the debt and you know we’re just going to have to wait until we get that information to be able to make an assessment what the impact is to Vermont."

(Kinzel) Reardon says that the state does have some additional funds available to help with any new federal cuts in this year’s budget:

(Reardon) "The Legislature did set aside out of the extra funds that came in above the revenue target for FY 2011 about $10 million in anticipation of some federal reductions so those funds would be available to offset some federal reductions should they occur in FY 2012."

(Kinzel) The second part of the new federal law calls on a special bipartisan Congressional committee to recommend a plan to cut an additional $1.2 trillion over the next 10 years. All programs are on the table including Social Security, Medicare, Medicaid and new revenue.

If the recommendations aren’t adopted by Congress by the middle of December, both defense and domestic spending will be cut by $500 billion over the next decade.

Reardon says the entire situation makes it difficult for the state to plan its budget for this year and next year.

(Reardon) "That could make the challenge for both ’12 and ’13 more difficult than what we’ve already experienced."

(Kinzel) Reardon says the Shumlin Administration has a limited ability to address federal budget cuts on its own. If there are sizeable cuts this Fall, he says lawmakers will need to consider how to deal with these reductions when they return in January.

For VPR News, I’m Bob Kinzel in Montpelier

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