(Host) State Treasurer Beth Pearce says Vermont could strengthen its Triple A rating on Wall Street if lawmakers support expanding the state’s Rainy Day Budget fund next year.
As VPR’s Bob Kinzel reports, the approach has the strong support of Governor Peter Shumlin.
(Kinzel) Currently the Budget Stabilization Fund, or Rainy Day Fund as it’s often called, has a cash reserve that equals 5 percent of the entire state budget, or roughly $65 million.
The fund is designed to have a very narrow use. If at the end of a fiscal year, the state lacks the revenue to pay for its budget, then money from the Fund is taken out to avoid a deficit.
Vermont is one of 15 states that still have a triple A rating from Wall Street bond agencies. State Treasurer Beth Pearce says expanding the size of the Rainy Day Fund, to eventually represent 8 percent of the budget, could be a key factor in helping the state maintain its high rating.
(Pearce) "The rating agencies have cited our stabilization funds as a strength, to the extent that we can build on that strength it would serve us well in the future with our new ratings."
(Kinzel) Pearce says the state’s rating will be re-evaluated this fall when she puts out bonds to finance a number of capital projects. She’s confident that Vermont will keep its triple A rating.
(Pearce) "There’s obviously a lot going on around us in terms of the national picture the global picture and in terms of the overall economic climate. Again, we’re confident that we’ve done all the right things and we’re very very hopeful, it’s stronger than that, we’re very confident that we will maintain that rating."
(Kinzel) Governor Peter Shumlin says expanding the Rainy Day Fund will be one of his top priorities during the 2012 session.
(Shumlin) "What are we doing to protect ourselves against a dysfunctional federal government and I think the answer is we’ve got to make sure that we have as much cash reserve set aside for tough times as we possibly can. If the last recession taught us anything… it’s that 5 percent is not enough 8 percent would be better… and if we have any extra revenue I would like to see us do that first."
(Kinzel) Shumlin says he also plans to present a level funded budget to the Legislature in January.
(Shumlin) "We made the tough choices in last year’s budget that this budget year is going to be less difficult but if we can in with a zero percent budget that means no cuts but no increases we can live within our means and help to grow Vermont‘s jobs future."
(Kinzel) The Legislature put $10 million of unanticipated revenue into a special fund that can be used if federal budget cuts are more severe than expected. If this money isn’t needed to cover a budget shortfall next winter, Shumlin would like to put it in the Rainy Day Fund.
For VPR News, I’m Bob Kinzel in Montpelier.