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January 24, 2011

Where Can the Shumlin Budget Find $130 million?

"What do you think he'll cut?" asked Anne Galloway, editor of vtdigger.org. She pointed out that Governor Shumlin said last week at a press conference that wholesale elimination of programs is not on the table. I'm assuming this means no major programs will be eliminated although it could be read as allowing "retail" cutting of programs (cutting just a few). He's also said no to increasing "broad-based" taxes, which he defines as "any tax affecting all Vermonters". Note that there is wiggle-room in this definition as well; for example, state income tax is only paid by a minority of Vermonter. But let's assume for now that this means no tax increases.

Even with increased revenue estimates as the economy turns up, there is a budget hole of about $130 million to plug. Having spent the previous two budget seasons on the 5th floor of the Pavilion where the Governor and his staff work, I know the kind of work that has been going on since the election to prepare the budget the Governor will present to the legislature and the state on Tuesday. In fact Governor Douglas instructed his staff to prepare a complete budget before they left office as a starting place for the next administration. "Do it as if it were going to be our budget," he said. I re-retired shortly after that so I don't know what was in or out of the preliminary Douglas budget and certainly don't know any specifics of the about-to-be-proposed Shumlin budget.

But there are actually lots of ways to bring down the cost of state government. Some began under Challenges for Change last year and can be harvested and expanded now. Others were proposed as part of Challenges for Change but turned down by the legislature; a governor who is a Democrat may be better able to sell these to the legislature than we were – especially now that the Stimulus money is gone and Republican control of the US House assures it won't be coming back anytime soon. And then there are really big steps that are much better taken in the first year of a new administration than the second, so that the pain can be forgotten and some of the benefits realized.

The lists below are an educated guess of what Governor Shumlin might propose if no taxes are to be raised or major programs cut. Remember, most of the state budget is spent on Human Services and Education so most cuts have to be where the money is.

Further savings to be had in things that got started under Challenges and are now ripe for harvesting:

  • Increase performance contracting – making clear what RESULTS (not just activities) we're contracting for and only paying if we get those results
  • Reduce driving by state employees
  • Reduce phone costs of state employees by using VoIP
  • Eliminate paper in the internal transaction of state business
  • Increase use of myvermont.gov for external transactions
  • Allow Forest and Parks to continue getting out of the general fund by living on fees and growing fee income through creative management and marketing
  • Continue reducing prison time both with preemptive programs to keep people out of trouble and good transitional programs to try to keep them out of trouble when get out of jail.
  • Close a prison – probably Windsor

Opportunity in the places where the legislature wouldn't let us cut for Challenges:

  • Since state employees have taken a cutback in both pay and number of positions, it now makes sense to cut back the funding for groups that operate on behalf of the state – "designated agencies" in human services, the plethora of housing agencies, the overabundance of economic development organizations (50 and counting last year). Severe cutbacks in administrative funds will force consolidation (but it won't be phrased that way). The consolidation is overdue and will result in better service
  • Cut benefit program cost by coordination of care – there is no good information now on the total benefits going to an individual or a family. If we had that info, we'd find some people are very good at collecting from multiple programs (and other don't get what they're due). An arbitrary goal could be set for savings from de-duping. This is better done by a Democratic administration – the equivalent of Nixon to China
  • Tighten eligibility for some programs
  • Expand successful programs like Blueprint from Health so that care is better coordinated
  • Reduce the cost of some health programs by allowing non-doctors to perform and supervise more activities
  • Sell state buildings and lease space as needed

Other things that can be done:

  • Focus almost all non-transportation capital spending on energy efficiency in state properties to get immediate savings
  • Move most state computing functions to an outsourced cloud
  • Don't let people buy junk food with food stamps. Even if the spending on stamps isn't cut back, health will improve
  • Look for further reductions in state employee and teacher benefits
  • Vastly reduce the use of Boards to perform executive branch activities and eliminate most boards
  • Further decriminalize marijuana use and possession

 Things I don't think the administration will propose but I would (still within the constraints Governor Shumlin set):

  • Eliminate most targeted grants and tax credits for economic development – perhaps with some of the savings put into reducing the corporate tax rate and the rest banked
  • Consolidate the Agencies of Economic Development and Agriculture
  • Put all permitting in one department within the Agency of Administration (much better for people needing permits as well)
  • Set a limit on education staff statewide by capping admissions to the state –funded teachers' retirement plan
  • Work towards a statewide teachers contract with mandatory performance pay
  • Either give the Dept of Ed authority to perform some of the functions now performed by districts and supervisory unions or drastically shrink it
  • Switch to a 401(k) defined contribution plan for at least recent and new hires (requires negotiation with the union but essential to Vermont going forward)

Related post:

Challenges for Change: Post Mortem

 

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