January 5, 2012
By Nathan Burgess and Lisa McCormack, Stowe Reporter

The 2012 session of the Vermont Legislature is shaping up as a blend of tough decisions, tight budgets and titanic problem-solving.

Lawmakers gathered Tuesday in Montpelier to open a session clouded by a multimillion-dollar repair bill from Hurricane Irene, shrinking federal aid, and yet another budget gap for the s

“It’s going to be a tough session,” said House Speaker Shap Smith, D-Morrisville.

But it’s not all bad news, local lawmakers said.

State officials see a $46 million gap between revenues and expenses for state services in the fiscal year that starts July 1. Earlier estimates ran to $75 million, and gaps were much deeper during the years of the recession.

Two local legislators will be in the thick of big-picture budgeting this year: Smith and Sen. Richard Westman, R-Cambridge, who’s on the Senate committees that deal with transportation and finance. 

Reps. Heidi Scheuermann, R-Stowe, and Peter Peltz, D-Woodbury, have important roles on House committees — Scheuermann on commerce and economic development, and Peltz on education.

Smith believes the state government can fill the budget gap without too much pain.

“We’re in a good financial position,” he said.

Much of the gap results from reductions in federal funding for Medicaid, the health-insurance program for low-income Americans. Each state’s share is based on its economy, and with Vermont’s doing better, fewer Medicaid dollars come in, Smith said.

Repairing the state’s roads and bridges has cost much less than initially thought. The total will be between $500 million and $600 million, with much of that covered by the Federal Emergency Management Agency and Federal Highway Administration. The state’s share is estimated at between $88 million and $99 million.

“My sense about Irene is that, to a large degree, we’ll be able to address most of the costs through money we already have available,” Smith said, such as money from a budget surplus in fiscal year 2011.

Westman said that, for Irene costs, the state could tap a fund that was established to help pay off long-term bonds for transportation projects, but lately has been used for other costs, as well. The fund, built up from taxes on fuel, was used in recent years to match federal stimulus money, but with that program gone, the state has the money to spend elsewhere.

“We’ve built up $80 million to $83 million in that fund,” he said. “That could probably help to fill some of the hole for the Irene stuff.”

It’s too early to say if lawmakers will consider raising taxes this year, Westman said. He’s waiting to see what Gov. Peter Shumlin puts in his budget proposal, due within a few weeks.

“The governor has clearly said (filling the gap) won’t come from broad-based taxes,” he said. “We’ll see what his proposal is and go from that.”

For Scheuermann, the Stowe legislator, private-sector job growth will be a priority this session.

“This cannot be done in a casual way, in which we do what we’ve always done and hope for the best,” she said. “Rather, it must be a determined and thoughtful approach to encouraging private-sector job growth.

“Vermont has a number of assets that lend themselves to job creation and prosperity, but we also have significant challenges. And, this is clearly evident by our modest economy — modest even in the boom times.”

Federal dollars

Vermont can’t look to Washington for help, lawmakers say, given conservative dominance in the House and gridlock in both houses of Congress.

“I don’t think it’s going to get better with regard to what the federal government is supplying for the states,” Smith said.

Federal rollbacks have already trimmed several Vermont programs. Among them is the federal Low-Income Home Energy Assistance Program, known by its acronym, LIHEAP.

Though heating-oil prices are running 20 to 30 percent higher than last year, the federal LIHEAP grant to Vermont is $19.5 million, down from $25.5 million in 2010.

“Until the federal government can really figure out its deficit problems, I’m still very concerned,” Westman said.

Education

What happens to the state education fund is still up in the air, Westman said.

Last month, Gov. Shumlin urged school districts to level-fund budgets for the coming year. Westman is skeptical about that strategy.

“I’m not sure how realistic that is over a long period of time,” he said.

Peltz will be at the center of school issues this session as a member of the House Education Committee. He’s working on tweaks in Act 153, the voluntary school-consolidation law passed in 2010. The law provides incentives for schools to share services, and includes mandates that supervisory unions take control of teacher contracts, transportation and special education in coming years.

“Even though there are disappointments … we’re already seeing the advantages of talking about sharing resources,” Peltz said.

Other issues

Among other major issues before lawmakers this year:

• The State Office Complex, which employed about 1,500 people in Waterbury, was deluged during Irene. Lawmakers will consider plans to replace the complex. 

Waterbury, whose economy relies heavily on the workers, will watch closely. Shumlin has already announced closure of the Vermont State Hospital in Waterbury, and state officials are weighing new options for mental-health care around the state.

• Health care. Last year, the Legislature set up the Green Mountain Care Board to study reforming Vermont’s health-care system. That work continues, Smith said. For the Legislature, this year’s focus will be on setting up a state health-care exchange, as required by federal health-care reforms.

Scheuermann hopes to see “the ‘robust’ exchange we were directed to create. These exchanges are supposed to be designed to increase competition for health insurance, increasing the choices consumers have for health insurance, thereby decreasing cost.”

• Redistricting in response to the 2010 federal census. A proposal that emerged from a reapportionment committee affects a number of local communities, such as moving Elmore to the Washington County Senate district, combining Eden and Hyde Park into one House district, and putting Waterbury and Duxbury into separate House districts.

“I’m keeping a close eye on it,” Smith said.