Opinion: Fueled by ARRA, state spending kept growing

first_imgDuring Governor Kunin’s administration, state general fund spending grew rapidly, by 12%, 13.7%, and 17.2% in fiscal 1987, 1988, and 1989 respectively. In 1990, these spending excesses hit the wall of a national recession, leaving a $65 million deficit. Governor Snelling and Speaker Wright agreed to ‘temporary’ tax increases to bridge the budget crisis. Following Governor Snelling’s untimely death, Governor Dean pledged to follow Snelling’s plan of tight spending controls and sunsets of the temporary taxes.Governor Dean kept his pledge. From fiscal 1991 to 1994, state general fund spending grew meagerly, by less than a percent per year from $643.3 million to $656 million. For fiscal 1993, Dean signed a general fund budget that was cut by 2.15%. He understood that cycles of higher spending and taxes are a downward spiral, both fiscally and politically, and the fiscal house cleaning recessions force upon private enterprise and government provide the financial capacity for new and changing priorities.After the ‘temporary taxes’ sunset, Dean continued with tight budgets through the 1990s. With core budget increases around inflation or less, revenues generated by real economic growth funded the governor’s priorities such as Success by Six, Healthy Babies, expanded health insurance (VHAP) and housing and conservation programs. As the dot.com bubble economy ballooned, core spending did not and the extra revenues were directed toward one-time priorities. In 1999, for example, Dean directed $5.5 million to the conservation of the Northeast Kingdom’s Champion Lands, funded the purchase of Civil War era art for the State House, and sponsored integrated computer systems for designated agencies. Yet, ever the budget hawk, in 2000 Dean authorized a letter to Senator Spaulding, then the Senate Appropriations Committee Chair, declaring, ‘It appears as if the Committee’s budget might be as problematic as that of the House, causing the Governor to veto the budget bill in order to preserve the benefits of our sustainable spending policy.’Both Governor Dean and current legislative leaders had one-time funds to bridge recessionary budget gaps. Dean had the Snelling/Wright temporary tax increases ‘ today’s legislative leaders the ARRA funds. Governor Douglas presented the Legislature with budgets that followed a constrained spending path similar to Dean’s. But, with a supermajority, legislative leaders overrode a Douglas veto, a key factor in the unsustainable spending profiled above.Now the Legislature and new governor must do in one year what should have been done incrementally over the past three ‘ constrain spending to a sustainable level to avoid a $150 million deficit. If not up to the task, expect taxes to rise and political fortunes to fall as happened in the Kunin era. Tom Pelham was Finance Commissioner for Governor Dean and Tax Commissioner for Governor Douglas. Agency of Human Services All Funds                                            $1.608 billion        $1.945 billion           $336.3 million                      6.53%General Funds + ARRA Funds       $497.7 million       $609.9 million      $112.2 million                 7.01%‘All funds’ comprise revenues from all sources, including general, federal, transportation, and education, among others. General funds are broad based state taxes including income, sales, meals and rooms, and corporate. ARRA funds are temporary federal stimulus dollars granted to states to soften the recession, but will end after fiscal 2011.The truth is that state spending has grown robustly during this recession. Yet legislators, news reporters, editors, advocates, and bloggers routinely reference state budget cuts as fact. In a January 15 article, the Burlington Free Press quotes Martha Heath, House Appropriations Chair, as saying ‘Because this is our third or fourth year in a row making budget cuts, it just gets more and more difficult to find a way to cut the budget that won’t be painful to peopleâ ¦.’ Whether to cut the budget or raise taxes is certainly debatable, but providing the public with factual reference points as to whether the budget has already been cut is fundamental to an informed debate. In this regard, the media has failed the public. Total State Budget                           Fiscal 2008           Fiscal 2011          Budget Growth             Growth Rate All Funds                                            $4.544 billion        $5.203 billion          $658.9 million                      4.62% General Funds + ARRA Funds          $1.200 billion        $1.428 billion          $227.9 million                      5.96% by Tom Pelham. True or False? State budgets have been cut during the current recession, including deep cuts in human services. Your answer? Now, here’s the record.last_img read more