Douglas says 8% budget cuts needed

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(Host) Governor Jim Douglas says he’s preparing a state budget for next year that will likely include difficult cuts.

Douglas says the reductions are needed because it’s unlikely that state revenues will rebound for several years.

VPR’s Bob Kinzel reports.

(Kinzel) A budget memo from the governor’s office to all agency and department heads tells the story of next year’s budget.  The managers have been asked to prioritize their programs in order to absorb an 8% cut in overall spending.

The governor says these cuts are needed because the state is facing a projected $85 million deficit.

Although state revenues declined sharply this year, the state was able to have a modest increase in spending because of the influx of several hundred million dollars of federal stimulus funds.

Douglas says the state is facing a major deficit because Vermont will receive less federal money next year and because revenues are still down.

(Douglas) "That’s the reality that we’re confronting. It’s going to be a number of years before we get back to our pre-recession revenue levels, probably another four, five or more years. So we have to recognize that this is not just a momentary blip in our revenue performance. This is a profoundly different time in the economic history of our nation and our state."

(Kinzel) Douglas says he wants to target education and Medicaid for budget reductions.

(Douglas) "I don’t see how we cannot have an honest discussion about the huge amounts we spend on K-through-12 education. It consumes nearly a third of our general fund budget now. So that has to be on the table. So does our very generous health care programs. … I think we have to look at the programs and decide if they are ways we can trim them in order to meet our available resources."

(Kinzel) Senate Appropriations Chairwoman Susan Bartlett agrees that there’s a serious problem. But she wants to take a different approach. She says the first step is to determine how much Vermont has to spend to meet all of its state and federal mandates.

(Bartlett) "I believe that the real value of the federal dollars is to give states the opportunity to have conversations and to set priorities and make reductions in a thoughtful manner, as opposed to not really knowing what you’re doing."

(Kinzel) Bartlett, who’s a Democratic candidate for governor, says restructuring the Corrections Department is her top priority because the vast majority of inmates in Vermont have substance abuse problems. She says it’s cheaper to expand these services throughout the state than to lock people up at a cost of $47,000 a year.

(Bartlett) "Vermont incarcerates a very high percentage of non-violent offenders that other states wouldn’t even think of incarcerating. … I think if we really want to save a lot of money permanently in this state we need to look at corrections and a driving force in corrections is substance abuse."

(Kinzel) Both Bartlett and Douglas agree that raising taxes is not the solution to the state budget problems.

For VPR News, I’m Bob Kinzel in Montpelier

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