BAC Rutland

MONTPELIER — Despite spending hundreds of hours together in a stuffy, second-floor committee room, the 11-member House Appropriations Committee failed to agree unanimously Monday on a budget it passed to operate state government next year.

All four Republicans voted against the final version of the spending plan, which cuts 51 state positions, relies on $162.5 million in federal stimulus money and will require $24 million in new revenue from a source or sources still to be determined.

“It’s a hard decision to vote ‘no’ on a bill you work so hard on,” Rep. John Morley, R-Barton, told his seven Democratic colleagues. He applauded the creative savings the committee found while maintaining critical health services. Still, he said the factors that led to his decision were the uncertainties about the source of additional tax revenue and the yet-to-be-agreed-on labor savings. The bill banks on the Vermont State Employees Association and the Douglas administration coming to agreement on $14 million in workforce savings.

Appropriations Chairwoman Martha Heath, D-Westford, was disappointed but not surprised by the Republican dissension. “Anytime you talk about revenues being part of a solution to a budget problem, it becomes particularly challenging.”

This is Heath’s fifth year chairing the budget-writing committee and the first time she hasn’t had unanimous support for a budget bill.

She defended this year’s budget as “making certain that the safety net for those who most need government was there.”

Vice Chairman Mark Larson, D-Burlington, noted key differences between the budget offered by Gov. Jim Douglas and the plan the House will debate starting Thursday.

The House plan spares a subsidized prescription program for the elderly that Douglas proposed to end. The House plan wouldn’t drain a $16 million human service caseload reserve account as Douglas would. The House wouldn’t shift the $40 million annual teacher retirement expense to the Education Fund, which is primarily funded from property taxes. The House would maintain an environmental laboratory the governor’s budget would cut.

Larson called the House budget “a creative alternative that works with the same difficult economic times.”

Finance Commissioner Jim Reardon countered, “What they are doing is business as usual. I don’t see any long-term planning.”

Rep. Robert Helm, R-Castleton, said his worry about future budgets was one of the main reasons he didn’t endorse the budget bill Monday.

“I need to see more of a direction going toward cost containment for the future,” Helm said. “I just don’t feel responsible hoping the economy gets better all of a sudden.”

Democratic House Speaker Shap Smith of Morristown came before the committee Monday to acknowledge the unusual process in which the budget would be considered before the House Ways and Means Committee recommends how to raise $24 million of the proposed spending.

“We will have the revenue package out by next week,” Smith told the panel. “Should it fail, and I don’t expect it to fail, I ask you to make a list of options.” He said he needed a list of potential cuts before the revenue bill came up for a vote.

Tough choices

On a recent afternoon, the appropriations panel moved through a draft budget, section by section. When they hit the page with the proposed funding for smoking prevention, they struggled.

“This is a very hard choice,” said Heath as the committee considered giving the program $650,000 instead of $1.6 million.

“Yes it is,” said Rep. Kathy Keenan, D-St. Albans. “This program is really working.”

After Monday’s vote, Rep. Howard Crawford, R-Burke, said he wished the committee had made more tough cuts. It was one of the reasons he didn’t support the bill.

“I know we can’t cut our way out,” he said of the state’s current financial crisis. Still, he would have preferred to balance the budget with cuts and stimulus money this year and only resort to new revenue next year if necessary.

Larson defended the use of the federal economic recovery dollars to help avoid deep cuts.

“I’ve heard people say, ‘Oh you are just relying on the federal stimulus money,’” Larson said. “That is a very strange critique. It infers you would rather give up the dollars offered and goes against the whole purpose, which was to stabilize our state budget.”

Last minute proposal

Half an hour before the Appropriations Committee was scheduled to vote, the finance commissioner delivered a spreadsheet representing the Douglas administration’s new plan for $77 million in federal money over the next two years.

Heath told Reardon it was too late. Legislative leaders had released their plans for the money last week and those ideas had been incorporated into the budget.

“We have been working diligently on trying to come up with an alternative plan,” Reardon said, defending the late delivery of the Douglas plan. “Every time we put a plan out, they want to talk about process. I want to talk about substance.”

The House budget has three uses for the $38.58 million that would be the first of two allocations of the State Fiscal Stabilization Funds designated for education. It divides $9.05 million between the University of Vermont and the state colleges, covers the growth in the teacher retirement expenses with $6.75 million and makes up the $23 million shortfall in the amount of general tax dollars the governor’s budget transferred to the Education Fund.

Reardon said the governor’s new plan would also make up that shortfall, but as part of a plan to transition to a new way to pay for schools in 2012. The governor has set up a task force to come up with a replacement plan.

Meanwhile, the administration wants to curb school spending by putting school boards on notice that spending per pupil would be capped when they write their next budgets. The governor also wants the Education Fund to pay the full cost of Teacher Retirement beginning this summer.

“We look forward to working with the Legislature to discuss this education proposal,” Reardon said.

Heath advised him to come back next week.