Date: Wednesday, October 23, 2013Tuesday, November 5, 2013Sponsored by: Vermont Agency of Administration

Videoconferencing services provided by:Vermont Interactive Technologies

Moderated by: Jeb SpauldingSecretary of Administration

Presentation by: Jim ReardonCommissioner Department of Finance &

Management

VIT Live Streaming (without Chat feature): http//www.vitlink.org/streamingmedia/vtcvitopen.php

Budget Basics◦Where does the money come from?◦Where does the money go?

FY15 and Beyond◦The Budget Process◦The Next GF Budget Gap

Final Thoughts - Questions

The budget incorporates both the spending and the revenue sides of the fiscal equation.

Vermont has a very good base revenue projection process. But revenue changes will always be difficult …

Annual spending changes seem marginal – but the base will continue to be looked at …

Budget growth is ultimately a function of economic activity and personal income growth

What is the New Normal – constant fiscal pressure but a more volatile funding environment

Total was $4.1B in FY08 now to $5.2B in FY14 Average annual growth 3.6% since FY09

General Fund (GF) is now 26% of total (down from 30%) GF growth has averaged 3.4% since FY09

Federal Funds now 35% of total (up from 30%) Base Federal Fund growth has averaged 6.4% since FY09

Education Fund – local spending decisions – state fund pressure Transportation Fund – as system needs grow – constant revenue

challenge

Gross State Product avg. growth 1.3% (projected @ 3% in ’14)

General Fund 25.9%

Transportation Fund & TIB5.2%

Education Fund22.5%

Special funds5.1%

Healthcare funds5.9%

Federal Funds35.4%

FY14 Budget As Passed - All Sources of Funds = $5.23 Billion

Includes Net Ed Property Tax and Federal Funds

net edprop tax18.5%

K-12 Ed32.2%

Debt Service1.5%

Higher Ed1.6%

Natural Resources1.7%

Transportation11.8%

Corrections2.7%

Protection (All)5.5%

All Other5.3%

Medicaid+ 28.3%

Children & Families5.5%

Gen'l Gov't1.8%

Labor&Commerce&Devel.2.1%

FY14 Budget As Passed - All Funds Uses =$5.23 BillionIncludes Net Ed Property Tax and Federal Funds

K-12 Ed24.1%

Debt Service3.2%

Higher Ed3.5%

Natural Resources2.9%

Transportation10.0%

Corrections5.9%

Protection (All)9.1%

All Other3.4%

Medicaid+ 25.6%

Children & Families6.5%

Gen'l Gov't3.9%

Labor&Comerce&Devel.1.8%

FY14 Budget As Passed - All State Funds = $2.4 Billion Excludes Federal Funds and Net Ed Property Tax

K-12 Ed27.3%

Debt Service5.2%

Higher Ed6.2%

Natural Resources1.9%

Transportation0.0%

Corrections10.1%

Protection (All)8.8%

All Other3.5%

Medicaid+ 21.6%

Children & Families8.9%

Gen'l Gov't5.1%

Labor&Commerce&Devel.1.3%

FY14 Budget As Passed - General Fund = $1.355 Billion

Healthcare will continue to suck up a lot of oxygen – FMAP, Exchange, ‘17

Constrained fiscal environment ◦How to manage risk? Vision

The Budget Process

The Next GF Budget Gap

Governor goes first FY14 BAA

Executive Recommendations will be presented to House Appropriations Committee (HAC) in Dec.

Next Revenue Update will be in Jan. FY15 Budget will be presented in Jan.

Executive Budget InstructionsGovernors Initiatives usually tied to budgetAchieve balance across funds and demandsAll about the GF in the end

FY13 came in better than expected 50% to property tax relief25% to federal funds 25% to rainy day fund

FY15 Demand on the GF is higher than forecast revenue growth

$55M of one time resources balanced FY14

Retirement obligations

Pay Act costs – roll out plus new contract

Other Human Service Demands

Education Finance expectations

Debt Service

Technology Funding

Build Reserves - $12 million in rainy day fund

Capital Demands

Administration will need to balance demands to revenues available

No New Broad Based Revenue

Governor’s Strategic Planning

Performance Focus

Federal Funding Risks

FY15 No Medicaid/GC Reserve

Questions?

This presentation will be available at: http://finance.vermont.gov

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