It’s being called the new normal. Our unemployment rate is near full employment, the economy, while not robust, still trudges forward, real estate prices are edging upward — but the state’s budget is forever in the red.
We can’t seem to get ahead.
The next budget year continues the trend. The Shumlin administration has asked each of its agencies to submit a budget that reflects a 4 percent cut — totaling roughly $31 million.
This follows a downward revision by the state’s economists as to the state’s revenue forecast. It’s been revised to three percent, down from 4.8 percent.
The problem is that the state has depleted most of its reserves and its spending has obviously been above sustainable levels. Another major consideration is that the federal government is also running deeply in the red and is less willing to help states shoulder their burdens. That unwillingness could increase depending on the outcome of November’s general election.
Either way, it’s unlikely Vermont will experience an economy robust enough to meet present spending patterns.
That should not be a surprise. Our spending has been above the level of inflation for some time. The squeeze from the feds has been long predicted. Our growth rate is anemic. And we don’t have an economy built to roar.
We can wring our hands in frustration that things are as they are, but that’s frustration built on expectations that were not realistic from the outset. We keep expecting to be rescued, but by whom and for what reasons?
The enemy isn’t outside our borders. Salvation doesn’t come with a Democratic or Republican label. The issue is one of habits. Or inertia. We keep doing things the same basic way we’ve always done things — little of it based on any real understanding of what works and what doesn’t.
We don’t really measure things. We just add to them.
Jeb Spaulding, secretary of administration, hinted at this recently when he said most of the growth in state spending comes from “formula-driven spending.” When a program becomes part of the state budget, the natural inclination is to expand it. And we do.
The result is a budget that expands beyond our ability to pay.
The inclination of this administration — and all others — is to spread the pain and have each agency submit reduced budgets. That’s the plan to reach the $31 million figure.
That’s the easy way. But it doesn’t work. That’s like letting a little air out of the balloon knowing full well that it will be inflated with the next breath.
The more difficult way is to decide what works and what doesn’t and to get rid of what doesn’t. The more difficult way is to force the agencies to rethink their missions, to place a value on the need to change their habits. It may, for example, be advisable to offer state employees financial incentives for suggestions that save the state money, or ideas to improve efficiency.
It’s also important to understand the difference between the agencies and their respective needs. As counterintuitive as it may seem, not all budgets can be cut without repercussions that end up costing the state more. For example, if a department has plans to upgrade its outdated IT system it may far outweigh the costs.
That’s why, from a management perspective, it’s smarter to be surgical in how the state’s budget can be cut. It’s not a tab of aspirin that all agencies are asked to swallow — with full recovery promised moments later. Instead, the task for administrators is to pull out the knife and cut the lowest-performing parts of their operations, the parts that matter least.
It’s completely doable. Let’s also remember that a 4 percent cut includes a baked-in increase in excess of four percent. If the average budget has been increased at roughly three percent for the last several years, then obviously cutting 4 percent doesn’t even get back to last year’s base budget.
We’re not talking about a lot of pain.
What we are talking about is the need to get away from the “new normal,” a term becoming synonymous with denial.
St. Albans Messenger