Budget Cuts Won't Hurt This Year, But 2012 Is A Concern

04/19/11 5:50PM By Bob Kinzel
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(Host) It appears unlikely that newly enacted federal budget cuts are going to have a major impact on Vermont's current year budget.    

But as VPR's Bob Kinzel reports, there's concern at the Statehouse that the situation next year could be a lot worse.

(Kinzel) There's good news and bad news from a special budget briefing at the Statehouse.

The good news is that the recently approved $38 billion cut in this year's federal budget will not have a big impact at the state level.

Martha Heath is the chairwoman of the House Appropriations committee. She says the budget deal will cut roughly $2 million in General Fund spending.

(Heath) "The numbers that we're looking at are surprisingly not as devastating as we feared."

(Kinzel) The biggest impact is on the state's Transportation budget. Vermont will receive roughly $12.5 million less than expected but Heath says these reductions can be pushed off until next year.

(Heath) "That won't affect any projects that are currently in the works or planned to be built this summer but that it will have an impact on how much we're able to do in future years."

(Kinzel) Heath says her greatest worry is that Congressional negotiations over next year's federal budget will drag on for months, putting Vermont in a very difficult position next winter.

(Heath) "I think one of our biggest concerns is that if the decisions aren't made until this time next year, as we saw this year, that we would have a very hard time reacting - especially if the impacts were severe."

(Kinzel) Jim Reardon is the state's commissioner of Finance. He says lawmakers need to realize that, even under the best of circumstances, it's likely that the state will have to deal with additional federal budget cuts next year.

(Reardon) "In the near term I think we're okay, but in the long term I think our relationship with the federal government is changing and we're going have future reductions that we're going to have to address."

(Kinzel) And Reardon says more cuts to this year's budget could emerge when Congress tries to reach an agreement on raising the nation's debt ceiling in about two months.

(Reardon) "That could even - before the FY 2012 budget plays out, I'm talking about the federal budget - have some effect on spending reductions."

(Kinzel) Legislative leaders were considering a special session this fall to deal with federal budget reductions but this now seems unlikely unless additional cuts are made in the coming months.

For VPR News, I'm Bob Kinzel in Montpelier.

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