Vermont May Lose Millions Under Debt Ceiling Bill

08/08/11 6:34AM By Bob Kinzel
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(Host) Although the specific details won't be known for several months, it appears likely that Vermont will lose tens of millions of dollars in federal funds in the coming decade.

The future budget cuts are a part of the new debt ceiling legislation.

VPR's Bob Kinzel reports:

(Kinzel) The new law calls for $2.5 trillion in federal budget reductions over the next 10 years. Some of the initial savings will be the result of level funding most federal programs and eliminating adjustments for inflation.  And a second round of cuts could reduce spending on a wide variety of programs.

Paul Cillo is the president and executive director of the Public Assets Institute in Montpelier. 

He says the budget deal means less federal money for education, health care, law enforcement and transportation programs:

(Cillo) "Really what's happening is that Washington is really passing the buck to the states and Vermont's going to have to be facing this over the next 10 years to have to make the tough choices that they've been unwilling to make."

(Kinzel) And Cillo says Vermont lawmakers will have to debate which services Vermont can continue to afford to offer and which programs can no longer be sustained:

(Cillo) "What I think is especially dangerous about this situation for Vermont is that we really haven't asked government to do less, we've just cut the amount of money that's available for state government to function and so what we have is an anemic government that actually cannot do what its citizens expect it do to."

(Kinzel) Art Woolf is an economics professor at UVM and the publisher of the Vermont Economy Newsletter.

He doesn't think the reductions in federal spending are necessarily a bad thing:

(Woolf) "It's probably better to have people in the states decide what's important to them and let them raise taxes and spend it locally or in the state they make better decisions the closer the money is to where it's being raised."

(Kinzel) And Woolf says it's clear that some areas of federal spending must be restrained in the future:

(Woolf ) "But if you think again about the federal government it's got to cut money to the states. 20 percent of all the federal government spending is defense, 20 percent is for Social Security, 20 percent is for Medicare and 20 percent is for Medicaid.  That leaves 20 percent for everything else. There's just not enough in the "everything else" category to leave all those other ones untouched."

(Kinzel) Congress is expected to identify the first round of budget reductions sometime this fall.

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

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