Gov. Shumlin Asks State Employees To Talk About Savings

“I don’t want to pretend to you that we’re not doing this without some real concern,” Shumlin said on his first full day in office. “We understand the pitfalls. At the same time, we have a $150 million budget gap to solve.”

The proposal, which will also seek concessions in health care and pensions from state workers, marks the new administration’s first specific plan to close a general-fund shortfall in the fiscal-year 2012 budget, which begins in July.

Through attrition, Shumlin said, the state can book ongoing savings in labor costs without resorting to layoffs. Of the 500 people expected to leave government jobs of their own accord over the next 12 months, Shumlin said, only half will be replaced. Letting state employees voluntarily cut back on their hours is also part of the package.

“We understand we have a shortage of state employees right now and we also understand that we’re going to make that problem a little bit worse by not replacing people,” he said. “But Vermonters understand we need to keep our fiscal house in order.”

Jes Kraus, executive director of the Vermont State Employees Association, which represents most of the state’s 7,500-person workforce, said the proposal is of some concern to his union’s membership.

“We’ve been saying for some time now that the outgoing (Douglas) administration essentially broke down state government to the degree that it’s having a hard time functioning already,” Kraus said.

The state workforce has been reduced by 660 workers over the past two years. “To put further strain on that,” Kraus said, “of course is concerning.”

But Kraus said the VSEA is prepared to do its part to help Shumlin and the Legislature dig out of a fiscal hole opened up in part by the expiration of a federal stimulus program that had helped Vermont sustain general-fund spending over the past two years, despite a steep decline in state revenue.

“These are troubling times,” Kraus said. “We don’t want to do it, but if it’s necessary to achieve savings, then we all have to struggle through it.”

The scope of next year’s budget shortfall has grown in recent weeks, from $112 million to $150 million. A reduction in federal Medicaid dollars and the failure of the Challenges for Change legislation passed last session to achieve a projected $38 million in savings are in part responsible for the bleaker projections.

In about two weeks, lawmakers will receive a new revenue forecast. Many predict healthier revenue estimates will eat into the $150 million gap. But the fiscal-year 2012 shortfall also presumes $33 million in additional Challenges for Change savings. Failure to hit that threshold would only increase the size of the budget gap.

On Friday, Shumlin reiterated his inaugural-address pledge to reject any increases in broad-based taxes that might help fill the budget gap.

Sen. Anthony Pollina, a Washington County Democrat, said prospects for raising new revenue shouldn’t have been discarded so quickly.

“I doubt that he’s found a way to reduce the need for services … so it’s hard to imagine how that important work is going to get done with fewer people there to do it,” Pollina said.

Pollina pointed to recent problems at the Department of Children and Families, where a shortage of staff resulted in inordinately long wait times for low-income residents seeking assistance with food, fuel and other state benefits. The administration has since committed to boosting staff levels there by 20 people.

“Reducing the state workforce could create serious problems for some people,” Pollina said. “And that’s the problem you run into when you immediately remove new revenue from the table.”

Shumlin did leave open the possibility for tax increases that aren’t “broad-based.” He said he’s open to a tax on the owners of Vermont Yankee for the radioactive waste being stored at that facility. And he also said that, if circumstances warrant, he would consider using some of the state’s approximately $60 million “Rainy Day” surplus to fill in gaps in next year’s budget.

“The governor has left open that door, if we think we can refill the reserve,” Secretary of Administration Jeb Spaulding said Friday. “If you think the storm is abating, then maybe that’s the time to do it.”

Rep. Tom Koch, a Barre Republican, said it’s worth noting that Shumlin’s first act as governor was to impose cuts on the same union workforce that endorsed him in the election.

“I wonder what the employees of the VSEA think of the first proposal from the candidate they endorsed for governor when everybody was afraid Brian Dubie was going to reduce the state workforce,” Koch said.

But Bob Hooper, president of the VSEA, said reductions in staff notwithstanding, the relationship between the workers’ union and the new governor is off to a good start. VSEA representatives got a heads-up on Friday’s announcement in a personal meeting with Shumlin on Thursday night.

“During the entire administration of Jim Douglas, I think that I sat down in his office maybe one or two times to discuss the impact of his decisions on the workforce or how we might participate and contribute to saving money,” Hooper said. “I think it bodes very well for the Shumlin administration that on their first day, they brought us in to talk about how government could run better.”

Hooper said Shumlin’s plan incorporates many of the money-saving proposals the VSEA had long encouraged Douglas to adopt. For instance, Shumlin’s plan includes about $2 million in annual general-fund savings by allowing state workers to voluntarily reduce their work week.

“We proposed reduced work weeks to Jim Douglas no fewer than three times when he was cutting people and he refused,” Hooper said. “There are people in the state workforce who would rather spend Friday with their grandkids. There are workers with new infants who, given the opportunity, would like to spend more time at home. The opportunities for employees, and also for savings to the state, are pretty significant.”

Shumlin’s $12 million proposal represents only a small portion of the overall budget shortfall. In his budget address later this month, Shumlin said Friday, he’ll outline a more comprehensive plan for bridging the entire gap.

Spending on education and human services account for more than 60 percent of overall general-fund spending. And since the executive branch can do little to constrain school spending unilaterally, Spaulding said, human services will likely absorb a significant portion of the coming budget cuts.

“Without looking at human services,” he said, “you can’t get there.”

Finance Commissioner Jim Reardon said budget writers are working to minimize the effects of those cuts on programs that deliver services to the state’s most vulnerable residents.