Vermont’s state government spends billions of dollars every year. So who decides where that money goes and how are such decisions reached?
The short answer, according to the Vermont Constitution, is that the Legislature must sign off on government appropriations — typically, though not necessarily, with the input and approval of the governor. The executive branch is then charged with raising and spending the money necessary to keep the state running, and it has a certain amount of discretion to determine where that money goes.
There is, of course, a longer answer.
State budgeting is a complex endeavor involving many players, but it follows some predictable patterns from year to year. The first thing to know is that the state’s fiscal year begins July 1. That means the ultimate deadline to reach decisions on state spending is the end of June — but the process typically begins a full year earlier.
Over the summer and fall, the various departments and agencies of state government begin to consider their spending needs — and wants — for the following fiscal year.
That process is typically overseen by the Department of Finance and Management, which often sets certain spending parameters within the executive branch. For example, the department may instruct commissioners and secretaries to increase their individual budgets by no more than 3% over the previous year’s budgets.
Ultimately, all this work makes its way to the governor’s office — by no later than Nov. 15, according to statute. The governor makes the final call as to what budget recommendations to make to the Legislature early the next year.
Governors often preview their big ideas during their inaugural address (in odd-numbered years) or their state-of-the-state address (in even-numbered years) in early January. Three weeks later, the governor delivers a formal and more detailed budget address to the Legislature and issues a full proposed budget in writing (and spreadsheets).
That’s where it gets interesting.
The Legislature has no obligation to do anything with the governor’s recommended budget. But in practice, it tends to use the document as a starting point for its own deliberations.
The House Appropriations Committee takes up the budget first, meeting with executive branch officials about their priorities and hearing from lobbyists and members of the public about theirs. Just as the governor is supported in budgeting work by the Department of Finance and Management, the Legislature is supported by the Legislative Joint Fiscal Office, a nonpartisan office of fiscal experts.
The budget — often referred to in the Statehouse as “the big bill” — then follows the same process as most legislation. It has to be approved by House Appropriations (generally before the end of March) and then a majority of the 150-member House. It can be amended at various points along the way.
Then the budget heads over to the Senate, where the Senate Appropriations Committee meets with similar witnesses and typically tweaks the bill as it sees fit. Once that committee signs off (usually by mid-April), a majority of the 30-member Senate must approve.
Assuming that the versions of the budget passed by the House and Senate are different — and they almost always are — a committee of conference is appointed to hash out the differences. This panel is composed of three House members and three senators, typically including the chairs of the respective appropriations committees. They negotiate a compromise over the coming weeks and send it back to the House and Senate floor for up-or-down votes. This is often one of the last moves the Legislature makes before adjourning in May.
All this time, it should be noted, the Legislature is advancing parallel bills setting tax policy for the coming year. Needless to say, the money coming in the door has to match the money going out.
The budget then goes back to the governor. If he or she signs the bill or lets it become law without his or her signature, it takes effect July 1. If the governor vetoes the bill — which has happened about half a dozen times in state history, according to the joint fiscal office — the Legislature returns to Montpelier to respond. Lawmakers may choose to override the veto, which requires two-thirds votes in both chambers, or reach a compromise with the governor and send a new, more acceptable version back for signature.
Even after the new budget takes effect, it can still be amended. The Vermont Emergency Board, which includes the governor and the chairs of the Legislature’s four taxing and spending “money committees” can meet outside of the legislative session to adopt new revenue estimates and make necessary changes to the budget.
And when legislators reconvene in January, one of their first orders of business is to settle on what’s called the Budget Adjustment Act, essentially a mid-year update of the current budget. Sometimes the changes are minimal, reflecting unexpected costs or revenue. Sometimes more significant changes to programs are adopted halfway through the fiscal year. The Budget Adjustment Act follows the same legislative process as the Big Bill, but it often moves more swiftly.
By the time one budget process is over, another has already begun.
Read the story on VTDigger here: How Vermont’s state budget is written.