Vermont

State Budget Practice Report Cards and Budget Resource Guide

Vermont posted B averages in three of the five categories evaluated for fiscal 2017 through 2019: budget forecasting, reserve funds, and transparency. In each one, it lacked only one element that would have earned a top A mark. 

The state has strong budget forecasting procedures, including consensus revenue estimates. Its outlook for expenditures extends for only two years, however—one less than necessary to get full credit in the category. Vermont’s policies regarding reserve funds largely parallel those cited as best practices by the recent Volcker Alliance working paper, Rainy Day Funds: A Call to Action. The state falls short in not considering historical revenue volatility in its calculations of rainy day fund deposits. 

The state’s B average in transparency reflected its failure to provide budgetary information on deferred infrastructure maintenance costs, a weakness shared by forty-four other states.

Vermont’s weakest grade was a D average in legacy costs, which cover public worker pensions and other postemployment benefits (OPEB), principally health care. With a high OPEB liability relative to its budget, the state contributed only 56 percent of the $112 million actuarial recommendation for covered employees in 2018. Vermont’s pension contributions came close to meeting actuarial calculations, but its pensions were funded at 64 percent of estimated obligations—6 percentage points below the total for all states.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2020 Volcker Alliance report, Truth and Integrity in State Budgeting: The Balancing Act, which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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