State Budget Practice Report Cards and Budget Resource Guide
Vermont is the only state without a balanced budget law but follows the example of its peers. It achieved an A average in budget maneuvers for fiscal 2016 through 2018, largely by avoiding one-time measures to keep revenues in line with expenditures. The only exception came in 2017, with the state pushing $16.3 million of corporate income tax refunds to 2018, when they were paid. Delaying the payment until 2018 offset a shortfall in income tax receipts.
Vermont’s lowest grade was its D average in legacy costs. Though the state made the actuarially required contributions to public employee pension plans, it was hurt by a pension funded ratio of only 64.3 percent as of 2017, compared with the US total of 68.6 percent.
Another reason for the low grade was the state’s failure to follow actuarial recommendations for funding other postemployment benefits (OPEB), such as health care. According to the Executive Budget Summary, the actuary for the Vermont State Employees’ Retirement System recommended a contribution of almost $75 million to the OPEB plan in fiscal 2018, over twice the budgeted contribution of $36 million.
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 found here contain grades of the state's budgetary practices during the fiscal years of 2016 through 2018. Each state received marks in five critical categories, based on their adherence to best practices in several key budgeting indicators. The five categories covered methods used to achieve budgetary balance as well as how budgets and other financial information are disclosed to the public.
States received grades of A to D-minus (there are no “failed states”) for their procedures in estimating revenues and expenditures; their use of one-time actions to balance budgets; how they oversee and use rainy day funds and other fiscal reserves; the adequacy of their funding of public worker retirement and other postemployment benefits; and the quality of transparency of budget and related financial information. The grades are based on research conducted by public finance and budgeting professors and students at eight US schools of public administration or policy. The universities’ research efforts were augmented by Volcker Alliance staff, data consultants at Municipal Market Analytics, and special project consultants Katherine Barrett and Richard Greene.
State Budget Sources
State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses is a resource published by the Volcker Alliance designed to help public officials, policy advocates, journalists, academics, and concerned citizens fully understand the critical fiscal decisions that governors and legislators must make. The guide includes the links below to budgets for this state as well as legislative analyses of budget bills and treasurers’ or comptrollers’ monthly state cash-flow statements; capital spending plans; reports on public-worker pension funding and returns; and reports by local and national fiscal research organizations, bond rating firms, and associations of state fiscal and finance officials.