Finance Officials Warn Against Overreacting to Sequestration

By Kirk Carapezza

Despite widespread estimates about the potential effects that across-the-board federal spending cuts could have on the states, Vermont’s Joint Fiscal Office said Wednesday it doesn’t know the precise impact of sequestration.

Still, Commissioner of Finance and Management Jim Reardon said the risks to state operations are real.

“We are a state that is heavily federally financed and therefore there could be some adverse impact on our bond rating, which ultimately could affect the cost of borrowing,” Reardon said. “I think it’s premature to get into any level of precision.”

If the sequester takes effect on Friday, Reardon said federal spending cuts could limit job growth, which would affect Vermont’s general fund revenues. On Tuesday, House Speaker Shap Smith said the possibility of new budget cuts from Washington could cause enormous problems with Vermont’s budget for next year.

Gov. Peter Shumlin agrees. “We can run through the examples,” Shumlin told reporters. “You’ve all seen the list that the White House released. It’s accurate. It would hit everybody.”

“It’s going to have such a devastating effect on job growth and our economy that there’s no state treasury in America that can bail out the federal government from this one,” said Shumlin, who blames conservative congressmen for gridlock in Washington.

On Thursday, Shumlin will join incoming Adjutant General Steven Cray at Camp Johnson in Colchester to outline the potential impact of sequestration on the Vermont National Guard. Earlier this week, military leaders in Vermont admitted that they’ve grown accustomed to the relentless chatter of fiscal cliffs, debt ceilings and sequestration in Washington.

Read the White House report on the impact the sequester could have on Vermont here.

VPR News: Vt. Set To Lose Estimated $15 Million If Sequester Takes Effect

Earlier: Vermont Guard Grows Accustomed to Preparing for Cuts