Budget Process

Introduction:

Preparation of the Governor's annual budget recommendations for the State of Vermont is the responsibility of the Commissioner of Finance and Management, the staff of the Budget and Management Division, and agency and departmental budget staff. The development and implementation of the budget is an on-going annual cycle comprised of the following highlights.

Financial Analysis of Actual and Projected Expenditures and Revenues:

At the end of a fiscal year (July and August), the Budget and Management staff reviews the financial data for each agency, department and program. This analysis provides important insights into how state government raises revenues and spends tax dollars. These insights may lead to recommendations for changes in the budget for the current fiscal year as well as assist the development of the Governor's budget proposal for the coming fiscal year. The results of this financial analysis are reviewed with the Governor and his or her senior staff.

Instructions are distributed to each agency and department, with a budget allocation for the coming fiscal year. Budget allocations generally reflect the Governor's spending priorities. Using Vermont Vantage (the budget development system), agencies and departments construct their budget requests. The Budget and Management Division staff analyzes these proposed budgets and revisions to the original allocations are made if necessary. By the middle of December, the Governor has made most of the decisions important to the budget.

Preparation of the Budget:

Following the Governor's decisions, the Budget and Management Division prepares the Governor's recommended budget proposal for submission to the General Assembly. This submission generally includes a draft Appropriations Bill and Executive Budget Book highlighting key financial information profiling the Governor’s spending recommendations.

Submission of the Budget to the General Assembly and Legislative Deliberation:

Soon after the General Assembly convenes at the State House in January, the Governor presents the budget proposal to the Legislature. The Governor usually accompanies the budget proposals with a formal address to a joint meeting of all House and Senate members. After the Budget Recommendations and Budget Message have been presented, the appropriation process is initiated. The Appropriations Bill, prepared by the Department of Finance and Management, is referred to the Appropriation Committees of the House and Senate. The Appropriations Committees develop their recommendations for consideration by their fellow members. Once the House and Senate pass the Appropriations Bill, a Budget Conference Committee, comprised of three members of the House and three from the Senate, is established to resolve any differences. Once differences are resolved, both the House and Senate must pass the final version of the Appropriations Bill. Upon passage by both the House and Senate, the Bill is forwarded to the Governor. The Governor can sign the Bill into law, veto the Bill or allow the Bill to become law by not signing or vetoing the bill within ten days of its arrival at the Governor's Office. If the Governor vetoes the bill, the legislative approval process begins anew.

Budget Implementation:

When passage of the Appropriations Bill is complete and it is enacted into law, the implementation of the act begins. The appropriations approved by the General Assembly and the Governor are entered into the State's accounting system (VISION) by the Department of Finance and Management on July 1, the beginning of the fiscal year. Agencies and departments can then spend the appropriated funds. At the same time, the Department of Finance and Management is "closing the books" and preparing the financial statements describing the prior fiscal year. At this point, the budget process begins anew for the next fiscal year.

During the fiscal year, the Legislature may deem it necessary to adjust the current year's budget. This change is implemented via the Budget Adjustment Act. The Budget Adjustment Act is enacted into law similarly to the Appropriations Act. The Governor submits proposed changes, differences are resolved, the House and Senate pass the final version of the Budget Adjustment Bill, and the Bill is forwarded to the Governor. The Governor will then choose to sign the Bill into law, not sign the Bill, or veto the Bill.