Daily Archives: January 16, 2015

Inmates aren’t people; they’re fungible assets

For those who believe that shipping prison inmates to distant for-profit prisons is immoral (human rights), unconstitutional (judge’s decision, uncontested), or simply counterproductive (isolation may lead to recidivism), this week brought just a little bit of good news courtesy of the soon-to-depart Laura Krantz at VTDigger.

After bringing home a few dozen inmates this week, Vermont has roughly 360 inmates in a Kentucky prison and another 40 in Arizona — the lowest number in a decade.

With the good news came some bad: a provision in Vermont’s contract with the Corrections Corporation of America imposes penalties if the inmate population falls below 380. We are now very close to that figure.

Corrections Commissioner Andy Pallito admits that the provision creates a disincentive for Vermont to bring more prisoners home, even if there’s space in state prisons.

Then came the Governor’s budget address on Thursday. One of the revenue upgrades is $1.7 million from the lease of 60 inmate beds to the U.S. Marshals.

Hmmm. A lower inmate population could trigger higher payments to CCA… but now we’re leasing five dozen beds, putting the squeeze on in-state prison space… Hey presto: Synergy! We save money on CCA and we make money from the U.S. Marshals.

Fiscally, it’s a win-win.

If you don’t mind treating your inmates like commodities instead of human beings.

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If the Governor is worried about the wealth gap, he could maybe do something about it

Gov. Shumlin’s budget address began with a bit of boilerplate that’s been a recurring feature in his recent public remarks: bemoaning the wealth gap in America.

At a time when the wealth gap between the people at the top and everyone else is more extreme than since before the Great Depression, Vermonters hear about the recovery both in Vermont and nationally; they hear about our state’s low unemployment numbers; and they wonder: Why aren’t I seeing it? Why is my family being held back?

The bemoaning is appreciated, but when he does so little about the wealth gap, it comes across as an empty rhetorical gesture — the last ghostly trace of a progressive agenda.

Okay, I don’t expect Peter Shumlin to single-handedly fix our profoundly unbalanced economy. But there’s one big thing staring him in the face that would help the middle class and help close the state’s budget gap.

Raise the effective tax rate on top earners. Not the actual rate, but the effective rate.

Yes, I’ve said this before; and yes, Shumlin blocked a House proposal to do just that a couple years ago. But our tax system has gotten worse since then, and our budget shortfall has grown.

Just look at this chart.

ITEP 2014 tax chart

Sorry, I should have warned you: seeing that chart may result in nausea and vomiting.

According to figures released this week by the Institute on Taxation and Economic Policy (ITEP), Vermont’s tax system hits the working and middle classes the hardest, while top earners pay the least of all (as a percentage of their incomes).

In the past, the Governor has praised the fairness of our tax system. He should never, ever do that again until he fixes it.

Not only has he failed to do so… not only has he blocked efforts to do so… but during the last two years, Vermont’s tax system has actually gotten worse. Here’s the ITEP chart from two years ago.

ITEP 2012 tax chart

Compare the two charts: Higher shares of family income for the bottom 60%, and lower shares for the very top. No relief for the middle class, despite the Governor’s rhetoric.

In many ways, our state tax system is relatively progressive, but there are problems. The sales tax is extremely regressive; the property tax hits the working and middle classes the hardest. And as Paul Cillo of the Public Assets Institute points out: 

“The regressive property tax is Vermont’s largest single revenue source supporting state and local public services, and the Legislature has been shifting more and more public costs onto the property tax.”

And while income tax rates are very progressive, the actual taxes paid are much less so. Vermont’s tax rate for top earners is 8.95% — but because of generous rules on taxable income and deductions, those top earners pay an effective rate of only 5.1%. 

In addition to the fairness issue, the disparity puts pressure on Vermont’s budget, as PAI points out:

If the nation fails to address its growing income inequality problem, states will have difficulty raising the revenue they need over time. The more income that goes to the wealthy (and the lower a state’s tax rate on the wealthy), the slower a state’s revenue grows over time.

What have we seen throughout the past several months? Income tax receipts coming in lower than expected, forcing cuts in the budget. Hmmm.

There was one modestly progressive tax proposal in the Governor’s speech: he wants to end a tax deduction for state and local taxes paid in the preceding year, a tax break that mostly benefits upper tiers.

Otherwise, he left our unfair, broken, and inadequate tax system untouched.

Just about every time he opens his mouth, he talks about how Vermonters are taxed to the limit of their ability to pay. This is clearly true for most Vermonters, but clearly untrue for the most fortunate among us.

There is a glimmer of hope. Shumlin yesterday took a tiny step away from his past opposition to raising income, sales, or rooms and meals taxes:

You have heard many times over the past four years my opposition to raising income, sales, and rooms & meals tax rates to fund state government.

When he delivered this line, he gave the word “rates” some extra oomph. And making the income tax fairer wouldn’t require a change in rates; it’d just mean closing loopholes and limiting deductions.

Reasonably. I’m not calling for confiscatory taxes on the rich; I’m just calling for them to pay their fair share in an economy that has bestowed most of its benefits on them.

How about it, Shap?

Mikey Pom-Poms is at it again

I can explain everything.

Nobody was Tweeting, officer. We were all in the back seat singing.

Last night saw another outbreak of TwitBoasting from serial offender Michael Townsend, the Burlington Free Press’ Cheerleader-In-Chief.

The first one wasn’t that bad:

Okay, fine, share a little love with one of your hard-working scribes. Nothing wrong there. But then came Step Two in Townsend’s descent.

Mike Donoghue was at the Statehouse yesterday, but I’m told he wasn’t covering Shumlin’s budget address; he was dogging people about this delinquent-taxpayer list. Short version: earlier this week, the state released a list of its top 100 tax scofflaws — 50 business, 50 individual. But just the names; not the amounts owed. Donoghue is seeking the amounts.

That’s the big scoop. On the day of Gov. Shumlin’s budget address, when he’s setting the agenda for this legislative session, the Free Press’ senior reporter is stirring up a tempest in a transparency teapot.

And then came Townsend’s topper:

Oh, Mikey.

Look, it’s perfectly okay to talk up your own reporters. But why do you have to run down everybody else?

As I’ve said before, this is why all the other reporters think Townsend is a jerk and the Free Press is a fount of institutional arrogance.

Also, please lose the fake cowboy stuff. Donoghue and Burbank are good reporters; they’re not The Magnificent Seven.

Same song, different verse

Hey, who switched the teleprompter to Español?

Hey, who switched the teleprompter to Español?

Reactions to the Governor’s budget address…

First, I hope the Republicans are happy. Last week they complained about a lack of attention to some major issues. Today they got a whopping hour and fifteen minutes. Be careful what you wish for.

This speech followed Shumlin’s usual pattern. There’s a whole lot of incrementalism — small, inexpensive approaches to big challenges — and, to spice things up, a handful of bigger proposals almost certain to go nowhere. It strikes many observers as a deliberate tactic: offer an unpalatable solution, and force the legislature to find an alternative. Example from a previous year: his plan for a major cut to the Earned Income Tax Credit.

I’ll give him credit, he’s very good at incrementalism. He finds modest improvements that don’t cost much, if anything. In today’s speech, he was constantly talking of leveraging federal funds, private-sector participation, and partnerships with entities of all sorts. A classic example: his plan to offer “motivated high school seniors” a free two-year Associates’ Degree in engineering technology “with no additional cost to the Education Fund.”

The plan involves the state Agency of Education and participating employers identifying students, and leveraging existing programs plus employer contributions to get them free tuition and a summer internship if they stay and work in Vermont after graduation.

It’s classic Shumlin. It sounds good, it will actually help some people, it’s cheap, and it can be effective as far as it goes.

But it doesn’t touch on the underlying problems: high college costs and stagnant earnings for all but the very wealthy. Even if the incremental stuff works, it seems like small potatoes for those of us who vote Democratic.

How big is the budget gap? It's soooooo big.

How big is the budget gap? It’s soooooo big.

Then there’s the other thing we get: the “big idea” that probably won’t go anywhere. I could mention a few; the double ban on teacher strikes and contract impositions, giving power to the state school board to close schools that fail to meet spending or achievement targets, the payroll tax increase to fund better Medicaid reimbursement.

Indeed, his entire education package seems designed for rejection. For one thing, it seems to do nothing to immediately mitigate rising property taxes. That’ll be lawmakers’ top priority, after last year’s election.

Shumlin’s broader reforms are an odd mix of distant and scary. Neither the teachers’ unions nor the school boards are likely to accede quietly to a plan that will strip them of their ultimate bargaining chips. The idea of eliminating “contradictory incentives” like the small schools grant may be good ideas, but they’ll be tough to support for lawmakers with small school in their districts.

Finally, the idea of Agency of Education “evaluation teams” going into every school to measure achievement and spending performance — with those who fail to meet benchmarks in line for state funding cuts or even closure — is DOA. It’s mandatory consolidation and top-down control via carrot and stick, rather than direct mandate. Kinda the worst of both worlds; no immediate impact, and a whole lot of state interference (as it will be perceived) in local decision-making.

He calls it a “partnership,” but one partner has the ultimate power.

If you think I’m too gloomy on Shumlin’s prospects, just take a look at this reaction statement from House Speaker Shap Smith:

…the Governor acknowledged Vermonters’ concerns about the unsustainable cost of health care, burdensome property tax increases, and the need to clean up our waterways. …I look forward to working with the Administration to make Vermont the best possibly place to work and live, and one that provides opportunity for all Vermonters.

He applauds the Governor for addressing the big issues — but not a peep about the Governor’s proposals. I expect lawmakers to consider Shumlin’s ideas, but he won’t get priority over others’ ideas.

This is all part of the game, as it has been since Shumlin took office. It’ll be even more so after an election that was largely a personal rebuke of the Governor, not the Democrats.

His budget message was a starting point. From here on, it’s a matter of top lawmakers devising proposals of their own that they can convince Shumlin to support.

Multimedia note: if the photos seem a bit blurry, it’s because they’re screengrabs from the Vermont PBS livestream. Workin’ from home today.