The black sheep of Vermont’s journalism family, Vermont Watchdog, took a short break from its incessant anti-renewable campaign and pooped out a single-source article alleging that Vermont is a fiscal disaster.
A new report from a government accounting watchdog group finds that Vermont has a debt of $3.9 billion, despite claims of having a balanced budget.
The Financial State of the States 2015 report, released this month by Chicago-based Truth in Accounting, debunks the myth that states balance their budgets.
Okay, first of all, any “accounting” group that doesn’t know the difference between a balanced budget and long-term indebtedness ought to be drummed out of the bean-counter fraternity. Every large entity, government or private sector, carries a certain amount of debt on its books. Routine.
So, who are these incompetent clowns at “Truth in Accounting”?
Three guesses, and the first two don’t count.
The Institute for Truth in Accounting is part of the State Policy Network, a web of conservative policy and advocacy organizations whose roster also includes, ahem, the Ethan Allen Institute. SPN and its subgroups get the bulk of their funding from the Usual Suspects — the Koch brothers and like-minded rich people and their “charitable foundations.”
Indeed, Vermont Watchdog failed to disclose the fact that it is a creation of the Franklin Center for Government and Public Integrity, which is — oh yeah — part of the State Policy Network.
So, one arm of SPN cranks out a misleading “study,” and another arm of SPN helps to publicize the “study.” Without seeking quotes from anyone else. And without disclosing their backstage relationship.
Now that we’ve got that out of the way, let’s take a look at the actual “study.”
The crux of TIA’s accusation is that Vermont is carrying unfunded pension and retiree health care obligations.
“The -$3.9 billion of money needed to pay bills represents compensation and other costs incurred in prior years that should have been paid in those years. Instead, these costs have been shifted to future taxpayers,” the report states.
Erm, actually, that $3.9 billion shouldn’t be a negative number. The obligation is a negative, but the “money needed to pay bills” is a positive. So, more accountancy incompetence.
And then we get to the inconvenient fact that this assertion puts TIA at odds with the standards of its own profession. It is absolutely normal for governments and businesses to carry unfunded future obligations.
Just as a f’rinstance, take a look at Entergy’s handling of the Vermont Yankee decommissioning fund. The expected cost of decommissioning is $1.24 billion. As of the end of 2015, the VY fund contained less than half the needed total — $595.4 million. And Entergy has been taking millions from the fund for plant expenses unrelated to decommissioning.
If TIA’s standards applied to Vermont Yankee, then Entergy would be forced to come up with $644.6 million immediately.
In reality, like it or not, Entergy’s management of the fund has passed muster by federal regulators and the courts. Entergy assumes that the fund’s investments will, over time, catch up with the total cost of the decommissioning.
And governments make the same assumption about their retirement obligations.
Do they always do a good job? No. But the Democrats have no monopoly on that. State employee retirement obligations rose significantly under Jim Douglas. And Democratic State Treasurer Beth Pearce has made closing the retirement gap her number-one priority. She’s made tremendous strides, and has Vermont on a much better trajectory.
Notwithstanding TIA’s funny numbers.