Author Archives: John S. Walters

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About John S. Walters

Writer, editor, sometime radio personality, author of "Roads Less Traveled: Visionary New England Lives."

The Kingdom EB-5: Spiders in the attic. Lots of ’em.

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About 15 years ago, a retired military man appeared in Dover, New Hampshire with an audacious plan: he had a revolutionary design for midsized passenger aircraft, and he was going to start a company — Alliance Aircraft — to build them. He claimed to have solid interest from some of the world’s major air carriers, and he planned to build a factory in some underutilized mill buildings in the middle of town. Good jobs, economic activity, what could be better?

At the time, I was a reporter/anchor for New Hampshire Public Radio, and I did a story about the project. At first everything seemed ideal, but the more I looked into it, the shakier it became. When I talked to experts in aviation and finance, I learned that this guy wasn’t especially well known and that it’s harder than Hell to launch a successful startup in a capital-intensive field like that.

My report raised questions about the project’s viability and public officials’ enthusiastic embrace of same. In the end, Alliance Aircraft fizzled out. No plant, no planes. Mind you, it wasn’t a scam; the head guy was a true believer. There was little or no public investment involved; the project didn’t even get that far.

Which brings us to today in the Northeast Kingdom. If you haven’t read VTDigger’s latest story about Bill Stenger’s EB-5 project, go and do so. It is a must-read.

The story by Anne Galloway focuses on AnC Bio, the biotech facility planned for Newport and funded by EB-5 investment — the federal program that gives green cards to foreign investors who put money into job-creating projects that would otherwise go unfunded. And the story is so full of authentic jaw-dropping “Holy Shit” moments that my mind was drawn back to the halcyon days of Alliance Aircraft.

I’ll recount some of the lowlights here, but please do yourself a favor and read the whole thing. It’s lengthy, but worth your time.

— AnC Bio Vermont is partnered with AnC Bio Korea, which has developed some promising products but has also been in severe financial straits for several years. How severe? Try “its headquarters was auctioned off in 2012” severe.

The Vermont firm is a separate corporation, but it’s entirely dependent on the Korean company for the intellectual property that would be the lifeblood of a Newport plant.

— Stenger’s group said nothing about AnC Bio Korea’s difficulties in its filings with investors or its communications with the state. Galloway: “State officials… weren’t aware of AnC Bio Korea’s problems until in the course of their own research in May 2014, they learned that the Korean headquarters had been sold at auction to satisfy banks and other creditors.”

— After learning of the Korea mess, the state ordered the Stenger group to cease any communication with investors about the Newport plan. This order was ignored. Thanks, Bill.

— Here’s a biggie buried deep in the story. The proposed site of the factory (plus 18 nearby acres) was purchased in 2011 for $3.1 million by a corporation owned by Stenger’s partner Ariel Quiros. Part of the land was sold to the EB-5 consortium, little more than a year later, for $6 million. That’s a tidy profit for Mr. Q. He’d profit even more if the plant is built and his 18 acres are adjacent to a booming factory.

— AnC Bio has yet to seek or receive FDA approval for any of its products, usually a lengthy process. Stenger: “…the FDA approval of products and services will in part be facilitated by the completion of the building.”

Cart before the horse, Bill?

I could go on, but you can read it all at VTDigger. Suffice it to say that this reeks eight ways from Sunday. And beyond the potential implications for the company, its investors, and the city of Newport, this could blow up big-time in Governor Shumlin’s face. He’s been Head Cheerleader for the Stenger projects, frequently traveling overseas to help Stenger and Quiros court investors. His administration set up a conveniently Stenger-friendly regulatory mechanism.

Not to mention that Shumlin’s former right hand, Alex MacLean, was working with the Stenger group through much of this troubled time. If she wasn’t pipelining information back to the administration about all this, she certainly wasn’t doing her political mentor any favors.

If the Newport project implodes or suffers any of several extremely realistic setbacks, it will be another black eye for Peter Shumlin’s tattered reputation for good management. A largely self-inflicted black eye, at that; he didn’t have to identify himself so closely with this project. But he got stars in his eyes, and he may well pay a heavy price.

Glass half full, glass half empty

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There are two ways of looking at the 2015 legislative session so far. Well, two if you’re on the left-of-center side of the political equation. The right, I suppose, is probably in full Ted Cruz “The World Is On Fire” mode.

You can look at it like Progressive Rep. Chris Pearson during last week’s House budget debate, lamenting big cuts to human services: “There have been program cuts every year since I joined the legislature in 2006.”

The glass is half empty. If you’re a liberal or progressive Vermonter, it seems like we’ve been in constant retreat since Peter Shumlin took office. And it got worse after the November election, with conventional wisdom telling us that Republican gains were due to Democratic overreach, the governor abandoning single-payer health care, and Democrats scurrying to the center.

Then there’s the glass-half-full approach. House Ways and Means Committee chair Janet Ancel noted that this year’s tax bill represented the biggest one-year revenue increase in all her years on the committee. And Health Care Committee chair BIll Lippert had this phlegmatic reaction to the rapid diminution of the health care reform bill:

We knew when we put that together it was robust. That was our job, to articulate priorities and how to get there. But I think in the context of the $35 million that was raised on the floor [in the tax bill], and $8 million for the lake [Champlain], if we were so fortunate as to have $20 million for health care, that’s a pretty big appetite for raising revenue in one year. So I would be pleased to have that much dedicated to health care in a year that’s as financially difficult as this.

And, the unspoken corollary: “I won’t be surprised if we get less than $20 million.”

Which leads back to my previous post, “Peter Shumlin: Defender of Liberalism.” If the House is stripping most or all the funding from health care initiatives, we’ll have to depend on the Governor’s political muscle — if he still has any — to get it back.

Anyway, which way do you see it: glass half full or glass half empty?

The current situation has echoes throughout the five-plus-year tenure of Gov. Shumlin. He’s delivered some good stuff, more than many liberals are willing to admit, while keeping the ship afloat in tough budgetary times. Plus, he’s been swimming against three powerful tides: a sluggish recovery which has yet to benefit the middle or working classes, a tax system that has failed to keep up with our changing economy, and the effort to fully fund public-sector pension plans that were revenue-starved by previous administrations. (Lookin’ at you, Tom Pelham.)

On the other hand, many of Shumlin’s promises have been curtailed or abandoned — most notably single payer health care, the issue that arguably won him the 2010 Democratic primary and hence the governorship. Plus, liberal expectations were inflated, fairly or not, possibly both, by the size of the Democratic majority. Shumlin and legislative Democrats never seemed to realize how much political capital they had; and now, much of it is gone, unspent.

And on the other other hand, it’s not as if the last five years have been without accomplishment. And it’s not as if this legislative session will be a failure if we don’t get significant movement on health care reform.

It’ll just kinda feel like one.

Lifestyles of the affluent and connected

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Both halves of one of Vermont’s top power couples are on the move. Eric Miller is in line to be the next U.S. Attorney for Vermont, while loyal spouse Liz Miller just announced her exit from Governor Shumlin’s office, destination TBA.

Eric M. will presumably take a hefty pay cut in his move from principal at Sheehey, Furling & Behm to Humble Servant of the People. Liz is about to forego her six-figure salary as a H.S.O.P., but could presumably have her pick of lucrative jobs in lawyerin’, lobbyin’, or corporate fixin’.

In announcing her move, Liz M. said something that could be taken one of two ways:

Liz Miller said Thursday that the two moves are coincidental. But she said the timing was good for her to leave a grueling job as he prepares to begin one.

“It would be difficult on the bill-paying and the dog, if nothing else,” she said.

I’m pretty sure she meant “difficult on the bill-paying” as a simple statement of time management: if both of them are burning the midnight oil as H.S.O.P.s, who tends to the duties of home and hearth?

LizMillerOn the other hand, if she meant it’d be hard for a childless couple with Ivy League law degrees and a costly home on Lake Champlain, plus extensive experience and connections in Vermont’s corridors of power, to make ends meet… well, no sympathy here.

At risk of losing my License to Blog, I’m willing to accept the less silver-spoony interpretation. Although I will point out that, whatever job Liz Miller takes next, they could probably afford to hre a part-time secretary/dog walker. Hey, jobs for Vermonters.

Peter Shumlin, Defender of Liberalism

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So this is what we’ve come down to: as the House continues to slash away at health care reform, Governor Shumlin has become its stoutest defender.

Isn’t it ironic, don’tcha think. A little sad, too.

Here’s the situation: the House Health Care Committee originally came up with a $52 million package that would have greatly reduced the Medicaid gap, made health care more accessible to our growing cohort of working poor*, expanded proven measures to enhance delivery while holding down costs, and boosted incentives for badly-needed primary care providers.

*Thanks to our top-heavy economic recovery, which has produced stagnant wages and lots of jobs with unlivable wages while fattening the pockets of the wealthy and corporate.  

The Ways and Means Committee couldn’t agree on any tax scheme to pay for the $52 million — or even part of it. So the ball got bounced back to Health Care with a new diktat: devise a bill that will only cost $20 million a year.

The two committees remain at loggerheads, with each other and within their own ranks. Health Care can’t decide how to downsize its deftly-woven tapestry without the whole thing unraveling, and Ways and Means can’t reach consensus on a tax plan to produce $20 million.

Which almost certainly means the package will be further reduced before it even gets to the full House.

This is where Peter Shumlin, Defender of Liberalism comes in.

“I think that it’s really important that we make real progress here, and you’re not going to make real progress with $10 or $20 million,” the governor said in an interview Friday.

That interview was with the Vermont Press Bureau’s Neal Goswami, who wrote a front-page story in today’s Times Argus about the developing tussle between cautious lawmakers and a determined governor. (The story is paywalled, but you can listen to the interview for free.)

Shumlin rightly points out that a modest health care package would leave “$100 million of federal [matching] money on the table,” and would reduce private insurance rates by closing the Medicaid gap. Penny wise and pound foolish, you might say.

Problem is, the legislature is in penny-pinching mode after approving a tax bill that will raise $33 million in new revenue. Well, that’s the next problem. The first problem is Ways and Means, which has just enough centrist votes to effectively roadblock any of the tax plans outlined by Shumlin or the Health Care Committee.

Hmmm. And who, pray tell, appointed the committee? Oh yeah: Mr. Speaker.

Ways and Means has eleven members. A bill needs at least six votes to pass. But wait, you might be saying, there are seven Democrats on the committee and only three Republicans.

Well yeah, but two of the Democrats are definitely in the party’s centrist wing. Jim Condon is one of the most conservative Dems in the legislature, and Sam Young is definitely a taxation skeptic. The lone independent, ski resort mogul Adam Greshin, might as well be a Republican.

That leaves five relatively liberal votes, and a tough task for committee chair Janet Ancel to find a majority for any tax proposal.

Problem is, the Governor is right: spending more up front would make the system more robust and effective, and bring down costs for private payers. It’d also bring in the aforementioned truckload of federal matching funds.

And oh yes, if you’re interested in the “humanity” angle, it’d make health care accessible to thousands more Vermonters.

Goswami reports that Shumlin “may have to turn his attention to the Senate if he is to rescue his own plans.”

Oh boy. The disorganized, testosterone-and-ego-fueled Senate, with the centrist Cerebus of John Campbell, Dick Mazza and Phil Scott guarding the portal.

Good luck with that, Governor.

Stupid Tax and Budget Tricks

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The Republicans often (constantly) accuse Gov. Shumlin and the Democrats of irresponsible governance — of taxing and spending without regard for the long term.

Well, pot, meet kettle.

Consideration of the tax and budget bills in the House has been marked by Republican gimmickry and short-term thinking. And it looks like we’re in for more next week.

A few examples.

First, House Minority Leader Don Turner’s deal with Speaker Shap Smith, delivering ten Republican votes in exchange for more money for Emergency 911 call centers and the Vermont Veterans’ Home. Thus ensuring the passage of a budget he claims to oppose, and fattening it by more than a million dollars.

Second, Rep. Paul Dame’s unaccountable vote for restoring full LIHEAP funding, in spite of the fact that he opposes all tax increases and wants even deeper spending cuts  — conveniently unspecified — than the Democrats proposed. Which means if we restored LIHEAP, we’d have to cut the money somewhere else — almost certainly in other human-services programs, since that’s the lion’s share of General Fund spending.

Third, Rep. Job Tate, a House freshman who was previously noted for handing out Life-Savers in honor of the Emergency 911 call center staffers whose positions he sought to maintain even while insisting on No New Taxes and More Cuts Elsewhere. Today he resorted to an old chestnut of Budget Theater: proposing a pay cut for lawmakers.

Who, as it is, make a mere pittance for their work. And because their pay is so minimal, the cut would have been minuscule compared to the budget gap. But hey, it would have sent a message, right? Share the pain, right? Yeah, thanks for participating, Mr. Tate.

And then we have Paul Dame, he of the pandering and hypocritical LIHEAP vote, proposing another cynical amendment. The tax bill includes a cap on itemized deductions equal to 2.5 times the standard deduction. Well, Mr. Dame touted an amendment to allow unlimited itemizations for people with incomes under $60,000 a year.

Never mind that pretty much everyone who earns less than $60,000 is taking the standard deduction. It’s virtually impossible to have an income that low and rack up enough deductions to make itemizing worthwhile. It’s an empty gesture aimed at positioning Dame as a friend of the little guy, even as he would force massive cuts in human services programs if he had his way on taxation and budget-writing.

As for next week, one of the big items on the House agenda is the water bill, aimed at sparking cleanup efforts in Lake Champlain and other Vermont waters. The Republicans, natch, oppose any new taxes even while paying lip service to clean water. Indeed, they apparently favor new programs (not that they have any choice, since the EPA would come down on us hard like a criminal if we didn’t act), but want to get the funding from existing sources. Like, oh, maybe scraping the gold off the Statehouse dome and selling it to Cash4Gold.com, or searching the seat cushions for spare change.

Or, in Don Turner’s case, scrounging a little money from existing sources and using it “to leverage bonds.”

Bonds?

Oh, you mean debt?

I see. So Mr. Fiscal Responsibility wants Vermont to assume a pile of new debt — adding to our long-term fiscal issues — for the sake of avoiding any new taxes right now.

You know, during the House debate we’d occasionally hear a blast of honest, hard-core conservatism. One Representative basically said all those poors should get off their asses and go to work. At least that’s honest, if it’s also ignorant and mean-spirited. But Republicans trying to have it both ways? That’s just sickening.

Oh, those wily Republican budget hawks

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So this just popped up on Ye Olde Facebooke:

Paul Dame hypocrite

Ahem. This would be the stout conservative Paul Dame who’s been Tweetbragging about his anti-tax votes in the House. And now he’s Facebragging about a vote that would add six million bucks to the budget. (Correction: I’ve been told it would have added three million, not six. I guess that makes Dame only 50% of the hypocrite I thought he was.)

Myself, I’m all for maintaining LIHEAP. It’s one of several budget cuts that will hit Vermont’s poor and working poor the hardest. But Paul Dame has no business bragging about a vote to increase spending.

This is part and parcel of the House Republicans’ two-faced game on the tax and budget bills. They’ve fought hard against tax increases and painted the Democrats as the tax-and-spend party, but they’ve also fought against many of the budget cuts proposed by Gov. Shumlin and House Dems. And, as reported earlier, House GOP leader Don Turner negotiated spending INCREASES in exchange for Republican votes on the big bills.

Don’t play poker with Shap Smith

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ItsNotGamblingAs one lawmaker pointed out yesterday, the Speaker of the House has never lost a vote he wanted to win.

Which is either testimony to Shap Smith’s backstage adroitness or his overabundant caution, depends on who you ask. In reality, it’s both.

His gifts were on full display yesterday, although not on the floor of the House. There, the apparent drama was high as votes approached on the big tax and budget bills of 2015. A coalition of liberal, Progressive and independent lawmakers were prepared to vote no — and that, combined with the Republican minority, would be enough to sink the measures and send the House back to the drawing board. Or the back rooms, anyway.

Indeed, on Thursday morning the tax bill was headed for defeat and the budget vote was going to be close.  But the Democratic leadership made a deal with Minority Leader Don Turner to ensure enough Republican votes to pass both bills. The tax bill passed 76-67, and later the budget bill passed by a roughly two-to-one margin.

What did Turner receive for, as VPR’s Peter Hirschfeld put it, ensuring “Passage of a Budget [the Republicans] Don’t Support”?

Well, in a lighthearted Tweet yesterday, I estimated his take as three paper clips, a rubber band, and some pocket lint. The reality wasn’t that bad, but it wasn’t much better.

Reportedly, Turner got a couple concessions that will actually increase spending: three more months of funding for the two Emergency 911 call centers slated for closure, plus more money for the Vermont Veterans’ Home. The two call centers are in heavily Republican areas and veterans are part of the GOP base. And constituency trumps consistency.

Beyond that, Turner folded to a big fat bluff by pokermeister Smith.

“Because their alternative was to increase spending to attract the more liberal side of the House,” Turner says.

Yeah, maybe. The hallway chatter told another story: Smith had no interest in dealing with the liberals, but it was a very convenient lever to get the Republican votes he wanted.

At day’s end, Smith raked in the winner’s pot. He got very tough tax and budget bills through the House with amazingly little disputation; he kept his undefeated streak alive; and he cemented his reputation as a moderate Democrat who can be dealt with and trusted to deliver.

.House Health Care gets the brown plate special

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Recently, the House Health Care Committee passed a health care bill that raised $52 million in new revenue to pay for an array of reforms, including better Medicaid reimbursement for providers and more premium support for the working poor. It proposed raising the revenue through a payroll tax and a sugar-sweetened beverage tax.

Then it went to the Ways and Means Committee, which couldn’t agree on either tax. Technically they have yet to agree, but they did send guidance to the Health Care Committee that it should craft a plan requiring no more than $20 million a year. Ways and Means is reportedly moving toward a smaller version of the beverage tax to raise that money, although nothing is final.

Well, as one of my childhood heroes, Detroit Lions great Joe Schmidt, says, “Life is a shit sandwich, and every day you take another bite.” When the Health Care Committee reconvened this morning with that guidance in mind, they looked like they’d been served the Brown Plate Special. Glum faces all around. As committee chair BIll Lippert said, tongue slightly in cheek, “We can’t do all that we have to do.”

Committee members had no clear idea how to proceed. There were widely varying ideas. Anytime a specific cut of any size was suggested, sound and reasonable objections were voiced.

When they looked at the overall picture, some members wanted to make big cuts here and hold harmless there; but they all had different heres and theres.

At the end of a necessarily brief discussion (before the House convened for the day), Lippert thanked everyone for their input and said he would try to put together a proposal for futther discussion. And he noted that the committee would need to adopt some kind of bill by the end of the day tomorrow. He didn’t sound very happy.

Whatever Health Care comes up with, it’s likely to face the ax down the road. It’s still unclear whether Ways and Means can pass the reduced beverage tax, to say nothing of its fate in the full House and Senate. If I were a betting man, I’d say any new health care initiatives are going to be whittled down to nothing, or nearly so.

Our Leaders will plead fiscal responsibility in tough times, and perhaps start looking for a bone to throw to disaffected liberals.

The punishment fit the crime

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Here’s something that’s by-the-books, letter of the law… but makes absolutely not a bit of sense.

Our dogged hero of law enforcement, Eternal General BIll Sorrell, is in hot pursuit of the scoundrel Dean Corren for a campaign violation. Seems the Democratic Party sent an email blast supporting Corren’s candidacy for Lieutenant Governor, and Sorrell deems this a violation of the public financing law.

Estimated value of the blast: $255.

The penalty Sorrell seeks: $72,000.

Sorrell says, and I understand, that he is simply following the law. which requires repayment of public funds still in Corren’s kitty at the time of the violation, plus a $10,000 fine for each of two violations (accepting the email, and failing to report it).

But holy Hell, I don’t care what the law says. $72,000 for a $255 violation is like a ten-year sentence for a speeding ticket. Does Sorrell have no flexibility whatsoever, or is he choosing to be a right bastard about this?

Also, this: I know for a fact that there was an ongoing, vigorous discussion within Democratic Party circles and the Corren campaign over what the party could do and couldn’t do on his behalf. The Democrats were very careful about it — so much so, that some liberals (including yours truly) wondered if they really wanted him to succeed. It’s hard for me to imagine that the Dems suddenly abandoned their caution in a spasm of Corren-love and sent out that email in a moment of blind passion, followed by headaches and regret the next morning.

Maybe so, because the Dems have responded to Sorrell’s onslaught like an abashed libertine trying to reform:

“To avoid the cost of litigation and move forward, both for the benefit of the Party and the State, the VDP decided to settle with the Attorney General’s Office,” the statement said.

As part of the settlement, VDP will agree to cooperate with Sorrell’s office in its investigation and litigation against Corren.

That’s nice. I’m sure it only appears that the Dems are throwing Corren under the bus.

Given the party’s SOP in dealing with Corren, I’m sure the email blast had to have been vetted by its legal staff. But that won’t do Corren any good now; he’s facing Mr. Prosecutor all by his lonesome.

House Ways and Means at impasse

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This afternoon, the House Ways and Means Committee was scheduled to discuss the health care bill. You know, the one with the two-tax solution: the .3% payroll tax and the sugar-sweetened beverage tax.

Well, it didn’t happen.

The committee took testimony in the morning. But after lunch, members did not reassemble. At one point, committee chair Janet Ancel entered the Ways and Means room; I asked her what the plan was.

I don’t have her exact words, but here’s the gist. They’d heard from all the witnesses, but the committee had stalled out on the two tax provisions. Neither tax would get majority support in the committee, if she held votes today. So, no votes.

No witnesses left. (She jokingly asked me if I’d like to testify.) And apparently she feels that more discussion or debate wouldn’t change any minds.

Welp, without those two tax provisions, there’ll hardly be any money for closing the Medicaid gap or any of the other improvements adopted by the House Health Care Committee.

Ancel had no idea what would happen next, or when it might happen.

Of course, either tax (or both) could be added back at a later point. But if Ways and Means can’t agree on a funding mechanism, it’s  certainly a discouraging sign for those of us hoping to redeem a few scraps of the lost promise of single payer health care.