Congratulations to Tim Ashe, chair of the Senate Finance Committee, for shepherding this year’s tax bill to the Senate floor. He managed to find some new money for the budget while keeping true to the intention he stated earlier this week:
“In terms of the major tax areas, my goal is not to have the Senate need to go to those sources,” Ashe said.
The final package emerging from Senate Finance and Appropriations:
The lion’s share of the Senate’s revenue package is generated by the miscellaneous fee bill. The Senate version removes an increase in the employer assessment for uninsured workers, as well as a hike in bank taxes.
The latter two were passed by the House.
My congratulations are tempered with confusion, however. Ashe’s goal would be sensible and reasonable if he were a centrist Democrat in the mold of John Campbell or Dick Mazza, not a Progressive who now lists himself as a D slash P.
The Vermont House passed a budget this week. Pretty quick and pretty painless, considering the state’s fiscal situation. Lawmakers found money in a lot of places that won’t directly impact working Vermonters’ take-home pay.
Much of the new revenue comes from raising fees on registration of mutual funds. That’s a minuscule line item in funds’ expenses, so the actual effect on The People will be negligible at most. Ditto with an increase in registration fees for large banks. In general, the House found ways to prop up necessary state programs with some fairly reasonable tax and fee hikes. Mostly fees.
Republicans, of course didn’t see it that way. There were the usual, utterly predictable cries of outrage that are repeated every time a tax or fee is increased — even when a fee hike simply reflects the impact of inflation. (Fees are fixed; if you don’t raise ’em occasionally, you’re narrowing your revenue stream.) It doesn’t help Republicans’ credibility when every single revenue enhancement, no matter how small, is a punishing blow to struggling Vermonters and a mortal threat to the economy.
This time, there were loud laments over being shut out of the process. Which, first of all, c’mon. When the Republicans ruled this roost for over a century, how much credence did they give to Democratic ideas? When state lawmakers in Kansas or Oklahoma or Michigan or any other state with a Republican majority sets policy, do you think they allow Democrats to have a fair say?
Of course not. Shoe’s on the other foot, guys. Suck it up.
House Minority Leader (and Chief Budget Scold) Don Turner presented an additional argument this time.
One of the annual features of the Shumlin Era is the battle to close a budget gap*. There are reasons for this: the rising costs of (1) operating a government (mostly health care), (2) operating public schools (mostly health care), and providing social services (mostly health care).
*To be fair, it was also a feature of the Douglas Era, but the dynamic was different: Republican governor versus Democratic legislature.
And then there’s the revenue side. Vermont is suffering from a creaky tax system that doesn’t reflect current economic realities, and is bringing in less and less money over time.
The Legislature is now in the throes of dealing with Budget Gap 2016, which has many of the features of past editions. Cries of doom, unexpected revenue upgrades, patently unworkable/unpopular money-raising ideas from Shumlin’s crack policy staff, and lawmakers trying to find alternatives. This year, we also have a significant difference between administration and Legislature over the size of the budget gap; per VTDigger, House budget writers say the administration omitted more than $9 million in basic government operations from its proposed budget…
…including a pay increase for state workers (estimated at $2 million to $6 million, depending on the results of a fact finder’s report and ongoing contract negotiations), pay increases for child care and direct care workers ($1 million each), and funding for the Low Income Home Energy Assistance Program ($4 million).
Shumlin’s modest proposals for new spending have already been killed by the House Appropriations Committee, whose first priority is closing the gap between current obligations and state revenue.
It’s a depressing Rite of Mud Season that has drained the energy of the Democratic caucus, party, and electorate.
Phil Scott’s proto-campaign for governor has, so far, been a matter of personality: Phil Scott is the nice-guy leader that Vermonters have been looking for. On the issues, nothing but vague hints and bromides.
Well, he gives it another go in an essay posted on VTDigger.
Sadly, it’s kind of an incoherent mess. He calls for a moratorium on all tax and fee increases, a tight rein on state spending, and expansion of several state programs.
And he claims he can do that “without cutting off services to Vermont’s most vulnerable populations or weakening environmental protections.”
Whatcha got in that basket, Phil? Five loaves and two fishes?
My neighbor Betsy Bishop, head of the Vermont Chamber of Commerce, is pushing something she calls an “impact list” of all the burdens placed on Vermont businesses in recent years — “as well as those that could be considered in 2016,” which is a big fat asterisk in itself. Given the state’s budget situation, a whole lot of potential revenue enhancers “could be considered.” Almost all of them will never get off the floor. (The carbon tax, already sidelined, is on her list.) Many are mutually exclusive. But all of ‘em, real or imaginary, make the “impact list.”
And, as VTDigger political analyst Jon Margolis points out, more than a third of the Chamber’s list of tax hits from the 2015 session were actually tax increases on affluent Vermonters, not on businesses.
Generally, the Vermont Chamber is a reasonable actor in Vermont politics. It hasn’t followed the rabid conservative path of the national Chamber. But this is a major step into partisanship for the Vermont Chamber.
And as you might suspect, the Chamber’s “impact list” tells only one side of the story. Margolis helpfully recounts many of the ways that public expenditures and tax breaks directly benefit businesses. It’s quite a list. But it’s arguably the tip of the iceberg.
You can make a strong case that most government expenditures benefit business. Infrastructure spending? You can’t do business without it. Education? You need educated workers, and there’s a big emphasis these days on STEM and workforce-oriented two-year programs. Law enforcement? One of its primary missions is protection of property rights.
The Shumlin administration is a lame-duck affair. Top staffers have begun to leave, and it’s awfully difficult to hire outsiders for openings that will only last a little more than a year. So, people get promoted from within or shuffled around. I imagine by next summer, the administration will look like a last-place baseball team in mid-September: plenty of scrubs trying to act like major leaguers.
The latest departure: budget chief Jim Reardon. His replacement: prison chief Andy Pallito.
Okay, fine, maybe Pallito is the best person for the job. But he, like Reardon, was a prominent holdover from the Douglas administration. Which brings us to the question above: Can’t we find a Democratic budget expert? Please?
This is of a piece with Democrats relying on Neale Lunderville as their number-one fixit man. Hirings like these reinforce the stereotype that Republicans are serious administrators while Democrats are softies. (This stereotype isn’t actually true, at least not at the national level. Since Jimmy Carter left office, Republican Presidents have done far more to increase the national debt than Democrats.)
Smile, though your heart is breaking…
The three top Democratic leaders stood shoulder-to-shoulder, smiled, and proclaimed their unity behind an agreement on taxes and health care. They praised each other and the Legislature for working hard and working together. “Everyone has given a little,” Governor Shumlin said.
After a week of harsh rhetoric about how “Montpelier” (meaning his own party) had produced a tax plan that he “hated,” he accepted a slightly modified version with nothing more than a fig leaf of additional spending cuts.
After days of harsh rhetoric about how capping income tax deductions would be “a big mistake,” Shumlin accepted a deal with a slightly less restrictive cap than the Legislature had been poised to enact.
The legislature “has given a little.” Shumlin gave a LOT.
Which belies his extreme rhetoric about a plan that was very similar to the one he accepted today, and characterized as “fiscally responsible” and “ensur[ing] that we continue to grow this economy.”