Category Archives: Budget

Shumlin Gets Ass Handed To Him

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Smile, though your heart is breaking...

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.

Well, almost.

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.”

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Well, there won’t be a veto.

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Lots of standing around and waiting at the Statehouse today. I just finished standing outside the Governor’s ceremonial office for about an hour, and my reward was to see the Big Three — Gov. Shumlin, House Speaker Shap Smith, and Senate President Pro Tem John Campbell come out and announce they’d reached a deal on the tax bill. And the Governor added that “There will be a health care bill.”

They wouldn’t release any details yet, but they did manage to close the remaining gap. And they all looked happy standing shoulder-to-shoulder, less than 24 hours after Shumlin’s tough talk on taxes seemed to portend a veto of his own party’s tax plan.

Well, that won’t happen. And I guess we shouldn’t be surprised. Rhetoric notwithstanding, there’s always a great deal of momentum toward deal-making at this stage. The unusual thing, really, was that the Governor’s plumage displays were aimed at fellow Democrats.

It’ll still be many hours before adjournment; the bills have to be drawn up, they have to clear the House and Senate, and there’ll need to be some suspending of the rules.

But at this point, it seems inevitable that the key bills will move and the Legislature will adjourn today.

Although the definition of “today” might get stretched a little.

Shumlin doubles down on bashing fellow Democrats

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If you thought there was a chance that Governor Shumlin would tone down his insistence on last-minute spending cuts, well, think again. Earlier, he’d called two key Senate committee chairs on the ceremonial carpet to argue for tax reductions and spending cuts — in a spending bill that had already passed the Senate Appropriations Committee. This didn’t go over well with Democxratic lawmakers, per Paul Heintz:

Gov. Peter Shumlin’s erstwhile allies in the Democratic legislature lashed out at him Thursday for pushing new cuts after the Senate Appropriations Committee signed off on the budget.

“It’s insulting to the process,” complained one top Dem.

… “It’s been pretty lonely in there all winter,” Sen. Bobby Starr (D-Essex/Orleans) said, referring to the Appropriations Committee, on which he serves. “I woulda thought they would’ve been in at least a month ago, if not five, six weeks ago, offering some suggestions.”

House Majority Leader Sarah Copeland Hanzas noted that the House-passed tax and spending bills actually called for less spending than the Governor’s original budget plan. She called the gubernatorial disconnect “perplexing.”

Welp, the Governor is unbowed by all the pushback.

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A new path forward for Peter Shumlin?

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Maybe he’s pulling a Tom Salmon, and planning to run as a Republican next year.

Nah, I doubt it. But it’d explain the sudden, aggressive, and decisively centrist re-insertion of himself into legislative debates. At the very last minute. After months of serenely floating above it all, and letting lawmakers shred his proposals to pieces.

The latest comes from VTDigger’s Anne Galloway, who tells us that the top Senators on taxes and spending were yanked into the Governor’s office yesterday afternoon to get an earful of his displeasure with the current budget and tax bills. According to Galloway, he “hates the tax bills from the House and Senate and would prefer to cut more from the budget.”

And:

While it’s the governor’s prerogative to influence the legislative process and ultimately sign or veto the legislation, Shumlin’s down-to-the-wire timing perplexed insiders who say the governor has had four months to influence the budget and tax bills, and has not made a concerted effort to do so until now.

… “Disrespectful” was a word several people used to described Shumlin’s late-game tactics.

He certainly seems to have adopted a scorched-earth approach toward his relationship with the Legislature — after promising, after the 2014 election, an open and collaborative approach. You know. that listening and learning stuff.

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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.

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.

The budget gap: an alternative story

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A simple narrative has emerged to explain Vermont’s budget gap of roughly $113 million. Oddly, tragically, it’s pretty much the same narrative whether you’re Republican or Democrat.

The Republicans’ version goes like this: The Democrats are out of control! They’re taxing and spending like drunken sailors!

Some liberals raise a fundamental objection to this — but not Gov. Shumlin. Now, he couches it differently; his version is that Vermont’s economic growth has failed to meet expectations and that state spending has overreached. But his underlying assumption — the state has spent beyond its means — is very similar to the Republicans’.

Gee, no wonder he had trouble developing a clear narrative in the 2014 campaign.

It’s true that the economy has underperformed expectations — but that’s not a phenomenon unique to Vermont. Nor is it attributable to our alleged “tax, spend and regulate” ways. By many measures we’re doing better than our northeastern neighbors. And we’re doing a hell of a lot better than states with hard-core free-market governments like Wisconsin, Michigan and Kansas.

(The states where free-market ideology is credited for booming economies enjoy unrelated economic advantages: Texas and North Dakota’s fossil fuel wealth, Arizona and Florida’s retirement havens and influx of immigrants.)

(Yes, immigrants. Most of them are hardworking people who came here in search of a better life. They add energy and ambition as well as cultural spice to our melting pot. We could use more of them here in Vermont.)

There’s an alternate story to tell about how we got into this fix. Strangely enough, it actually shows the Shumlin administration in a positive light. If only the Governor was willing to tell it.

Part of our problem is the structure of our tax system, as previously discussed in this space. ur income tax system has an extremely narrow base because of how we calculate taxable income and allow itemized deductions.  We’re losing tens of millions in potential revenue because our sales tax system has more holes than Swiss cheese. (Sen. Tim Ashe, chair of the Senate Finance Committee, estimates that we’re losing $50 million a year because of Internet sales. That’s not new tax money; it’s money we used to collect and aren’t anymore.)

The rest of the problem is that the Democrats have been responsible stewards, even if it means short-term trouble. They’ve tried to manage state finances in difficult times while maintaining state programs that have a beneficial impact on our present and future well-being.

Programs like Reach Up and expanded health care access and substance abuse treatment aren’t giveaways; they’re aimed at giving Vermonters a way out of systemic poverty. There’s also an immediate benefit: money spent in programs like food stamps and LIHEAP and the Earned Income Tax Credit go directly back into the economy, creating much more positive impact than capital gains tax cuts or corporate tax breaks.

And here’s a great big item that, sadly, I didn’t even realize until Saturday when House Speaker Shap Smith addressed the State Democratic Committee. The Democrats have spent millions to restore full funding to public sector pension plans. Smith mentioned $60 million, and called it a significant reason for our budget troubles.

Which is true. But it’s also the responsible — nay, the legally required — thing to do. The pension gap was created through years of mismanagement under previous administrations. (You know, those administrations that featured budget hawk Tom Pelham in prominent roles.) They took the easy way out of budget predicaments: putting off the day or reckoning. As Smith said, “we’re making up for the sins of the past.”

Really, it’s the Republicans who are bad managers. They are so single-mindedly focused on cutting that they fail to develop any sort of vision for governing. And they undercut the good things that government can, and should, do.

Two more overdue investments. First, the current administration has instituted health care reforms that have produced some waste and a bug-riddled website, but have also cut our uninsured population to 3.7%, compared to a national average of 12%.

And second, it’s making a long-overdue attempt to clean up Lake Champlain. That’s another legacy of the short-sighted practices of past administrations: they ignored the problem and let it get worse. And more expensive to fix.

These are noteworthy accomplishments. They are the right things to do. They are not wild or radical or thoughtless. And they are big reasons why we’re in our current budgetary difficulties.

And that’s it. It’s not a narrative of spendthrift liberals bankrupting the state. It’s a narrative of careful investment in Vermont’s future weighed down by a legacy of bad management and an outdated, creaky tax system.

This is not to say that I agree with everything the Democrats do. They’ve been too careful for my taste. But they do have a compelling story to tell.

Too bad nobody’s telling it.

The nice and the necessary

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Congrats to the House Republican Caucus, which finally came up with something like a budget plan, on the very day the House Appropriations Committee passed a budget. Three observations to begin:

— The committee vote was 11-0. Even so, the Republicans were lambasting the budget even before the vote was taken. Are the committee’s Republican members hypocrites, or is it harder to be a simple-minded partisan when the rubber hits the road and you’re in a small room with your Democratic colleagues, than when you’re facing the camera with fellow Republicans?

— The Republicans clearly didn’t take the budget-writing process very seriously, since they waited until Approps had finished its work before offering a single specific cut. Even worse, during the process Republicans frequently objected to cuts proposed by Democrats — again, without suggesting alternatives.

— The Republicans’ budget plan is unworkable on its face. Its major initiative is a call for zero growth, but that’s (a) impossible because some programs are growing, like it or not (Lake Champlain cleanup, for instance), and (b) an abdication of the Legislature’s responsibility to draw up a budget. The responsible course, as Approps chair Mitzi Johnson has pointed out, is to fulfill the legislature’s duty and make the hard choices. Across-the-board slashing is the coward’s way out.

The GOP caucus did identify some cuts they’d like to make — finally. Most of them are short-sighted as well as mean-spirited:

The cuts [House Minority Leader Don] Turner put on the table Monday include eliminating grants to substance abuse recovery centers, scrapping a childcare subsidy for poor mothers, cutting funding for state colleges by 1 percent, and taking $5 million from a fund that would otherwise provide college aid to Vermont students.

Republicans also say spending reductions on items such as the renter rebate, financial assistance for health insurance and the Vermont Women’s Commission are preferable to increasing revenues that would otherwise be needed to fund levels recommended for those programs in Gov. Peter Shumlin’s budget.

Okay, let’s make it harder for addicts to get clean, harder for poor mothers to hold down a job, make higher education less affordable, and make health insurance less accessible. All those cuts would save money in the short term, but cause even more expensive social damage in the long term. The Democrats are trying to walk a fine line, and craft a budget that’s not fiscally irresponsible while still helping to make Vermont a better place to live.

Which brings me to something that Senate Minority Leader Joe Benning said last Friday on The Mark Johnson Show. I don’t have the exact quote, but the gist was, “There are things that are necessary, and things that are ‘nice.’ At a time like this, we cannot do the things that are ‘nice.'”

That sounds good and responsible, but the devil is in the definitions.

Do you think low-income heating assistance is nice or necessary?

How about broadening access to health care? A social obligation, or an extra?

Let’s talk substance abuse treatment, at a time when Vermont is in the throes of an addiction epidemic. Necessary or nice?

The good Senator apparently believes all these things fall into the “nice” category. Many of us don’t agree.

Okay, now let’s look at some items that aren’t on the Republican cut list — and weren’t on the Democrats’ either, for that matter. Necessary or nice — you make the call!

— The state giving $2.5 million to GlobalFoundries, a move that will do nothing to keep the company in the state. On a worldwide corporate scale, that’s nothing. It amounts to a burnt offering meant to propitiate the corporate gods. And it takes a big leap of faith to think it’ll have any effect whatsoever. Necessary?

— The state continuing to let unclaimed bottle deposits go to bottling companies. That’s a $2 million item, I’ve been told. Is that a necessary giveaway? Hell, I wouldn’t even class that one as “nice.” “Noxious” is closer to the mark.

— When ski resorts purchase major equipment, they don’t have to pay sales tax. That’s another $2 million a year. Is that necessary, in any definition of the word?

— For that matter, we’re letting the ski industry make a fortune thanks in large part to bargain-basement leases of public lands. The industry is understandably loath to reopen the leases, but there are ways to get it done. Instead, we’re letting them ride. Necessary? Hell no. Nice? Only for the resort owners.

— Vermont is one of only a handful of states that exempts dietary supplements from the sales tax. Nice or necessary?

In addition, the state gives quite a bit of money in small grants to private and corporate groups. Here’s a few examples:

— The Vermont Technology Alliance gets a $52,250 grant. Why?

— The Vermont Captive Insurance Association gets $50,000 to pay for “promotional assistance.” I realize the industry is a strong positive for Vermont, but the grant is certainly not necessary.

— The Vermont Ski Areas Association gets $28,500. This is the same group that refuses to reopen the leases. Why are we rewarding their intransigence?

That’s just a few I happen to know about. I’m sure there’s lots more. Are grants to industry “necessary” or “nice”? If we’re asking the poor and downtrodden to take major hits to the social safety net, couldn’t we ask our industries to accept at least a haircut?

And if we want to promote business in Vermont, why not take back all these penny-ante grants, put part of the money into a coordinated statewide campaign (like the one proposed by Lt. Gov. Phil Scott’s economic-development crew) and bank the rest?

Also, the state Senate is considering a bill that would make Vermont’s economic development incentives easier to access. Supporters, such as Republican Sen. Kevin Mullin, posit the bill as an investment in Vermont’s future. 

Which is fine. But so is increasing access to higher education, providing child care for working mothers, and helping addicts get clean. Those social programs aren’t just “giveaways,” they are investments in a safer, healthier, more productive Vermont.

Unfortunately, they are investments on behalf of Vermont’s voiceless. LIHEAP recipients and working mothers and addicts and prison inmates can’t hire lobbyists or mount a PR campaign. So we too often fail to invest in them, while we’re more than happy to invest in corporations that might or might not use the money productively — but in either case, it’s definitely in the “nice” category, not the “necessary.”

So you see, Senator Benning, I agree with you. I just have different definitions of “necessary” and “nice.”