Smith and Campbell: A reprise of the 2011 Golden Bubble

Senate President Pro Tem John Campbell. VTD/Josh Larkin

The Democratic leaders of the Vermont Legislature held a let’s-pat-ourselves-on-the-back press conference on Wednesday. Senate President Pro Tempore John Campbell and House Speaker Shap Smith gave themselves (and the Legislature) credit for several major victories, including resolution of the $176 million budget gap without raising “broad-based” taxes (lawmakers passed $24 million in health care provider assessments) and passage of the universal health care bill.

The self-congratulatory tone wasn’t particularly novel — Governors Jim Douglas and Peter Shumlin have been known to tout their successes on occasion, too — nor was the press conference, held in Smith’s office, unusual. (Last year the presser held at Smith’s law firm Dinse, Knapp, McAndrew was spiced up by questions about then-Senate President Pro Tem Peter Shumlin’s five-way Democratic primary campaign at a time when he was behind in the polls.)

Campbell and Smith, still dressed in the suit-and-tie attire that is de rigueur during the session, took pains to laud the minority parties in the Senate and House, listing each chamber’s accomplishments in detail. And they reflected on their new relationship with the governor.

Campbell said people describe the 2011 legislative session as “the most boring session in a long time.”

“I take that as a compliment,” Campbell said. “There were no major blow-ups because of the bipartisan work that was done.”

Smith ticked off a long list of accomplishments, including passage of consumer-oriented bills — a ban on fertilizers with nitrogen for household use, an expansion of the net-metering program, stiffer penalties for DUI, broadband expansion, an end to minimum use fees for propane and a new funding mechanism for the Clean Energy Development Fund (allowing developers to receive a 50 percent grant up front instead of the full value of tax credits for solar panels over a five-year period).

I’ve always been of the position that it’s better to know your target before you fire. I don’t want to anticipate something that might not occur.”
- John Campbell

“I look at this entire session as one of the most productive I’ve ever been a part of,” Smith said. In the next breath, he commended his counterparts in the Republican Party (Don Turner and Patti Komline) and the Progressive Party (Chris Pearson and Susan Davis).

Though the governor wasn’t present at the conference (and there was no reason why he should have been), he could have given much the same presser. That’s because the three Democratic leaders have developed an air-tight lingo around what appears to be the third rail of politics in Vermont: taxes.

Because the same language is used so often by politicians to describe a given policy stance, reporters listen for a single new word like hounds waiting at attention for the scurry of a fox. A single broken twig, eh voila, a real story, can — possibly — emerge from the bushes.

“Retroactivity” and “capacity” have become the catchwords du jour for anti-tax sentiments expressed by the leadership. The speaker and the Senate president pro tem say they don’t want to raise taxes now because they’d be retroactive. Capacity is the code word used to describe any number of possible new taxes that the Democratic leadership has fought this year, including a tax on sugar-sweetened beverages, closing the sales tax exemption, expanding the sales tax to services and tapping a small percentage of the income of the wealthiest 5 percent of Vermonters.

Though the Legislature avoided imposing new taxes this session despite intense pressure from the left-leaning members, Campbell and Smith haven’t ruled out raising new revenues next year. That’s because the state faces another budget gap (for the fifth year in a row). The total so far is $70 million.

That number could grow by tens of millions of dollars before the 2012 legislative session if Congress and President Barack Obama agree to proposed federal cuts to human services programs.

In an interview last Friday, Smith said he thought income tax revenues would grow enough to cover some of the projected state spending gap, and he was hesitant to say whether new taxes would be necessary. On Wednesday, that stance hadn’t changed. Smith said it’s premature to make decisions now about what might happen in six months, particularly if the economy turns around in the meantime. (Yesterday’s state revenue report showed a modest increase in tax receipts that could be hopeful, though high gas prices could dampen that gain.)

House Speaker Shap Smith. VTD/Josh Larkin

“Right now it’s all speculative,” Smith said.

The speaker is loath to raise revenues. Representatives put forward a “host of options,” he said, none of which “are favorites of mine.” “It is not easy, ever, to raise revenues,” Smith said. “It should only be done if there is an overwhelming need to do it.”

Smith said the Shumlin administration will “scrub” the budget and “look deeply into state government to see where there may be savings and, through that, what the need is and where the need is.”

Over the last four years, the state has cut budgets for agencies, eliminated 10 percent of the state workforce, asked state workers to take retirement and pay concessions, asked teachers to contribute an additional $15.3 million a year toward their retirements, and cut $14 million from the nonprofit designated agencies that provide mental health services and programs for the developmentally disabled.

Campbell said at this point they couldn’t foresee the scale of the total budget gap until after the fall when Congress is supposed to vote on the federal budget for fiscal year 2013.

“I’ve always been of the position that it’s better to know your target before you fire,” Campbell said. “I don’t want to anticipate something that might not occur.”

When a reporter asked about raising taxes in an election year, Campbell said: “This is not an easy job, and all of us know that. We have major decisions to make.”

Their biggest disappointments this year?

Smith said he would have liked to have changed the state’s tax code. He wanted to adopt the Vermont Blue Ribbon Tax Structure Commission’s recommendation to shift from assessing taxable income to taxing adjustable gross income. Campbell said he would like to have passed bills to address consumer fraud problems identified by the Vermont attorney general’s office.

Both Campbell and Smith identified their new relationship with the governor as a difficult challenge. Campbell served under Shumlin when he was president pro tem of the Senate, and Smith had worked hand in hand with Shumlin to override Gov. Jim Douglas’ vetoes of the gay marriage bill and the budget in 2009.

They had to get used to the idea of not calling the governor “Pete,” at least in public.

Smith said Shumlin made a point of not presenting his budget as a fait accompli, and instead suggested that lawmakers would likely improve it. And, as promised, the governor did listen to alternative proposals, Smith said. When legislators pointed out that folding Catamount into the Vermont Health Access Plan wasn’t a good idea and they opposed a tax on dentists, the governor listened and opted to accept those changes, Smith said.

Campbell, who had difficulty managing the Senate on several occasions in his new role as Senate President Pro Tempore, shrugged off suggestions that the governor tried to run the Senate from his office on the Fifth Floor. He did say that while the governor is inclusive, “he likes to let you know where he’s going.”

“He doesn’t like taking side roads — or changing the Trip Tik,” Campbell said.