Margolis: Stalemate looms as end-of-session Sturm und Drang intensifies

Gov. Peter Shumlin unveiled his budget on Thursday (01/24/13) to the General Assembly in Montpelier Vermont. Photo by Roger Crowley

Gov. Peter Shumlin unveiled his budget on Thursday (01/24/13) to the General Assembly in Montpelier Vermont. Photo by Roger Crowley

Editor’s note: Jon Margolis is VTDigger’s political columnist.

The distressed damsel has been tied to the tracks. The speeding train approaches. Can anyone save her?

Sure, but they don’t appear to be doing anything about it. They’re too busy pursuing their own selfish interests even to discuss a rescue plan. Is she doomed?

Thus, the Vermont State Legislature in 2013. With its leaders still hoping to adjourn on Saturday, the two houses and Gov. Peter Shumlin are nowhere near agreement on the basics – taxing and spending. To the naked eye, they don’t even appear to be talking to each other about it.

What looms, then, is stalemate. Probably less tragic than the evisceration of a fair young maiden, but not desirable either, not for the officials and not for the citizens.

And not for the dominant Democratic Party. Around the Statehouse, the unthinkable is being thought: Could a Democratic governor veto budget and tax bills approved by both houses, each with a commanding Democratic majority?

Sorry to break the suspense, but the answer is: probably not. For all the political Sturm und Drang in the Montpelier air – Shumlin’s determination not to raise taxes on “hard-working Vermonters,” prompting some in his own party to accuse him of “sounding like a Republican” – chances are that the squabbling leaders will come to an agreement.

To begin with, it is in all of their interests to come to an agreement. They all want the session to end, if not next Saturday then soon thereafter. Furthermore, failure to agree would simply not look good. Tempers, already edgy, could get downright nasty. The voters might begin to wonder – if they are not already wondering – whether the state is being run by a gang that cannot shoot straight.

None of this guarantees agreement. In fact, in both the Legislature and the governor’s office, officials have discussed what would happen if Shumlin did veto the tax or spending bills, some Democrats wondering whether Republicans would vote to uphold a veto, cementing their reputation as tax-cutters, or decide they’d rather embarrass the governor and the Democrats.

Undeniably, this is the most acrimonious session of Shumlin’s tenure. His first term was dominated by recovery from Tropical Storm Irene and his ambitious health care plan, controversial, but supported by almost all the Legislature’s Democrats. Now, the Democrats are in disagreement if not disarray, and the governor, in the words of one experienced Statehouse observer, is being “tough, very tough” in his criticism of the House and Senate tax and budget bills.

It’s also getting late, some lawmakers say.

Not so late, said Administration Secretary Jeb Spaulding, who said there is nothing unprecedented in the current situation. When fiscally conservative Democrat Howard Dean was governor, Spaulding recalled, he and the more liberal legislative leaders often squabbled over taxes and spending. But in the end, they reached agreement. The safer bet is that the two sides will do so again.

Secretary of Administration Jeb Spaulding. VTD/Josh Larkin

Secretary of Administration Jeb Spaulding. Photo by Josh Larkin

Make that the three sides. The Shumlin administration, the Senate, and the House of Representatives each has its own preferences about how much the State should spend and who should pay for it.

As is common when elected officials disagree, they have often expressed their disagreements bluntly, even angrily. But take a look at how far apart they are, or are not. The Senate proposal is for $1.362 billion in total spending for fiscal year 2014, which begins July 1 (that’s the state’s share of $5.239 billion, most of the rest from federal funds). That’s $2 million less than the House plan and $17 million less than the total called for in the budget Shumlin presented in January.

That $17 million is not much more than 1 percent of the total, hardly enough to prevent the lawmakers and the governor from reaching some kind of consensus, also known as making a deal.

The dispute over taxes is more contentious, but less because of the quantity of taxation than its quality. Again, the money differences are not that big. The Senate wants to add $10 million in new tax revenue. The House passed some $27 million in new taxes, though as of Friday that figure is out of date and perhaps $9 million too high.

And the governor?

Good question. To hear him talk, you’d think he wants no tax increase at all.

“Lawmakers this session have now voted to raise taxes on Vermonters’ income, clothing, meals, vending machine purchases, water, soft drinks, candy, satellite television and cigarettes,” he said in a statement issued after the Senate approved its budget bill. “Vermonters expect us to control spending by using existing tax dollars more efficiently. We must protect our fragile economic recovery.”

There would be all but no debate about taxes and spending had not one senior official proposed a major new state undertaking, and the name of that official is … Peter Shumlin.

Unmentioned here – unmentioned in most of the tax debate – are three interesting facts: (1) The governor actually proposed spending more money than either the House or the Senate have approved; (2) There would be all but no debate about taxes and spending had not one senior official proposed a major new state undertaking, and the name of that official is … Peter Shumlin; (2) He called for paying for that major new undertaking by … raising taxes.

In his inaugural address on Jan. 10, Shumlin proposed “the largest single investment in early childhood education in Vermont’s history.” His administration projected that it would cost $17 million, to be financed by “redirect(ing) $17 million from the state’s Earned Income Tax Credit.”

As Spaulding said last week, Shumlin and his top aides, “do not consider that a tax increase; we consider it a reallocation of existing benefits.”

It is, but not to all the same beneficiaries. According to Karen Lafayette, a lobbyist for the Vermont Low Income Advocacy Council, about 45,000 Vermont households pay lower taxes because of the EITC. But only about 5,900 have preschool-age children and would have benefited from the child-care subsidy. The others would just pay higher taxes, because whatever else it may be, removing a tax credit is a tax increase, in this case on low-income working households.

One question many lawmakers are asking – though rarely in public – is why Shumlin decided to push so hard for preschool expansion this year. To many of the legislators, other programs seemed more pressing, such as making sure the low income households could pay their heating bills and helping them insulate their houses so those bills wouldn’t be so high and Vermonters would burn less fossil fuel.

Shumlin did propose spending more for both, which would not have cost as much as the preschool program and possibly could have been financed by normal revenue growth, without raising taxes.

Spaulding noted that in January officials thought the state would have more revenue. The economy had been on the rise, and the administration had some hopes that Congress would pass a bill allowing states to collect more sales taxes from online sales. The economy then slowed for a while, and that bill failed. A similar measure may be on the verge of passage now, but too late to help the coming fiscal year’s budget.

Spaulding said it was by no means too late to reach an agreement. Talks are going on, he said, and if they can’t yet be described as negotiations, they are a prelude to negotiations. First, he said, the two houses would have to reconcile their spending and tax proposals. Then serious talks between the lawmakers and the administration would begin.

As they surely will. If the past is any guide – and it is the only guide – those negotiations will be private, often late at night, possibly contentious, and ultimately successful. At the last minute, the good guys will come together, work out a plan and loosen the ropes binding that poor young lady to the tracks.

But the train is moving fast, and getting closer.

Jon Margolis

Comments

  1. Renée Carpenter :

    “Unmentioned here – unmentioned in most of the tax debate – are three interesting facts: (1) The governor actually proposed spending more money than either the House or the Senate have approved; (2) There would be all but no debate about taxes and spending had not one senior official proposed a major new state undertaking, and the name of that official is … Peter Shumlin; (2) He called for paying for that major new undertaking by … raising taxes.”

    Also unmentioned here–once again–are the positions of our third major political party, the Progressives (whether they ran as D/P or Independents, we all know who they are); and the hundreds of Vermonters who rallied on the statehouse lawn Wednesday, May 1st to call out for a People’s Budget and a legislature that actually represents the interests of the people-at-large.

    For every person who came out on May Day, there were likely ten others who wished they could be there. Shouldn’t they–and the rest of us–have some recognition via vtdigger?

    Perhaps this legislative session points to our need in Vermont to eliminate the system of dueling political parties and to vote in more non-partisan, deep thinking, unaligned legislators who are willing to clearly protect and support the most vulnerable people in our state and a community-based localized economy that provides (at least) for all of our basic needs.

  2. Fred Woogmaster :

    The Governor will save the damsel in distress; not before securing a donation and all electronic messaging lists. The winds of ambition are powerful. This governor, more than any other, demonstrates the sham of the “two party system”. True independents most often are choosing ‘ the lesser of two evils. Is the two party system akin to a political hermaphrodite?

  3. Joyce Travers :

    I don’t know, maybe it is naive, but since they know that they have to come up with a budget – couldn’t they work on that first? And NOTHING else until a budget is passed. Seems logical that if the budget sets the tone for everything else – they should only work on it until it is done. We would certainly not have all this last minute drama to deal with and (as entertaining as it can be)tempers would not be at such a high point. Personally, I cannot wait until election time – between the way our rights (as citizens) have been ignored with the immigration BS and all the new taxes coming at us – I cannot wait to VOTE THEM OUT.

    • David Dempsey :

      Great idea Joyce. It probably won’t fly in Montpelier because it makes to much sense. Instead they will put off the most important items until the last minute when going home is more important than passing quality legislation.

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