Editor’s note: Jon Margolis is VTDigger’s political columnist.
It was officially a nonpartisan event but actually a Democratic Party love fest in the Statehouse one day last week, with former Gov. Phil Hoff, who in 1962 became the first Democrat elected to that office since the mid-19th Century, listening to tributes from the Democrats who now dominate the state.
The guy who now holds the job – Peter Shumlin – didn’t limit his praise to the guest of honor. Introducing House Speaker Shap Smith, Shumlin called him, “the best speaker in the country.”
Smith did not call Shumlin the best governor in the country. In fact, he didn’t say much about Shumlin at all. He talked about Hoff, noting that the 89-year-old former governor was among “those who uphold the ideals of the Democratic Party.”
Hmmm. The Statehouse chattering breed – reporters, lobbyists and the like – immediately began to wonder whether the Speaker was taking a shot at the governor. Some of those same chatterers – the advocates of various liberal causes – had for weeks been muttering to themselves and anyone who would listen that Shumlin was not upholding those ideals, and should hardly be considered a Democrat at all.
These Democrats preferred Smith, whose House had approved tax increases, mostly on upper-income earners, earning Shumlin’s harsh criticism. Love fest or not, the prospects that afternoon were for an intra-party battle royal over taxes and spending between the governor and the Legislature.
Then, Poof! A few days later, a real love fest. There were Shumlin, Smith and Senate President Pro Tem John Campbell, side by side and smiling as they announced that the deal had been done. They had agreed to work out a new budget with no tax increases.
So everybody is a winner.
Well, perhaps not some of the rank-and-file lawmakers who wondered why they’d been working so hard for months to craft budget and tax compromises.
“You do have to wonder what we’ve been doing here,” said Williston Democrat Jim McCullough.
But these legislators were more miffed than angry, and certainly all the leaders were winners, especially Peter Shumlin, who showed once again that nobody in Vermont plays this game as well as he. It wasn’t just that he forced lawmakers to accept a budget with no increase in “broad-based taxes.” He demonstrated why he was able to prevail: He bestrides state politics like a colossus, if only because there is no credible alternative to him. Unloved he may be, but he is effectively unchallenged – and, for the nonce, seemingly unchallengeable – by either the Republicans or those liberals who mutter that he might as well be one. Right now, he looks all but unassailable, not just in dealing with the Legislature, but in next year’s election.
So it seems, at least, and despite what the song says, things usually are as they seem.
But they’re often a little more complicated, and this is no exception.
To begin with, taxes are going up. Together the Legislature and the governor raised the gasoline and diesel fuel tax by some 6 cents a gallon. Together, the governor and the Legislature raised the statewide school tax by 5 cents, though exactly how that sugars off as to who pays what depends on decisions made by local school boards, who then get to share the blame.
In fact, one indication of Shumlin’s political genius is how he managed to paint himself as the fiscally conservative tax-cutter when he initially proposed a bigger budget with a larger state government than either legislative house accepted, and when he recommended financing some of his new spending with a tax increase.
He didn’t call his tax increase a tax increase. But limiting the earned income tax credit for low-income working households would have increased their taxes, and that’s what he proposed. Whether a tax increase on only 44,000 or so households counts as “broad-based” could be debatable, though it’s not hard to figure out which side those 44,000 households would take.
Neither the House nor the Senate even took the proposal seriously. So in the ‘Who Won?-Who Lost?’ accounting, here the Legislature won, and the governor lost. The EITC stays as is, and major preschool expansion will have to await another year.
There’s a touch of irony here. Though Shumlin ended up infuriating the liberal wing of his part, that preschool proposal is quite left-of-center, now a preferred policy of Progressives who argue that spending more on higher education (also in the budget) exacerbates inequality; teaching the three-year-old children of low-income families ameliorates it.
But the governor chose the fiscally regressive cut in the EITC to finance his progressive policy, and ended up losing both.
Shumlin further enraged liberals by proposing to limit the time young mothers could stay in the “Reach Up” program. The two sides fought this to a draw – the time will not be as limited the governor wanted and there will be plenty of room for exemptions.
Leftish unhappiness with him is limited, but it is intense.
Whether the outcome was worth it to Shumlin is uncertain. Leftish unhappiness with him is limited, but it is intense. He would face no short-run threat from his left if it had a potential candidate to opposes him in a primary, and it does not. Three members of the Lamoille County Democratic Committee quit because, as one put it “the highest elected executive officer in our state has found it politically expedient to abandon the policies which my party has so carefully put in place and protected for over half a century.”
But there are some 600 county committee members in the state, said party spokesman Ryan Emerson, who reported no other protest resignations. Three of 600 is a gesture, not a rebellion.
But that doesn’t mean there’s no longer-term danger. Intra-party political fissures often grow over time. At a press conference last week, Speaker Smith was asked whether Shumlin’s EITC and Reach Up positions had damaged “the Democratic brand.”
He said they had not, of course, but the fact that the question was asked means at the very least that the question is in the air, possibly to reappear should the governor stumble politically.
But he doesn’t do that very often, and he can afford to annoy some Democrats because he has so little to fear from the other party. A savvy Republican operative, who for obvious reasons did not want to be named, said even Lt. Gov. Phil Scott would lose to Shumlin next year, and that his party had no other credible contender. Besides, the Republican said, Scott is unlikely to run both because he would probably lose and because “Shumlin has held him so close.”
Republicans will use the Democratic tax votes to try to win some legislative races next year. Especially in the House, Democrats who voted for $27 million in tax hikes can expect to see mailings sent to their constituents from the GOP and from conservative Super PAC Vermonters First assailing them as big spenders out to milk the taxpayer.
Depending on what else is happening, this tactic could help the GOP knock off a few Democrats, though it would hardly threaten the Democratic majority. And it’s harder to get voters upset over taxes that did not in fact go up.
Shumlin made at least one other mistake at the outset of this session, uncharacteristic for its sloppiness. He said the state could raise $17 million by taxing the “break-open” tickets sold at many taverns.
The administration’s arithmetic turned out to be wrong. The proposed tax would not have brought in nearly that much money. The error doomed any possibility of seriously considering the tax.
But perhaps not forever. Administration Secretary Jeb Spaulding said the break-open ticket business is an untaxed, unregulated, $120 million enterprise in Vermont. Nothing else meets that description.
Except, of course, the sale of marijuana, cocaine and other illegal recreational drugs. Extrapolating from estimates in other states, marijuana sales alone in Vermont could be something like $1 billion. The 6 percent sales tax on $1 billion could have paid for all of Shumlin’s initiatives and then some.