State workers take a number of blows in Gov. Peter Shumlin’s proposed budget, and in response, the Vermont State Employees Association has launched a campaign to “Fight Back.”
Members of the union filled the House Chamber on Tuesday, and in a Greek chorus style answer and response, workers described how the cuts will affect government services. They argued that the Shumlin administration’s proposal is tantamount to an unfair tax on workers and urged the governor to raise taxes on the state’s wealthiest residents instead. Handouts passed out during the forum featured explicit tax proposals.
Patricia Bennett, a dispatcher from Derby who could lose her job when the state consolidates services, urged lawmakers to reach out to state workers on the front lines.
“When the upper echelons say we don’t need that, we can cut that, ask a front line worker what their job is, what they’re doing and why they’re working,” Bennett said. “I want to be there for that 911 call when you need me. I don’t want you to be put on hold. I want you to understand that these cuts, if they are done, it doesn’t cut the need for services. Vermonters are still going to need those services and they’re not going to be there, so I ask legislators look for ways to create revenue and not cut. We’ve been cut too much.”
Shumlin’s budget includes unspecified pay reductions to the state workforce and possible job cuts. The administration is asking the union to reopen the current contract and renegotiate $8 million in roughly 4 percent pay increases that were approved last year. The union is under no obligation to bargain over the pay cuts. In addition, the administration is asking departments and agencies to find another $5.8 million in workforce savings. As tensions have heightened over the issue, the governor’s office has said that the alternative to finding $5 million in pay act reductions and the workforce savings is the equivalent of a reduction in force of 450 workers. The Joint Fiscal Office estimates the number of layoffs possibly needed would be between 150 and 200.
The judiciary branch would see a roughly $1.5 million cut under the governor’s plan, most of which officials say would come from job vacancies. The budget proposal also consolidates state dispatch services ($1.8 million) and education services for inmates ($1.9 million in savings diverted from the Education Fund). Both plans have met with heavy local resistance.
The state police dispatch services in Rutland and Derby would be rolled into Williston and Rockingham. The dispatch positions are good paying jobs, and critics say the 20 to 30 job losses would negatively impact two communities that are already economically challenged.
Cuts to the Community High School of Vermont would result in the loss of 27 positions. Graduation rates from the school have dropped by more than two-thirds over the past seven years. Andy Pallito, the commissioner of the Department of Corrections, has said he had to choose between the education program and sex offender treatment.
Sen. Anthony Pollina, P/D-Washington, recalled a similar situation over budget priorities that occurred two years ago. In the end, he said “low-income people suffered service cuts, state employees suffered pay cuts and wealthy Vermonters got their tax cuts.”
“We knew at the time that was wrong, but here we are today in the same situation not having learned too much,” Pollina said. “We still seem to understand that throwing people out of jobs, pushing people into the unemployment lines undermines rather than strengthens the economy.
“What we’re told in this building is we have a systemic problem,” Pollina said. “The systemic problem, we’re told, is we’re spending too much money. Every year costs go up, and there’s a reason why we spend more money. Still, I would argue there is another systemic problem we don’t talk enough about. It’s not that we spend too much, it’s that our incomes are too low.”
The VSEA members gave Pollina a standing ovation before he want on to say that income inequality is the fundamental problem the state is facing, and the state needs to make sure that all Vermonters are paying their fair share.
While Democratic leaders and the governor don’t agree on everything in proposed budget, they are of one mind about what they say is a stark reality: They must reduce state spending in order to solve the state’s $110 million budget gap this year and they want to resolve an ongoing structural budget problem. Tax receipts are coming in 2 percent below state spending levels for the foreseeable future.
The VSEA says cuts to the state’s workforce are unnecessary and will be detrimental to Vermonters. The union counters the Shumlin administration’s budget gap narrative with the argument that the state has a structural revenue problem, not a structural budget issue. “Recurring state government deficits are directly attributable to growing income inequality,” the union said in a statement. Income tax receipts are down because incomes are down, VSEA says.
House Speaker Shap Smith and John Campbell, the President Pro Tem of the Senate, both say base budget cuts must be adopted this year. While there will be a new revenue source proposed by the Legislature, Smith and Campbell told VSEA members on Tuesday that they won’t be able to raise enough to cover what has become a widening gap. Personal income tax and corporate tax receipts have not met expectations and revenues were downgraded last month.
Both Smith and Campbell said they wished they could give the kind of speech Pollina delivered, which they said gets at the heart of what many people feel. Smith said that compared with other states, Vermont has a strong commitment to supporting disabled and low-income residents.
Smith told the union members he would not sugarcoat the reality of what the state faces. “The challenge we face this year is real, and I wish I could give the speech Anthony gave,” Smith said. “I don’t like the idea of having to figure out how to solve a $120 million hole in a budget knowing there is going to be a hole every year if we don’t actually make some longterm changes.”
Part of solving that hole “is going to be about revenues,” Smith said. No ideas about raising revenues will be “left off the table.” “We will have a full conversation about what we need to look at,” he continued. “But I can also tell you we can’t solve the problem with just revenue alone.”
Smith asked state employees to work with the Legislature to “resolve this problem together.”
Campbell said the state has dealt with shortfalls of $50 million or $70 million in the recent past. This time is different, he said.
“When I talk to the Joint Fiscal Office folks, and they have faces of despair I know we’re really in trouble,” Campbell said. He, too, reassured the workers that revenue will be on the table.
“There’s no way we can tackle this problem without raising revenue,” Campbell said. “If we were going to do it solely on restructuring government then we would have little government left and that’s not going to happen under our watch.”
As an alternative to cuts, the union has pitched four possible sources of new tax revenue to lawmakers, including:
- Taxing capital gains like wages. The union’s proposal would eliminate the 40 percent capital gains income exclusion for people who make profits on the sale of assets such as stocks, bonds and real estate. The change would raise $11.5 million, VSEA says. Tom Pelham, a former special assistant to Gov. Jim Douglas, says the exclusion was already eliminated in 2010.
- Capping the mortgage interest deduction at $15,000. This change would raise $5 million and impact about 8,000 wealthy households, according to the union.
- Imposing a hotel occupancy fee of $2 per night fee for each room that is occupied. The charge would raise $11 million to $12 million, the union says.
- Placing a minimum income tax of 3 percent on high earners. VSEA says 139 tax filers with incomes above $125,000 and five filers who made $1 million that year paid no tax in 2013. A minimum tax would raise $1 million to $2 million.
Editor’s note: This story was updated with more information at 8:01 a.m. Feb. 18.
CORRECTION: The quotes from Patricia Bennett were originally conflated with comments from Melissa Sharkis.
