Gov. Jim Douglas receives L'Ordre National du Quebec

At his weekly press conference on Friday, Gov. Jim Douglas called into question the credibility of the Environmental Protection Agency, in light of its reconsideration of the state’s Lake Champlain cleanup plans; defended state utilities’ preliminary agreement with Hydro-Quebec; pushed for renewing the license for Vermont Yankee; and blamed tax increases for the state’s most recent revenue shortfalls.
Text follows on Lake Champlain, declining tax revenues, Hydro-Quebec and Vermont Yankee; video clips are listed by topic.

Lake Champlain

A reporter asked whether the EPA-approved state plan for cleaning up Lake Champlain has been successful.

Douglas’ reply: “That’s the same EPA that said it was OK to send 31,000 tons of dioxin-filled soil from Massachusetts to our landfill in Moretown. So I think, to be perfectly honest, the credibility of the EPA in regional office Boston is called into question right now. But I gotta be honest, the efforts to reduce phosphorus deposits in Lake Champlain, to reduce stormwater runoff, to clean up the quality of the water is a long project that’s going to continue to require enormous effort, from governments to nongovernment organizations and individuals alike. So, regardless of what the EPA might say I’m going to keep working hard, as are thousands of Vermonters who have made a strong commitment.” Douglas said he doesn’t want the EPA’s decision to reconsider its approval of the state’s cleanup plan to discourage watershed alliances, municipalities, businesses and environmental organizations that are working to stem phosphorus runoff from flowing into the big lake.

Reporter: Leave the EPA out of it for a second. Has that long effort been successful?

Douglas: “It’s been successful, but not as quickly as I and others would like. On an aggregate basis, if you look at the latest report from the Lake Champlain Basin Program, it’ll show that we have made progress. We’ve stabilized phosphorous, in some areas more than others, but we’re moving in the right direction.”

Reporter: But were any of the goals for 2016 actually achieved by 2009?

Douglas: “Not overall, but you’ve got to have aggressive goals. I remember when I talked with New York’s Gov. Pataki in 2003, I said, gosh, 13 years seems so far into the future that folks won’t be aggressive enough, won’t devote the energy and resources necessary to get the job done, and I said, we’ve got a quadricentennial coming up in six years, what do you say we accelerate those goals and try to do it faster than we otherwise might. My guess is, if we’d set the date at 2016, it might be far longer than that before we made the progress that we see. Whether it’s cleaning up Lake Champlain, or extending telecommunications infrastructure everywhere in the state, you’ve gotta have aggressive goals or you won’t get legislators and the people around Vermont to work hard and achieve them.”

Reporter: What’s the practical impact on the state and municipalities of the EPA action, if they do indeed reconsider approval of the total maximum daily load (for phosphorus in the lake)?

Douglas: “It depends on what they do, I guess. I don’t know what reconsider means. I hope ultimately they’ll decide we’ve got the best commitment to a lake cleanup plan in the country. There are 13,000 so-called TMDLs, targets for loading phosphorus in waterways … across the country, and the EPA does not dispute that Vermont is taking it more seriously, literally, than anybody else. We made a strong commitment between administrations and legislatures of different parties to put a great deal of money on the table, to engage people, private organizations, to work with our neighbors to address that. Other TMDLs are documents on a shelf. Here, we’re doing the best of anybody, and for some reason they’re focusing here. I don’t understand it. We’re trying to do everything we can to persuade them we’re doing a good job.”

Reporter: Scientists say it’s been a lot wetter than prior to when the TMDL was formulated, so the fundamental assumptions about phosphorus loading are changing. What if the science actually backs that up? Shouldn’t we re-examine the plan, if there’s more rain and more phosphorus going into the watershed?

Douglas: “I don’t think they should choose the best of the 13,000 TMDLs to reconsider. We’ve had changes in weather patterns all across the United States. Why single out the TMDL that’s being taken the most seriously?”

Reporter: You say it’s being taken more seriously. By what standard?

Douglas: “The financial commitment to get the job done.” (Justin Johnson, commissioner of the Department of Environmental Conservation, told Vermont Public Radio last week that $100 million has been spent on Lake Champlain cleanup efforts.)

Hydro-Quebec and Vermont Yankee

Reporter: Large hydro, according to several studies, is quite a source of methane releases into the atmosphere, and methane gas as a greenhouse gas is 20 times as potent as carbon. Does that give you any misgivings about using Hydro-Quebec as a source of power for Vermont?

Douglas: “There is no source of power that is totally free of some consequence. Look at coal mines, look at what’s happened with gas plants. Windmills are problematic, causing the death of many animals. There’s no source of power that doesn’t have some drawback, but we have to power our society, we have to power our economy. We have to do what we can to reduce consumption through greater efficiency efforts, but we need to have the source of power that is the best, and I think hydro power, compared to any other, is clean, renewable and reliable. It’s competitive from a pricing standpoint, and it’s served our state well for a long time.”

Reporter: Does this power deal take on increased importance given the uncertainty around Vermont Yankee? How aggressively do you think the state should be pursuing other power contracts?

Douglas: “I don’t know that Vermont Yankee won’t be a part of our future. Obviously, the (Vermont) Senate made a decision recently, but there are some positive indications on the tritium leak. I hope at some point in the not too distant future, we’ll be able to take another look at Yankee.
But locking in a commitment for hydropower over a 26-year period beyond the proposed deadline for the proposed Yankee contract is an important step that provides some sense of security for our energy future. These discussions were under way apart from Yankee. The retail utilities in Vermont have been talking to Hydro-Quebec for seven years. Perhaps they were more motivated to reach an agreement because of the VY uncertainty, but this is a conversation that’s been going on for a long time. Its time came.”

Reporter: Doesn’t it remove one of the arguments for relicensing Yankee, because there is another source of power?

Douglas: “I don’t think we should put all our eggs in one basket, even a big one. It’s interesting that’s there’s been a lot of discussion in Vermont (about whether) it’s a problem … getting 70 percent of our power from only two sources. I think it’s ironic now that some are saying, ‘Let’s get 70 percent from one.’ I think it’s important to have diversification in our power supply, just like we would in our
investment portfolio or any other kind of service. We want to spread the risk and not focus on one source.”

Reporter: Is there any provision in this thing to allow these utilities to increase the amount?

Douglas: “Hydro-Quebec has additional capacity to sell more. There will be opportunities for additional purchases if all the parties agree that’s in our best interest.”

Reporter: Do you think it’s in our best interest? It sounds like you don’t.

Douglas: “I don’t think it’s good to have our source of power dominated by one particular generating company or type of company. I think the diversification we’ve had is good, and I think Yankee still is something we ought to look at. I’ve said we should take a time out on the Yankee licensure initiative because of the leaks they’re looking at now, but perhaps more importantly, the attorney general’s investigations into misrepresentations of the company and the need to re-establish a level of trust and confidence in the plant. So not now, but at some point.”

Reporter: Have you gone up on your trust and confidence level in recent weeks (regarding Entergy, Vermont Yankee’s owner)?

Douglas: “Obviously, they made some personnel changes, but I’d kind of like to wait until the attorney general finishes his look at the situation, and they get a clean bill of health on the tritium situation.”

Reporter: Is it really a good deal for Vermont ratepayers if the price (for Hydro-Quebec power) rides with the market?

Douglas: “It’s tied to a series of market indices, both prospective and retrospective. It’s market-sensitive. It prevents wide swings both ways, and I think that’s good for both parties. That’s why yesterday I said it was a win-win arrangement for both Quebec and Vermont. I think it’s a great deal. It’s not only clean, reliable, stable power, but it’s without headaches. We don’t need to worry about tritium or the representations of a company. And there is more than one facility; there are a number of dams in the province. So I think for a variety of reasons, it’s a great deal for Vermonters.”

Reporter: How can you evaluate a deal without a price?

Douglas: “I think there’s a sense from utility officials about what that price is likely to be and what all the legal terminologies are about. I think it’s going to be in the neighborhood of what we’re paying now, perhaps a little better, but it will fluctuate over time based on these indices. I’m not the expert, but those who are feel very comfortable with this arrangement. And it has to be approved by the Public Service Board.”

Reporter: Is it right for public utilities to agree to a contract without a specified price structure?

Douglas: “I think you ought to ask the company, but there are experts not in this building who are going to make a decision about what’s best for the ratepayers of Vermont.”

Reporter: There is language in the agreement that ties a contract to legislative action. Isn’t that unusual?

Douglas: “It’s important to recognize hydropower regardless of its size as renewable because it is. It seems arbitrary to say a hydro project that generates 199 megawatts is renewable and one that generates 201 megawatts is not; both forms of power are renewable. I think it’s important for our legislature to make that determination, and I appreciate those legislators who are considering that actively. It’s the kind of incentive that is perhaps unusual but important. We don’t know what the cap-and-trade legislation (in Washington) will look like, but we want to make sure that Vermont fares well. And recognition of our power supply as renewable is going to put us in a better position to benefit. It’s an important step forward. It may be unusual for a utility contract.”

Declining tax revenues

Reporter: Is there anything that’s been done in Montpelier that has exacerbated the situation we’re in or helped alleviate it?

Douglas: “The former. The tax increases the Legislature approved last year were a serious mistake and are going to (work to) our detriment in terms of revenue performance. The Legislature raised $26 million, at least theoretically, in new taxes last year, and yet income taxes (revenues) continue to plummet. From 2008 to 2009, they were down $100 million. This year income tax receipts were down around $69 million year-to-date from where they were last year. I think other states have learned it’s illusory to increase the income tax and expect you’re going to get more money because people are leaving. There’s an editorial in The Wall Street Journal about the state of Maryland and its huge increase in the personal income tax and how one-eighth of their millionaires are no longer income taxpayers in Maryland. I’ll bet states that lower their income taxes might fare better. The estate tax change was a big mistake as well. We heard some testimony from the Senate Economic Development Committee this year where it was pointed out that just shy of the maximum level for the federal estate tax exclusion, the extra hit from the state would be $230,000. If you have a choice, a home in Vermont and another in a warmer climate, and you spend six months and a day here, you could probably spend six months minus a day here and save a quarter of a million dollars for your heirs. People have figured that out. An accountant who appeared before Sen. Vince Illuzzi’s committee said, ‘That’s what we’re advising the clients, and why wouldn’t we? We have an ethical obligation to ensure their best interests from a financial standpoint, and so my colleagues and I are recommending that they change their residency.’ I think I told you before I attended a gathering of tax professionals up in Franklin County where they had an hour-long seminar on how to change your residency. That’s what people are doing. There are some legislators here who are in denial, but Vermonters are making those choices. I had a prominent business leader visit me recently and sit at this table and tell me that he’s leaving the state. He pays a lot of taxes. People are making these choices, and I think the tax increases that were enacted last year were a serious mistake. And I hear some talk that maybe we should raise them some more; well, it doesn’t work.”

Reporter: It’s interesting that you say that states that lower their income taxes might do better because they did in fact lower income taxes last year.

Douglas: “No they didn’t. They reduced the marginal rates, but the net effect was an increase because they lowered those rates, but they increased the capital gains component more, and so, on balance, there was a $16 million increase in the income tax and $10 million in estate taxes.

Reporter: You know in an election year it’s dangerous to introduce a tax cut to the rich. Isn’t that problematic?

Douglas: “It’s going to be more problematic if we don’t make those changes. We’ve got a shortfall now we’re looking at that’s a magnitude of $150 million, and it could get worse if revenues continue to underperform. This federal money, however much it is, from the Recovery Act or from a Medicaid increase, is not going to be there forever. Even folks in the federal government realize that there’s a limit to how many trillions we can borrow and send a bill for to future generations. This is going to continue to be a serious problem, and I hope legislators will summon the courage to bring this budget into balance.”

Reporter: Governor, you’re a person of some means. Have you thought at all about changing residence after leaving office?

Douglas: I’m not sure I accept the thesis of your question, but no I’m not.

Douglas awarded the l’Ordre national du Québec

Douglas gives opening remarks to reporters about his trip to Quebec where he was awarded l’Ordre national du Québec yesterday at a ceremony in the Québec National Assembly. Douglas talks with reporters about Vermont utilities’ negotiations with Hydro-Quebec; an agri-food initiative between the state and the province of Quebec; Lake Champlain clean-up efforts; and border security.

Douglas supports anonymity exemption for donors to state colleges

Douglas gave his support to H.331, which would carve out an exemption in the public records law for anonymous donors. At a time when there are calls to keep tuition down at UVM and the state colleges, and the Legislature has been unwilling to increase its support of the higher education system, Douglas asked: “What other sources of revenue do they have?”

“Now we’re going to say they can’t accommodate all donors because of a restriction on anonymity?” Douglas asked. “It puts the university at a disadvantage.”

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Gov. James Douglas

Gov. James Douglas painted a dark picture of the state’s economy for reporters at his weekly press conference on Thursday.

Douglas announced that revenue figures for January have come in $5.5 million below the most recent revenue forecast, or 4.5 percent less than expected.

“That underscores the fact that we’re in very uncertain territory from an economic standpoint and emphasizes the need to take important steps to right our fiscal condition as quickly as we possibly can,” Douglas said.

He also made reference to a recent White House report that indicates unemployment in the United States will remain at 10 percent in 2010 and projects an ongoing rate of 6 percent for the next five years.

This makes passage of the “Challenges for Change” bill, S. 238, all the more imperative, Douglas said. He thanked the Senate for passing the bill this week, and asked the House to push the $38 million plan forward.

“Moving quickly on this $38 million plan will allow us to proceed with certainty on the $151 million challenge that we’re facing,” Douglas said. “The effort goes beyond next fiscal year’s budget. If we can achieve state budget efficiencies now we’ll realize even greater savings in the future. That’s essential because the effects of this recession are going to continue for a few more years.”

The ultimate solution, however, Douglas said, is “growing our tax base and ensuring Vermonters have access to good jobs that pay good wages.”

Douglas also urged the Legislature to pass the so-called jobs bill, which would infuse $8.7 million in federal stimulus dollars in the economy, before Town Meeting Day. He said the money would be used for what  he called “critical economic development needs,” such as workforce training, spring planting grants for farmers, capital for companies, tourism marketing and broadband investments.

He also called for a roll back of capital gains and estate tax changes that “the Legislature imposed last year.”

“We’ve to make our state more competitive economically,” Douglas said. “If we’re going to avoid a slow and halting recovery we have to have a competitive tax burden and provide incentives for creating more jobs.”

When asked whether he thought the jobs bill should have been pushed through the budget adjustment bill for fiscal year 2010, so that $1 million of that funding could have been made available for dairy farmers, Douglas said he had hoped the jobs bill would have been passed by the end of January. Sen. Vince Illuzzi, R-Essex-Orleans, had tried to attach the bill to the budget adjustment act, but the House objected, Douglas said.

“We can talk about process all we want, whether it’s budget adjustment or the jobs bill, farmers need the money to plant their crops very soon,” Douglas said. “And 40 companies need that job training money on March 1, VEDA can get some more low cost loans out to create more jobs as soon as possible.  We can start expanding broadband as quickly as we can do it. I don’t think Vermonters care about the legislative process, they need the money.”

Douglas said the $8.7 million in stimulus dollars is being used for economic development programs instead of filling the budget gap because they are “one-time” dollars, funds from the federal stimulus bill from February of last year, that won’t be available next year.

“One-time dollars should be used for one-time purposes,” Douglas said. “Remember, the purpose of the recovery act was to create jobs. Last year I was critical of legislators for … building (some of those funds) into the budget base. They put money in Public Safety and we need the state police every year and we don’t want those dollars to go away so I think this is exactly the purpose for which these were intended.”

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