After today, all eyes will be on the Vermont Senate. That’s because the Vermont House effectively tipped the ball into senators’ court yesterday when it passed the Challenges for Change 2 bill, 98-43, on second reading, with an amendment that calls for a special legislative session if more work is needed. The bill is expected to make final passage today.
The House Democratic leadership’s decision to call a special session quieted resistance to the Challenges for Change legislation from the GOP caucus and some worried Democrats — and pressured the Vermont Senate to begin taking action on the bill next week.
NEW! Challenges spreadsheet with House and Douglas administration detail numbers by agency
House Speaker Shap Smith – 30 minutes before the Challenges for Change 2 debate on the floor was to begin on Thursday – announced to the media that the Democratic leadership would introduce an amendment for a special legislative session to address the $18 million Challenges budget shortfall.
The special session would, Smith said, give lawmakers more time to vet new administrative proposals due on July 1 and the authority to approve more statutory changes. The July 22 session would come on the heels of the second quarter revenue forecast, which would give lawmakers a clearer picture of the overall state of the economy, Smith said.
“We have a commitment to Vermonters to make sure their needs are met,” Smith said. “And we also know at times we need to be flexible and think outside of the box, and we’re going to move the process forward.”
“We know Senate will continue to work on this process,” Smith said. “But if we aren’t done when we leave, we will maintain proper oversight.”
If the special session is deemed necessary, the Legislature would reconvene on July 22, Smith said, and would meet for “as long as it takes” in order for lawmakers to develop the reorganization plans in collaboration with the administration.
The House budget for fiscal year 2011, which passed several weeks ago, included a $38 million carveout for government restructuring savings under Act 68, also known as Challenges 1. The Douglas administration’s proposals produced $31 million in savings, and the Legislature was willing to accept $20 million worth of the reorganization plans. The Challenges 2 legislation, H.792, is a compendium of statutory changes that give the administration the authority to implement sweeping changes to state government.
The special session will only happen if the Vermont Senate doesn’t find a way to fill that gap in the next few weeks before adjournment, and observers say the amendment could be dead on arrival in the other body. Smith, however, suggested the amendment gives the House an insurance policy.
“We know Senate will continue to work on this process,” Smith said. “But if we aren’t done when we leave, we will maintain proper oversight.”
The President of the Senate, Peter Shumlin, who is a Democratic candidate for governor, says the special session won’t be necessary. “We need to get the people’s work done on time to save taxpayers’ money,” Shumlin said. “I’ve never found that decisions are easier to make when you put them off. So, let’s get the hard decisions made and go home.”
The House decision to move forward with a special session could have an unintended consequence: Under the state’s lobbying law, legislators are restricted from receiving solicited or unsolicited money from lobbyists and lobbyists’ employers during a legislative session until after final adjournment, according to the Vermont Secretary of State’s office. This could potentially hurt fundraising efforts for the three Democratic candidates for governor in the Senate, as well as for House, Senate and statewide seats.
Guide to Vermont’s Lobbyist Registration and Disclosure Law, See page 6
Shumlin said this isn’t a factor in his decision to try to move the Challenges bill forward in the Senate. “I’ve said right from the beginning about all those campaign questions, my job is to do the best job I can as Senate president and that’s what I’m going to focus on,” Shumlin said.
“Our commitment is to Vermonters, not campaigns,” Smith said. “Our intention is to do what needs to be done to meet the Challenges.”
With the exception of a few steadfast opponents of the Challenges legislation, the amendment passed, 130-12.
The GOP role reversal
The special session idea originated with House Republicans. Rep. Olsen, R-Jamaica, wrote an amendment, with 44 GOP sponsors, that would have brought the Legislature back on June 15.
In a GOP caucus before the vote, lawmakers said they chose the earlier date because they wanted to fill the budget hole before the 2011 fiscal year began, and they didn’t want the session to impinge on campaign fundraising.
“Our concern was, this is an election year, and if we don’t adjourn, we have a lot of people who can’t raise money,” said Patty O’Donnell, R-Vernon. “And we felt that if we did that, we’d have less of a chance of getting this through, and so we put the June date on so at least they’d have time to get more information.”
“This is about changing structures, not just cutting costs, so even if the revenue forecast is better than expected, I can’t see us backing away from the Challenges for Change philosophy,” O’Donnell said.
Nease explained to GOP caucus members that “the July date is really about the revenues” and that lawmakers in the Democratic caucus wanted to be “fully apprised.”
O’Donnell argued that the revenues shouldn’t affect the Legislature’s commitment to the Challenges if the state is serious about government restructuring.
“This is about changing structures, not just cutting costs, so even if the revenue forecast is better than expected, I can’t see us backing away from the Challenges for Change philosophy,” O’Donnell said.
Rep. Patti Komline, R-Dorset, asked Nease whether it was realistic to expect that the Senate would find the $18 million to $20 million in missing savings from the Challenges.
“I don’t know,” Nease said. “I don’t know how realistic it is. As we all know, it’s a lot of work.”
“It’s important that the Senate understand how important it is to us that we have this information about how these challenges are going to be met prior to adjournment,” Nease said. “It’s possible that at the end of the Senate’s process, they will have identified other challenges savings and a way to fill the $38 million, in which case my caucus is happy because we know before we leave here we have the full $38 million. My guess is that the other body has a very keen interest in doing this now rather than later.” Nease said the amendment was important for the Democratic caucus because “trust was an issue.”
“We entered into this process with the administration in good faith, and the administration came back with some excellent ideas,” Nease said. “They also came back with some proposals, some policy initiatives, that have failed for eight years, and this is apparently the last train leaving the station. So they attached them there, and that didn’t help in terms of trust. What also didn’t help was Mr. (Tom) Evslin’s statement in the House Appropriations Committee where he said that if they didn’t get their way, they would do it by executive order – I forget what the issue was – that sort of raised concern.”
(Evslin is a key point person for the Douglas administration’s effort to win passage of the Challenges.)
Republican lawmakers said they would support the amendment, not because they didn’t trust the administration, but because they said they needed more information in order to make a responsible decision.
On the House floor, Olsen offered the GOP amendment with a caveat: “I support the underlying values of Challenges for Change … but we’re trying to squeeze short-term savings from long-term outcomes.”
Olsen then gave the floor to Nease who offered a substitute amendment from the Democrats. With the exception of a few still-concerned independents, progressives and Republicans — who fought the Challenges legislation from the beginning — the amendment, passed, 130-12.
The road to passage
When Nease introduced the substitute amendment, he congratulated the Douglas administration on finding $20 million worth of good ideas under the Challenges.
“We’re asking them to go back to work,” Nease said.
He said the Challenges 2 legislation requires the administration to engage service providers, families and recipients of services in the next round of restructuring plans because “those things didn’t happen in first progress report.”
There is “legitimate discomfort” about how the reorganization will play out after the Legislature adjourns, said Rep. Janet Ancel, D-Calais. For that reason, a technical amendment of the bill “establishes limits on the actions the administration may take in implementing the two Challenges bills,” Ancel said.
“The reason we are talking about coming back is because we are being responsible,” Nease said. “It’s important for us to know what the final Challenges are and to be able to act on them.”
There is “legitimate discomfort” about how the reorganization will play out after the Legislature adjourns, said Rep. Janet Ancel, D-Calais. For that reason, a technical amendment of the bill “establishes limits on the actions the administration may take in implementing the two Challenges bills,” Ancel said.
Those limits include “absolute prohibitions” on changes in Vermonters’ eligibility for government benefits and personnel reductions that are used “solely to achieve savings.” Ancel said reductions must come as a consequence of meeting the Challenges outcomes, or legislative goals for government services, not as a result of traditional cost cutting. “This strikes at the integrity of the process,” Ancel said.
Rep. Paul Poirier, I-Barre City, offered an amendment to the Challenges bill that would require Corrections to restrict placement of prisoners to communities that don’t already have high populations of Vermonters on probation or furlough. The Legislature is considering a bill, S.292, which would permit the release of several hundred nonviolent offenders, in order to save a net of about $3 million this year. Corrections restructuring is one of the Challenges, and Poirier’s amendment addressed concerns from
about a dozen communities in the state that have a disproportionate number of residents who are under the supervision of the Department of Corrections.
Poirier said about 4,000 former inmates reside in 12 municipalities around the state. Under his amendment, prisoners would be released to communities that have former inmate populations of 2 percent or less. The amendment passed 111-29.
As lawmakers turned their attention from the amendments to the purpose of the underlying bill, questions were raised about the efficacy of some of the proposals, including programs for children and families and the voluntary savings target set for school spending.
In the topsy-turvy world of the Challenges discussion, Democrats defended the efficiencies gained through the reorganization proposals, while Republicans talked about a lack of transparency in the Challenges process and hurting programs for the underprivileged.
Rep. Anne Donahue, R-Northfield, an outspoken opponent of the Challenges, said members of the public don’t understand the substance of the reorganization effort as long as the bill didn’t include budget numbers, nor did lawmakers.
Donahue soliloquized on the floor of the House. “It isn’t too late to stop this underlying bill,” she said. “This bill creates strong possibility we will be in no better shape than we were this summer. When we voted to remove $38 million from bottom line … we were not just deceiving ourselves, we were deceiving the public.”
O’Donnell said that even though she was pleased that the House passed an amendment, she still couldn’t support the Challenges because there wasn’t enough information. She called it a “cop-out.”
“This was all about how do we cut without putting our fingerprints on it,” she said. “The administration isn’t doing this, folks, we are. … We are the elected officials, we’re the ones who campaigned, who asked people to vote for us to send us to Montpelier because we were going to be responsible and look out for our constituents. It’s our job to make cuts.”
Members of the House Appropriations Committee defended the Challenges process as lawmakers’ only recourse at a time when the state faces significant, ongoing revenue declines.
O’Donnell pointed to the 1-800 crisis hotline for mental health proposed by the Douglas administration as an example. “What is Challenges for Change? If we can’t explain it to constituents, they will understand when there is an emergency in their families, and they can’t get the help they need,” O’Donnell said.
Members of the House Appropriations Committee defended the Challenges process as lawmakers’ only recourse at a time when the state faces significant, ongoing revenue declines.
The shortfall is $154 million for fiscal year 2011 and $200 million in fiscal year 2012. The committee counted on the $38 million in savings from the Challenges in order to balance the 2011 budget a few weeks ago.
Rep. Ann Manwaring, D-Wilmington, who serves on the committee, said traditional cost cutting wasn’t the answer and that the principles of the Challenges for Change have been effectively used in the private sector.
“We stepped up to the plate,” Manwaring said. “We have kept Vermont on a fiscally sound footing. With this imperfect process, we have an opportunity to do something new and something powerful. Our present appropriations are built by cutting back on prior years’ activity.
“What’s new about the Challenges for Change is, we’re using people’s money to purchase outcomes,” Manwaring said.
Rep. Susan Davis, P-West Topsham, was the only member to bring up other methods of resolving the $38 million shortfall.
“I am concerned we have not considered short-term bonding, taxes or rainy day funds,” Davis said. “Why would you vote in favor of something today that will not save $38 million?”
Poirier told his colleagues he was booking a vacation on July 22. He predicted the Senate would find the missing $20 million and Challenges for Change would be a done deal.
The debate lasted about five hours, and continued today with the third reading.
