Editor’s note: This oped is by John McClaughry, vice president of the Ethan Allen Institute.
From the standpoint of preserving the state’s solvency, making life easier for revenue-generating businesses, and defending our liberties, the 2010 legislature’s work is a mixed bag of the good, the bad and the ugly.
Facing a $154 million deficit in January, the Legislature produced what it claims is a balanced budget without broad based tax increases. In fact, in the face of Gov. Jim Douglas’ not-so-veiled veto threat, it even lightened the business tax burden by allowing many Vermont businesses to claim the full 9 percent domestic production credit against state taxes as well as federal. It also liberalized capital gains treatment for investments in Vermont businesses.
To reach a putatively balanced general fund budget, the legislators made changes in the two state retirement plans ($17 million), and continued a state employee pay freeze ($9 million). But the remainder of this apparent fiscal miracle contains two highly suspect elements.
Internal human service program changes are credited with a $39 million spending reduction, and the “Challenges for Change” initiative is “assumed” to produce another $38 million. The former is too complicated to grasp, and the latter – amusingly touted by Douglas as “reforming government” – is highly speculative.
The “Challenges” effort was conceived as a way of streamlining state government and thereby saving money without reducing any programs or services. The $38 million in “assumed” savings put forth by the highly overpaid consultants last January was apparently based on no analysis at all. Next January, when another $122 million in savings must be found, be prepared to hear that much of the “assumed” Challenge for Change savings failed to materialize, and it was the other guy’s fault.
Perhaps the most notable achievement, other than avoiding a veto battle, was putting the Unemployment Insurance program back on track, after recession-incurred payouts drove it well into the red. Businesses saw their taxable wage base rise from $8,000 to $16,000 (in 2012); unemployed workers saw their benefits delayed a week, and then frozen at the present $425 a week maximum. This issue will have to be revisited again, as early as next year.
The legislature agreed to bond $10 million for a new mental health facility for – get this – the 15 most difficult or dangerous patients. The federally-decertified Vermont State Hospital has been a costly sinkhole for a decade, mainly because the bureaucracy cannot conceive of “treatment” that does not involve “facilities” staffed by certified professionals and unionized workers.
One bright spot was the disappearance in the Senate of the House passed-bill to force Entergy to set millions aside to restore the Vermont Yankee site in Vernon to the “greenfield” condition once enjoyed by the Abenakis. Let’s hope this madness has finally passed, and the next legislature comes to grips with the need of Vermont businesses, farms, schools, governments and ratepayers for Yankee’s 285 Mw of reliable, bargain priced base load electricity. If they don’t, you’ll know who to blame for the brownouts.
Another bright spot was the disappearance of the shopworn mandatory seat belt bill. Both chambers did agree on a texting while driving ban on under-18 drivers, and primary seat belt enforcement for them only. If the police abuse this provision, only non-voting teenagers will feel the brunt of it.
The really ugly provision was the passage of Sen. Racine’s latest government health care takeover bill. This politically motivated proposal will shell out yet another quarter million dollars to yet another consultant to design three more plans, all of them coercive, bureaucratic, expensive, and destructive of our health care providers. This “taxpayers must pay for my human right to enjoy all the health care I think I deserve” issue will be fought again starting in January.
The other really ugly provision was a “voluntary redistricting” measure for public schools, supposedly in the name of cost efficiency (undocumented and highly dubious). The parents in every school district whose voters agree for it to join a new Regional Education District – other than a remarkable mega-district that operates no schools at all – will find that their cherished educational choices have been handed over to the regional educrats who view parental choice as a mortal threat to their careers and job security.
Tuition towns will be allowed to go it alone and keep their parental choice, but continual official pressure and the enticement of property tax rate reductions will eventually extinguish, rather than expand, this popular Vermont practice.
The 2010 legislative outcome was, as usual, a mixed bag. Let’s hope that next biennium there will be a lot less of the bad and the ugly. That of course will depend on who we elect in November.
