Editor’s note: Rep. Thomas F. Koch, R/D, represents Barre Town in the Vermont House of Representatives. This column is a reprint of his Feb. 24 “Scribblings,” an occasional newsletter from the Legislature.
The Legislature is now in the thick of things, with lengthy committee hearings every day, bills beginning to emerge from committees, and floor sessions getting longer as we begin to debate bills. There are a lot of ideas, many with fancy price tags. The governor’s budget address proposed a number of new programs, but the list of costly ideas is not limited to those coming from the front office. The question surrounding all of these new programs, regardless of who proposed them, is: Where is the money going to come from?
One major initiative proposed by Gov. Shumlin is to provide universal pre-K care and instruction, at a cost of $17 million, paid for by cutting way back on the earned income tax credit and using the money saved to pay for the expanded pre-K programs. A major argument in support of pre-K is that a child’s brain is most susceptible to learning at the earliest ages, and an investment in early education returns seven dollars in the long run for every dollar invested. Whether that is true or not — and a recent study strongly suggests that it is not — the governor’s proposed means of payment is highly unpopular across the political spectrum, and while I have learned never to say “never,” the chances of expanding pre-K education programs at the cost of the earned income tax credit seem very remote. So then where does the $17 million come from?
The governor also proposed creation of several new environmental programs, also with a price tag, coincidentally, of $17 million. His proposed source of funds for these programs is a surcharge — that’s not a “tax” you understand — on break-open tickets sold at nonprofit clubs around the state. Once again, the proposed new tax is highly unpopular in many quarters, especially among the nonprofit clubs (Elks Clubs, for example) that sell them; furthermore, whether such a tax would actually raise $17 million has been seriously questioned.
But that’s only part of the story. The real cost of just one of those environmental programs — a new “thermal efficiency” program — is actually slated to cost $27 million in new money in the first year, increasing to $40 million by 2020. What is a “thermal efficiency” program? Basically, it’s our current weatherization program (cost: $12 million per year) on steroids. It’s a new bureaucracy, a whole bunch of new employees, all to help you realize that your heating bills are too high and then to help you figure out what to do about it. Help in making building modifications would also be available, mostly in the form of subsidized loans.
So how does one find $27 million in new money to get such a program up and running? Suggestions include an “energy efficiency excise tax” of about 4 cents per gallon on fuel oil, and equivalent amounts on other fuels; tax credits; an increase in the gross receipts tax on fuels of about two percent; applying the 6 percent sales tax directly to the retail sale of fuels; and a few other more exotic schemes. Once again, the benefit-for-dollar-invested argument enters the discussion: that each new public dollar secures $6.18 in benefits, that the gross state product increases $1.47 for every one dollar invested, and that $1.90 of private funds is leveraged for every one dollar of public funding. So you all understand, I hope, that your money is better spent when the state spends it for you than if you spend it yourself!! Which of these schemes will eventually be recommended remains to be seen; one thing I can confidently predict — it will be structured so as to pick your pocket in the manner you are least likely to notice.
Then there’s health care. With both the Affordable Care Act (“Obamacare”) and Vermont’s movement toward a single-payer plan kicking in, some existing programs are being replaced, including some that have been targeted toward low-income folks — programs such as VHAP and Catamount Health. But with subsidies under the ACA not as high as the subsidies people have been used to under Vermont’s programs, some folks now fear that health insurance for lower income people will suddenly become too expensive, and they will drop out of the insurance market.
Gov. Shumlin initially said that we could not find the $18 million necessary to hold everyone harmless in the changeover. But then he warmed to the idea. As it turns out, the cost is more like $22 million a year. So enter the “sugar tax.” Only trouble is that the sugar tax is not very popular, and this past Friday, the House Health Care Committee took a vote, and on a 5-5 vote, with one member absent, the sugar tax proposal was killed. Now, as I said before, never say “never.” But for now, the question remains: Where’s the $22 million going to come from?
Those of us who, like me, voted NO, will tell you that there’s something very wrong with a system where what one town adopts for a school budget affects every other town in the state — a system that nobody can control because, theoretically, everyone controls it.
On the education front, there are also numerous proposals, and I don’t think we even have good numbers on what these proposals would cost. One minor element is the governor’s proposal to give free lunches to all students who until now have qualified only for reduced-cost lunches; the difference is 40 cents per day per student, or about $72 per student per year, or about $322,000 statewide per year. That’s not a lot of money, but I have to wonder if it’s really necessary, or whether it’s just a feel-good idea, nice-to-have, but not need-to-have.
This past week, the House voted to raise the base residential school tax rate from 89 cents per hundred to 94 cents per hundred. On a house appraised at $100,000, that’s a $50 per year increase (not accounting for a whole lot of other variables that go into determining the final tax bill.) Those who voted for this increase will tell you that the Legislature is not the one raising the tax, but rather the school boards and voters back home who approve the school budgets. Those of us who, like me, voted NO, will tell you that there’s something very wrong with a system where what one town adopts for a school budget affects every other town in the state — a system that nobody can control because, theoretically, everyone controls it. The system is called Act 60/68, and Rep. Heidi Scheurmann of Stowe introduced an amendment that would have repealed Act 60/68 two years from now, forcing the Legislature to design a new system. There was a good bit of support for her amendment, and I guess the vote counters weren’t sure of the outcome, so they introduced a political fig leaf as a substitute amendment, which passed. The long and short of it is that next year the increase in the property tax will be even greater than this year, and there is no real relief on the horizon.
Finally (not really, but for purposes of this issue of “Scribblings”), there is the matter of a $36 million hole in the transportation budget, part of which is needed as a state match to draw down $74 million in federal funds. The needs of our roads and bridges and decreasing revenues that support the transportation fund have come together to create a major problem, if not a crisis. The bridges built after the 1927 flood are in a serious state of decay, and the interstate highways built in the 1950s are all coming due for major maintenance at the same time. At the same time, people are driving less, so the 19 cent per gallon gas tax is generating less revenue, and more fuel-efficient cars are having the same effect. The combination (along with the fact that we have been diverting funds from the T-fund to the general fund for years) results in a net deficit.
So where will the money come from? One proposal that could have enough votes to be adopted would combine a 5 cent per gallon reduction in the gas tax with a 4 percent excise or sales tax on gas. The reduction would cause a loss of revenue to the T-fund of $15.3 million, but the sales tax would result in a $43.5 million increase in revenues, with a net, then, of $28.2 million in new revenues.
There are other possibilities. We could bond for some of the needed repairs. We could adopt a tax on miles traveled (a substantial invasion of privacy that I doubt has anywhere enough support to pass.) We could impose a new personal property tax on the ownership of motor vehicles. We could do any number of things. But will we? I think nearly everyone recognizes that highways are a vital segment to our economy and our way of life, and that keeping highways safe and in good repair is a legitimate governmental function. But this year, I have heard many people echoing the themes “No New Taxes,” and “We Have No Capacity for New Taxes.” It’s hard to predict what might happen, and it’s hard to predict what my own position will be on T-fund taxes until I see a firm proposal.
So just offhand, adding all those costs up, that’s more than $100 million in new commitments, and the question remains: Where will the money come from? It’s really not a mystery. The answer is clear. Regardless of the mechanism adopted, and whether the funds are raised locally, or federally, or by the state, the money will come from you and me — the taxpayers.
The real question is: When will people say enough is enough?
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By now, nearly every Vermonter knows about the bill to name kale as the state vegetable. I happen to love kale, but do we need a “state vegetable?”
Most states have a state motto, bird, tree, flower, and maybe one or two other symbols. But Vermont also has a state rock, warm water fish, cold water fish, insect, fossil, flavor, and probably a few other “things” that I can’t remember, all compliments of acts of the Legislature.
Many of these are due to requests made by students in civics classes studying “how a bill becomes a law.” Their teachers encourage them to submit an idea to the Legislature and follow the bill to its final enactment. Unfortunately, with a few exceptions, the ideas submitted take the form of naming another state something-or-other. I recall the late Rep. Helen Wakefield of Brookfield standing during debate on the bill to name the honeybee as the state insect and asking, “Why are we passing this bill, because the kids are cute?” She had a valid point, and part of the lesson that the students must learn is that sometimes a bill doesn’t pass!
This session, we have not only the kale bill, but also bills to designate the Mount Holly mammoth tooth and tusk as the state terrestrial fossil (re-designating the current state fossil, the white whale fossilized skeleton, as the state marine fossil), the Governor Aiken bucktail streamer as the state fly-fishing fly, and any dog adopted from an animal shelter as the state dog!!!
To tell the truth, bills of this nature do not take a lot of time or cost a lot of money. You can’t simply take the legislative budget and divide by the number of bills introduced and say that every bill costs X dollars. It doesn’t work that way; some bills consume much more time and many more resources that other bills. A bill to name kale or some other plant as the state vegetable consumes few legislative resources. What such a bill consumes, however, is something much more valuable — the respect for and reputation of the Legislature itself.
We need to be concentrating on important matters, not trivia. And one thing we need is a moratorium on bills proposing to name new state symbols!
