House Speaker Shap Smith gives his opening address.
[L]awmakers began the 73rd biennium of the Vermont Legislature with a renewed sense of purpose on Wednesday.
Property tax and school spending reforms will be job No. 1 in the House of Representatives in the aftermath of an election that gave the Republican Party and conservative independents more of an edge in the House and the Senate. Many lawmakers believe that voters are fed up with recent property tax hikes at a time when student enrollment has fallen 20 percent.
Legislators say the disappearance of the Democratic supermajority that often kowtowed to the party standard bearer Gov. Peter Shumlin will lead to better legislation in the long run and will enable them to move forward with school spending reform and structural changes to the state budget, which is projected to be in the red for the foreseeable future.
Shumlin’s ability to control the Legislature has been diminished, thanks to his poor showing in the general election. The governor won the popular vote by a razor thin margin and now faces a legislative election today.
Shumlin also scrapped his single payer health care financing plan, which would have required a daunting effort on the part of the Legislature to vet and shape into law. Many in the Statehouse were nervous about the impact of the $2 billion plus shift from insurance payments to taxpayer financing on the state’s fragile economy.
Lawmakers say they couldn’t have possibly tackled budget restructuring, education reform and single payer at the same time. Now, they don’t have to. While the Senate and House may tinker around the edges to continue bending the cost of health care spending, there is no appetite in the General Assembly for taking up single payer without the governor’s support.
The political power shift and the dissolution of serious health care reform gives the Senate more room to tackle a host of issues.
And it gives House Speaker Shap Smith, who was re-elected to the top post in the House on Wednesday, the room he needs to take on the formidable task of reforming education financing and school spending.
Smith, in a rousing speech to the 150 newly elected representatives, gave an election style oration on the “promise of opportunity.” He outlined his priorities for the session: tackling financial issues including the $100 million budget gap, education reform, moderate steps to lower health care costs and creating an economic climate in Vermont that creates prosperity.
Smith began by talking about his own experience growing up on a farm in Vermont in the 1970s. His dad, who was a bank manager in Fairfield County, Connecticut, was not satisfied with their life there, and he moved his family to Wolcott, Vermont, where the economic center was Buck’s Furniture and the Wolcott General Store, “and there weren’t a lot of opportunities for jobs.” That first winter, his dad cut Christmas trees for work.
“Even though that existence probably was much harder than being a branch manager of a bank in Fairfield County, he and my family and my mom and my brother and I were in Wolcott, Vermont, because they believed in the promise of Vermont,” said Smith.
Smith talked about how his family struggled to make the farm work, first raising sheep, then tapping 2,000 maple trees. His dad also cut wood and did carpentry work on the side.
Though their life here was not easy, his family has continued to “see the opportunity of Vermont,” Smith said.
Twenty years later, Smith said he found himself in a skyscraper working at a big law firm.
“I was in New York City and I was working in a law firm and all of a sudden I felt that pang … the pull of that promise of opportunity in Vermont, so in 1993, I came back to Vermont … I may not make the most money, but I knew that I could have a wonderful place to raise a family and make a living and participate in democracy, and let me tell you, participating in democracy in Vermont is a lot different than participating in democracy in New York City,” Smith said.
Today, Smith said many Vermonters wonder if that opportunity still exists. He believes it does.
“While we have challenges, Vermont’s culture is still inviting and accessible,” Smith said. “We still have strong schools, a beautiful landscape, we have a growing economy and we have a healthy and happy citizenry, but we all heard this fall a growing uneasiness from our friends and family.”
Many Vermonters are not feeling the impacts of economic improvements “in their own pockets,” said Smith, saying too many families are feeling pinched financially. Health care expenses continue to increase “as wages fall flat.”
“I think the most troubling thing for all of us is that workers and businesses are uncertain about what the future holds, and neither are sure they are being heard in this House,” said Smith.
The speaker challenged the members to face the state’s long-term challenges head-on. They must, he said, ensure that children in Vermont get a world-class education so that they can contribute to the economic success of the state and pursue their own happiness as citizens.
Act 60 and Act 68 were created to fulfill this obligation, he said, but because taxes have risen at a rapid rate at a time when median incomes are flat, constituents are saying “that they cannot afford (increases) at this time of economic uncertainty.”
Smith asked the public to submit solutions to the state’s education challenges and received more than 70 responses, which he will release to lawmakers and reporters next week.
A newly constituted education committee that includes members of the tax-writing House Ways and Means Committee, will work to get “education right.”
Smith urged lawmakers to drop divisive partisan rhetoric and to put Vermonters’ interests first.
“We must come together on all sides of the aisle to tackle the great challenge of providing an education that is equitable for all the children of Vermont,” Smith said. “We need change.”
As for the budget, Smith said lawmakers must evaluate where state government is most effective in serving Vermonters and “where we are falling short.” He is calling for the delivery of effective, efficient delivery of services to “responsibly balance the budget, deliver state services effectively and efficiently and maintain our safety.”
Smith said even though single payer is off the table, there is more work to do on curbing health care costs and the Medicaid cost shift that is driving up premiums for privately insured Vermonters.
Lake Champlain cleanup is also a top priority. If the state doesn’t act now, many areas of the state “will be permanently impacted by our failure to act.” Lawmakers last year proposed a set of fees that would have raised money to address phosphorus runoff that feeds toxic blue green algae blooms in the lake. The measure failed. This year there is more momentum behind paying for cleanup ordered by the EPA.
Smith also told lawmakers that bolstering the state’s economy is also crucial, and they need to look at “both sides of the equation” — how to help workers and businesses.
Holding costs down on a per pupil basis
In an interview with reporters after his speech, Smith dove into a few more specifics about how he plans to approach the education spending and financing conundrum.
First and foremost, he said, the Legislature must look at declining enrollment and how the state can “get the ratios correct.”
He is interested in finding ways to adjust the current system “so that people are spending less money on a per pupil basis and not have their taxes increase.”
“Let’s be clear, there is no silver bullet for this, this is an issue that has persisted for the last 200 years in funding education, but I don’t think I can set the expectations any higher than the people of the state of Vermont already have,” Smith said. “I think this is not only setting a course we should go on, but it’s a course that has been dictated to us by the voters in November.”
While local communities vote on spending, the cost is distributed across the state through the statewide property tax.
State officials have long struggled with how to control spending without eroding local budget setting authority.
Last year the House after a great deal of handwringing, hearings and debate passed an education governance restructuring bill, H.883, which then languished in the Senate. The legislation set up a framework for consolidating the state’s nearly 300 school districts into regional regional districts. The objective was to address the issue of hyperlocal governance in which nearly every town has its own school board.
Smith did not indicate that he would pursue this approach again. He described school governance as a hot button issue and he wants to make sure lawmakers have the “right community involvement and local participation in the plans we develop while also realizing that it’s unlikely that things can stay the same.”
“We have to figure out a way to hold costs down on a per pupil basis,” Smith said. “I think when you look at the statistics Rebecca Holcombe (the secretary of the Agency of Education) has put together, we are in many areas failing the equity test with regard to opportunities and results our students are getting.”
Smith is committed to retaining the state’s equitable funding system (which is a requirement under a Vermont Supreme Court decision). “I think it’s only through equity that we are going to strengthen the economy of the state of Vermont and actually have a school system that is worthy of a financial structure that is equitable.”
Smith will take a hands-off approach to the education committee’s work and won’t announce publicly which education finance and spending reduction plan he supports.
“I think the work the committees are going to do is going to get across the message that I’m serious about it,” Smith said. “I was not joking that there are a bunch of people who said that politically diving into education finance and tax reform is a disaster.”
Lawmakers react
Rep. Sarah Buxton, D-Tunbridge, who serves on the newly formed education committee says she appreciates that the speaker has paved a path for reform, but “now the really hard part begins.”
The committee she said will begin looking at the proposals from the speaker’s working group and the public, and the prospect of figuring out where to go from there is “a little overwhelming.”
“Frankly, where do you start?” Buxton said. “Do you start from scratch? Sometimes it’s easier to react to something that’s already out there.”
Whatever happens, the current system has to be changed, according to Rep. Jean Sullivan, D-Burlington. The big elephant — single payer — has been taken out of the room and lawmakers must make real changes in the property tax system, she says.
Lawmakers were relieved that Shumlin pulled single payer off the table when he did, Sullivan said. The Legislature couldn’t possibly address property taxes, school spending and health care in one session, in her view. “Something was going to be horribly mauled in that process,” she said.
Sullivan said lawmakers have to go back to the people with some real changes in the property tax system. “If we don’t do that none of us should come back, we should all get fired,” she said. “You can’t just tweak this stuff anymore.”
Rep. Butch Shaw, R-Brandon, says people can’t afford to live in Vermont anymore. “They can’t afford to pay their education taxes,” he said. Brandon rejected its municipal budget five time last year, and he says “a lot of it’s because of the trickle down we’re doing here. We say do this, this and this, and we don’t fund anything.”
That said, Shaw says he is encouraged that the speaker and lawmakers of all parties are interested in doing something about education costs and the structural gap in state spending because now “we don’t have a choice.”
“I’m looking forward to education funding reform and education structural reform,” Shaw said. “They have to go together, and they have to be constructive. That’s going to be a real tough thing to do but we have to do it. We have to make the decision here. We can’t pass them off to the administration. If we don’t make the decisions in the building it’s our own fault.”
Rep. Cynthia Browning, D-Arlington, was critical of the speaker’s address.
As he spoke, she says she was thinking about all the problems the state faces and what lawmakers need to do. She blames Smith for not taking action sooner as the problems were worsening.
“I was kind of like where have you been? And what have you been doing these past six years while all these problems were developing?” Browning said. “Did you do tax reform? No. Did you do real budget reform? No. Did you do moderate health reform? No. I was thinking he should have taken advantage of my advice.”
Editor’s note: This story was updated at 7:30 a.m. Jan. 8.
