Editor’s note: This commentary is by Rep. Paul Dame, a Republican who represents Essex Junction in the Vermont House of Representatives.
[L]ast week at the Statehouse was consumed with the most important work of the year: passing a budget. All of the current tax policies gave us $33 million more in revenue than we had last year, due to normal inflation and economic growth. But that wasn’t enough, and so the budget that passed required an additional $48 million in new taxes and fees to be raised in order to pay the bills. This happens because our general fund spending grows at nearly 4 percent while the revenues are growing at roughly 2.2 percent. It has happened every year for the last six years, and mark my words, it will happen again next year. Our spending continues to grow faster than the Vermont economy, and nothing was done last week to change that pattern. If the composition of the Legislature does not change substantially, neither will these budget or tax increase trends. Until there is new leadership and a new majority the focus will remain on continuing the current status quo on spending, and raising taxes to make up the difference.
When – not if – we have another recession these tax hikes will just get higher. If we continued spending at the same rate, and instead this year had seen a modest 2.2 percent decline in revenue from a contracting economy, then we would have needed to come up with $114 million in new taxes and or fees.
As you file your income taxes before April 15 ask yourself this question: Who can make better use of that money – you, or Montpelier?
One of the problems we have is the process used to create the budget. The Appropriations Committee starts by asking each committee to send a list of priorities. Often these spend more than even Gov. Peter Shumlin has recommended. They compile and assess the requests, then when the clock runs out, they send it to the Ways and Means Committee to fill the gap between available income and desired spending by creating new taxes. This is exactly backwards of how my financial services clients – and most Vermonters – plan their household spending. The average person knows what their income is likely to be this year, then makes spending decisions within those constraints. Imagine if you started your budget process with a list of all the things you’d like to spend on, then were able to send the bill to the rest of your neighbors – you wouldn’t have a sustainable budget that would stay within your means. But that is exactly what happens in Montpelier.
Instead we need to start with a recommendation from Ways and Means on what tax policy the state needs to have to encourage economic growth. Then once we know how much money that policy will raise we need to ask each committee to prioritize their spending, given those constraints. We can decentralize these decisions and put them closer to committees that have deeper understanding of the impact. Each committee could spend time getting into the details of what our state government is doing and begin asking the questions about how effective our efforts are. There could be a number of programs out there trying to do valuable things – but just not doing them successfully.
My Republican colleagues and I have put forward a few ideas to help close this gap without reaching in the pockets of Vermont taxpayers. One idea I presented last year, and again this year is to evaluate buying Medicare supplement policies for eligible Medicaid beneficiaries. We already pay their Medicare premiums, and I think buying a supplemental policy would provide substantial savings in a way that would ensure the same benefit package Medicaid patients already enjoy, and would have a side effect of giving hospitals and physicians a slightly higher reimbursement rate.
It will take a little bit of time and effort to figure out the savings, but it’s the kind of thing Republicans have proposed before, that just don’t get enough consideration. It takes less time to figure out a new tax or fee to cover the spending, and kick the can down the road, hoping the economy grows next year. We spend a significant amount of time talking about how important it is to keep spending on a particular program – but I don’t think we give equal consideration on how important it is to allow Vermont businesses and regular everyday citizens to keep more of their own money by keeping taxes level – and there is virtually no conversation about allowing them to keep more of their own money. As you file your income taxes before April 15 ask yourself this question: Who can make better use of that money – you, or Montpelier? Who spends it more carefully? Who will be quicker to identify waste and make changes? Again, I have more faith in the average Vermonter.
The Human Services Committee I serve on spent three hours last week taking testimony on whether or not we should raise the smoking age from 18 to 21. Regardless of which side of that issue you fall on, I can say that if there was a Republican majority and I had the opportunity to be the chair of that committee, we would have more likely spent time evaluating the 1,260 grants issued by the Agency of Human Services that, until this year, had gone almost completely unevaluated. Some entities are receiving millions of dollars from multiple grants. Maybe they are all perfectly worthwhile and important. But I am very uncomfortable with the idea that we asked taxpayers for $48 million in new money without knowing the answer to that and other important questions.
