(Jon Margolis writes political columns for VTDigger.)
House Speaker Mitzi Johnson, Senate President Tim Ashe and their Democratic followers want to make life better in Vermont by spending government money.
So does Republican Gov. Phil Scott.
They don’t agree on where the money should be spent or on how much. Scott insists that no more be spent than can be raised via the current tax and fee structure. The Democrats might tweak that structure to raise more revenue.
But these are differences of degree, not of principle. They are important differences of degree, and they will likely be fought about for the rest of the legislative session, often with loud voices.
But the noise need not obscure the reality that both the Democratic leaders and the Republican governor are centrist, mainstream political operatives who believe in using the power of government to strengthen the economy, protect the environment, feed the poor, heal the sick and educate the young.
Scott is a business-oriented conservative, intent on holding the line on taxes and not creating new or bigger obligations on the private sector, such as compulsory paid family leave or a higher minimum wage.
But while he insists on not raising taxes, he did not suggest cutting them, and he spent much of his State of the State speech Thursday boasting (accurately) about how much his administration has accomplished in terms of improving health care, expanding affordable housing, promoting downtown and village center development, combating opioid addiction and reducing water pollution, all of which cost money.
All of which will cost money again this year, with his approval. Scott is a big spender. Because his Democratic foes in Vermont would spend a bit more, even if they have to raise taxes to do it, he emerges as the penny-pincher. But the argument is over money (and not that much of it), not ideology. It was the Republican governor, not one of his Democratic adversaries, who proclaimed, “There’s nothing wrong with wanting government to invest in programs that enhance the lives of Vermonters.”
Scott proposed new spending schemes and at least one ambitious and innovative government program: “a bold, sophisticated campaign to identify and persuade working-age individuals, families and entrepreneurs to relocate to Vermont.”
This campaign, he said, “will use state-of-the-art targeting, plus direct outreach to individuals and businesses,” and it will have “a self-sustaining funding model.”
An intriguing and perhaps unprecedented proposal. All states operate economic development plans in which they try to entice businesses to relocate. They engage in tourism promotion, and many do some general advertising – usually glossy full-page spreads in trendy magazines – to promote themselves.
But this kind of targeted campaign using the latest information technology appears to be a new development. University of Vermont economics professor Art Woolf, who is well-versed in state and local public policy matters, said via email: “I don’t know of any successful marketing campaigns by cities or regions to lure people. There have been successful campaigns to lure specific industries through tax incentives and regulatory incentives (Vermont’s captive insurance, North Dakota’s credit card processing), but not individuals.”
It would be premature to assess Scott’s proposal before he provides details, But it is not premature to point out that there is scant evidence those other state tub-thumping efforts have done much except to provide indoor jobs with decent pay and benefits to a few people who found favor with a governor, often because they had helped him or her get elected.
They are, in other words, government make-work projects, usually not described that way because the work they make is done behind desks by white-collar employees, not on construction sites or road crews.
Scott may find it challenging to convince the Legislature that his plan would be an exception and worth funding. Even the kind of “self-sustaining funding model” he proposed needs an upfront appropriation, and lawmakers are likely to ask the governor where the money will come from.
Especially because this is by no means his only new spending proposal. He had a few other innovations, such as “offering tuition-free college in Vermont, for those who commit to serve in our National Guard,” and removing the state income tax from military pensions.
These would not be line-item appropriations in the state’s budget. But they might as well be. They are tax expenditures, which in mainstream economics are indistinguishable from appropriations. It makes no difference whether the state allows a military pensioner to pay less in income taxes or writes the pensioner a check for the same amount. Relinquishing the revenue is identical to spending the money.
There were other indications in the speech that Scott and mainstream economics may not always be in synch. One of Vermont’s major problems, he said, was that companies – he specifically mentioned six of them – had jobs to fill and could not find people to fill them.
“We need more workers,” he said.
Mainstream economics provides these companies a simple device for getting these workers: Offer them higher pay, better benefits and training if needed to do the jobs. If markets work (an essential premise of mainstream economics), the workers will appear. The companies, it seems, would rather have the state (meaning the taxpayers) attract the workers and provide the training.
Like his “relocate-to-Vermont” promotion plan, giving National Guard soldiers free tuition at state colleges, Scott said, would persuade more of them to move to or stay in the state. Here again lawmakers might ask for some evidence that it will accomplish that goal. For instance, has it been tried anywhere else? If so, did it work?
Not to mention how it will be financed. With Scott adamant about rejecting any tax or fee increases, the money for new initiatives can come only from economic growth or from reducing state spending elsewhere. With the state’s economy growing at less than 1 percent a year, most new spending would have to come from cutting other programs.
That’s not easy, considering broad agreement that there are places where the state does not spend enough. Johnson, the House speaker, said the state’s psychiatric treatment facilities are so inadequate that some dangerous and even violence-prone patients are spending a week in hospital emergency rooms, where they can do harm to themselves, hospital staff or other patients.
That seems to be the case. Melissa Bailey, the commissioner of the Department of Mental Health, said that in November an average of six involuntarily committed psychiatric patients were in a regular emergency room each day, meaning it was not unlikely that a few were there for roughly a week. With more resources, she said, her department could find room for these patients where they would receive better treatment and pose less danger.
Is fixing this problem worth raising anybody’s taxes? That’s why somebody invented politics.
