Governor announces spending plans, but gives no details on financing it all

by Shayne Spence

Facing a $70 million budget gap this year, the Vermont General Assembly convened in a joint session to hear Governor Peter Shumlin outline his spending priorities. Many Vermonters were hoping to hear solutions to the unsustainable path the state government is headed down, but it appears that we will be doubling down on the same policies. Having covered the opiate addiction crisis in his State of the State address, the Governor mostly avoided this issue, although he did talk about additional investments being made in treatment facilities statewide. The crux of the speech was a tip of the hat to areas in which the Governor sees progress in Vermont, such as our economic recovery, energy future, and healthcare and education systems.

Touting Vermont’s 5th place rank in unemployment rates nationwide, Shumlin reiterated his previous claim that Vermont was “strong and getting stronger”. Boasting 11,000 new jobs since his first budget address, including 2,000 new manufacturing and professional services jobs in the last year, Vermont’s economy has started to recover from the recession that hit its lowest point just before Shumlin took office. And despite what the “living wage” movement may say, Vermont is one of a few states in which wages are rising faster than inflation. The Governor attributed much of this recovery to the expansion of Downtown Tax Credits, citing the examples of the rapidly-growing town centers in St. Albans, Hardwick, Rutland, and others around the state. He calls for a $500,000 expansion of these tax breaks, to bring more jobs into Vermont towns and cities.

Governor Shumlin also expressed pride in Vermont’s path towards a 90% renewable energy portfolio. He called for an expansion in the net metering program that allows consumers with home solar installations to sell excess power back to the grid. This, combined with federal and state subsidies for industrial wind projects, has led to an increase in the total amount of energy Vermont gets from renewable sources. However, some say this goal is wishful thinking. Meredith Angwin wrote in a July 2013 VTDigger op-ed “Right now, Vermont uses 6,000 Gigawatt hours (GWh) of electricity per year. (A GWh is a million kilowatt hours.) My estimate is that Vermont would need 18,000 GWh annually to achieve the 90 percent goal by switching to electric cars, heat pumps and so forth.“ To put this in perspective, she writes “The results are appalling. For example, making 18,000 GWh using wind turbines would take about 2,000 turbines, covering 400 to 700 miles of ridgeline. Vermont is only 160 miles long. Making the same amount of electricity from biomass would require 12 million acres of woodlands, sustainably harvested. That’s twice the size of Vermont.” She goes on to say that a more reasonable goal, of 20%, would be ambitious, but attainable.

The Governor acknowledged problems in the way that Vermont’s education system is funded, and admitted that continued increases in the property tax are unsustainable. He made a pledge to “explore any options that would improve the school funding system.” However, the reforms he will pursue likely won’t involve much local control. His remarks reflected a widely held sentiment in Montpelier that it is local school board spending driving the increasing property tax. But when you speak to members of local school boards and parents in the community, they see the policy mandates that are handed down to them to be excessive and the main factor behind rising educational costs. These rising costs juxtaposed with the falling number of students paints a bad picture for the future of Vermont’s education system.

And of course, the Governor spoke of Vermont’s progress towards a single-payer, Medicare-for-all healthcare system. While taking responsibility for the rocky rollout of Vermont Health Connect for the first time, the Governor said that we must not be discouraged by recent government failures, and we must make further progress along this path. However, he continued to avoid outlining any way of financing the system, despite calls from both the right and the left for his plan. In the post-speech press conference, Republican Senator Joe Benning (Caledonia County) called for the Governor to share his plan, and asked members of the media to go to a caucus meeting at which Sen. Peter Galbraith (D-Windham) would share his plan for an 11% payroll tax to finance the program.

Despite all of his grand plans, however, the Governor said nothing of how to finance them. To pay for single-payer, estimates range from $1.6 to 3 billion in new taxes. Despite tax revenues being up $178 million over last year, there is still a $70 million gap between revenues and planned spending. The Governor’s budget relies on $30 million in one-time, federal funds to help bridge this gap, however, additional tax increases will be necessary. Since the Governor has pledged not to increase broad-based taxes, Vermonters will need to be on the lookout for the return of the “cloud tax”, another increase in the gas and property taxes, and anything else the Legislature may try to slip in to the miscellaneous tax bill.

Shayne Spence
Outreach and Development Coordinator
Ethan Allen Institute

One thought on “Governor announces spending plans, but gives no details on financing it all

  1. This is the “Vermont Way”, propose touchey feeley legislation and worry about how to fleece the taxpayers for it later! Seems to be working so far!!!

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