Yesterday I reposted a press release from Campaign for Vermont about the need to address our spending problem as the first step toward real reform. Vermont Digger also ran a story on Campaign for Vermont’s push for fiscal sanity. The comment section contained an argument by Kevin Ellis, a principal in the biggest lobbying firm in Montpelier (Kimball, Sherman and Ellis) http://www.ksefocus.com/ essentially claiming that Vermont’s fiscal woes were Bush’s fault:
Greenberg is right. And to blame implicitly the current legislature for this spending is ridiculous. The current Speaker is hardly a runaway spender. Likewise, the governor, who is cheaper than the Speaker in his spending practices and unwillingness to raise taxes. Tom’s beef should be with the forces unleashed during the Bush years via unfunded wars and tax cuts and unrestrained Wall Street chicanery. The legislature and the governor do what they must to protect people and keep society moving ahead. To try and tag them as spenders will never sell.
The “Tom” he is referring to is Tom Pelham, a Campaign for Vermont co-founder and former Finance Commissioner during the Howard Dean Administration, who provided some of the group’s analysis of Vermont’s fiscal health. Pelham wasted no time in setting Ellis straight:
Kevin…given your standing as an inside the Montpelier beltway lobbyist, I can understand your solicitousness of the Speaker, the Governor and the other powers that be under the Golden Dome. But I hope, for your clients’ sake, that behind closed doors you offer them a more thoughtful and realistic profile of what’s going on in Montpelier other than the lame bromide of it’s the “Bush years”.
All the data in our report came from sources routinely used by state leaders, including the JFO, the state Department of Labor, the new Department of Financial Regulation, the Consensus Forecast of the JFO and Administration, Tax Department statistics, among others. This data clearly reveals that state spending and state cost shifts have grown substantially over this 5 year period while the underlying economy and demographic profile of the state has been quite stagnant. This is unarguably true. Such a separation of the state budget from the underlying economy may be recoverable if occurring for a year or two, but five years of such a divide results in a substantial gap that pushes the state’s fiscal affairs toward the danger zone.
Your statement as to whether or not the Legislature and Governor are “spenders” requires a relational benchmark. You can see from the data in the Campaign for Vermont analysis that the spending growth rate in the six years prior to 1991 was 9.2%, but in the 8 years following 1991 had dropped to 2.6%. Given this, it’s clear that the Legislature and Governor are not “spenders” of the order of the Kunin Administration, but I don’t believe their frugality matches that of Governor Dean and the Legislatures of his era. You can see from the Becker polling data in our report that as the spending grew in the pre-1991 period, the favorability ratings of Governor Kunin plummeted, I believe because the spending was too much, and not too little.
In the 2010 budget process, then Senator Shumlin and Speaker Smith led the charge to override the Governor’s veto. The general fund equivalent difference between the Governor’s budget and that of the Legislature was $94 million. Whether this additional spending makes them “spenders” I don’t know. I do know that if our base spending today was lower by even half that amount, the budget woes we will listen to on Thursday from Governor and Legislature would be severely diminished; maybe even allowing him to pay for child care without raiding the Earned Income Tax Credit.
Or maybe you might consider the use of the $437 million in federal one-time “stimulus” funds received from 2009 through 2011 to cushion the effects of the recession. Rather than use these funds to bridge the worst of the recession, the Legislature also used it to ramp up spending. For example, the substantial increases in LiHeap and 3 Squares eligibility during this period, then supported by “one-time” federal stimulus money, must now be supported with state funds, adding to the budget woes you’ll observe on Thursday.
Whether or not the Governor and Speaker have, as you describe, an “unwillingness to raise taxes” also requires a bit of forgetfulness. In 2010 they passed increases worth tens of millions in the income tax by almost eliminating the capital gains exclusion and limiting state, federal and sales tax deductions to $5,000. Then, in 2011 there’s the $27 million raid on the education fund, pushing property taxes up along with the multi-million laundry lists of tax increases in Act 45, including taxes on hospitals, nursing homes, home health agencies, cigarettes and insurance claims, among others. Plus, don’t forget the $56 million increase in Medicaid cost-shift onto hospitals. So all this adds up to be a substantial increase in burden on Vermonters. But, I guess if one were the Speaker and the Governor who raised all this revenue, it would be a relief to know there are folks like you Kevin who didn’t notice, thus offering more opportunity for further tax increases to close the current budget gap.
And finally, there are the missed opportunities. During recessions, families and businesses alike have to figure out how to do more with less; but not so much our state government during this recession. Both the Legislature via its Challenges for Change process and the Administration via Tiger Teams and its proposals for education reform put forth numerous ideas that could save money to redirect to priority areas of need. But, with that boatload of “one-time” federal stimulus funds in the pipeline, it was much more politically expedient to avoid the messy business of change that often upsets the status quo and its special interests. So, these reform opportunities are not in place today to help address the budget woes we’ll listen to on Thursday.
One conclusion that can be drawn from the information in the Campaign for Vermont’s report profiling the pre-1991 spending trend relative to the post-1991 spending trend is that our leaders are not victims of circumstance. The Kunin folks chose to spend at the excessive rate of 9.6% and the Dean folks chose to spend at the more frugal rate of 2.6%. To blame our current circumstances on the “Bush Years” is rather bush-league, don’t you think? Especially in view of the events at the state house profiled above.
That response leaves little to add except in noting that ‘it’s clear that the Legislature and Governor are not “spenders” of the order of the Kunin Administration’, perhaps a goal is being put in front of the current Legislature and Governor to strive for. I say this because they are just beginning and are poised to far outstrip the Kunin Administration if their plans for a government takeover of our health care system ever see the light of day. In other words, as profligate as the current Administration’s spending has been, the really big spending is still on its way and there seems to be no end to their plans to turn Vermont into a social laboratory for costly progressive policy experimentation. When it comes to unsustainable spending, we haven’t seen anything yet.