Bah (Bleeping) Humbug

Lost in the current talks about our imploding state budget is how Vermonters have responded to previous recessions.

As Gov. Jim Douglas and lawmakers on the 10-member Joint Fiscal Committee [1] put their Scrooge-ish twist on the Secret Santa ritual by proposing state budget cuts totaling $19.7 million, few, if any, of our top elected officials are offering any alternatives.

The Douglas team had wanted the 10-member committee to approve $37 million in cuts, but the group balked, claiming it does not have the authority to make all of the cuts without conferring with colleagues. Vermont’s elected representatives convene in Montpelier on January 7.

The committee, however, will hold public hearings this week on the guv’s proposal to slash services for kids, the elderly and the poor, and funding for public arts and media, higher ed, the courts and the environment. They plan to vote Friday on whether to accept some, none, or all of the austerity measures.

Douglas and his team are refusing to tap into the state’s $100 million Rainy Day Fund, or to raise taxes as a way to get out of this morass.

Senate President Pro Tem Peter Shumlin (D-Windham) and Senate Majority Leader John Campbell (D-Windsor) say Vermonters are maxed out on taxes. Democratic State Treasurer Jeb Spaulding has suggested raising gas taxes to fuel road and bridge repairs. His plan has generated little excitement.

Despite the stance of his Senate colleagues, incoming House Speaker Shap Smith (D-Morrisville) said it’s premature to rule out anything — including targeted, and short-lived, tax increases.

That was the approach of Republican Gov. Richard Snelling, who dug us out of recessions in 1983 and 1991 by utilizing a mix of budget cuts, tax increases and deficit spending. When the deficits were retired, the tax increases sunsetted.

Snelling believed Vermont couldn’t balance the budget on the backs of poor and working Vermonters. Smith is taking a page right out of the Snelling playbook.

“We know there are going to be difficult decisions to make, but we need to be talking about shared sacrifices,” said Smith, who has served the past four years on the tax-writing House Ways & Means Committee. “We can’t be asking only those who are the most vulnerable among us to bear the brunt of this burden.”

Vermont’s Public Assets Institute [2], led by Paul Cillo and Jack Hoffman, is reviewing the state’s respective responses to the 1983 and 1991 recessions. Today’s fiscal shortfall is on the same order of magnitude, roughly 10 percent of the state budget.

Administration Secretary Neale Lunderville is having none of the tax talk.

In his cover memo detailing the $19.7 million in cuts, he writes, “Economists widely agree that tax increases during challenging economic times serve only to slow recovery and further exacerbate the financial strain on family budgets. I want to reiterate the governor’s strong opposition to tax increases on already overtaxed Vermonters.”

As usual, Lunderville — like his boss — presents the overtaxed theory as if it’s fact. It’s not. It’s subjective.

According to a 1991 report from the National Association of State Budget Officers [3], 31 states raised taxes on everything from personal and corporate income to motor fuel and cigs to help meet FY 1992 budget shortfalls. In all, $15 billion in new taxes was collected.Vermont raised $87 million in taxes that year — $37 million of it in income taxes.

The same group reports that in FY 1983, 24 states enacted temporary tax increases and 27 put in place permanent ones.

So much for the old “no one raises taxes during a downturn” mantra.

As for being overtaxed, Hoffman notes that Vermont’s top marginal income tax rate is currently 9.5 percent. In 1983, the top marginal rate was around 12 percent; in 1991 it was 13.5 percent. Um, isn’t 9.5 lower than 13.5?

Plus, people don’t pay taxes in “rates”; they pay in dollars. Last year, the Joint Fiscal Office debunked the myth that Vermont is a high-tax state. In a special tax study, the JFO found that the taxes Vermonters and in-state businesses pay are about average nationally. Their study took actual income returns from Vermont and compared them with those from other states.

We’re nowhere near the top, as Douglas and his folks like to claim. But why let real-life statistics get in the way of spin, though, right?

Personally, I think that if Douglas and Lunderville feel so strongly about the righteousness of their cuts, they should publish them in their entirety and let voters weigh in. Beats leaving it to 10 lucky lawmakers.

But I suspect Douglas would rather the committee members agree to his cuts, so when people complain, he can blame them — and, by extension, the legislature. That’s what he did earlier this year. When jobs were eliminated at the commerce agency, and services were cut to the elderly, he said it was all due to the leg-approved budget cuts, even though his team handed lawmakers the scissors.

This strategy has another bonus: It gives his highly paid team of PR staffers something to do. Their ranks have been thinned, from six to four. Vacant “communicator” jobs in the Department of Public Service [4] and the Agency of Human Services [5] will not be filled. Steve Wark, who held the DPS post, is now Douglas’ communications director.

But a number of former campaign staffers have been added to the state payroll: Dennise Casey, his deputy chief of staff, Jason Gibbs, his former spokesman and now Forest and Parks commish. Erik Mason once served as his national community service director.

Sources tell “Fair Game” that two lower-level campaign staffers were recently placed at do-nothing jobs in the Department of Buildings and General Services and the Department of Economic Development. Both jobs pay between $35,000 and $40,000 a year. Hey, Jim = Jobs, right?

To his credit, Douglas is instituting 5 percent across-the-board pay cuts for any politically appointed “exempt” staffer making $60,000 or more, including himself. That means someone making $100,000 will take a $5000 pay cut. So much for that vacation to the Outer Banks this year, eh?

Don’t forget: When Douglas came into office in 2003, he paid some of his top staffers as much as 25 percent more than their predecessors under Gov. Howard Dean. And more than a dozen appointees make six-figure salaries in the Douglas administration, compared with two when Dean left office. Even after the paycut, Douglas is still one of the top 10 highest-paid guvs in the U.S.

Maybe someone should study the connection between being overtaxed and overpaid?

******

Wright Gets It Wrong? —

Republican City Council President Kurt Wright kicked off his mayoral campaign last week before an energetic crowd of more than 100 supporters in Burlington City Hall Auditorium.

The question is: Can a Republican get elected in a city so left-wing it’s known for embracing socialists, a city often mentioned in the same breath as progressive locales such as Ithaca, New York, Madison, Wisconsin, and Portland, Oregon?

If you think Wright has only GOP support for his candidacy, think again. One of several people warming up the crowd for him last Thursday was none other than Burlington Parks Commissioner John Ewing, the former chair of the state’s Environmental Board and founder of Smart Growth Vermont [6].

Despite being a self-proclaimed lifelong Democrat, Ewing said his decision to back Wright was not based on party but on “electing the most qualified person.” Ewing said Wright has proved himself to be an effective leader, which he defines as someone who puts the interests of the city before party or partisanship.

Progressive City Councilor Jane Knodell (Ward 2) was in the crowd at Wright’s announcement. She said later that Wright “did a great job” and she thinks he’ll “have broad appeal across the political spectrum and across the city.”

Great job and broad support? Is this the makings of a “Progressives for Wright” group? Nope, said Knodell. So she’s backing Bob Kiss, right? Wrong again.

“I am not going to be publicly supporting any candidate this mayoral election,” said Knodell.

Wright’s background as a council president, city councilor and state legislator makes him uniquely qualified to tackle the pressing needs of the city, he told his supporters. Those needs are fostering economic development, keeping budgets under control, delivering key city services, and promoting a tri-partisan approach to solving problems in the Queen City. He said he’s accomplished all of these items as city council president.

Wright joins Democrat Andy Montroll and Independent Dan Smith, son of one-term former U.S. Congressman Peter Smith, in the race to oust Kiss.

Smith is the first candidate to launch an ad. The 30-second spot began airing last week on WVMT-AM [7] and its sister FM station— 95 Triple X [8].

Wright appears on WVMT’s “Charlie & Ernie Show” so often, he may not need to buy ads.

A key theme in Wright’s campaign is how he’s provided leadership to the city when Kiss didn’t. Wright says he worked to make sure election officials received proper training, argued for more transparency in government, pushed back against the school’s $226 million bond, and wrapped up the rewrite of the city’s zoning regs.

“I have to tell you: There is only so much a council president can do. Leadership needs to come from the top. There is only one person that is elected by the whole city and that is the mayor, and the mayor must lead,” Wright said.

Kiss supporters say Wright’s got it wrong. Progressive leadership has resulted in a long list of accolades for the Queen City: It’s been called healthiest city, best place to raise kids and a real-estate safe haven. Hey, we’re even a “beer lover’s destination,” according to newly elected State Sen. Tim Ashe (P/D-Chittenden).

Ashe was one of several speakers at a Sunday night caucus convened to nominate Kiss for re-election. Before an audience of about 40 Progressives, he recalled Wright’s prediction two years ago: that the incoming mayor would last no more than one term. Why? Because Wright believed raising taxes was the city’s only way out of its fiscal mess.

Kiss has kept city spending growth at or below 3 percent in each of the past three years, avoided raising taxes, renegotiated a historic “fee-for-services” agreement with nonprofit institutions such as UVM and Fletcher Allen, and navigated tough labor agreements with city workers, said Ashe, who is currently a Ward 3 city councilor.

Progressive attorney John Franco noted that in 2007, Burlington’s job-growth rate was three times that of the rest of the state; Queen City incomes increased twice as much as incomes elsewhere in Vermont.

Maybe Kiss just needs a slogan: Bob = Jobs.