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January 25, 2011

Governor Shumlin’s Proposed Budget – First Impressions

Vermont Tiger editor Geoffrey Norman asked a bunch of us from across the political spectrum in Vermont to do quick commentaries on the budget address Governor Peter Shumlin gave today. Fortunately, he limited the questions to what'd we liked most, liked least, and what we were most surprised by. The Vermont budget, intertwined as it is with federal funding and various special purpose state funds, is too complex to analyze without having the actual budget spreadsheets, which we don't have yet.

Remember, too, that even though the Governor is now from the party which has huge majorities in both the House and the Senate, a budget proposal still needs to go through the legislative process. It is by no means certain that the reductions proposed by the Governor, his restraint in not proposing new broad-based taxes, and his refusal to use rainy days funds – or even the spending he proposes to do – will be in the final budget bill as it emerges in late Spring.

My answers to Geoffrey's questions are below. But go to vermonttiger.com to get a much broader perspective.

Liked the most:

  1. Keeping his promise not to recommend an increase in broad-based taxes or a raid on the rainy day fund
  2. Good explanations of why Vermont cannot follow Illinois in raising taxes (our taxes are already comparatively high, Illinois rates were low) or even follow Governor Snelling's example of temporary increases (our taxes are much higher now than they were then).
  3. Dedicating capital money to energy efficiency in state buildings. Actually should have been more than $3.5 million given the backlog of projects and the quick return in lower operating costs. I'm hoping that when he mentioned renewable energy in the same breath, he meant solar hot water and geothermal which have excellent economics and NOT solar photovoltaic and wind turbines which don't.
  4. Excellent explanation of why regulatory reform is necessary to achieving our broadband goals – "Rapid build out could be delayed and millions of dollars could be wasted if we fail to act." He mentioned "consolidated land use and environmental permits for the placement of poles" but didn't mention making permanent the soon-to-expire expedited permitting for radio towers. Since he did promise to extend this necessary provision during the campaign, I'm assuming that's meant to be included. BTW, telecommunications buildout isn't the only activity that would benefit from regulatory reform, but it makes sense for the Governor not to let reform for this purpose get bogged down in the greater and harder discussion about permitting which we need to have.

Liked the least:

  1. Continued emphasis on single-payer health insurance – but he's been clear all along where he stands on that
  2. Using $19 million in one-time federal money to postpone for yet one more year dealing with the over-staffing of our school systems – but that was also no surprise
  3. No mention of the urgent need to change state employee and teacher retirement plans to 401(k)-like defined contribution plans rather than defined benefit – at least for new hires. Every year we delay this we risk not only our ability to keep the promises we've already made to current retirees but the solvency of the state as a whole. Hopefully he's saving this for collective bargaining.

Biggest surprise

The proposal to go to a two year cycle for capital budgeting. It does make sense to take advantage of currently low bonding rates and construction costs – and planning more than one year at a time for capital expenses is a good idea anyway. The danger, of course, is the pressure to come back for more in year two if the money is spent quickly – as it should be – this year. We don't want to endanger out hard-won triple A bond rating.


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