Gentle Readers: The wry and somewhat theoretical examination of government budgets and their discontents originally scheduled for today will be postponed until Monday because yesterday the folks in Montpelier committed a new.

Which is to say, they made news, news of some magnitude as it turns out, and this being a news site, such news ought to be dealt with here.

Speaker Smith

For details, however, you are advised to consult your conventional print or electronic news source. Most of them employ quite competent if not excellent reporters, some of whom were actually on hand when this particular news was committed, as the News Guy, alas, was not.

Nonetheless, there is some advantage to being free from the constraints of the conventional news sources. If you can get more detail there, perhaps you can get more (or at least more free-wheeling) explanation here.

What happened was that the Democrats who run the Legislature announced some changes in their own $4.5 billion budget bill, the one that Gov. Jim Douglas has said he would veto.

The new provisions seem unlikely to persuade the Governor to do otherwise, though in some ways they move the total package slightly (perhaps minutely) closer to his point of view. One provision in the budget “Companion Bill” for instance, would encourage state workers to retire as a means of reducing the state work force, one of the Governor’s major goals.

Douglas opposes the budget bill because he says it spends too much and cuts too little. The changes made by the Democratic leaders, House Speaker Shap Smith of Morrisville, Senate President Pro Tem Peter Shumlin of Putney and some of their committee chairs, actually adds a little more spending.

But it’s the pro-business, pro “economic development”  kind of spending the Governor likes-new research and development tax credits for business, more money for expanding internet and cell phone service. The Democrats also agreed to cap unemployment compensation benefits (a Douglas position), and to postpone for another year the plan to limit the capital gains exemption in the state income tax.

That means they scaled back one of their proposed tax increases (though in a “revenue neutral” manner), also a small dip in the Douglas direction.

But perhaps more to the point, a dip in the direction of some of their own members. The capital gains preference is of special importance to some farmers and to folks in the forestry business. Farmers and folks in the forestry business have political clout in this state, and some of them are constituents of Democratic members of the House, all 95 of whom will probably be needed if Douglas’s veto is to be overridden.

Later, Speaker Smith said the changes were not made out of “a concern that we would lose votes on the override.” But then he acknowledged that the changes had not lost him any votes either. Asked if he was more confident of winning the override vote than he’d been the day before, Smith said, “these things are so fluid.”

Earlier, he’d been even blunter, saying, “I know it’s hard to take at face value, but I actually think this isn’t about shoring up votes or anything like that.”

Who would even suggest such a thing? Obviously, these Democrats leaders, votes to override safely in hand, simply sat around yesterday pondering how to make their budget even more brilliant and transform Vermont into a Utopia, until one of them just popped out with something like, “say, why don’t we put more R&D tax credits into the budget?”

Or maybe not.

As Smith sort of acknowledged in a statement he and Shumlin released, in which Smith said, “I’ve heard a lot of constructive feedback from small business owners, farmers, hi-tech innovators and working Vermonters about steps we can take to set the state on a more solid footing for the future”

Republican Leader Patti Komline of Dorset certainly thought there was as much politics as policy in the Democratic announcement.

“Despite the fact that they have a supermajority in the House and Senate, they did not have the votes, and so this is just meant to cherry pick and get those so they can override,” she said (on WCAX-TV, Channel 3, which had the best early coverage of the story)

Komline’s statement appeared both triumphant and submissive, asserting first that the Democrats didn’t have the votes then, but acknowledging that they may well have them now.

As usual, the truth may be more complicated than either the cynicism or the naiveté outlined above. Senators, representatives, members of the Joint Fiscal Office staff and even a few officials of the Douglas Administration have been talking for days. No one should be surprised that the lawmakers decided to tweak their budget.

It is possible to tweak and count votes at the same time.

Besides, if the Democrats are at risk of seeming a bit sly, Douglas is in danger of seeming downright irrelevant. The Governor has not had a good spring. The Legislature overrode his veto of the same-sex marriage bill. It probably would have overridden his veto of the renewable energy bill or he wouldn’t have let it become law without his signature earlier this week. Now he is about to become the first governor in Vermont history to veto a budget bill, perhaps the first to have that veto overridden.

He could spring back, of course. First of all, it’s still possible, of not likely, that the House will sustain his budget veto. Or maybe he won’t veto it. He could announce that these latest revisions moved the whole package just far enough in his direction to render it acceptable.

Not likely, either. Because the Companion bill says nothing at all about what seems to be the issue about which the Governor feels strongest – school costs. Douglas wants the schools to spend no more per pupil next year than this year. To persuade (or force?) them to do so, he wants the legislature to finance the annual  contribution for teacher retirement from the Education Fund rather than from the General Fund, from which the payments have always been made.

That switch would increase property taxes unless schools make the deep cuts Douglas has called for.

On this issue, the Democratic leaders did not move a bit in Douglas’s direction. They didn’t have to. Smith said not a single member of his caucus had taken the Governor’s side in this matter.

Neither, it seems, did many members of the Republican caucus. Republicans in the House have backed Douglas’s general fiscal conservatism, his insistence on deeper budget cuts and fewer tax increases. But if there has been any support for his contention that the current school financing system is ” fundamentally broken and beyond repair, it has been so muted as to be unnoticeable.

Jim Douglas is still a relatively popular governor who will be favored to be re-elected should he run for a fifth term next year. Right now, though, at least on this issue, he gives the impression of being a leader who proclaimed a crusade, buckled on his armor, mounted his steed, and looked behind him to see…effectively nobody in the ranks.

Opening the public hearing into the State budget yesterday afternoon,  the chairman, Rep. Michael Obuchowski of Bellows Falls pronounced the proceedings “a serious exercise in democracy.”

He then read a statement from James Reardon, the Commissioner of Finance and Management, explaining that he had decided not to attend the hearing because it was “designed to disparage the governor’s alternative budget approach.”

So who was right?

Maybe both of them. Government usually combines statecraft with stagecraft, in the words of  Notre Dame political scientist Robert Schmuhl, and the two can occur simultaneously.

Even when the subject is public money, the taxing and spending of it. Or perhaps especially when the subject is money. Accounting is a creative art, and budgets are cobbled together based on assumptions and projections, only some of which turn out to be accurate.

Yesterday’s hearing (and another set for this afternoon) was scheduled by the Legislature’s Democratic leaders who oppose the budget proposal put forth by Republican Gov. Jim Douglas last week. Reardon’s assumption that it would be a Douglas-bashing session would seem reasonable.

But there were two Republican lawmakers at the table, and many of the speakers criticized the Legislature’s budget as much as the Governor’s. The very first public witness, in fact, was Jim Harrison of the Vermont Grocer’s Association, one of several speakers who assailed both budget plans for their proposed tax increases on alcohol and tobacco.

If nothing else, then, the Democrats who controlled the production knew enough to try to appear to be holding a serious exercise in democracy, and in order to make it seem like one, they had to conduct one. So one after another, 33 farmers, store owners, foresters, educators, and unclassifiable citizens sat before the legislators for three minutes each and explained what they didn’t like about both budgets.

That’s an exercise in democracy. And all the speakers were serious. Whether their statements will make the least bit of difference is another matter. It isn’t just that both sides have established their battle lines and dug in behind them. It’s that the entire dispute is a blend of statecraft and stagecraft, politics and policy, bluffing and authenticity. Even the budget documents themselves may not be entirely on the up-and-up.

Amidst all the confusion, though, some apparent (if debatable)  reality has emerged, and most of it puts Douglas on the political defensive.

First, what this whole fight is about is Vermont’s public schools. The governor wants to force them to spend less. A lot less. And now, or at least as close to now as possible.

Second, the Democratic budget, passed by both houses, cuts taxes for most (though not all) Vermonters. Some Democrats don’t think this is good policy. But it has its political advantages. Thanks to the proposed income tax rate cuts, even people who buy tobacco and booze will probably see a small reduction in their total tax bills, unless they buy a lot of tobacco and booze.

Douglas’s proposal, not yet in bill form and short on detail, would not cut the taxes of the lowest-earning taxpayers at all, but would reduce the taxes of the wealthy, the one group that would pay more under the Democratic plan. The Governor thinks raising taxes on the wealthy would be bad for the state’s economy. He may be right. But there are many more middle-income people than wealthy people, so it’s a tough political argument.

This could explain why the Republicans at the hearing, Reps. Carolyn Branagan of Georgia and Richard Hube of South Londonderry, while they objected to some of the Democratic analysis, never endorsed the Douglas plan.

Third, and potentially most damaging of all, if Douglas can not convince the Legislature and some 240 local school boards to make deep cuts in school spending, the result would be substantial property tax hikes, especially on middle-income homeowners.

As explained at the hearing by Mark Perrault of the Legislature’s Joint Fiscal Office, “the total amount of property tax (in the two plans) is comparable, but there is a shift in who pays.”

Under the Douglas plan, Perrault said, the average household earning less than $75,000 a year would pay $19 less under Douglas’s plan next year, but “almost 14,000 households (with incomes between $75,000 and $96,000) would see a property tax increase of $605 in (Fiscal Year 2010).”

“Middle income people will be picking up the lion’s share,” said Sen. Robert Starr, a Democrat from Troy.

School financing is devilishly complex, and there are many causes of this likely shift of the tax burden. But far and away the biggest is Douglas’s insistence that the state’s annual contribution to the teachers retirement system — $100 million over two years, Perrault said – come out of the Education Fund instead of the General Fund.

That payment has always come from the General Fund, financed largely by broad-based income and sales taxes. The Education Fund gets much of its money from the statewide school property tax.

Sifting the burden to the Education Fund has been on the Governor’s agenda since January, and he appears to be committed to it. In fact, House Speaker Shap Smith said the main reason he and Senate President Pro Tem Peter Shumlin decided further budget negotiations with the Administration would be fruitless was Douglas’s doggedness on the issue, even after the Legislature agreed to move some of the teacher retirement burden to the Education Fund.

“I never wanted the budget to be a veto showdown,” Smith said.

Douglas insists that property tax increases could be avoided if only all the schools freeze their per-pupil costs for a year while the state works on a long-term plan for education cost control. But the Legislature, the school boards, and the teachers all insist that such deep cuts would seriously degrade the quality of the public schools, and so far, most indications are that the general public agrees. There were relatively few school budget defeats this year.

One of the speakers yesterday, Bernie O’Rourke, a school board member from Burlington, said he worried that if the retirement fund contribution were shifted to the Education Fund, “I’m concerned that our budgets would not be passed (by the votes) because of this extra burden.”

Which could be just what the Governor wants. If the Legislature and the school boards won’t force the schools to cut their spending, then perhaps the voters will. He didn’t get his “taxpayers revolt” this year; he seems to be trying to lay the groundwork for getting it in 2010.

Needless to say, hovering around the hearing room and the corridors of the Statehouse yesterday was the question of whether the House would override Douglas’s promised vote of the budget bill. (The Senate override seems a sure thing) The Governor was talking to individual Democratic lawmakers, hoping to convince just one or two of them to uphold his veto.

Smith said he knew abut the meetings and did not object.

“We’ll both make our best pitches and we’ll see what happens,” he said. “If his best pitch is a $605 property tax increase, I’m not worried.”

Smith needs just about every one of his 94 fellow Democrats and the five Progressives to win the override.

“We’re not cocky,” he said. “But I have a lot of faith in my team.”

There is more to the budget conflict than cost shifts or potential property tax increases. Budgets aren’t really based on numbers. They’re based on words. Some of those words are more…well, at least more meaningful than others. Maybe even more true (meaning others are more false) than others.

To be explored tomorrow.

Regular readers should be aware that it is the News Guy’s policy not to take sides in public policy disputes.

Taking sides is not the reporter’s job. Explaining is the job, also analyzing. That analysis may include critiquing, but the criticism should be applied impartially to all sides of the debate.

This site, then,  expresses no conclusion over whether  Gov. Jim Douglas or  the Legislature is wiser in their conflict over taxes and the budget (though it might hint now and then that neither side is all that wise), or whether the state should force the Vermont Yankee nuclear power plant to set aside money now to pay for its eventual disintegration, or whether the state should tamper with the market price of sun and wind power.

Even the most emotional, personal, confrontation of the year in Vermont over same sex marriage, was the subject of several posts which attempted to acknowledge the bona fides of  both sides and to ridicule neither. Or, perhaps more accurately, to ridicule either when warranted.

(A digression: In the interest of bi-ideological ridicule, the News Guy here subjects left-of-center Sen. Bernie Sanders to the same scorn he visited yesterday on Republican Douglas. In a statement released by his office yesterday, Sanders said, “In nominating Judge Sonia Sotomayor for the Supreme Court, I very much appreciate that President Obama is attempting to address…blah, blah, blah.”

No, Senator, Obama nominated Judge Sotomayor. You did not nominate anybody. But you said you nominated her, using the same kind of  dangling modifying clause Douglas used in his statement about Auditor Tom Salmon’s offer to mediate the budget dispute.

Pay attention class (this includes governors and senators). “Walking down the street, the man thought the flowers were beautiful,” is correct. “Walking down the street, the flowers were beautiful,” is not, because it says the flowers were walking down the street, which is unlikely. Public officials have a responsibility to the language. End of digression)

But sometimes a proposal comes along which is so inane, so out of synch with common sense, so absurd, that, in Linda Loman’s words, attention must be paid.

Especially when no one else seems willing to pay attention, even those who understand the foolishness of the proposal. Even more especially when the general public seems enthusiastic about it. Their enthusiasm helps explain why the politicians are reluctant to speak out. An explanation is not an excuse.

The proposal comes from the Governor. He made it last year, and brought it about. Now, in the budget “alternative” he outlined last week, he’s at it again. He wants another summer weekend “sales tax holiday,” when shoppers could buy anything that costs $2,000 or less without paying the six percent state sales tax.

This is, without doubt, one of the stupidest ideas in the entire history of humanity. Mind you, it is not one of the most destructive ideas in the history of humanity. Just to take a few examples, the  Crusades, Communism, and artificial turf were stupid ideas that caused substantially more harm (the last of those only to knees and aesthetic sensibilities). Still, for out-and-out pluperfect dumb, it’s right up (down?) there with the worst of them.

To be sure, it is not stupid for shoppers to take advantage of this weekend should it come about. If, for instance, a shopper wants to buy one of those fancy flat-screen television sets for $1,000, it makes perfect sense for her to buy it on that weekend and therefore not pay the $60 in sales tax. Good for her. She’s now saved sixty bucks.

But in almost every case, she’s only buying what she was going to buy anyway. She has saved some money, but the state’s economy has not gained a penny. Yeah, she’s got the 60 smakaroos to spend elsewhere. But then the state does not have the $60 to spend, and the state is one of the state’s biggest consumers.

Humbly, the News Guy consulted an economist, one who does not live in Vermont and so has no dog in this fight. His reply? “People will just spend on that Saturday or Sunday what they were going to spend on any Tuesday or Wednesday.”

Net gain to the economy? Zippo.

In fact, Vermont economist Tom Kavet, in a message to the Legislature’s Joint Fiscal Office, reported that, “there is no credible literature…that suggests such holidays result in anything but net revenue losses at the state level, and therefore produce no net stimulus to the economy.”

But wait a minute. Isn’t it possible that some people, inspired by the tax-free day, will buy something they were not going to buy anyway?

Yes, because some people are almost as dumb as the holiday idea. He who spends a thousand bucks on something he didn’t need or really want to save 60 bucks is he who is not hitting on all cylinders.

Well, let’s not be judgmental. It’s his business. If he wants to throw his money around, let him throw it.

But from the point of view of the state’s economy, it makes no difference. This careless shopper would then have a thousand dollars less to spend on other stuff. And he would spend it. People spend their disposable income. That thousand dollars was going to be spent on something, almost surely in Vermont. And most of that other spending would have been taxable, so the state would have more money to spend. Last year’s sales tax holiday cost the state $2 million, just what it saved the consumers, according to Kavet.

Again, net gain to the state’s economy: Bupkiss. In fact, according to Kavet, there was probably a net loss.

Let’s deal with the final objection. Wouldn’t the state gain if the sales tax holiday attracted a whole lot of non-Vermonters to come into the state and buy their flat-screen TVs, fancy sofas, or riding lawnmowers?

In theory, yes. In actuality, not hardly.

First of all, no one has even claimed that many out-of-staters took advantage of last year’s holiday. And from whence would they come? Not from New Hampshire, which has no general sales tax at all. Not from Quebec because the currency exchange (a Canadian dollar was worth about 89 cents yesterday) would cancel any savings even if it were legal to bring all that merchandise back into La Belle Provence, which it probably is not.

There’s Massachusetts and New York, but northwestern Massachusetts is sparsely populated, and so is eastern New York except for Plattsburgh and environs, and it makes little sense for a Plattsburgher to schlep to, say, Tafts Corners, to go shopping, even to save a few bucks. The round trip by land is 175 miles and takes almost four hours, according to Mapquest. Depending on the wait, taking the ferry might take less time, but for two adults the round trip is $24. Hardly worth it.

It isn’t that no one benefits from the sales tax holiday. Some shoppers do. And probably so do stores that sell expensive, taxable, merchandise. That’s because some of the money shoppers spend in them on the tax holiday would otherwise be spent in restaurants, or ski trails, or going to the movies, or buying (mostly tax-free) clothing.

So good for the stores. But not good for the state’s economy. In fact, bad for the state’s economy.

Altogether, the sales tax holiday is an idea whose time has never come and never will. But it’s popular. So here’s the question: Will any one of the many government officials who knows it’s a dumb idea have the gumption to say so?

Like maybe one of the Democrats thinking of running for governor? Let’s see if they have any gumption.