Budgets and Bluffs
Gov. Jim Douglas said the Legislature’s proposed budget is unacceptable because, among other things, it would lead to a $67 million deficit next year, and “a staggering shortfall of over $200 million over the next two years.”
He’s right.
He’s so right that the Democrats don’t argue with his figures, at least not for next year. They argue that a $67 million deficit isn’t that big a deal.
They might be right, too.
Not that it’s chump change, 67 million smackaroos. It sounds like a lot of money. But as Speaker Shap Smith said, much of the projected shortfall deals with Medicaid, the details of which are renegotiated with the Federal Government every year.
House Appropriations Committee Chair Martha Heath of Westford agreed. “we’ve often had gaps of comparable size ,” she said. “This (projected $67 million gap) is not that unusual.”
Besides, the Democrats say, Douglas’s budget alternative has problems of its own.
“He makes assumptions that ,if you believe them ,you’ll believe in the tooth fairy,” said Senate President Peter Shumlin of Putney, and at least one of Douglas’s assumptions does seems a little far-fetched.
He “cuts” $20 million in spending by having a ” goal…to make necessary reforms to find $20 million in annualized General Fund savings beginning in FY 2010.”
What reforms? Well, he includes “a partial list of structural reforms to be analyzed,” including some reorganization, “rethinking service delivery models,” consolidating some departments, and cutting office hours of state departments by relying more on the Internet than on personal service.
Ever heard the term “blue smoke and mirrors”? The above is a pretty god description.
On the other hand, it’s only $20 million. Budgetarily speaking, that is chump change. In a $4.5 billion plan for getting and spending over a one-year period, $20 million can be found (or lost) easily.
“Both budgets leave a hole,” Shumlin said, which is not only right, but an understatement. All government budgets leave holes, and so do most corporate, partnership, and even family budgets (if there are really families well organized enough to budget).
Those holes give both sides the opportunity to engage in honest criticism.
Uhhh, let’s rephrase that. The holes give both sides the opportunity to engage in accurate criticism. When Douglas says the Democrats risk a deficit next year, when the Democrats say Douglas’s budget is “balanced” only through gimmickry, they are both accurate. They are both irrelevant.
But it’s good political drama, which is what is going on right now. In fact, nothing else is going on right now. Douglas has the budget bill and is likely to veto it today. Tomorrow is the special session of the Legislature, when the veto either will or will not be overridden.
Don’t look for any predictions here.
But don’t rule out a deal, either. Yeah, both sides are talking tough. But that’s part of the drama. Douglas on one side, Smith and Shumlin on the other, they all know how to play the game: Wait for the other guy to blink first. The Governor said he would be reachable by phone all weekend. So, no doubt, was the Speaker, who only would have called if he knew he wouldn’t have the votes to override.
Even then, he probably wouldn’t call because as long as he doesn’t call, Douglas can’t be sure Smith doesn’t have enough votes.
Why, then, is a deal still possible?
Because it’s in everybody’s interest. Douglas couldn’t want to become the first Vermont governor to veto a budget bill and have it overridden. Not the kind of distinction for which a governor wants to be remembered for the long run. Not a boost for his clout in the short run, either.
But Smith couldn’t want to lose the override bill on the floor. And if the veto stands, everybody has to hang around Montpelier for the hours, days, or even weeks it will take to hammer out a compromise. The lawmakers want to go home. Most of them have day jobs at which they earn far more than they do while legislating, not to mention families and work to do around the house.
Maybe Smith knows that he’s got the votes. But as Terri Hallenbeck of the Burlington Free Press astutely observed the other day, Smith kept saying last week that he was confident he “will” have the votes to override the veto.
Meaning he didn’t have them yet?
So it’s face-off time, in which Douglas has one big advantage: He’s the governor, and you’re not. Neither are Smith, Shumlin, or any Democrat. Douglas is better known than any of the rest of them, and probably (though no one has lately taken a poll), held in higher regard statewide. One-on-one against any Democrat right now, he probably makes the shot (and maybe even draws a foul). In a political culture in which personality trumps policy, being the go-to guy helps.
Less helpful to him is that neither in the Legislature nor in the state at large does there seem to be much support for his insistence that public schools freeze per pupil spending next year, a step that would require steep budget cuts in many districts. Rep. Heath, a member of the Westford school board, said that in her district, which has cut its staff by 25 percent since 2001, a reduction of that size would result in “dismantling a quality education system.”
With little apparent support for cuts of that magnitude, it will be hard for the Governor to convince lawmakers to finance the teachers retirement system from the Education Fund, which relies largely on the statewide property tax. Absent those deep school budget cuts, property taxes would go way up.
Douglas’s other problem is that his supposed political trump card doesn’t trump much. The Governor himself has never said this, but some of his associates have suggested that Democrats should worry that if their budget goes through, they will be held responsible for the state’s economy.
To which the typical Democratic legislator might well say, “please don’t throw me in that there briar patch.” The Democratic budget would have almost exactly the same impact on Vermont’s economy as would Douglas’s budget alternative. That impact is roughly zero.
In 2007 (the most recent figures from the U.S. Commerce Department), Vermont had a gross state product of $21.245 billion. The Democrats want to impose some $13 million more in taxes than does Douglas. That’s well under one tenth of one percent of the state’s economy. They could double or triple that without leaving the tiniest footprint on the production and distribution of goods and services here. Besides, the bigger budget cuts the Governor wants would suppress economic activity by at least as much as the Democratic tax increases.
Meaning not by much.
Vermont will prosper, or not, along with the nation and the region. What the Legislature and the Governor do may make a big difference to a lot of people. The macro-economic impact will not be noticeable. There could be lots of good reasons for individual Democratic legislators to vote to uphold the veto. Worrying about being blamed for what happens to the state’s economy is not one of them.
Tags: The Budget
