The most important things that happened on Town Meeting Day were the things that did not happen.

Actually, not much happened. With the exception of that vote about how Burlington votes (tune in Monday for an examination of the Burlington brouhahas), the voters of Vermont last week endorsed: (1) The status quo; (2) the love of money (part of the status quo); and (3) their public schools, even if those schools cost some of that money they love.

So Mayor Mary Hooper of Montpelier presided over an administration that got bilked out of 400 grand. She gets re-elected anyway. So Coventry Town Clerk Cynthia Diaz has been charged with income tax evasion. Leave that to the feds, said the voters of Coventry, re-electing Diaz by a 3-1 margin.

Roughly the same margin by which voters in neighboring Lowell endorsed a wind power project in their town, either because they are committed to renewable energy or because the wind company will lower their tax bills, or both.

But peanuts compared with the almost 5-1 margin by which voters in Island Pond approved of selling the state airport in town to make way for a pellet plant that could provide more than 30 jobs. Both the Lowell and the Island pond votes are advisory, and do not officially decide either issue.

But the main thing that did not happen was a “taxpayers revolt” against school spending. Au contraire, as they say just north of here, despite the Great Recession, despite objections from no less than Gov. Jim Douglas that the current school financing system was “broken” and “twisted,” despite the tax commissioner’s official advice to raise the property tax rate and warnings that more tax hikes are in store, the voters overwhelmingly supported the school budgets.

According to the Wednesday afternoon count by the Vermont Superintendents Association, 228 budgets were approved as submitted, four passed after reductions from the town meeting floor, three were  postponed, and only 14 were defeated.

It was the smallest number of rejections since 2004.

Furthermore, most of the approvals were by large margins, while several of the rejections were by razor-thin majorities.

Always beware of over-interpretation. The results do not mean that voters are indifferent to their tax bills, or to the cost of public education. One reason the budgets were approved was that they didn’t go up much, if at all. Though final figures are not in, Brad James, the Education Finance Manager for the Education Department said that, “as of 23-Feb, we had received 261 proposed budgets out of roughly 280.” Based on those districts, James said, “overall budget increase for the State was up (one half of one percent).”

Furthermore, said James (via email), “education spending, which is the lion’s share of the Education Fund and is the figure that drives tax rates for individual districts, is down (by one tenth of one percent).”

In other words, all those warnings from Douglas, Education Commissioner Armando Vilaseca, and others had an impact. So did the Recession. As a result, said John Nelson of the State School Boards Association, local boards made a major effort “to keep budgets in line.”

Board members knew that “people in their communities weren’t getting raises and were being laid off,” Nelson said, so understood that spending would have to be restrained “ if they were going to get support for budgets.”

But also beware under-interpretation. The budget votes prove that the current school finance system is not “broken.” It is not perfect. But no school finance system is, not in any state. Vermont’s present system – Act 60 of 1997 as amended by Act 68 in 2003 – works. The schools function. They are, according to the (possibly flawed) standards by which Americans judge their schools, rather good.

They are also rather expensive. But obviously they are not too expensive. According to whom? According to the people who pay for them. If those people thought the schools were too expensive, many more budgets would have been rejected.

In a sense, the effectiveness of the criticism from Douglas et al only prove that the system works. Those criticisms are part of the system. The complaints of politicians (including their hyperbole) are part of any school finance system. Rhetoric, however overblown, neither can nor should be eliminated from any public policy process.

Less certain, but potentially more significant is the possibility that this year’s hold-the-line school budgets signal the start of a long-term spending moderation resulting from declining enrollment.

For years, one theme of the school spending critics has been that costs kept going up, and the number of teachers and teachers aides kept rising, even as the number of pupils fell by more than 10 percent in the last decade or so.

On the surface, not an unreasonable objection. Below the surface, matters get more complicated. A kindergarten-through-sixth grade school with 100 students, evenly distributed among its seven grades, has about 14 kids per class. If a few years later it has only 90 students, still evenly distributed, it can’t get rid of a teacher by combining classes unless educators (and parents) are willing to accept 24-pupil classes, which most educators consider much too big, especially in the lower grades.

So cutting staff in response to falling enrollment – without sacrificing quality – takes time. As Jeff Francis of the Superintendent’s Association said, “you don’t ever decrease capacity at the same rate that you increase it.”

But as enrollment continues to decline, more schools may be seeing an opportunity to reduce staff. There has been a small decline in the number of teachers over the last few years. A few very small schools have closed their doors entirely. There is more talk, encouraged by Commissioner Vilaseca,  of consolidation of schools, districts, and supervisory unions, highlighted on Town Meeting Day by the decision to merge four Addison County districts into one.

All small steps, and perhaps reversible. Brad James at the Education Department said he thought the poor economy “moved ahead the time when some boards planned on reducing staff due to declining enrollments,” while acknowledging that this was “merely a supposition.”

But John Nelson of the School Boards Association said he thought the falling school population was “beginning to kick in,” and that this year’s budget “reflected that there is a response from the school boards.”

Even the teachers union – the Vermont-NEA – acknowledged that there might be fewer teachers in the state’s schools a few years from now. Darren Allen, the union’s spokesman, said that while obviously the NEA did not want to lose members, “if there aren’t the kids to teach, then there aren’t the kids to teach.”

It would take at least another year or two of little or no school spending increases to determine whether this year’s moderation was a fluke,\ or the start of a long-term trend. But if it is not a fluke, it is a political tectonic plate shift. Public schools are the state’s biggest expense. The steady increase in school spending has been a contentious issue both in the Legislature and for local school boards. If that increase really abates as long as school enrollment drops (which won’t be forever), pressure on officials and policy-makers would substantially ease.

Not that schools won’t continue to be a political issue. They will still spend a lot of money. Some of the cuts the boards have made arguably lower the quality of education, so when the economy improves, educators may well seek more funds, perhaps arousing opposition. And some Vermonters don’t like Act 60 because it does what it was designed to do – make school taxes and (to a lesser extent) school spending, more equitable among richer and poorer districts.

For at least another year, though, the politicians who try to argue that Vermont’s public education sky is falling don’t have much of an argument. This week, the sky stayed right up there where it belongs.

The Greek slave Pedagogue

Grammar Note: On Vermont Public Radio Friday, Sen. Phil Scott, a Republican from Montpelier and an aspirant to the lieutenant governorship, described something as “a phenomena.”

Scott was thereby guilty of what might be called the criterion phenomenon, the inexplicable compulsion to call a single phenomenon or criterion two of them.

But let us not confine our pedagogic purity to the politicians. To the contrary, we will also meticulously monitor members of the media (as we assiduously arrange the alliteration). A few hours earlier, VPR’s Mitch Wertlieb, helping the quarterly and loathsome fundraising drive had imagined “$5,000 laying on the ground.”

Possible, had the $5,000 undergone metamorphosis into human form and commenced placing objects upon the earth. Or alternatively, transformed itself into two human beings, and….oh, no. This is a family web site.

More likely the five grand was (at least in the Wertliebian imagination) lying on the ground.

If it’s any comfort to either man, on the radio the next day, Steven Chu, the secretary of Energy and, more pertinently in this case, a Nobel prize winner, talked of a competition “between (his younger brother) and I.”

This is the “between I” problem, the origin of which could be similar to that of the criterion phenomenon For decades, teachers scolded kids who said “Johnny and me are going to town,” or some variant thereof, convincing millions that it is always correct to say “(whoever) and I” even when “me” is right and “I” is wrong.

(Anyone who at this point actually said to him/her self, “no, ‘I am wrong,’” should be thoroughly ashamed, if not summarily executed.)

Political Note: Back in October, the News Guy, putting on his political prognosticator hat, suggested that State Sen. Doug Racine of Richmond had emerged, however tentatively, as the front-runner among the five Democrats running for their party’s nomination for governor.

Very tentatively indeed, as it turns out. Looking at the field today, it looks as though Senate President Peter Shumlin of Putney has become the first among equals.

Considering that the primary is at least 28 weeks away (the date may yet be changed), that no one seems to have taken an actual poll, and that most people who will vote in the primary are so far paying scant attention to the campaign, Shumlin’s hold on this position is just as tentative as Racine’s was.

Besides, in a way it was no fair. Shumlin had outside help. From the Vermont Yankee nuclear power plant.

It’s not likely that Vermont Yankee or its owner, the Entergy company of Louisiana, planned things that that way. Shumlin has been one of the plant’s persistent critics, meaning the best thing it could do for him was to do just about everything wrong, calling attention to the plant’s possible safety problems and its management’s competence and dependability, or lack thereof.

Precisely what it has done in the last several weeks, almost as if the Shumlin campaign had been secretly orchestrating Entergy’s actions, or (for those who believe in such) put a hex on the company.

But Shumlin didn’t just sit there as this gift was proffered to him. He knew what to do with it. No smug I-told-you-so wise cracks. No (apparent) gloating. He’s been calm, forceful, consistent in the way he’s handled himself behind the various podiums from which he’s addressed the issue.

Of course all the candidates have been standing behind podiums. But thanks to the Vermont Yankee tritium leaks and misstatements, there have been lots of television cameras and reporters in front of those podiums while Shumlin spoke. It’s been hard for the other Democrats to get much ink or air time of late.

Speaking of which, has anybody noticed that Lt.Gov. Brian Dubie, who faces no primary for the Republican nomination, has gotten a bit of air time because Gov. Jim Douglas keeps inviting him to every podium to face the cameras even though there is no point at all to Dubie’s presence?

Well, not counting to have him face the cameras.

Since Dubie has said nothing newsworthy, he hasn’t gotten much attention. Still, he’s been pictured up there next to the other officials who actually have power to make policy decisions.

Not Dubie’s fault. The lieutenant governor just doesn’t have much in the way of power to make policy decisions.

Tax Note: Well, on the very morning of the News Guy’s last post (scroll down), the one pointing out that there was no actual evidence that Vermont’s relatively progressive income tax structure has produced a measurable exodus of wealthy folks, the Burlington Free Press’s lead story in the local section bore the headline “Tax Migration Feared.”

What? Had somebody come up with actual evidence that your humble agent had somehow missed?

In a word, no. A tax accountant said some of his clients had asked him about the tax benefits of moving elsewhere. This is actual evidence of nothing. The closest thing to evidence that the Senate Economic Development Committee heard at a Burlington session was the claim of real estate developer Ernie Pomerleau that he has no plans to move out, but knows three dozen people who have.

A nice, round figure, three dozen. Nobody seems to have asked Pomerleau for their names. But let’s stipulate that Pomerleau is an honorable fellow and has actually talked to 36 wealthy Vermonters thinking about blowing the pop stand because of last year’s repeal of the state tax preference on capital gains.

But just where will they go? Only eighteen other states (according to the Legislature’s Joint Fiscal Office) offer tax breaks on capital gains, and most of them apply only to some gains. The only states that had the kind of broad preference Vermont just repealed are Arkansas, North Dakota, South Carolina, and Wisconsin.

Somehow, a mass exodus of wealthy Vermonters to North Dakota does not seem likely.

.

As everybody knows, Vermont has a bad business climate.

Everybody knows it because everybody’s been told it early and often. Politicians, led by none other than Gov. Jim Douglas, regularly bemoan the hostility visited upon businesspersons and entrepreneurs. The business leaders themselves rarely miss a chance to proclaim that were only Vermont’s regulations weaker and its taxes lower, especially on the wealthy (meaning, often, them) they would employ far more workers. Even more rarely do most newspapers and TV stations fail to report those contentions, or to cite “studies” asserting that Vermont’s economy is stifled – if not strangled – by state policies.

It’s almost unanimous.

Oh, except for the actual data.

They (the data) say Vermont is one of the more affluent states, with an economy that grows (and, these days, shrinks) roughly in concert with the rest of the country and/or the region. They say that the state’s economy has its problems, but so do all the others states, and raise the question of why, if Vermont’s business climate is so bad, business in Vermont (until the Recession) isn’t.

Now comes a new report indicating that the business climate couldn’t be that bad because (again until the Recession) Vermont’s economy was quite healthy, another way of saying that business was good.

Better, according to several measurements, than in most other states, including those where taxes are lower and regulations looser.

For instance, according to the report, The Vermont Job Gap Study, Phase 10, Part 1, from 1998 to 2007 Vermont’s rate of job growth was the highest in New England, the 17^th highest in the country, and higher than five of the nine states which have no personal income tax, including neighboring New Hampshire.

During those same years, the study shows, the per capita Gross State Product, grew (in inflation adjusted terms) faster in Vermont than in 45 other states.

“If Vermont was ‘anti-business,’” the report said, “we would not see this result.”

Not that everything is economic peaches-and-cream here, the study acknowledges. Vermont lost manufacturing jobs during those years. But so did 43 other states, 35 of them at a faster rate.

For at least two reasons, this study should be viewed with some skepticism. The first reason is that all studies should be so viewed, in accordance with The General Law of Studies: Every study reaches the conclusion its studier wished to conclude before he/she obtained his/her first datum.

The second reason has to do with its pedigree. The study was written by Doug Hoffer, the Burlington-based policy analyst whose politics are decidedly left of center, on behalf of the Peace and Justice Center, whose politics might be to the left of Hoffer.

In addition, Hoffer used economic statistics from something known as the National Establishment Time Series, not from the standard U.S. Government sources, the Census Bureau or the Bureau of Labor Statistics.

But it isn’t as though the NETS is some kind of Marxist cabal. It’s associated with the Dun & Bradstreet financial services empire, putting it smack dab in the Wall Street mainstream. Firms that subscribe to it base some of their business decisions on its information.

Hoffer said the NETS statistics are better for assessing a state’s economy. Their samples are much larger, he said. In addition, BLS employment figurers are based on payroll surveys, which omit many single practitioners, who are quite common in Vermont.

(For instance, the News Guy probably would not be considered an employed person by the BLS, but might be by NETS. Which appraisal is more accurate will be left to others).

There is no indication that Hoffer cherry-picked either his numbers or the dates he used to make Vermont look better. Not much happened in Vermont between 1998 and 2007 that did not happen in the rest of the country. And his findings are consistent with those of other studies, including (see below) some undertaken by those on the other side of the political spectrum.

So the data – the actual, empirically testable evidence – leads to the conclusion that a business can thrive and prosper in Vermont about as well as in most other states. This is not to say that there are no problems facing businesses in the state, some of them worse here than elsewhere. For many firms, Vermont is far from raw materials and big markets. Some companies have trouble finding enough qualified workers. The state is small, rural, and atypical, all in an economic climate that confers advantages on metropolitan areas, dense population centers, and standardization.

But what about the argument from politicians and some business leaders that Vermont does have a poor business climate? It has to be based on something.

It is. But it is not based on data. Take a look at the presentations made last year to the Blue Ribbon Tax Structure Commission by the Lake Champlain Regional Chamber of Commerce and the Greater Burlington Industrial Corporation.

They are not insubstantial. They are full of facts, suggestions, anecdotes, proposals, and assessments, some of which are undeniably correct and some of which are debatable. But they make no statistical case that Vermont’s economy is weaker than any other state’s.

Then there are several business-sponsored studies reporting that many business executives in the state (and a few outside it) find Vermont “unfriendly” to business. But with one exception, these are not based on data either, but on the impressions of the business executives surveyed.

Some of their specific complaints are no doubt legitimate. But any survey of business people, or lawyers, or teachers, or (let’s not omit) journalists is going to elicit complaints, because (a) ours is a culture of victimization whose real motto is “woe is me and mine;” (b) under the “squeaky wheel gets the grease” rule, they’d be fools not to complain.

Besides, some of these surveys are weird. Take the one by the very conservative American Legislative Exchange Council which put Vermont next-to-last for pro-business policies between 1997 and 2007 (similar to Hoffer’s time period). But in those years, the study had to concede, personal income per capita grew by 61.2 percent in Vermont, the seventh highest in the country.

Most residents of most states would love to have such a poor business climate.

In fairness, many Vermont business leaders do not complain about state policy. Among the business organizations here is the liberal Vermont Businesses for Social Responsibility. Not every business leader always agrees with the lobbyists from the Chamber, the Business Roundtable, and the GBIC. Nor do those organizations contend that the state’s business climate is all that terrible.

“This can become a sort of self-fulfilling prophecy,” said Tom Torti, head of the Lake Champlain Regional Chamber. “You play with fire when you say things are always bad.”

And Seth Bowden, the Director of Business Development for the GBIC, said his organization is “not trying to make a case that we have a bad business environment. Every state has got its pluses and minuses.” Bowden even said Vermont may have been wise in “trying to control growth in particular ways,” though he added that “sometimes that doesn’t work out for some of the businesses.”

It isn’t that neither man had complaints about the state’s economic policy. Not surprisingly, those complaints had to do with taxes, and here the business community is not entirely without statistical evidence. Though even the Tax Foundation has given up arguing that Vermonters shoulder the highest state and local tax burden in the country, there is no doubt that taxes here are higher and more progressive than in most other states.

There is substantial doubt, though, that the current tax structure is bad for business, especially when there is so much evidence that business isn’t bad, or wasn’t before the Recession, and is still not as bad as in many other states.

The tax angle, however, deserves a separate discussion. Tune in Friday.

BAGS

To illustrate how difficult it is likely to be to reduce the cost of public education in Vermont without also reducing the quality of same, please allow a local example or two.

These postings come to you from Barton, up in the Northeast Kingdom, where 153 children attend the Barton Academy and Grade School, not surprisingly referred to as BAGS by some, a standard kindergarten-through-eighth grade school.

For years, the school employed a professional, highly regarded school librarian, and the pupils had regular access to the library, where they could look up information, browse the shelves, get help selecting a book.

At the end of the last school year, she retired. To save money, the school decided not to replace her, at least for this year. Instead, the head of the computer room would do double duty at the library. By all accounts, she’s doing a great job. She’s capable, energetic, dedicated.

But she’s not a librarian. And because she has other duties, the pupils don’t have quite as much access to or guidance in the library as they did last year, and for many years before.

The decision not to replace the librarian was reasonable. That’s one less FTE (full-time equivalent) employee whose salary and benefits have to be financed by the taxpayers. In a tight economy, with school officials reluctant (as they should be) to raise taxes, leaving that position vacant is, at least debatably, the right choice.

But here is what is not debatable: A school with a fully functioning library presided over by a professional librarian is better than a school without them. It isn’t that BAGS isn’t a good school. Principal George Vanna said the library is “not boarded up” and is open almost as much as it was last year. The younger pupils still get their story hours. But Vanna also acknowledged that he’d rather have a librarian, even if only a part-timer. Maybe next year, he said.

In other words, saving money reduced educational quality. Perhaps not by much. Perhaps saving the money justified the reduction. But reduction it was.

As it almost was up the road at Lake Region High School, where the board decided to save money by cutting both the music program and the Spanish language program from full-time to half-time.

Again, a decision quite reasonable under the circumstances. But – again – a school with full-time music and Spanish instruction is better than a school with half-time music and Spanish instruction. Better enough to be worth the $68,000 needed to keep both programs fully functioning? Who knows? Either way, Lake Region would be a slightly worse school after the cuts (which were partially rescinded earlier this week after a public outcry; the board will try to keep both programs full-time).

The point here is not to express opposition to any of these cutbacks. In fact, it’s hard to see how anyone who served on a school board wouldn’t at least seriously consider approving those cost-saving steps. Whether those programs were worth the money is a legitimate question. But there is no question at all that they were worth something. So eliminating, reducing, or diluting them eliminates, reduces, or dilutes…something, a something which has value.

A lesson worth remembering as Vermont thinks about holding down school spending. In addition to Gov. Jim Douglas’s renewed call to “freeze” school budgets (not much more likely to be heeded than last year), Education Commissioner Armando Vilaseca is campaigning to reduce the number of supervisory unions and school districts, and even lots of Democrats speak openly about urging schools to consolidate. In Montpelier, at least, the established point of view seems to be that, in the current Washington health care jargon, something has to be done to “bend the curve” on school spending.

Making it all the more important to be wary of the commonly-heard claim by partisans on all sides that it is possible to cut costs without cutting quality. In theory, it may be. In practice, as the above examples demonstrate, it’s somewhere between hard and impossible.

Besides, some of the cost-cutting steps might not cut costs all that much. Vilaseca recently wrote of his supervisory union consolidation plan that, “my staff and I estimate this would save the state several million dollars a year.”

Kind of vague. Asked for elaboration, Education Department spokesperson Jill Remick supplied a Department study indicating that consolidation in Essex could save more than $600,000, or almost 25 percent, in personnel costs.

To put all this in some perspective, former Rutland Northeast Supervisory Union Superintendent Bill Mathis, who is skeptical about most of the cost-cutting proposals, pointed out (and Education Department statistics confirmed) that only 2.4 percent of the roughly $1.3 billion Vermont spends on public education (not including federal aid) goes to these central administration expenses.

“Let’s say we combined and saved one third of the money,” he said. “That’s less than one percent.”

Not a compelling case against consolidation. Less than one percent of $1.3 billion can be several million bucks. But Mathis’s larger point has merit. Almost everyone agrees that the big driver of school costs is the number of paid employees in and around the classroom, not the central offices. For several reasons (which will be examined in subsequent posts) Vermont has a lot them – teachers, teaching aides, counselors, librarians, technologists. The quickest way – if not the only way – to “bend the curve” of school spending is to have fewer of these educators.

Raising the threat of worse schools. A little-mentioned factor in this discussion is the real question of whether that “established point of view” in Montpelier is all that established among the electorate. Last year there was no “taxpayers revolt” against school spending at town and school meetings, as relatively few school budgets were rejected. With the lingering recession, it would be no surprise if more were defeated this year even though, in response to falling enrollments, schools around the state are cutting back.

Nobody likes high property taxes, but those were not a bunch of raging liberals who pressured the Lake Region School Board (raging liberals are not plentiful in this precinct) to put back the money for Spanish and music classes. A few made clear that if it took higher taxes to preserve today’s level of educational quality, then taxes should be higher.

Quite possible a minority outlook. But nobody’s really taken a poll on the matter, and there was the comment not long ago by one man whose politics are relatively centrist and who has no children in the public schools. When someone pointed out that Vermont spends a lot of money on education, he asked, “where else should we spend a lot of money?”,

Forenote: There will be an extra News Guy posting tomorrow, Thursday (as well as the usual Friday posting), along with an announcement about some new developments at the web site which we trust will be received favorably.

Actually, it might be more accurate to consider today’s post the “extra” one. Tomorrow’s will have more news; what follows is a bit of musing on Vermont and consistency.

Back in the day, Sen. Russell Long, the Louisiana Democrat who chaired the Senate Finance Committee for a century or so, used to sum up the average person’s attitude toward taxation as follows: “Don’t tax you, don’t tax me, tax that fellow behind the tree.”

Bad poetry, but good political analysis.

As Vermonters are now learning (and proving), the same phenomenon applies to spending. From Gov. Jim Douglas on down, the attitude of the body politic is: “Cut the other guy to the bone, but leave my favorite program alone.”

Poetry no better. Perspicacity identical.

Exhibit A comes right from the top. For years, Vermont farmers and woodland owners have gotten a tax break thanks to the “current use” tax assessment. Nobody opposes this policy in principle; it’s kept thousands of acres open and green by removing an incentive for landowners to sell to developers.

But it’s also expensive.

According to whom?

According to the Douglas Administration, whose tax commissioner, Richard Westman, just a few weeks ago identified the Current Use policy as one reason everybody else’s property taxes keep rising.

As it happens, over the last year or so, the various “stakeholders” of Current Use – farmers, foresters, environmentalists, local officials – have been meeting to try to figure out a way to get a little more money for the state treasury without seriously diminishing the advantage to landowners.

And they succeeded. Or at least most of them thought they did, and they presented the Legislature with a plan that would bring in another $1.6 million in revenue.

Oh, no, said the Douglas Administration, represented in this case by Agency of Natural Resources Secretary Jonathan Wood. Yeah, we need money. We’re $150 million in the hole. But we don’t want money from these landowners because…well, because it’s a good program, Wood said.

Yeah, but they’re all good programs. Maybe what he really meant was—These are our friends.

Then there was the Governor’s major power play to get a special Legislative Board to approve spending several more million dollars for one of his pet programs even as he insists on cutting almost everything else. This was the cap-raising of the Vermont Economic Growth Incentive . (See VEGI Burgher,” the January 13 post)

Assume for the sake of discussion that this, too, is a valuable program. But it never seemed to have occurred to Douglas to apply the same standards to it that he wants imposed on other agencies—spend less than you have in your budget this year because we all have to tighten our belts.

Do not suppose, though, that this “cut everybody but me” attitude is limited to Douglas and his fellow Republicans. At a Democratic fund-raiser a couple of weeks ago, former Gov. Howard Dean scolded lawmakers who might be willing to consider reducing the budget of the Vermont Housing and Conservation Board.

“We need that program,” Dean said. “It is the perfect public-private partnership.”

It may be, and like Current Use, it has been useful as a conservation mechanism. But it couldn’t survive a year or two with a little less money?

The liberals are somewhat less inconsistent than the conservatives here, because some of them openly call for some targeted and temporary tax increases to help the state over its $150 million budget shortfall. But everybody agrees that programs will have to be cut.

Just not their favorites.

OK, some folks are willing to take less. State workers took a three percent pay cut. Yes, they did it under pressure and to avoid more layoffs, so it wasn’t just an act of noble sacrifice. But it was a sacrifice, as was the five percent pay cut taken by their bosses, the “exempt” state workers who earn more than $60,000 a year. The Stowe teachers agreed to give up the 5.5 percent pay hike they had negotiated for this year.

But these seem to be the exceptions. The default position for Vermont advocates left and right remains a firm and forthright conviction to cut spending. On everybody else’s programs.

Aftnote: Because the News Guy rarely misses an opportunity to ridicule or insult the Burlington Free Press when it deserves ridicule or insult, it’s only fair that the paper’s triumphs be recognized. Last Sunday alone it had three pieces of first-rate journalism: Sam Hemingway’s lead story about tritium contamination at nuclear plants nationwide, Nancy Remsen’s story about the potential impacts of state budget cuts, Candace Page’s fascinating account of niche marketing agriculture in Vermont.

Does Vermont coddle the Middle Class?

Gov. Jim Douglas thinks so, and he may have a point.

No, the governor didn’t use those words. But take a look at his budget message of last Tuesday and some of his other recent proposals.

“Maintaining coverage for the greatest number of people will mean scaling back benefits for some,” he said in his speech to the Legislature.

At that point, he was talking about health benefits. But the same theme echoed throughout the speech: In order to protect the services and subsidies that go to the poor, Vermont would have to cut back on those services and subsidies for the not-so-poor.

And while some of those not-so-poor are very low income, many are not. In both tax and social policy, Vermont provides benefits to thousands of people whose earnings are close to – or higher than –the middle of the income spectrum.

For instance, a family of four can get health care assistance in Vermont if its total income is under $68,400. That’s way above the poverty line for a family of four ($21,834 in 2008). It’s even higher than the median household income in the state (about $66,000) before the Recession started.

Then again, it’s less than the median income in Vermont for a family of four. That’s was $71,382 a couple of years ago, one of the highest in the country. Still, by any reasonable definition, a family of four living on $68,000 a year is neither poor nor low income. It’s right there in the middle.

Meaning, at least according to conventional assumptions, it ought to be able to support itself. After all, this is America, the richest country in the world and the one that created mass affluence. Shouldn’t moderately affluent people pay their own bills?

Nor is health care the only example. A large family – two parents and six children – can get state help winterizing its home if its income is higher than $74,000. In all, Douglass said, “nearly one-third of our population receives services from the State… Since the beginning of the decade, overall spending for human services has more than doubled – a growth rate of three-and-a-half times inflation.”

Conventional assumptions, to be sure, ought to be challenged from time to time. As it happens, most Americans no longer live better than their counterparts in many other countries, partly because those counterparts don’t have to pay separately for health care at all. And in this country, health care has gotten so expensive that it could pose a heavy burden even on the moderately affluent.

Still, the case made by Douglas and other economic conservatives is not frivolous. If nothing else, they are asking a legitimate question: In a culture that values (or at least claims to) self-reliance, where should the line be drawn between personal and social responsibility?

Despite the claims of some of his liberal critics, Douglas remains a moderate, not one of those ultra-conservative Republicans who believe – as Newt Gingrich proclaimed in 1995 as he prepared to become Speaker of the U.S. House of Representatives – that government ought to do little more than defend the country and print money. Douglas proposed expanding several state programs in his speech, and did not call for abolishing any.

But he does want to save money, mostly by cutting services to middle-income and even some affluent people and by raising their taxes.

Again, he didn’t put it precisely that way. No sane politician is going to say, “I want to raise the taxes of middle-income and upper-middle-income homeowners.”

But that would be the result of Douglas’s plan to alter the “income sensitivity” provisions of the statewide school property tax. Instead of all households with income under $90,000 protected from paying more than 1.8 percent of their incomes on that tax, those earning between $60,000 and $75,000 could pay as much as 2.25 percent; for households between $75,00 and $90,000, the limit would rise to 3.5 percent.

Of course that might not be a tax increase if local school districts froze their budgets, as Douglas proposed. But they don’t seem likely to follow his advice. Either way, families who earn $90,000 a year, even big families, are in the top 20 percent of all earners. By any definition they are affluent. Why do their property taxes need to be subsidized?

Democrats claim that income sensitivity is not a subsidy, but a method of linking taxes to each taxpayer’s “ability to pay.” It may be that, but it is also a subsidy; whatever the homeowner saves on property taxes because of income sensitivity is made up for by funds from other taxes, mostly the income tax.

And that tax, in turn, is disproportionately paid by upper-income earners. When economic conservatives, including Douglas, complain that Vermont is a high-tax state, what they really object to is that it’s a high-tax state for high earners. Lower and middle-income Vermonters – even those up near the $90,000 range – pay little if any more in state and local taxes than do their counterparts in many other states, especially in the Northeast. But because the state tax structure is relatively progressive, the wealthy pay a bit more. Among other things, they are subsidizing, through income sensitivity, the affluent as well as the poor.

Unless income sensitivity is altered, then, there might be renewed pressure to raise taxes on the very wealthy to help make up for what the merely affluent don’t pay in property taxes. Douglas adamantly opposes any such tax increase. In fact, he wants last year’s small hike in taxes on the wealthy rolled back.

This debate, then, is, among others things, a class conflict. Not the traditional version in which the workers with their pitchforks storm the banks. Not even the more recent brand in which the bankers with their lobbyists and their pseudo-think tanks storm the government and the media.

This class conflict is more nuanced, more interesting, and perhaps necessary. It’s all about precisely who qualifies as “middle class,” who in that middle class deserves tax breaks and government services, and who will pay for them. A healthy debate as long as it does not degenerate into a situation in which everybody is trying to protect his/her own government benefits and tax breaks at the expense of everyone else.

It would be irresponsible to leave this discussion without noting that some of Douglas’s proposed budget cuts would hurt the very poor. For instance, he noted that Vermont’s Medicaid system allows an “unlimited number of emergency room visits” by recipients. “Capping ER visits that do not result in hospitalization at 12 per year will bring Vermont more in line with peer states – saving money to preserve this benefit for everyone in the system,” he said.

No doubt it would. Not only that, but it’s a good bet that some of those emergency room visits, being unlimited and free, aren’t really necessary. But those unlimited visits also probably help explain why Vermont is regularly designated the healthiest state in the union. The most obvious consequence of reducing health care services for the poor is that the poor will become less healthy.

Gov. Douglas. Speaker Smith half hidden behind his right shoulder

And the lawmakers returnedeth to Montpelier, where layeth down the lion with the lamb. Nor did the Democrats unsheathe their rhetoric against the Republican governor, who in turn utterethed not the words, “irresponsible spending.” But stoodeth they side by side, as brethren that dwelt together in unity.

All right, all right! Enough of that! Let’s heed the advice of veteran Democratic Rep. Michael Obuchowski: “Don’t be too cynical.” What began in Montpelier yesterday was both sincere and bipartisan. Democrats and Republicans from both houses, legislative leaders and Gov. Jim Douglas’s top aides (not to mention Douglas himself), who….

Oh, you mean the same guys who just several months ago stopped barely short of questioning each other’s parental legitimacy? The same guys who still hold diametrically opposing views on how the state should be governed? We’re supposed to believe this era of good feeling will last?

…are really trying something new, an innovative approach . This time, state officials are not acting on their own. The Legislature is spending $200,000 for the services of Public Strategies Group, a Minnesota-based consulting firm which is….

Waitaminit, Waitaminit! We’re supposed to take seriously a firm that could write the sentence, “To achieve this client centric approach, the State will seek to redesign the delivery system through the more effective and efficient alignment of financial and staff resources across public sector programming, such as economic benefits, social services, health and human service programs”? It’ll cost us more to translate that into English than we’ll save by following their recommendations.

…providing advice on how to “do more with less,” as several legislators said, for instance…

More with less? Don’t be ridiculous. When the inputs are smaller, so are the outputs. Any time a politician brags about a “win-win” solution, somebody loses.

…having a “unified and systematized…human service intake” system, so that Vermonters who needed social services could enter the system through “one doorway,” rather than having to visit several different agency offices. Similarly, according to the Public Strategies Group report, “streamlining” the process of granting permits to developers could “increase compliance with state regulations while spending 3% less in (Fiscal Years 2011 and 2012).”

Not those old saws again. This “one-stop shopping” plan for both social services and development permitting has been around forever. Furthermore, almost nobody is against it. Douglas and the Legislature could have put all that into effect years ago without the advice of some clowns from Minneapolis.

The consultants came up with some other ideas. For instance, they suggested the state could save money if it would “empower families to support aging Vermonters and individuals with disabilities. Vermont is spending almost $69 million from its General Fund for these services, and “aging demographics and reduced public resources may be requiring Vermont to reconsider its expectations about whom it can afford to serve.”

In English, that means don’t do as much for some doddering old geezers and disabled folks of all ages. That’s doing less with less. They admit it.

If there is a central guiding principle behind the Public Strategies Group’s recommendations it is that the state should not pay for services as much as it should pay for the results of those services. In effect, the PSG’s report says, Vermont and other states use something comparable to the health care system’s widely criticized “fee for service” method, “paying providers ‘hit by hit’ rather than…paying for outcomes.”

Instead of paying for the work being done, the consultants said, the state should pay for the results obtained/

As an example, PSG’s Babak Armajani told members of the Joint Legislative Government Accountability Committee, instead of paying for “a night of bed-space” for a caretaker to tend a sick child all night, the state could “actually purchase the (desired) outcome,” of a healthy child.

Excuse me! In this case the desired outcome is what the state is paying for. The service itself – a sick child not alone in the night but watched over by a health care professional – is the desired outcome. That’s often true with sick children or physically and/or mentally disabled people of any age. They have to be taken care of. The taking care of them is the outcome. It’s expensive.

(Armajani later acknowledged that he might have chosen the wrong example. Instead, he said, think of a social service agency hired by the state to deal with troubled children. Instead of paying it according to how many nights a child stays in its facility, pay it for quickly placing an abandoned child in a good home).

The Joint Committee adopted the 42-page report from the consultants and the committee’s own five-person “steering team” of three legislators and two Douglas Administration officials. The report envisions possibly saving $38 million in Fiscal Year 2011, which begins July 1, without major cuts in state services.

Yeah. That’s a lousy 38 million bucks of a projected $150 million budget shortfall. Let’s see. If this pocket calculator is correct, that still leaves $112 million of money to be raised or programs to be reduced or eliminated.

Meaning that the big-wigs are still facing the choice of raising somebody’s taxes or cutting services to people who really need them. Not that it would actually come down to ‘crippled children left out in the cold.’ But it might be close.

And how about considering the possibility that this report and this display of harmony is a way of: (a)diverting attention from the real choices (and possibly the real disputes) confronting them; and (b) laying the groundwork for making the case that they tried as hard as they could to avoid having to consider raising taxes or slashing services. The possibility, in other words, that all this was less bipartisan harmony than bipartisan political theater.

Afterwards, Douglas and House Speaker Shap Smith and Senate President (and candidate for governor) Peter Shumlin, the Democratic leaders who orchestrated last year’s first-ever legislative over-ride of a governor’s budget bill veto, stood together and pledged to work together to solve the state’s budget problem without last year’s rancor.

When Shumlin said, “Do not doubt our resolve. We will get this done,” he said it forcefully enough to raise doubts in even the harshest cynic.

Okay, Okay. Maybe they mean it. And this consultant stuff doesn’t hurt. It’s like having a good editor go over your copy. There’s nothing wrong with hiring someone to take a fresh look at the old ways you’ve been going about your business. If not taken to extremes, efficiency can be useful.

It’s just that whenever you hear politicians talk this way, you should remember the immortal words of Sammy Cahn and Jule Styne.

Who?

The guys who wrote the music and lyrics to, “It seems I’ve heard that song before”

Another year looms, and with it another session of the State Legislature. Because it’s another year of recession, it’s another year of not enough revenue to pay for all the scheduled spending, so it will be another year of debate over how much to cut, and where, and maybe the state should look for a little more revenue.

That’s “higher taxes” in English.

A year, in other words, rather like last year.

But remember what the guy said about how you can’t step into the same river twice (same river bed, maybe, but different water; the guy was Heraclitus [535-475 BCE]), and in all likelihood this year’s budget will not quite be déjà vu all over again. Expect a new factor.

It’s a likely flap over the Rainy Day Fund, the state’s savings account. Though there were rumblings from some liberals last year about possibly dipping into the savings, the proposals never rose above a whisper.

This year, the talk is likely to be louder. To begin with, the legislative leaders have – for now – ruled out new or higher taxes, eliminating – for now – the most obvious alternative to deep spending cuts.

That makes the Rainy Day Fund a more attractive alternative for those on the political left, who can be expected to push it harder.

Most likely to no avail, and not just because the spending cut advocates of Gov. Jim Douglas’s Administration are dead-set against using the Rainy Day money. So are the relevant committee chairs of the Legislature, even though they are Democrats and (by and large) liberals.

“I don’t think that’s prudent,” said Rep. Martha Heath of Westford, the chair of the House Appropriations Committee.

Neither does Rep. Michael Obuchowski of Bellows Falls, chairman of both the House ways and Means Committee and the Joint Fiscal Committee. Obuchowski said “Rainy Day” money was designed to be used for “unforeseen circumstances” that occur during a fiscal year after the budget has been adopted, not to make up for revenue shortfalls in preparing the annual budget

(Heath’s Senate counterpart, Sen. Ann Cummings, Democrat of Montpelier, took the same position, according to a story in the Barre-Montpellier Times-Argus last September)

“Rainy Day Fund” is something of a misnomer, actually, because there are three of them – one for the General Fund, another for the Education Fund, and still another for the Transportation Fund. They are, in a sense, the state’s forced savings accounts. By law, according to Maria Belliveau of the Legislature’s Joint Fiscal Office, five percent of the previous fiscal year’s appropriation for the General and Transportation Funds, and a slightly more complex formula for the Education Fund, is put aside in the Rainy Day Funds.

Sort of like a non-voluntary Christmas Club.

Together, the funds hold more than $100 million, a little more than the projected shortfall for Fiscal Year 2011, which starts July 1.

So, say some interested parties, why not use the money, or at least some of it? Isn’t that better than laying off another few score state workers, or cutting health care services for poor children, or not repairing potholes in the roads? Not to mention better than raising taxes. Other states have dipped into their versions of a Rainy Day Fund. Why shouldn’t Vermont?

That’s the message likely to be heard starting next month from some advocates of generous social service programs. For instance, the organization known as One Vermont, a coalition of health, education, and neighborhood groups and supporters, calls (on its web site) for a “balanced approach to addressing Vermont’s budget shortfall,” which would include “the use of new revenues, rainy day funds, federal funds, and possible debt.”

Using similar language, the liberal think tank Public Assets Institute calls for “the balanced approach—which includes restoring lost revenue and using rainy day funds in addition to cuts,” because it “recognizes that all Vermonters both use public services and pay taxes.”

One, though so far only one, of the five Democratic candidates for governor, State Sen. Doug Racine of Richmond, has also endorse the “balanced approach” concept, using both temporary tax increases and the Rainy Day money to avoid deep spending cuts.

That’s the argument, and on its face, it appears to have some merit. If this money is for a “Rainy Day,” today would seem to qualify. Fiscally speaking, the state, like the rest of the country, is suffering the heaviest downpour since the Great Deluge of the 1930s.

Furthermore, other states have dipped deeply into their comparable savings accounts (only Arkansas, Kansas, and Montana don’t have some version of a Rainy Day Fund). According to a report last summer by Stateline.org, at least “11 states committed upwards of $1.5 billion from their rainy day funds for the 2010 budget cycle,” and more were seriously considering it.

Many of those states are more conservative than Vermont, and some of them, such as Minnesota and North Carolina, virtually depleted their reserve funds to avoid deeper spending cuts or tax increases.

But Vermont seems unlikely to follow suit because of an apparent political irony: Vermont Democrats may be relatively liberal, but they are also Vermonters, as reluctant as their Republican predecessors to dip into capital or deplete their saving accounts.

Continuing with the irony, these liberals are like the conservatives of the past, but not like those of the present, at least on the national level, where most conservatives have embraced former Vice President Dick Cheney’s contention that “Reagan proved deficits don’t matter.”

During the decade now in its final two days, conservatives in Washington voted in deep tax cuts without corresponding spending cuts, and created, with the Medicare prescription drug bill, a totally unfunded new entitlement program.

Both Heath and Obuchowski said they would be willing to consider dipping into Rainy Day money if, after the Fiscal Year 2011 budget is adopted, the economy improved and revenues seemed likely to rise. In that case, they said, knowing the funds could be repaid quickly, Rainy Day funds could be used as what would effectively be an up-front loan to shore up important programs.

That happens anyway. The Rainy Day Funds don’t just sit there. Various state funds borrow from them to finance programs, then repay them as tax revenue comes in. Otherwise, state funds might have to borrow in the commercial market, and pay interest.

Obuchowski and Heath both expressed guarded optimism that the state might succeed in its effort to “do more with less,” as Obuchowski put it. The Legislature has granted a $200,000 contract to a Minnesota-based consulting firm for advice on how to scale down state government without reducing the quality of state services.

Obuchowski said that though Legislative leaders were very reluctant to increase taxes, they might be open to selective fee increases to increase revenue. Even then, though, he acknowledged, there would probably have to be “some reduction in services.”

And remember, on the assumption that almost nobody would read in anyway, there will be no post Friday. A happy, healthy, and prosperous 2010 to one and all.

Pay attention because today’s post is going to provide exclusive answers to one of the great unresolved questions bedeviling the people of this fair state: Why Is Vermont’s State Government Facing a Budget Shortfall?

Ready for the answer? Brace yourself for shock. Make sure you’re seated and have not just partaken of a large meal (though recent imbibement of a cocktail or two might not hurt).

OK, here it is: Because Vermont is Part of the United States of America.

Almost all of which is in deep recession, even if it has been declared officially over. The unemployed and under-employed don’t pay much in the way of taxes. The newly foreclosed don’t buy much. The businesses who used to sell to them aren’t expanding.

Not here in Vermont. But hardly anywhere else, either. Most state economies are in worse shape, and most of their governments are facing worse budget shortfalls.

This does not mean Vermont has no budget problem. It does seem to mean that though state policy-makers may have made some mistakes in the past that rendered the state more vulnerable to the ravages of recession, they didn’t make any more – and possible not as many – as their counterparts elsewhere.

In a report titled, Beyond California: States in Fiscal Peril, The Pew Center on the States counts nine other states facing deep budget crises in addition that big one on the left coast.

Vermont is not among them. In fact, Vermont was rated among the fiscally less troubled states.

Even more pessimistically, a report from the Kaiser Family Foundation finds that only two states – Montana and North Dakota – are not “facing budget shortfalls.”

From the statistics alone, it was impossible to determine the source of the good fortune of these two states, though it’s reasonable to suspect that it has some connection with the coal, oil, and natural gas underneath them. Under the circumstances, all the rest of us help pay their taxes every time we start our cars or turn on a light. If only maple syrup were a necessity instead of a mere delight, Vermont’s budget might be easily balanced.

(Objection One: Isn’t there a lot of oil under California? Yes, but California is so huge, its economy so diverse, that the petroleum revenue adds up to a paltry percentage).

(Objection Two: Isn’t it sad to deride a delight, which in a sane world would be treasured more than a “mere” necessity? Yes).

Both the Pew and the Kaiser studies show why Vermont is not as hard-pressed as some other states. The root cause of the problem in all states is the Recession, which stemmed from what the Pew study called “the bursting of the housing bubble.” That’s why, the study noted, three of the nine states in almost as much trouble as California are its neighbors – Arizona, Nevada, and Oregon – into which some of the California housing boom (and unsustainable lending practices) spilled.

For several reasons, the bubble in Vermont never expanded as recklessly as it did in some states, so the “burst” was less damaging. Vermont’s foreclosure rate is the lowest in the country.

Why? Well, tighter regulations may be one factor; mortgage prepayment penalties are illegal here, for instance. But the figures indicate that the state’s economy generally sat on a relatively strong foundation. The report by the Kaiser Family Foundation shows that since the Recession began, Vermont’s unemployment rate has gone up less than the nation’s as a whole (1.6 percentage points compared to 3.6).

It even seems possible, reluctant though we may all be to find anything good to say about political office-holders, that Vermont’s leaders were more responsible – or at least less irresponsible – than their counterparts elsewhere.

“Virtually every state had to make tough decisions this year about where to cut and how to raise additional revenues,” the Pew report said. “But in some states, lawmakers punted the responsibility,” refusing to cut spending or raise taxes. Vermont did both. It may not have been pretty to watch or pleasing to any political faction, but as a result the state has a smaller budget shortfall than most others.

The Pew report gives Vermont a “score” of 13 (lower is better), tied with Virginia, and better than all but nine other states. The Kaiser Family Foundation report also finds that only ten states have less serious budget problems than Vermont.

(Most, though, not all, ten are the same in the two studies, which were taken at different times and used somewhat different criteria. Their basic conclusions, though, seem consistent).

Still, Vermont has a rather substantial looming budget deficit which is likely to dominate the Legislative session beginning next month. The exact size of the extent to which likely revenues for Fiscal Year 2011 (starting next July 1) will fall short of projected expenses is unclear, but should add up to roughly $100 million.

That’s a lot of money, and the early indications are that the Legislature is going to “find” it by cutting spending. Both legislative leaders, Senate President Peter Shumlin of Putney and House Speaker Shap Smith of Morristown, have come out against any new or higher taxes. Considering that they’re both Democrats, the party less resistant to raising taxes, it’s unlikely that taxes will go up.

Unlikely but not certain. There is at least one dissenter, State Sen. Doug Racine of Richmond (check the December 7 post here), who favors a temporary tax increase to avoid deep cuts in social programs. And wait until the advocates of those social programs get television news footage showing the impoverished, disabled children whose lives would be further impoverished by some of the cuts that would no doubt be proposed.

People don’t want to pay taxes. Neither do they want to abandon needy children. That Vermont may have to abandon fewer of them than most other states is not likely to make the decision much easier.

(Note: This is obviously the first of several examinations of the state’s budget situation; Wednesday’s post will be on a different topic, but we’ll return to this one next Monday

What happened to Friday? As indicated earlier, on the assumption that almost no one will be reading this kind of stuff on Christmas and New Years Days, there will be no new postings the next two Fridays.)

Note One: If you missed Wednesday’s post because you checked in early and it wasn’t there, scroll down to read it. The system disobeyed orders. It will have to be dealt with, but that can’t happen for another week or so.

Note Two: Because a few have graciously inquired, herewith policy: The News Guy does NOT want donations from public officials or candidates, those he may have to excoriate. But thanks for the thought.

Sound the Alarm! The statewide school property tax rate is going up. It’s unprecedented. Worse, the rate isn’t going up by a penny or two. No, by 2013, so projects the Tax Commissioner, sounding the alarm in a letter to the Legislature, the increase may total 22.2 cents.

In the property tax world, that could add up to a lot of money.

So the alarm has been sounded.

And sounded. So persistently that the average Joe/Jane minding his/her business might be forgiven for thinking that the world as we know it is doomed, or at least that their property taxes will drive them to either: (a) the poor house; or (b) another state.

Joe. Jane. Calm down.

Your taxes are not necessarily going up.

First of all, these projections are just that – projections, especially that 22.2 cents estimate, which is for Fiscal Year 2013, before which a great deal can change. Like all projections, these are based on certain assumptions. The assumptions in this case seem reasonable, but (details below) at least one of them might be a bit pessimistic.

None of which is to say that your taxes are likely to go down, or even not likely to go up, as they usually do. It’s to say that the going down and the coming up don’t depend only on the rate. Or in the words of Deb Brighton, one of the policy analysts who helped Commissioner Richard Westman work out the proposed new rates, “You might end up having exactly the same tax bill,” even with higher rates.

It’s also to say that (surprise!) there is a certain amount of politics behind the tax rate rhetoric. Right now, it’s from Republicans, but do not think that Democrats don’t sometimes indulge. They did last year when they assailed then-Tax Commissioner Tom Pelham for not reducing the rate as quickly as they thought he should.

So he reduced it.

And all your property taxes went down?

Uhhh, no. Mostly they went up because the value of your property went up more than the rate went down.

Next year your actual tax payments may stay the same or decline, even as the rate goes up, because property values are going down in Vermont as they are elsewhere.

In fact, they are declining faster in most other states, which helps explain why, though Vermont’s fiscal predicament is real enough, it is less severe than in about 45 of the other states. (Check in Monday for details and elaboration).

Now, this property tax business is complicated, so complicated that were one a cynic, one might suppose the powers that be made it complicated so that the average person would have a tough time understanding it.

No such cynicism will be expressed here. But just to clear up one complication, here’s how your property value can go down (for purposes of the statewide school property tax) even if your property is not reassessed: Every year the state adjusts the grand list based on the actual prices of recent home sales in your town. If those prices go down, so does your tax bill unless the rate is raised. Hence Westman’s decision to raise it (subject, of course, to Legislative approval).

Another complication: The property tax is not the only source of revenue for the Education Fund, which pays for the schools. That Fund also gets money from other sources, especially from the General Fund, into which go most income, sales, and other taxes, out of which most operations of state government are financed.

According to Mark Perrault of the Legislature’s Joint Fiscal Office , for Fiscal Year 2008 the Legislature determined that the General Fund would transfer $280.2 million to the Education Fund that year, increasing it annually to adjust for inflation.

That’s what happened for the next year, when $291.8 million was transferred. But for this year (FY 2010), the Recession had hit. The General Fund didn’t have enough money. So the lawmakers cut $18.4 from the transfer for this year, and the same for FY 2011. The Ed Fund, then, is slated get only $240.8 million from the General Fund, less than it got two years ago.

For these two years (2010 and 2011) the burden on the property tax was eased because the Legislature funneled $38.6 million of federal stimulus money directly to the towns, Perrault said. But unless more federal money comes next year, he said, “the problem comes in FY 2012.”

True, depending, again, on assumptions. One of them is that the Feds won’t cough up more money in 2011. Another is that the Legislature won’t fatten the General Fund by raising taxes. Yet another is that total school spending will continue to go up by two percent a year.

Those first two assumptions seem on the mark. The last is a bit more questionable. Deb Brighton said she and her colleagues learned that the most recent increase was “something like 1.96 percent,” and “we had to make some assumptions, so we just agreed to assume a two percent increase to make some sense of it.”

That does make sense, but there is some reason to suspect that school costs will go up more slowly over the next few years. With the number of pupils still falling, schools all over the state are reducing staff. There were slightly fewer teachers in FY 2008 than the year before (the last statistics available), and the decline might well continue.

In his letter to the Legislature, Westman made much of the school spending matter, noting the “uninterrupted growth” of school spending, mostly “personnel costs” despite falling enrollment. Here he echoed the steady refrain of Gov. Jim Douglas and his associates who regularly call for lower school spending.

It may have been mere coincidence that just days after Westman submitted his letter, Neale Lunderville, Douglas’s Administrative Secretary, noted the three percent pay cut negotiated by the state employees union and not-very-subtly suggested that teachers consider following that example.

Or it may have been, as Darren Allen of the Vermont National Education Association said, “an orchestrated effort into bullying teachers into taking a pay cut.”

Allen, needless to say, is hardly a disinterested observer. But if it wasn’t an orchestrated effort, it was a pretty good imitation.

Either way, it might be a bood idea. It would save money for the taxpayers, most of whom earn less than most teachers. On its face, it would be sensible budget policy.

But perhaps very bad fiscal policy. In a recession as serious as this one, economic policy should aim at getting people to spend more, which they cannot do if they earn less. Prices have fallen, but by about one percent according to official government figures. So if they ratify the contract with the pay cut, some 7,000 or so state workers will suffer “real” pay cuts of two percent.

That’s Vermont’s own anti-stimulus package.

And there are more teachers than state workers. All this salary reduction might be good for the state budget and the property taxpayers, but awful for Vermont’s economy.