The fight is on, and it promises to be a humdinger.

Attack and counter-attack. Quick response. Thrust and parry. Jab and hook. Give no ground or quarter. The best defense is…well, you get the picture.

All of which is lots of fun, but threatens to obscure the meaningful substantive differences between Republican Brian Dubie and either Peter Shumlin or Doug Racine.

In fact, “obscure,” may understate the case. “Pervert” could be more appropriate. The barbs each side is throwing at the other seem designed to convince voters that the opposition is extremist: that the Democrat would raise everybody’s taxes; that Dubie would permit the poor to starve on the sidewalks.

Not hardly.

As mentioned here the other day, the winner will be governor, not emperor. Even if Shumlin/Racine wanted to raise everybody’s taxes, the Legislature would not. Nor would it allow the poor to starve on the sidewalks.

Besides, the Democrats, who are prudent, do not want to raise everybody’s (or anybody’s) taxes, and Dubie, who is decent, does not want the poor to suffer at all, much less starve on the sidewalks.

“People who depend on vital state services are not going to be abandoned by state government,” said Dubie campaign spokesperson Kate Duffy.

Even the semi-defensible attacks are a bit over the top. There is some justification for Shumlin to argue that Dubie’s economic policies would lead to “deficits, unending deficits, tax cuts for the wealthiest Vermonters and budgets that don’t balance.”  Dubie’s determination to cut taxes and his vagueness about what programs he would cut do complicate the budget-balancing task.

But in addition to redundancy (deficits are “budgets that don’t balance”), the attack ignores Dubie’s pledge that tax cuts “won’t happen in one big step or one year,” but would be “incremental.”

Similarly, Dubie may not be dead wrong when he claims the Democrats have “only two solutions for the challenges we face: more government spending and higher taxes.” Both Shumlin and Racine are on record in the past favoring new programs and higher spending. But while they still favor  some new state initiatives, they are not for higher taxes.

Besides, there’s another candidate who proposes new government spending: Brian Dubie. The jobs plan in his “Pure Vermont” document calls for the state to “increase support for (Vermont Economic Development Authority’s) highly successful interest rate subsidy program,” “ increase public investment in the new Technology Lending Program,” “add support for (Small Business Development Center) counseling,” and create an investment tax credit.

All that costs money. Yet the heart of Dubie’s campaign is to hold the state budget to spending increases of  two percent a year. Because revenue is projected to rise at a higher rate, a Dubie Administration could then cut income taxes by a total of $240 million over four years.

This means, said  Duffy, that Dubie’s plan “is not making any cuts.” State spending, she said, would continue to rise, just more slowly than it has been rising, and more slowly than revenue would rise.

Dubie’s arithmetic is correct, except that he first pledges to close the projected $112 million deficit for the coming Fiscal Year (2012). That would require a spending cut of more than 9 percent, creating a new base. Increasing spending by two percent a year for the next four years on top of that new base would mean that spending would fall by an annual rate of about three-quarters of a percent over a five-year period. Extend the same policy out another five years, and spending does go up, but only at an average annual rate of slightly more than one percent.

That might be the smallest growth rate of state spending in decades, if not a century, raising questions about how realistic the plan is. Dubie claimed that in the early 1990s, Gov. Howard Dean actually level-funded (no increase) spending over a three-year period, a harsher reduction than Dubie’s proposed two percent growth.

Not really. Check the esoteric document available from the Joint Fiscal Office web site’s “Appropriations” page,called “Budget History FY 83-present.” It shows that while the General Fund budget actually went down for one year under Dean, it then started up again, and over a five-year period it rose by an annual rate of 3.4 percent a year.

That document provides other interesting information, both casting doubt on the assertion that Dean really “level-funded” spending and confirming that budgeting is a creative art. In those same recession years that Dean was spending less out of the General Fund, some new expenditures are recorded in the Transportation Fund.

Could it be that the state was using Transportation Fund money (financed from gasoline taxes, auto registration, etc) for non-transportation purposes? The document suggests, but does not prove, that the answer to that question is in the affirmative.

If so, it would not be unusual, in Vermont or elsewhere. One reason for that $112 million projected shortfall for the next Fiscal Year, for instance, is that the Legislature and Gov. Jim Douglas have been effectively filching from the Education Fund by not transferring into it as much General Fund money as the law required. (Legislatures and governors, who make laws, can change them as an alternative to obeying them). Reached at home where he did not have access to his records, Joel Cook, the executive director of the Vermont National Education Association, estimated that the shortfall was at least $50 million.

If the Legislature doesn’t repay that (as it said it would) or come up with enough money again this year, the Education Fund could be short tens of millions of dollars. That would require either deep cuts in school spending or substantial increases in local property taxes.

This poses a potential political problem for Dubie. He wants to cut everybody’s income tax rate by about a third, reducing the top rate from nine to six percent and the lower rates comparably. That’s good politics; everybody likes lower taxes.

But the Democrats will try to convince voters that the result would be higher property taxes, which are the taxes Vermonters really dislike. Democrats are already making that argument as well as claiming that, in Racine’s words, Dubie’s “numbers just don’t add up.”

“He wants to add money for various business promotion efforts…but he wants to cut taxes,” Racine said in a telephone interview. “This sounds like the federal budget discussion. Make promises of higher spending for business and lower taxes for everybody. That’s Washington. We don’t do that here in Vermont.”

That’s harsh, but standard political rhetoric. What came out of the Dubie campaign late yesterday may have crossed the line from standard to…well, to  false. In a statement released yesterday afternoon, Dubie said Racine had wanted to use money from the state’s “Rainy Day Fund” to “expand government-run services,” and that he opposed the “Challenges for Change” plan to make government more efficient.

The first of those accusations is simply incorrect. Racine has suggested dipping into the reserve funds, but only to support existing social service programs, not to “expand” government service. The second charge is minimally defensible, but a stretch. Racine supported “Challenges for Change” during this year’s legislative session, voting for it at least twice,  though he voted against the final Fiscal Year 2011 budget which incorporated “Challenges.”

“Fundamentally, Brian is a decent man,” Racine said. “If he wants to disagree with me, that’s fine. But don’t be deceitful.”

It could be a long two months.

Note One: An Apology– Thanks to the storms of Tuesday evening, the News Guy kept getting disconnected from the Internet. In the rush to finish writing, and to get the post into the system before the connection broke again, confusion prevailed more than it usually does. As some readers noticed, the post got posted twice. As at least one reader noticed, the first reference to the town of Hartford called it “Hartland,” another town entirely, if not that far away. Apologies to all readers and to the residents of both towns.

Note Two: The Next Two Weeks–As previously announced, the News Guy is going to take some time off. Admittedly, not the best timing, what with the primary on August 24, only a little more than two weeks away. But even primaries have to take a back seat to family events and school vacation periods.

So there will be no posts next Monday or Wednesday. There will be one on Friday, and it will be an in-depth analysis of the economic policy proposals of the five Democratic candidates for governor, one of which is not scheduled to be released until next week. (Republican candidate Brian Dubie has said he will release his after the primary).

There will also be no posts the following Monday and Wednesday (August 16 and 18), but there will be one on Friday, the 20^th, after which the regular Monday-Wednesday-Friday schedule will resume.

Note Three: A Clarification– Chris Roy, one of the two Republican candidates for Secretary of State, took issue with the News Guy’s assessment in last Friday’s post, Getting Tetchy, that he “seems to be losing” the primary race to Jason Gibbs.

Roy may have a point. He agreed that Gibbs has more money in the bank,(though Roy who has been running far longer, has raised more overall), has the support of Gov. Jim Douglas, and has been more successful in getting his name into the news.

But, Roy said, in what is likely to be a very low turnout, his “targeted” campaign, based on “a very focused mailing program and very focused phone call program” could propel him to victory.

So it could. At any rate, he provides a worthwhile reminder. Much attention has been paid to the likely Democratic primary turnout, with estimates ranging as low as 40,000. But at least the Democrats have a real race for governor, the highest-profile position. On the GOP side, though, nobody is challenging Dubie or U.S. Senate candidate Len Britton (whose prospects against Sen. Patrick Leahy are bleak anyway). Yes, there is a three-way contest for the U.S. House seat. But it is among three little-known long shots against Rep. Peter Welch, and therefore not likely to arouse much enthusiasm among rank and file Republicans. The Republican primary turnout could be really anemic.

Note Four: An Assessment– Speaking of the Democratic primary, has anyone noticed that it is one of the weirdest political campaigns in recent years, and not just in Vermont?

That’s because of what has happened in the race: nothing. Usually, in political campaigns, the process creates its own dynamic. Either Candidate A makes a fool of him/her-self, or Candidate B gets accused of some misdeed or peccadillo, or Candidate C makes a magnificent speech that captivates 5,000 cheering supporters in an arena, or some bizarre event not directly connected to the campaign plays to some candidate’s strength, or….well, or something.

If nothing else, in a close race the candidates start attacking each other. Or at least the candidates who are behind in the polls start attacking the front-runner. Rarely do these attacks enlighten, but they often get folks more interested.

Not here, at least not yet, and there’s not much time left. This race is about where it was when it began. It pits five honorable, responsible and not very exciting mainstream Democrats battling each other for the biggest share of the primary pie. Not one of them has stumbled. Not one of them has really caught on.

As to attacking, it isn’t certain that any of them knows how. Or, perhaps more likely, all are reluctant to start attacks because they know the attacker would be hurt as much as the attackee.

Just from the political perspective, the major recent development was Peter Shumlin’s decision to start television ads last month. The ads are pretty good, but as far as can be determined (not very far, there being no public polls) they haven’t much changed the structure of the race. Maybe, it being midsummer, voter are simply not paying enough attention.

All this is good news for Deb Markowitz, who started as the best-known, best-liked of the contenders, and seems not to have lost a step. True, as a candidate Markowitz is not exciting. But she’s likeable, and the other four haven’t inspired the voters to mobilize behind their banners, either.

Note Five: A Critique—The good news that came out of the Associated Press’s interviews with all six candidates about how, if elected, they would deal with next year’s likely budget shortfall, is that one candidate had a very specific idea which would clearly save money, and the candidate knew how much money the idea would save.

The bad news is that it would save only $16,000.

The idea was Markowitz’s pledge not to accept the $61 per diem allotment for the governor’s meals. She said the governor of Vermont earns enough to pay for her own meals.

From other candidates, the responses ranged between imprecise and arguably inaccurate. Bartlett said Vermont could save money by bringing home some of the prisoners it now sends to out-of-state facilities, though one reason the state sends prisoners elsewhere is that it’s cheaper. Shumlin said the state could save as much as $50 million by more closely policing some $250 million of outside consulting work, which might cut costs as much as 15 percent.

But 15 percent of $250 million is $37.5 million, not $50 million.

Then there was the candidate who, asked how he would reduce the budget gap, proposed increasing it.

That was Dubie, who told the AP he would make the budget easier to balance by cutting taxes.

“A gradual reduction in taxes will put more money in the hands of hardworking Vermonters,” Dubie said.

Yes, it will. And with more money in their hands, Vermonters (including the ones who don’t work all that hard) will pay more in taxes. But not enough more to offset the revenue loss the tax cuts will create. Whether cutting taxes is a good idea is debatable. That it will reduce revenue and therefore make the budget gap bigger, not smaller, is not. It will.

The head of a statewide business organization claims that the state’s “bureaucratic, arbitrary, time-consuming and expensive regulatory system” weakens the state’s “business climate.”

A small businessman argues that the high cost of workers compensation makes for a poor business climate.

Citing the ratings of business magazines, a legislative candidate laments the state’s standing “as one of the worst states in the nation for job growth and business climate.”

A pro-business think tank reports that the state has “one of the most difficult business climates in the nation,” and a pro-business journal notes that the state has “a well-documented bad business climate.”

No surprise, right? Vermont’s “poor business climate” has become a statewide mantra, and is already a factor in this year’s governor’s race.

Except that the above examples are from, in order: New Jersey, California, Wisconsin, Washington (State, not D.C.), and Maryland.

No doubt all these states have their economic problems, as do the other 45. It may be significant, though, that they are among the more prosperous states. Maryland and New Jersey have the highest median household incomes in the county. California isn’t far behind. Before the start of the Great Recession, Washington had the tenth highest per capita income in the country. Wisconsin had the 20^th largest economy, just about what it ought to have considering its population.

So why all the complaints about the “poor business climate”?

Because in almost every state, some (though not all) business leaders and their supporters in politics and academia complain abut the “business climate.”

They’d be fools not to. It’s a good argument for getting what business leaders often want: less regulation and lower taxes. Most business leaders are more wealthy than not, meaning that in state’s with (relatively) progressive income taxes their tax bills are (relatively) high (though, in Vermont at least, lower than they were a decade or two ago).

As to regulations, many of them are at least a big pain in the neck (forms to fill out and all that) and often a profit-reducing cost.

Furthermore, many businessmen think that they do not need most of the services financed by their and everyone else’s taxes. As it happens, they are at least partly wrong here. This year the Legislature approved more transportation spending than ever, according to House Speaker Shap Smith. Business interests did not complain. Roads are, among other things, a subsidy to businesses; the taxes they pay are a lot less than it would cost to build and maintain their own highway systems.

Schools are a subsidy to business, too. Vermont schools may be expensive, but firms would spend a lot more if they had to teach all their workers how to read, write, and do arithmetic.

Just because complaints about “business climate” are heard in almost every state does not make them totally invalid. In most states, a few costs could probably be cut and a few regulations eased to lubricate economic activity without harming workers, consumers, the needy, or the environment.

But not much. Otherwise, those costs would have been cut, those regulations eased. Almost all of them exist because they provide goods, services, and protection that people want.

What the near-universality of the “poor business climate” slogan does mean is that the phrase is meaningless. It is self-interested bumper-sticker drivel that does not deserve to be taken seriously.

Neither do the “studies” by some pro-business “think tanks” or business magazines that purport to rank states according to their “business climate.” These rankings are based on extraordinarily selective criteria, as if the studies were designed to promote a policy agenda rather than to examine the subject honestly. They were.

The studies do take into account a state’s spending, taxes, regulations, and labor union strength. They tend to ignore the state’s health care, education system, recreation and cultural amenities, and other factors which attract the educated, higher-income people who have money to spend, and are therefore good for business.

Among academic economists, who acknowledge that, as one of them put it, “exactly what constitutes a good business climate is not entirely clear,” there is no agreement on whether state taxes, regulations, and labor union power (weak in Vermont) have any discernible impact on economic activity at all.

“Considerable empirical evidence suggests that state and local taxes do not significantly impact the geographic distribution of economic activity,” noted economists Bruce L. Benson of Florida State University and Ronald N. Johnson of Montana State at the outset of an article in the journal Economic Inquiry hIn general, the consensus among economists who have carefully studied the data is that if these factors do affect a state’s economic performance, they do so minimally, and are therefore easily offset by the positive outcomes (good schools, parks, health care, etc.) taxes and regulations provide.

In Vermont, for instance, where the term is bandied about almost daily, the “poor business climate” argument faces an obvious challenge. If the business climate is so poor, how come the economy is relatively so good?

The “relatively” is emphasized because right now Vermont’s economy is not good at all. But that’s only because the national (and in fact the global) economy is not good at all. But compared to most other states – and especially most other states in its region – Vermont’s economy is somewhat better.

Its unemployment rate, though higher than it was a couple of years ago, is lower than the national or regional average. So is its poverty rate and its home foreclosure rate. Vermont seems to be coming out of the recession somewhat faster than most other states, based on the unemployment and job creation numbers.

That doesn’t mean that, from the perspective of some businesspeople, state laws and taxes are not a serious problem. But it obviously isn’t a big problem for all of them, or they wouldn’t be hiring more workers and planning new facilities, as many of them are.

Vermont’s regulations probably have their greatest impact on builders and developers. All states have environmental restrictions, but Vermont’s are among the most stringent. That helps explain why builders, developers, and realtors are among the most vocal critics of the state’s business climate.

But those regulations help other businesses, such as the software developers discussed in Friday’s post.   The regulations help attract affluent, educated, newcomers to the state, and John Canning of the Vermont Software Developers Alliance said that’s good for the software business.

The bottom line, to put it in business terms, is that objective examination of the “poor business climate” claim can not even define the term, much less find persuasive evidence of its existence in any state. Vermont, like the rest of America, is pro-business, and would be foolish to be otherwise. Everybody benefits from a strong economy, which in turn depends on the healthy profitability of businesses.

The “poor business climate” moan is just the whine-of-choice of some segments of the business community and the politicians pandering to them. In fairness to that community, they are hardly the only whiners these days. But as members of the wealthiest and most powerful faction in the land, they have less excuse.

OK, who won?

Now that the palavering, posturing, and pontificating of the 2010 session of the Legislature is over, it’s time for at least a preliminary evaluation as to who did and did not come out ahead.

Not just by the measurement of raw politics, either. This assessment will also taka a look at whether the day-to-day lives of regular folks were affected by what the lawmakers and Gov. Jim Douglas wrought these last four-and-a-half months.

The short – and possibly welcome – answer is: not too much. A large majority of Vermont citizens who are neither rich nor poor will note little if any change in their bank accounts, their job security, their children’s education, their retirement benefits, their recreations, or their passions because of any legislation passed and signed into law this year.

Welcome news indeed to those who remember the old phrase about how “no man’s life, liberty or property are safe while the Legislature is in session.”

But there were exceptions. No one should be shocked by this news, but in general, the very wealthy came out ahead, while the poor and near-poor did not, especially the poor and near-poor who are ill or otherwise in need of social services.

And some 7,700 middle and upper middle-income households will face higher property taxes, quite a bit higher in some cases.

The results do not mean that impoverished Vermonters are going to be begging in the streets, their open sores exposed to the elements. Legislative sessions, especially as they wind down are: (1) dramatic; and (2) insular. The drama takes place in an enclosed space in which the same relatively small number of people – legislators, lobbyists, reporters, administration officials — constantly interact with one another.

What happens then is that all disputes become magnified and the disagreements are assumed to be more polarizing than they really are. Had Douglas gotten all the spending cuts he wanted – and he did not – the state’s social services would not have evaporated, no more than business investment would have dried up had the Democrats blocked all those tax reductions.

The last dispute resolved, for instance, was over whether the capital gains tax would be cut by $1.5 million or $3.2 million. Not an inconsequential sum, but a tiny fraction of a $3.77 billion budget.

But let’s get to the raw politics, because it’s easy and it’s fun.

Douglas won.

Not everything, but a lot. For a lame duck governor, he showed that he still has a fair amount of clout. He did it by being stalwart (or stubborn, depending on one’s political preferences), betting that the Democratic leaders wouldn’t risk a repeat of last year’s budget veto and subsequent veto override vote.

Last year, they won that vote. This year, they might not have won it in the House of Representatives. And even if they had won it, they feared it might play into Republican political hands, allowing Lt. Gov. Brian Dubie to paint them as big spenders who raise taxes.

Which he’s going to do anyway, but a budget confrontation might have strengthened his case.

Under some circumstances, Douglas’s strategy might have been risky for Dubie and the Republicans, giving Democrats the chance to portray them as friends of the ultra-rich but indifferent toward the needy.

But those circumstances would exist only if a leading Democrat started making that argument a few weeks ago. There are five Democrat running for governor, but none of them stepped forward to make that case. That left Douglas and his allies free to set the parameters of the discussion.

That Douglas “won” does not really mean that the Democrats “lost.” In the final bargaining, they gave up more points to him than he to them. But first of all, this isn’t really a game. Besides, they held firm on education financing. There will be no mandatory school district consolidation, nor a required change in the student-teacher ratio.

In addition, both sides could claim “victory” in that they passed a budget despite starting the year facing more than a $150 million projected deficit. They did so in a collegial manner, and they could claim that the budget was “balanced.”

It might be.

Celebrating the agreement and his success, Douglas said that “while other states are cutting programs and raising taxes in response to the fiscal crisis, Vermont, I am proud to say, is moving in a different direction.”

Sounds good. Except that what he and the Legislature did this year was cut programs and raise taxes. They didn’t eliminate programs or raise the key income, sales, or property tax rates. But they raised some people’s taxes (while reducing others) and effectively reduced the quantity – and almost surely the quality – of many public services.

By how much? Impossible to say, because the “challenges for change” concept grants the Administration broad powers to cut spending. One of Douglas’s victories occurred when the Democrats gave up on their proposal to allow the state to dip into its “Rainy Day Fund” if the “Challenges” process did not save enough money.

It won’t (for reasons to be explored in a post coming soon). The result will be more cuts in services for the poor, the sick, the mentally ill. It was not a liberal Democrat, but Republican Rep. Anne Donahue of Northfield who said (in Thursday’s Times-Argus), the lawmakers are “pretending that we are restructuring services when in fact we will be cutting services.”

The higher taxes will be the result of some tinkering the Legislature did with the formulas for deciding who is eligible for how much “income sensitivity” in determining their statewide school property tax bills. The tinkering means that more people will benefit less from income sensitivity.

According to figures from the Legislature’s Joint Fiscal Office, some 7,700 households will pay an average of $662 more a year in property taxes, a total of more than $5 million.

The hardest-hit will be 423 households earning between $85,000 and $95,000 a year. Their property taxes will rise an average of $1,639 each. But some households with incomes of $40,000 or even less will pay a few hundred dollars more a year.

The money will go into the Education Fund, holding down the statewide school property tax rate. The beneficiaries here are households with incomes too high to qualify for any income sensitivity, and who pay solely on the basis of the value of their property.

Upper-income taxpayers will also reap most of the benefits from the partial restoration of a capital gains tax break. Under the new law, someone with, say, a $10,000 capital gain from the sale of business assets with a Vermont connection would pay taxes on only $6,000. Douglas wanted the exclusion to apply to all capital gains including stocks, bonds, and homes.

In the end, he accepted a partial victory, and the Democrats agreed, in the hope that lower taxes on Vermont-related capital gains would provide an incentive for more business investment which in turn would lead to more jobs.

The evidence for this assumption – or hope –is…is…well, it may not exist, a mystery worthy of detailed examination next week.

“Everything is resolvable at the end. Unless it isn’t.”

This time, it seems, it isn’t.

The words came from Shap Smith, heretofore known not as a Buddhist philosopher but merely as the Speaker of the Vermont House of Representatives

But it was that kind of day at the Statehouse Tuesday, a day of policy and politics; a day of hope and worry; a day, one might say, of now and Zen.

Occasional spurts of activity were followed by long periods of waiting around. The talk in the corridors was sometimes theoretical, sometimes practical. Optimism clashed with pessimism.

Oh, and Democrats clashed with Republicans.

Politely, to be sure. Everyone from Republican Gov. Jim Douglas to Democratic Senate President Peter Shumlin made sure to tell reporters that their discussions were courteous and friendly.

But by the time Smith uttered his mystical mantra, at about 4 PM, they had not resulted in agreement between Douglas and the Legislative leaders on the Fiscal Year 2011 state budget, nor on the taxes Douglas wants lowered. Without those tax cuts and more budget reductions, the Governor has implied, he might veto the budget bill as he did last year.

Nor was there any agreement by mid-evening, and Smith had made clear that with or without a deal with Douglas, the lawmakers would vote on a budget this week. Hence the possibility that Democrats would pass the budget they prefer, taking the chance that Douglas will veto it.

That’s what he did last year, only to have his veto over-ridden. This year, both sides said they wanted to work together, and at least they have behaved more civilly toward one another. In fact, negotiations continued into the night, both sides clinging to the hope that an agreement would be announced Wednesday morning.

Later in the night, though, negotiations broke down without agreement. It’s not quite the end. In theory, talks could resume Wednesday morning. In theory, everything remains “resolvable.” But the “isn’t” outcome seems more likely, as does a veto and a possible veto override session next month.

All day, in fact, there was conjecture, not all of it by Democrats, that Douglas actually wants to veto the budget bill to provide a political boost to Lt. Gov. Brian Dubie’s campaign for governor. According to this theory, a veto would dramatize the GOP argument that without a Republican in the governor’s office, Democrats would just keep spending more money and raising more taxes.

The fact that in its two-year life this Democratic-controlled legislature actually lowered income taxes – albeit minimally – on a large majority of Vermont taxpayers seems not to diminish the potential force of this argument. In modern America, myth and image outweigh mere fact.

The conjecture about Douglas’s political strategy was, of course,  surmise. But it gained some currency by the fact that all day long (actually, for the past several days), the Democrats kept giving ground to the Governor.

Who kept taking it. And asking for more.

By early afternoon, the Democrats had made so many concessions that one Republican lawmaker crowed, “the Democrats are caving on all the taxes,” and some liberal Democrats were grousing about their own leaders.

One of those Democrats said…well, his precise words are too indelicate for this web site. Suffice to say that he suggested that his party’s leaders were acting as though they were the Governor’s concubines.

But some of those Democratic concessions might have been more symbolic than substantive Take the capital gains tax dispute. Last year, over Douglas’s objections, the Democrats reversed a capital gains preference enacted in 2002. That change is expected to raise some $10 million in revenue in the coming fiscal year.

Smith said he thought a compromise could be reached by restoring the preference, but only on capital gains from investments in companies based in Vermont. Anyone who knew much revenue would be lost by such an amendment (Smith indicated he did) wasn’t revealing it. But probably not much. Wealthy Vermonters (and most capital gains taxes are paid by the wealthy) no doubt invest in diverse portfolios on the advice of financial consultants whose job is to make their clients richer, not to play in-state favorites. One of the great things about capitalism is that it is heartless, with devotion to neither person nor place, but only to money.

Nor would the Democrats be giving up much if they repealed the higher estate taxes they enacted last year. In a few years, the federal estate tax, the terms of which Douglas wants the state’s version to follow, might actually take in more money from wealthy estates (the only kind that are taxed) than Vermont’s. So if the Democrats can find a way to delay the revenue loss for a year or so, they might be willing to compromise.

And there seemed little doubt that the Democrats eagerly – if not desperately – want to compromise, while Douglas and his advisors appeared  willing to accept another veto confrontation. This could be because Smith isn’t sure he has the 100 votes needed to over-ride a veto. (Shumlin has a bigger majority in the Senate, and should have no problem). Perhaps significantly, the Speaker never claimed to have commitments from 100 representatives.

On the other hand, as long as today’s topic is political conjecture (not to mention meditation), here’s another possibility. Remember, Shap Smith knows how to play this game, too, as he proved last year when his House overrode two Douglas vetoes. If he has a problem this year, it would seem to come from a handful of his less liberal members. Continuing to give way on these liberal positions (the two taxes), only to have the Governor continue to rebuff him, might be just what he needs to shore up those votes for the veto override.

Again, conjecture, but, again, perhaps given some currency by another development. Most of those less liberal Democrats are from rural areas, where many influential voters are big landowners who oppose the changes to the Current Use system called for in a bill which has passed both houses, but in different versions.

Smith has been in no hurry to bring an amended bill back to the House floor. He could be holding it as a possible bargaining chip, dropping one or more of its most controversial provisions to placate those rural Democrats.

Log-rolling to please the forest industry. Something Zen there.

Around this time last year, the Democratic leaders of the Legislature outfoxed Gov. Jim Douglas. Using their big majorities, they passed a budget that cut spending (but not as much as Douglas wanted) and raised taxes (by more than he wanted, which was not at all).

He vetoed the budget. The Legislature overrode his veto, by a big margin in the Senate, by just enough in the House. Big win for House Speaker Shap Smith of Morrisville and Senate President Peter Shumlin of Putney.

Fade out. Fade back in to now. Douglas is outfoxing the Ds.

Maybe not for long. This is a play with several acts, and before it’s over, Shumlin and Smith could be singing a happy finale while the Gov, a la Tosca, leaps to his (political) demise off the top of the Golden Dome.

For the moment, though, Douglas is playing the part of the leading man (if not exactly a matinee idol) while the Democrats make like a slapstick comedy troupe. Friday morning, Shumlin and Smith said they were confident about ending the session by Saturday as they and their committee chairs neared agreement on taxes, school consolidation, and the “Challenges for Change” process. They were striding toward both adjournment and success.

Then Douglas pulled the rug out from under them.

He didn’t like what they had agreed on, he said, even though they had stripped out one small tax increase he opposed. While he didn’t exactly threaten another budget veto, he…well, he sort of threatened another budget veto.

The timing was interesting. Douglas didn’t express a single policy position he had not expressed before. From the beginning of the year, for instance,  he had called on the lawmakers to repeal the increases in the capital gains and estate taxes they passed over his veto last year. But until Friday, he had not hinted that he might veto the budget over this issue.

Now he did, using a more confrontational tone, perhaps because he no longer  had to be as accommodating. Earlier in the week, he and the Democratic leaders had agreed on a plan to shore up the state’s Unemployment Insurance fund. It was a compromise, but a compromise notably closer to what the Governor and the business community wanted than to what the Democrats and organized labor wanted.

So now it was no more Mr. Nice Guy?

No, that would be going farther than the evidence supports. So far, both sides are playing Mr. Nice Guy because it is in their interest. If Douglas seems to be strutting and bullying, he risks uniting the Democrats against him. To keep the support of some of their wavering members, the Democratic leaders have to appear to be willing to negotiate and compromise. That makes it easier for them to paint Douglas and the Republicans as the obstinate side in this dispute.

Still, while nobody was making predictions, Douglas seemed to be operating on the assumption that this time the Demos don’t have the 100 House votes they’d need to override a budget veto. (The Senate, with its 23-to-7 Democratic majority, would almost certainly override).

And for the moment at least, the Governor seemed to be right. Otherwise, the Democrats might not have agreed to drop the full implementation of the state’s share of a federal deduction for manufacturers, and then also give up on ending the sales-tax free status of dietary supplements. Democratic leaders of the House were walking around with sheets of paper listing the names of the Democratic members who might not support overriding the veto. These members, it can be assumed, were being pleased, prodded, placated, and pled with by those leaders.

But also by Douglas and his associates.

To override, the Democrats would have to get the votes of all 93 members of their caucus, all six Progressives, and at least one of the three independents. They can probably count on one of the independents, Rep. Paul Poirier of Barre, but at this point they are not sure about all the Progressives.

On straight policy grounds, the Progressives would be considered certain to vote with the Democrats. But Democratic leaders are wondering these days whether some of the Progs have political or personal agendas that might impel them to vote with Douglas, as much as they disagree with almost everything he does.

The Dems could give up on the depreciation and dietary supplement taxes because they wouldn’t produce that much revenue. But the bigger tax cuts the Governor wants in the estate and capital gains levies would be harder for the Democratic leaders to accept. Those taxes bring in some $21 million a year, and cutting that revenue would require more budget cuts than the ones already made under both the regular budget process and the “Challenges for Change” enterprise, which is supposed to make government more efficient, but which also requires some straight-out spending reductions.

So if you hear hints that Legislative leaders are thinking about even scaling back those taxes, you can assume they’re having trouble getting enough commitments to override.

But then it would also be a mistake to underestimate the extent to which all the statement pro and con are theatrical. This end-of-session positioning – not just in Montpelier, but also in Albany, Austin, Sacramento, Cheyenne, or the big one down in D.C. – is also posturing. It is, to use the term of Notre Dame political scientist Robert Schmuhl, stagecraft as well as statecraft, an artificial production in which the script calls for all performers to talk tough until they arrive at a harmonious compromise.

Or don’t.

Because no one should be surprised that Douglas and his associates are pushing their agenda as hard as they can. This is Douglas’s last budget, and therefore his last chance to advance his basic policy outlook: less government spending in general, less education spending in particular, lower taxes on business and upper-income earners.

Nor should anyone be surprised if, as many Democrats suppose, some of the Governor’s associates are pushing that agenda even harder than he is. They can’t be confident that Lt. Gov. Brian Dubie will hold the governor’s office for the Republicans.

For instance, in a detailed, 13-page letter to the Legislature on May 3, Finance and Management Commissioner James Reardon (pirated here from the valuable VT Digger web site; it seems not to be on the state government’s site)) claimed that the Legislature’s budget was based on “an unstable foundation of higher taxes and deferred spending decisions which threaten the long- term viability of the State’s economic engine.”

Referring to the tax increases adopted last year, Reardon wrote that “businesses have been clear that these taxes are hindering growth and the necessary reinvestment in our economy essential for its growth. Rolling back these taxes is a critical first step to getting Vermont on the path back to fiscal health.”

The reality that there is at this point no evidence that Vermont’s growth has been hindered by anything at all except for the nationwide Recession is irrelevant here. Reardon’s letter was a political document, part of the end-of-session theatrics, not a dispassionate fiscal report.

What seems not to have been part of the discussion is the possible broader political impact of this squabble, and here the Republicans might face worse consequences than the Democrats. In addition to insisting on repeal of those taxes, Douglas also wants the Legislature to require school districts to consolidate, as opposed to merely suggesting and providing financial incentives for consolidation, as the Democrats propose. There may be broad agreement that Vermont’s 280 school districts are too many. But imposing consolidation by state law violates the “local control” so central to the state’s self-image (even if it may not really exist any more, a subject for another day). And spending less on schools or on the mentally handicapped in order to cut taxes on wealthy individuals is always risky politics.

Media Note: This web site occasionally critiques Vermont’s major news organizations such as the Free Press or Channel 3 because they’re important and because they’re big boys; they can take it. It has not bothered with St. Johnsbury’s Caledonian-Record because it is neither and because critiquing it could be a full-time job.

But some entries are too ridiculous to ignore. Such was the Cal-Rec’s lead story on Saturday: “Angels Say Clyde River Hotel Houses Spirits.”

No, reporter Robin Smith did not claim to be quoting literal angels, just the owners of East Coast Angels Paranormal Investigations, a Connecticut-based outfit to whom the owners of Island Pond’s Clyde River Hotel seem to have paid American money (though only expenses) after hearing strange noises in the 144-year-old building.

There’s a good story in there somewhere, and the reporter did note that perhaps the owners are talking openly about their haunted hotel because they could use the publicity. But the minimum requirement here is at least a smidgen of skepticism that  anything ever really haunts houses (or hotels), or that the kind of “spirits” the East Coast Angels folks said they discovered actually exist. There was no such smidgen in the story.

Note to the Cal-Rec: Next time you quote a fellow bragging about his degree in “demonology,” you might point out that demonology is not a recognized academic discipline.

Some time today, the Douglas Administration and the leaders of the Legislature either will or will not reach agreement on how to restore Vermont’s depleted Unemployment Insurance Trust Fund.

If they do agree, the Legislature will pass a bill that Gov. Jim Douglas will presumably sign.

If they don’t, the Legislature will pass a bill anyway, effectively daring Douglas to veto it.

According to sources privy to the negotiations that went on most of Thursday, Douglas is holding out for a compromise that cuts unemployment benefits more than the Democrats are willing to cut them.

But even without an agreement, it might be politically difficult for Douglas to veto whatever the Legislature passes. It’s the Governor, after all, who has been insisting for months that the UI Fund has to be made solvent immediately, if not sooner, to avoid fiscal catastrophe.

Actually, the state and its unemployment compensation system would survive if the Legislature went home without doing anything about the UI Fund. No matter what the lawmakers and the Governor do, the Fund will still be broke next year, and the year after that, and the year after that.

But Douglas is right when he argues that it would be better to put the Fund back on the road to solvency sooner rather than later. To pay unemployment benefits, the State is borrowing from the Federal Government. Without paying interest this year. Next year, the interest payments start. The longer the Fund is in arrears, the longer the borrowing will go on, and the more the interest payments will add up.

State officials have known this problem was pending for at least a year. As is common in the political world, they got serious about solving the problem about a month ago.

Well, what was the hurry? After all, the actual numbers involved aren’t that huge, so this seemed the kind of dilemma that could easily by worked out. It would require tiny tax increases on businesses. Or maybe, according to one proposal, even tinier – and temporary – tax increases on all workers. And perhaps some modest reductions in the benefits paid to the unemployed.

That would indeed sound like an impasse almost begging to be solved by reasonable compromise. But only for those who do not know the history of this issue, and the explanation for how Vermont got into this pickle in the first place.

Happily, the explanation can be brief: Vermonters were dumb, dumb, dumb, dumb. They were boneheaded. Or perhaps fatheaded. They erred.

And this was all of them.  Not just the Republicans or the Democrats, or business or labor, or the Administration or the Legislature. Everyone.

The financing of the Unemployment Insurance Trust Fund is very complicated, but the dumbness was very simple. The fund is financed by a small tax on employers, a percentage of only the first several thousand dollars of each workers’ pay. It’s called the Taxable Wage Base.

Last year the Legislature and Douglas agreed to raise that base from $8,000 to $10,000. That was actually not dumb. What was dumb is that until last year the Taxable Wage Base had not gone up for 25 years.

Twenty-five years of economic growth, including higher wages and higher prices. Considering that unemployment benefits are supposed to comprise a respectable percentage (roughly 40 percent) of the unemployed person’s pre-layoff wages, any fool would know that the Fund that pays those benefits would have to keep growing, too, or else it would run dry the next time unemployment rose.

Any fool but these Vermont fools.

In 1983, according to figures compiled by the National Employment Law Project (a liberal group, but its numbers are reliable) almost half of all wages were subject t UI taxes. By 2008, “the ratio of total wages to taxable wages had fallen to roughly 25 percent,” the Project found.

For this foolishness there are two explanations, one at least as old as the Tulip Panic (circa 1637), the other more recent.

The first is humankind’s incurable delusion that good times will last forever, so why plan for bad times? Businesses didn’t want to pay any more, politicians didn’t want to raise anybody’s taxes, and Organized Labor was happy enough because the jobless benefits kept rising. We could all afford it; hardly anybody was unemployed, anyway, so they could get generous benefits.

The second – more contemporary – delusion is that all tax increases, no matter how tiny, are always a mistake that will suppress economic growth. In this case, the tax amounts of 0.89 percent of total wages in 2009, according to George Wentworth, the project’s Unemployment Insurance Modernization Coordinator.

To their credit, Vermont business leaders (and the Governor who is usually allied with them) now realize that they should have agreed to small UI tax increases several years ago, and are willing to pay them now. Ironically, there is a better argument that even these tiny tax hikes will suppress economic growth during a recession, though they would have been an unnoticeable blip earlier.

Well, if the business community and Douglas are willing to accept higher UI taxes, what’s the problem?

The problem is that they also want lower unemployment insurance benefits. And they want these lower benefits to be permanent, so that unemployed workers in Vermont will continue to get less money per week forever.

Not necessarily less than they get now, but less than they would get under current law.

To labor advocates, such as Christopher Curtis of the Vermont Legal Aid Society, these proposals mean the Douglas Administration is “using the present (Trust Fund) crisis to reduce benefits far beyond the level needed to restore (the Fund).”

That’s true, not because Douglas, Labor Commissioner Patricia Moulton Powden and other officials are heartless beasts intent on starving the working class. It’s because they are convinced that some workers are gaming the Unemployment Insurance system, preferring to stay home and live off their benefits rather than trying to get another job.

“The Governor says some people work six months a year and then go to Florida,” said someone familiar with the negotiations going on between the Administration and the Legislative leaders.

Obviously, there are such people. There do not, however, appear to be very many of them, and the belief that large numbers of people would rather lie around and collect unemployment benefits than work for a living, while widespread, seems rare in, if not absent from the peer-reviewed economic literature.

In fact, a recent study by economists at the Federal Reserve Bank of San Francisco concluded that recent extension of unemployment benefits had only a “modest effect” on total unemployment. Extending benefits, to be sure, is not identical to the generosity of benefits. But Vermont’s aren’t all that generous. The average weekly benefit of $304 is 25^th in the nation, and the $425 maximum ranks seventeenth.

Besides, concluding that many people would rather earn less money than more money is something of a refutation of a basic tenet of capitalism, which rests on the premise that individuals rationally pursue their economic self-interest. Deliberately deciding to cut one’s income by more than 50 percent does not seem a rational economic pursuit.

If anything, Vermonters stay on unemployment less workers in other states. The average length of stay in the system has been 14 weeks, though Powden said it had recently ticked up to at least 15 weeks. Very few unemployed Vermonters stay on the unemployment rolls for the 26 week maximum. Most unemployed Vermonters, it seems, want to go back to work.

From one perspective, then, the Administration might be trying to solve a problem that does not exist. But Powden said that because Vermont has a high proportion of seasonal workers (ski resorts, and all that) some people are “utilizing the system to their advantage,” and “may choose unemployment” for part of the year thanks to Vermont’s “fairly generous benefits.”

She acknowledged that she was describing less than 10 percent of those who receive benefits, but said perhaps some of the seasonally unemployed “who know their job is coming back maybe should be getting a lower amount” to create “an incentive to get back to work.”

The problem seems to be that most of the formulas that will lower those benefits would also lower the benefits of many workers who don’t know their job is coming back, and are already trying as hard as they can to find work. The negotiators were seeking what one of them called “creative ways” to threat that needle.

But first, some correction and amplification:

Until about 1:15 PM Friday, readers of Friday’s post may have understood that the State Senate was toying with the idea of diverting $6.89, otherwise known as six dollars and eighty-nine cents, from one fund to another.

Presumably most readers of this web site are alert, more alert in this case than is, at least sometimes, the writer of this web site, and understood that what the meant was $6.89 million.

But what’s few zeros among friends? And thanks to the readers who noted the omission.

Also, Sen. Ann Cummings is chair of the Senate Finance committee, not, as Friday’s post said (again, until corrected), the Appropriations Committee. Susan Bartlett is Appropes chair.

Something else was absent from Friday’s post because it was not clear on Thursday, at least not to the News Guy, and apparently not to many legislators. That $10 million to be raised by considering some capital assets – expensive houses, stocks and bonds, etc. – when applying the “income sensitivity” provision on the statewide school property tax is not slated to go into the Education Fund.

Instead, for the first time, money from the school property tax would go into the General Fund.

Like any policy change, this one might be defensible, or even wise. But it does stretch if not violate the understanding that the school property tax would be used to support the schools, not the rest of state government. It’s only $10 million, but when it comes to taxes, experience shows that the first exception is rarely the last.

Now, to today’s main order of business, also inspired by readers who have communicated by email, old-fashioned phone calls, and even older-fashioned personal conversations (you may remember them; the kind where the conversers are actually in the same place at the same time).

The question: why, right after the entire United State Government adopts a comprehensive change in the health care financing system, is the Vermont Legislature passing a bill to study comprehensive change in the state’s health care system?

Good question, because it can be answered with one word: politics.

That’s a description, not a condemnation. Politics, the method by which free people govern themselves, is not a pejorative. It’s a reality.

The political reality against which lawmakers have based their political decision to pass S.88 http://www.leg.state.vt.us/docs/2010/bills/Senate/S-088.pdf (in separate House and Senate versions that have yet to be resolved) is that Vermont is home to a politically significant  minority of voters who are convinced of the superiority of a ‘single-payer’ health care financing system—basically Medicare for everyone.

No, that was an understatement. These folks are not merely convinced of the superiority of a single payer system; they are committed to such a system with a fervor approaching that of a religious zealot’s  devotion to his faith, with comparable intolerance toward dissent.

This too is description not (except for the intolerance part) condemnation. Clearly, there is a case to be made for a single-payer system. It is how most civilized (prosperous, democratic) countries finance health care. In those countries, everyone is covered, they live longer, healthier lives than Americans, and it’s all done for a lot less money per person.

The focus here today. Though, is not on the policy, but on the politics, the first requirement of which is, in the words of  Richard J. Daley to “know how to count,” raising the question of how big is this constituency of single-payer enthusiasts.

Not very. Nobody has polled on the matter, but we are almost surely talking about less than 10 percent of the adult Vermont population, though probably more than five percent. For purposes of discussion, then, let’s say seven percent, or about 20,000 voters.

Ah, but it’s a strategically positioned seven percent. Just about every one of them identifies with either the Democratic or the Progressive Parties. Furthermore, just about every man (and woman)-jack of them will vote. Unless the Progressive Party puts up its own candidate for governor, most of them will vote in the Democratic primary in August. In what is likely to be a low-turnout election, this faction will make far more than seven percent. It could come close to a majority.

Obviously, then, two outcomes Democrats – and especially Democratic candidates for governor — want to avoid are: (1) Displeasing these primary voters and (2) Annoying the Progressives so much that they decide to find a gubernatorial candidate of their own, who would siphon off more votes from the Democratic contender than from Republican, Lt. Gov. Brian Dubie. Months ago the Progs declared that Democratic support for a single-payer health care system was among their sina qua nons for staying out of the race.

So it should be no surprise that Sen. Doug Racine, one of the five Democrats running for governor, introduced the bill to engage a consultant to study health care reform, with specific directions to look into the single-payer option. No surprise either that few Democrats opposed it.

There is no suggestion here of insincerity or cynicism on the part of Racine or the other Democrats. Racine has long been a single-payer proponent. He no doubt thinks it would benefit Vermont, and he could be right.

(Or not. If there is a strong case for the entire nation to adopt a single-payer system, there is an equally strong case for a single state to avoid it, for reasons to be discussed in another post soon).

Nor is the earnestness of other Democrats and Progressives in the Legislature open to doubt. Judging from a couple of overheard conversations outside the second floor cafeteria in the Statehouse the other day, some of them are so solemn and intense about the subject that they may have lost touch with reality.

But sincerity and political self-interest are not mutually exclusive, and there seems little doubt that whatever else they may be doing, the Democrats are pandering to one of their core constituencies. Absent that intense minority of single-payer enthusiasts, this bill might never have come before the Legislature.

Again, this is observation, not condemnation. All political factions pander to constituencies. Gov. Jim Douglas, for instance,, has of late been pandering to the home builders and the all-terrain vehicle riders. Politicians not only have to pander, but up to a point they should. It’s part of democracy.

The point at which they should not pander, of course, is reached when the interest of the pandered-to constituency is actually contrary to the public interest. But that does not seem to be the case here. The worst that can be said about this consultant study is that it will spend $250,000 that may not have to be spent. As unnecessary expenditure, this is small potatoes, and for a function likely to be more productive than the comparable expenditure on the pointless pornography-detecting software the Douglas Administration is in the process of installing on state computer systems.

Besides, the process might do some good. The consulting firm is likely to look at the possibility of replacing the fee-for-service method of paying doctors. Many health care economists consider fee-for-service second only to the high price of prescription drugs as an explanation for why health care is so much more expensive in the U.S. than elsewhere.

But the consultant report will not pave the way for Vermont to adopt a single-payer health care system. That’s because Vermont, on its own, is not going to adopt such a system, not now, and possibly not ever. Federal law forbids it until at least 2017, and while Congress could theoretically grant the state a waiver from the prohibition, the prudent Vermonter would be advised neither to hold his/her breath nor to bet next month’s mortgage payment on that outcome.

The real – if not, it should be stressed, the intended — purpose of this legislation is not to change Vermont’s health care system. It is to send a signal to a small but potent constituency. It seems to have worked.

‘You,’ in this context, is the Vermont citizen taxpayer. ‘They’ are the six people with ambition to lead the government of said citizen-taxpayers, all of whom have recently released their 2009 federal income tax returns.

Let’s deal with “them” first, because it’s simpler and quicker, starting with this indisputable and somewhat surprising piece of information: Not one of them is filthy rich.

Peter Shumlin, the Senate President from Putney (and a Democrat, as are they all except Lt. Gov. Brian Dubie, so we won’t have to keep specifying party labels here) comes closest.

Shumlin reported $974,732 in total income last year, most of it – more than $617,000 – from rents and royalties, and about $286,000 from wages and salary. He paid $271,870, or about 27 percent of his total income, in federal income taxes.

He sure wasn’t cheating on his taxes. Many taxpayers at that income level pay far less of it to the feds.

Shumlin is in Vermont’s top income bracket, but he’s small potatoes compared with – just to take one example out of the blue – Barack Obama, who cleared more than 5 million clams last year, mostly royalties from the books he’s written.

Not to mention compared with Sen. John McCain, who couldn’t remember exactly how many houses he owned when he ran against Obama in 2008. By national political standards, Shumlin is a piker. Even in Vermont, that kind of income doesn’t quite meet the “filthy rich” level, unless someone earns it for so many years that he acquires huge amounts of property and other capital.

Shumlin, a businessman who is, among other things, a director at Putney Student Travel, which arranges foreign trips for students, seems to be in the early stages of that process. But it would take him a while to get to the filthy rich level, and if he gets elected, being governor might prove too great a distraction.

The rest of the field doesn’t even qualify as rich, though all would seem to be comfortably affluent. The incomes range from a low of $95,969 (Sen. Susan Bartlett) to $198,435 (former Sen. Matt Dunne). In the middle were Dubie ($165,395); Sen. Doug Racine ($136,192) and Secretary of State Deb Markowitz ($122,614).

The lesson here appears to be that one need not be a multi-millionaire to get elected governor of Vermont. While it’s probably not true that anyone can be governor – all the contenders earn substantially more than the typical Vermonter – a whole lot of people can reasonably aspire to the state’s top job.

Taken together, the only outstanding revelation in the tax disclosures is that…there is no outstanding revelation in the tax disclosures. Judged by their tax returns at least, the gubernatorial field is a bunch of moderately successful, law-abiding, respectable folks.

Oh, and maybe bland.

In fact, the returns are so unexciting that there is no point in going into detail about them here. Whoever is interested can get them on line, though not via the candidate web sites. Try the web sites of the major newspapers or TV stations.

Now to your money, or at least the part of it the state is going to tax. There were a couple of interesting if tentative developments at the Statehouse yesterday.

One is that the Senate seems to be intent on raising the statewide property tax two cents higher than the House voted for or the Douglas Administration proposed.

It’s right there in a document the Senate Appropriations Committee prepared to explain the differences between the two houses over H. 783. The Senate would set the education property tax rates for Fiscal Year 2011 at $1.37 for nonresidential property, and $0.88 for “homestead property,” in both cases two cents higher than the House version.

This displeased some House members, especially Rep. Ann Manwaring of Wilmington. She said the Senate was supporting an Administration proposal to shift $6.89 million in federal funding for Special Education Revenue into the General Fund, thereby shorting the Education Fund, where these monies had gone in the past.

Actually, she didn’t just say this; she had a document to back it up, a list of proposals from Senate Appropriations.

But the document had the word “Draft,” penciled on top in big capital letters, and Shumlin warned, “at this stage in the session, don’t take seriously anything the House says about the Senate, or the Senate about the House.”

Perhaps some bargaining is taking place.

As it seems to be on another issues, raising taxes on people who don’t earn a lot of money and therefore qualify for the “income sensitivity” rebate on the statewide school property tax even though they might live in a million-dollar home and have other assets.

Stories about such incidents, including this one in the Burlington Free Press have annoyed if not enraged some folks, many of whom would agree with Senate Finance Chair Ann Cummings, who said “they should probably sell (their expensive house) and pay taxes on a smaller house.”

The annoyance is understandable, but in some ways this seems like a fake issue. As Sen. Mark MacDonald of Williamstown noted, the statewide property tax isn’t really a property tax. It was designed to tax most people on the basis of their income, not on the value of their property. Only the wealthiest, he said, are really taxed primarily on the value of their property.

This is not entirely true. A $70,000 household whose statewide property tax bill was only about $1,700 would be taxed on the value of its property, because the bill is less than 2.5 percent of its income, the current maximum.

But this is probably rare. Like other Americans, most Vermonters no doubt buy as much house as they can afford, if not more, so most households earning less than $90,000 (and that’s a large majority of households) have their tax capped on the basis of their income.

The proposed changes, MacDonald said, would “create a tax on these people that never existed,” forcing them to pay on the basis of the value of their property rather than their moderate incomes.

The beneficiaries, he said, would not be modest-income people in more modest houses, whose tax would remain capped according to their income, but the very wealthy, most of whom pay no more than half a percent of their income in the statewide school tax.

But Cummings said the change might bring in as much as $10 million. Considering the budget crunch, lawmakers are unlikely to resist some formula for raising taxes on the opulently housed but moderately paid.

As of yesterday, the Census Bureau web site showed that Vermont had a 65 percent rate of returning 2010 Census forms. That was better than the 56 percent recorded April 6. But it still lagged behind the national rate, by the same four percentage points.

And this is supposed to be the most educated state in the union?

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The late Sen. William Scott

Thanks (or perhaps more accurately, no thanks) to missed phone calls and the varying schedules of both parties, the News Guy’s report on the wisdom, or lack thereof, of stocking Vermont rivers with “put-and-take” adult trout (Taking Stock, April 9) lacked the key information of how much the Fish and Wildlife Department spent on this activity.

Tom Wiggins (inexplicably called “Wiggin” in the original post; apologies to him) reports that the total cost of the program this year will be approximately $4.57 million, $2.85 million to staff and operate the hatcheries, and $1.72 million for to administer the actual stocking.

This money does not come from the taxpayers. Wiggins said about 75 percent of is from federal funds obtained from the excise tax on fishing gear, and the other 25 percent is from the money anglers pay for their fishing licenses ($20 for a Vermont resident).

Still, every penny the Department spends on stocking is a penny it can not spent on habitat protection, which all the biologists agree is the best method for providing healthy fish populations in the long run.

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Ken Page is a mentsch.

Page is the high school principal — indeed, the head of the Vermont Principals Association – teased (if not downright ridiculed) in last Monday’s post (“Three for Monday,” April 12 ) for ungrammatically saying “less students” instead of the correct “fewer students.”

A lesser man might have been resentful, or at least have ignored the attack. Not Page, who sent an email with the subject line “guilty as charged.” He was wrong, he knew it, and he said so.

And for whatever it’s worth, Arne Duncan, the Secretary of Education of the entire United States of America, made the same mistake last week.

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Last Thursday was, of course, Tax Day, a day Americans have been conditioned to revile even though about 80 percent of all tax filers got or will get refunds, according to IRS figures. Furthermore, almost everyone is paying less in federal income taxes this year than last year.

That includes Vermonters. According to Sen. Bernie Sanders, 99 percent of Vermont working families and individuals “received a much-needed average federal tax cut of over $1,100 for 2009.” In addition, he said, “14,000 Vermont families were able to receive an expanded tax cut to send their kids to college last year (and) nearly 60,000 Vermont small businesses received tax cuts to purchase new equipment and other things.”

For those who find Sanders a less than reliable source, everything he said checks out, except calling the tax cut “much-needed” which is of course his assessment, but one that will not be disputed here.

Speaking of federal taxes, another reason Vermonters ought to temper their displeasure about them is that they got back more than they pay out to the feds.

According to the latest tabulation by the Tax Foundation, Vermont’s individuals, businesses, and governments get $1.08 for every dollar Vermonters pay to the feds (that’s total federal taxes, not just the income tax).

That puts Vermont right about in the middle – 26^th – of the rankings, which, truth to tell, might not mean much. The states that get back the most – Alabama led, getting back $2.03 for every dollar – tend to be the poorest, while those at the bottom – New Jersey got back only 61 cents – are generally the wealthiest.

Actually, that’s the way it’s supposed to work.

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Some years ago there was a U.S. Senator named William Scott, a Virginia Republican. In 1974 New Times magazine published an article noting that Scott had been named “the dumbest Congressman” by an organization affiliated with Ralph Nader.

Since New Times had little clout in Washington and less in Virginia, Scott’s best option was obviously to ignore the designation. He did not. Instead, he called a press conference to deny the description, thereby confirming it.

An incident brought to mind recently when the Rutland Herald ran an editorial titled “Prism of Paranoia” arguing that Republicans were motivated largely by “festering anger.”

Like all editorials, this one was rebuttable. Alas, in his letter rebutting it, Steve Larrabee, the Chairman of the Vermont Republican Party, displayed no small amount of…well, anger.

The assertion that “all we have to offer is anger is false and misleading,” not to mention “reprehensible and unjustifiable,” Larrabee wrote, adding, “I can only conclude that this is intentionally so.”

Larrabee’s letter did not rise (or perhaps sink) to what we might call Scottian levels. He did provide some factual evidence to support his argument that the GOP has more to offer than anger.

But here’s some free advice to political operatives responding to condemnation: when criticized for being angry, respond with wry amusement, biting sarcasm, sardonic satire or the like. Not with anger. He may not be a model Republicans want to follow, but Robert Kennedy’s advice remains sound: “Don’t get mad. Get even.”

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And finally (and again, for what it’s worth) from Vermontbiz.com , the online version of Vermont Business Magazine, comes word that the folks at U-Haul International found that many more people are moving into Vermont than out of it.

In fact,  said U-Haul President of Phoenix Operations John “J.T.” Taylor, “for states with 5,000 – 20,000 families moving, Vermont had the highest (in-over-out) percentage, with a growth rate of 16.67 percent in 2009, moving Maine to second place after two years of ranking first”

Obviously, the U-Haul folks count only those who move in and out with U-Haul vehicles, and the statement read more like an advertisement than a data-based research report.

Still, for what it’s worth…