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

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

So who was right?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To be explored tomorrow.

Tags: Jim Douglas, The Budget

This entry was posted on Thursday, May 28th, 2009 at 12:08 am and is filed under Politics & Elections, Schools, Taxes, The Legislature. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.