In his last State of the State address, Gov,. Jim Douglas demonstrated once again that he is tenacious, determined, single-minded, and bold.

And maybe a little clueless?

It was a fairly long (5,917-word, 50-minute) speech to the Legislature, clear if not eloquent in composition, crisply delivered, politely received.

And familiar.

In fact, if some in the audience thought they had heard similar sentiments similarly expressed not all that long ago, they were right. Similar statements had been similarly expressed a year and a day ago in the same place by the same speaker, in his fourth inaugural address.

Leading some to wonder why, early in the speech, Douglas warned his listeners not to “choose to recycle old ideas and hope for a different outcome.”

In this case, the governor recycled some of his old ideas, including several that he’d proposed last year. He didn’t get them then. If he’s hoping for a different outcome this time, he would seem to be ignoring his own advice.

After all, little has changed. It’s the same Legislature that ignored most of his proposals last year and over-rode his veto twice. If anything, the lawmakers are more confident than they were a year ago, especially because one thing that has changed is that Douglas decided not to run for re-election.

In other words, he’s a lame duck. He keeps insisting that he isn’t, though he is, or at least that it has not weakened him politically, which would be a first in the history of the country, if not the world.

So why did he make the same controversial (and probably doomed) proposals again?

Because he really believes in them. Because he’s tenacious and bold. Because he thinks this time he might prevail.

Or because he’s clueless.

As he did last year, Douglas urged the Legislature to set a cap on local school spending. It didn’t. As he did last year (though in slightly less blunt language) he called the school finance system “broken,” implying that the lawmakers should replace it. As was true last year, he didn’t specify what the replacement would look like, leaving that to the lawmakers. Perhaps because most legislators don’t agree that the system (Acts 60 and 68) is “broken,” they came up with no replacement last year. They won’t this year, either.

But Douglas did not stop at recycling his old ideas that were not adopted. No, bulling right ahead with little hope of success, he came up with some new ideas that are almost certainly not to be adopted, as follows:

–Repeal – or at least pledge to repeal in the near future — the capital gains and estate tax increases adopted last year;

–Require teachers to pay 20 percent of their health insurance premiums;

–Trim the “income sensitivity” provision of the statewide education property tax so that middle-income homeowners pay more and the wealthy pay less. (of course, he didn’t word it quite that bluntly, but that’s the gist of his proposal);

–And while this was more a suggestion than a specific proposition, Douglas made clear he thought it would be a good idea if all the teachers emulated state workers and took an immediate three percent pay cut.

(Not an outlandish idea, but unrealistic. The state employees agreed to the cut in their new, statewide, contract. Teachers contracts are district-by-district, and they do not all expire at once).

It was hardly necessary to wait until the speech was over to figure out that Douglas was not convincing the legislators. Six times the audience in the House Chamber interrupted the speech with applause. But except for the early support for his tribute to Vermonters fighting (or soon to be) overseas, almost all the clapping came from the balcony, full of old friends and administration officials.

Down on the floor, where the lawmakers sat, few applauded except for the stalwart but decidedly outnumbered Republican contingent—50 of 150 House members, seven of 30 senators, and not all of them firm Douglas allies.

Perhaps because they know they have the votes and Douglas doesn’t, the Democratic Legislative leaders were relatively restrained in their post-speech comments. Snate President (and Democratic governor hopeful) Peter Shumlin and House Speaker Shap Smith both said they were willing to discuss the governor’s ideas. Sen. Susan Bartlett of Morrisville, another candidate for governor, called the speech a “pragmatic first step” in this year’s legislative process. Sen. Doug Racine of Richmond, yet another gubernatorial hopeful, said he agreed with Douglas that the state is in a “tough” fiscal bind.

Then, bit by bit, they began to say what they really thought. Douglas’s proposed tax cuts would “reduce Vermont revenue by roughly $28 million,” Shumlin said. Bartlett said that Douglas “wants to have his cake and eat it, too,” because he didn’t call for repealing the income tax cuts adopted last year, only the capital gains and estate tax increases.

Racine said the speech sounded like “a list of the things he promised to do seven years ago and failed to do,” such as extending broadband Internet service statewide and cleaning up Lake Champlain. And Sen. Mark MacDonald, a Williamstown Democrat, said Douglas’s proposed changes in the income sensitivity mechanism would “raise the property taxes of working Vermonters and cut them for out-of-staters,” some of whom own large tracts of land. Income sensitivity used to hold down the tax bills of 80 percent of Vermonters, MacDonald said. It is now down to 70 percent, and Douglas wants to reduce it further.

Despite these dismissals, a few of Douglas’s proposals might actually get adopted, though probably with some alterations. Regardless of party, almost everybody in state government agrees that public education in Vermont is expensive, in large part because there are, as Shap Smith put it, “legitimate questions about the pupil-teacher ratios.”

They are very low, 11-to-1 statewide, Douglas said, and he proposed “a mechanism to fill only one vacancy for every two retirements.”

A politically sophisticated plan, because it doesn’t require firing anyone, and because raising the ratio to 13 to 1, as he suggested, hardly degrades the quality of education. Perhaps not a realistic plan, though. It’s based on statewide numbers, but teachers neither teach their classes nor retire statewide. They do it school by school, where the numbers may not always add up (or subtract down) precisely the right way to allow reducing faculty without letting some classes get too big.

Still, here’s one area – quite possibly one of the few– where the legislators might build on (or off) one of Douglas’s proposals.

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.)

But first, everyone, especially those who read Friday’s post before it was corrected at about 10AM, is urged to scroll down to read the special Sunday post explaining what went awry, and why,

Now let’s deal with the forest-trees problem in re: the Democratic primary for governor and perceptions thereof.

Whether some people are so carefully examining the trees that they can’t see the forest, or vice versa, makes no difference. In general, observers have been so carefully scrutinizing the numbers (with five candidates, one could win with less than 30 percent of the vote, etc.) that no one has noted that the contest has taken form.

Racine

Not over strategy or tactics, either. Over policy. One of these guys wants to raise taxes.

Somehow, because the “narrative” has been created and set in stone that the five Democrats don’t disagree on much, the emergence of a real disagreement has been all but ignored.

Not that State Sen. Doug Racine of Richmond has come out and proclaimed in so many words, “I want to raise your taxes.” Nowhere on the home page of his campaign web site does the word “taxes” appear.

But he isn’t being cute about it, either. What is prominent on his web site is a link to his November 20 appearance on Vermont Public Radio’s Vermont Edition, where Racine clearly said he thinks the answer to the state’s budget shortfall has to include some new revenue.

That means higher taxes.

On that program, and again in an interview last week, Racine said his policy was modeled on what Gov. Richard Snelling, a Republican, did when the state faced a similar revenue shortage in 1991. Working with a Democratic Legislature, Snelling did cut spending. But to ease the impact of spending cuts, especially on the poor and the ill, Snelling and lawmakers agreed on temporary tax increases.

“(Snelling) went to Vermonters and said, look we’re all in this together, we’re all going to feel a little bit of the pain,” Racine said on the radio, calling for the same “balanced approach” to be used next year, when the state faces a revenue-spending gap of at least $90 million.

Racine said he, too, would cut spending, would “try to find efficiencies in state government, and think about using the rainy day funds.” But some new revenue would probably be necessary, he said.

How much and how it would be raised he has not yet figured out, he said, adding that he and some campaign aides were trying to work out the details of a specific proposal.

The other four Democrats running for governor haven’t absolutely ruled out calling for any new or higher taxes. But neither have they come close to suggesting any such thing. In a recent article on “the state budget problem” on her web site, State Sen. Susan Bartlett of Hyde Park spoke only of the need for cutting the General Fund budget and holding down school costs. Senate President Peter Shumlin of Putney announced his candidacy last month saying, “Vermonters cannot  bear more of a tax burden.”

(Although he said much the same thing earlier this year, but then put together a budget package that included higher taxes for upper-income earners; Racine and Bartlett voted for it).

The other two candidates, Secretary of State Deb Markowitz and former State Sen. Matt Dunne of White River Junction have said little about how they would deal with the impending budget problem.

So Racine is taking a gamble. Most people don’t want to pay higher taxes. As Racine himself said, the Democratic field is strong. Most Democratic voters would be reasonably happy with any of the five. So why wouldn’t most primary voters choose one of the four who doesn’t call for higher taxes, even if they’re advertised as temporary?

(The 1991 tax increases were rescinded in 1993 as scheduled, though the sales tax was later raised back to five cents; it is now six cents).

“Running for office is a gamble,” Racine said. “I’ve run for office before. Maybe it’s a function of my age. I’m telling people what I think.”

But just looking at the politics of the situation, maybe it’s not such a foolish gamble. One way to carve out a plurality victory in a five-person Democratic primary is to appeal to the social welfare liberals – call them the “One Vermont” constituency, after the group that formed last year to fight cuts in programs that help the poor.

These voters are likely to make up a heavy share of the Democratic primary electorate, and if they unite behind one contender, that candidate would probably win the primary.

Traditional political strategy calls for the candidate then quickly to trim back to the center for the general election. But as Racine acknowledged, in this case, that would be close to impossible.

“If you’re out there. It’s really hard to trim back because you’re not trimming, you’re contradicting,” he said. “It would hard for me the day after the primary to say I didn’t mean everything I just said.”

So should he win the primary, the Republicans, presumably led by Lt. Gov. Brian Dubie, would undoubtedly – and credibly – assail him as a “tax and spend liberal.”

Not as deadly a label in Vermont as in many other states. But still a potential problem.

On the other hand, before the election – even before the primary — the Legislature, including three of the candidates, is going to have to pass a balanced budget for the state. Voting to cut programs for, say, poor, sick, children, might not be any more politically palatable than voting for a temporary tax hike.

But that’s for later. For now, the Democratic race has a structure. It even has an issue. And an obvious question for the other four candidates: Without any new revenue at all, exactly (and that means exactly, with numbers) how would you balance the budget?