“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.

For a greater understanding of this much-discussed “Challenges for Change” legislation passed by the House yesterday, consider the following objects (or perhaps concepts, or metaphors): the buckets, the silos, the function analysis, the Hail Mary pass.

The buckets were on the tables in the rooms where met the House “committees of jurisdiction,” which is Legislative jargon for the committees that deal with substantive stuff (natural resources, health care, education) as opposed to the functioning of government (appropriations, ways and means).

No, of course there were no actual buckets on the table. These were imaginary buckets, into which Legislative leaders urged committee members to place (imaginarily) the various proposals from the Douglas Administration. One bucket for the ideas the committee would accept, one for those it would reject, yet another for those in the “maybe” category.

Sure, it was a gimmick. But it seems to have worked. In a little more than two weeks, those committees went through the budget of almost every state agency, coordinated them with the “Challenge for Change” report from a consulting firm, and came up with a comprehensive bill designed to make state government work more efficiently, providing “more for less.”

Will it work? Nobody knows. It might not Even some lawmakers have their doubts, and worry that the end result will be little more than old-fashioned budget cuts which will reduce services for the poor, the sick, the elderly.

But “nobody knows” also means that the “Challenges” plan might work, at least to some extent. At any rate, what was evident in Montpelier yesterday – what has been evident there for the last two weeks – is that most legislators think it can work. Otherwise they wouldn’t have spent all that time and effort filling those “buckets.”

And fill them they did. The end result may be in doubt. The process was not. The lawmakers took their task seriously. They spent hours in long, boring discussions about “more effective delivery plans,” about “redesigning structure to improve outcomes,” about getting more people to file their income taxes electronically.

Perhaps because of the boredom,  reporters largely ignored the committee meetings. Maybe that’s why there seemed to be little posturing, political pontificating, or partisan wrangling. Speaker Shap Smith may have been self-serving when he said yesterday that the House had acted with “tri-partisan collaboration,” but he wasn’t inaccurate.

There were no actual silos in the Statehouse either. These are “funding silos,” and in a sense they are the problem the whole “Challenges for Change” project was designed to solve. Over the years, various programs – and the dollars to run them – have been put in different agencies even if the programs have the same goal.

Just to take one example, protecting the state’s water quality is handled by both the Agency of Agriculture, Food and Markets and the Agency of Natural Resources. Each has its own water quality “funding silo,” and while officials from the two departments co-operate, they don’t seemed to have eliminated duplication.

Legislators had hoped that the Administration, in making its proposals for implementing the “Challenge” bill, would try to combine or merge some of these “silos,” and at least some of the lawmakers were disappointed by the results.

“I had anticipated some creative responses,” said Sen. Virginia Lyons, the Williston Democrat who chairs the Committee on Natural Resources and Energy. “I haven’t seen that.”

Engineering her own creative response, Lyons invited Tanya Marshall of the Archives and Records Administration, a division of the Secretary of State’s Office, to appear before her committee Wednesday. Marshall has information relating to the silo situation, though she doesn’t use that term. She talks about function analysis.

“We take the whole, large, complex aspect of state government and break it down into simple components,” she said. “We track legislation, we track the agencies, we track the government functions over time and map them so we link the relationships.”

So, she said, if two agencies are duplicating each other’s efforts, “we’ll be able to understand how they’re connected and can help them achieve efficiencies.”

What Marshall’s office has is essentially a record of almost every function performed by most state agencies for years. A careful analysis of those records could, at least in theory, reveal where agencies were getting in each other’s way and replicating each other’s work.

Does that mean that instead of paying a consulting firm $286,000 for the “Challenges for Change” report, the Legislature and the Administration could have gotten the same results cheaper by calling Tanya Marshall?

Not really, she said, because some agencies don’t provide all their records; it’s voluntary on their part. But, she added, the analysis her office does often reveals “significant overlaps (in which) agencies working in their own environment don’t necessarily know where there are overlaps.”

Even though some subdivisions of the Agencies of Transportation and Nature Resources do not turn over all their records, Marshall said it was likely that there was some duplication in the process of approving permits for construction developments.

Whereupon we segue to the final metaphor – the Hail Mary pass.

As noted at the end of Wednesday’s post (scroll down) while most politicians talked about using the “Challenges” idea to “do more with less,” Gov. Jim Douglas wanted to use it to have the state government “do less with less.” He also had goals that went beyond the “Challenges” report, and he saw the report as a vehicle for accomplishing some of those goals.

So he attached part of his own agenda to the report.

No governor would do otherwise. Politicians (and everyone else) take opportunities when they see them, and Douglas saw the opportunity to accomplish two of his long-time goals: bringing down school spending and easing the permitting process for developers.

It was not only an opportunity; it was surely his last because he’s leaving office at the end of the year. With little to lose, he threw the long ball.

It was not a complete pass. His proposal to give the Education Department the power to consolidate the state’s 280 school districts to 50 or fewer went nowhere at all. His suggestion that most new construction projects be cleared under a “permit by rule,” which is essentially self-regulation, didn’t fare much better. The House Committee on Natural Resources and Energy did agree to allow that kind of permitting in two specific circumstances, and for one of them, even John Groveman of the Vermont Natural Resource Council said the consequences would be “benign.”

Groveman was less sanguine about the other one, allowing “permit by rule” for some projects in which industrial pollutants might endanger groundwater. But Rep. Tony Klein of East. Montpelier, the committee chairman with a strong environmental record, said the change was minor and posed no danger to water quality.

The changes, then, appear to be largely symbolic. But then so is the entire, seemingly unending squabble over “permit reform.” Sen. Lyons said she was “not sure there’s a permitting problem at all.”

There isn’t. It’s a tribal-psychological issue worth exploring another day.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Who?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NOTE: Today’s post wasn’t planned to be the first of two parts, but the subject ended up being too complex and too intricate to deal with in one sitting. Oversimplifying a bit—today the theory, Monday the down and dirty politics.´

Remember Ashley Ellis?

Don’t beat yourself up if you answered in the negative. Neither, it seems, do most Vermonters.

Ellis was the 23-year-old woman who was serving a 30-day sentence in the Northwest Correctional Facility in St. Albans last August when she died because she didn’t get the medicines she needed.

Her death was a story in the newspapers and on the air for a few days, until Franklin County States Attorney James Hughes decided not to press criminal charges. Then the whole affair faded away.

In an interview Thursday, Hughes said he found no evidence of criminal activity on the part of “any individual.” Prosecutors may bring criminal charges only against individuals. But Hughes’s answer implied that he wasn’t convinced that nobody had done anything wrong.

On the face of it, some person or organization did something fatally wrong. Ellis was not blameless. The auto accident she caused put a man in a wheelchair for the rest of his life. But her offense was a misdemeanor. She was sentenced to 30 days, not death. Even the most cursory examination of the details indicates that somebody – a doctor, a nurse, the Department of Corrections or Prison Health Services (PHS), the private company hired to provide health care to inmates – did something very wrong. Perhaps something inexcusably wrong.

From one perspective, it makes no difference. As quietly as possible, the matter has been dealt with. Conveniently, the state’s $16.4 million contract with PHS expires next month, and the company decided not to try to get it renewed. And according to reliable (if unidentifiable) sources, the nurse who didn’t get Ellis her medicine has been fired.

But the public will probably never know the details. Nor are the policy implications of Ellis’s death likely ever to be discussed. Absent criminal charges, Vermont’s authority to investigate such occurrences is effectively non-existent

The Corrections Department could scrutinize itself, were that not a contradiction in terms. The Secretary of State’s office regulates “professional conduct,” but the head of that division, Christopher Winters, said it could impose only “administrative penalties,” at most revoking a nurse’s license. Winters said the law barred him even from saying whether his agency was looking into the circumstances surrounding Ellis’s death.

But what about the legislature? In many states, as well as on the federal level, committees of the legislature or Congress can and do investigate the workings of the executive branch. In neighboring New York, for instance, the Senate has a committee on Investigations and Government, the Assembly (what New York calls its “lower” House) a committee on Oversight, Analysis, and Investigations, both of which regularly monitor the behavior of state agencies. In Virginia, the Joint Legislative Audit and Review Commission of the General Assembly “assesses the performance of the agencies and programs (the Legislature) creates.”

Vermont doesn’t do any of that. In fact, by both culture and law, Vermont’s legislature appears to be one of the weakest in the country in its capacity to find out about what’s going on in the executive branch, much less to monitor it or to probe into possible incompetence or misconduct.

That’s one reason the administration of any capable governor of Vermont – and Jim Douglas fits that description – has substantial leeway to follow the policies it pleases and ignore those it dislikes, sometimes perhaps even to ignore laws it dislikes (details Monday). It isn’t exactly that nobody is standing guard over executive over-reach; it’s that the guard is not heavily armed.

The Legislature’s impotence in these matters seems perfectly illustrated by the Ellis case, because one of its few permanent oversight committees is a joint House-Senate committee to monitor the Corrections Department..

Its chair, Rep. Alice Emmons , a Democrat from Springfield, said the committee “looked into (the controversy over Ellis’s death) as it was occurring. We’ve had conversations.”

But conversations are about all the committee can have. It is designed, Emmons said as “an interim committee,” which only meets six times a year when the Legislature is not in session. Its only staff, she said, “is one legislative person, and (investigation) would be beyond his capacity.”

Emmons was not criticizing the staffer’s ability, merely his authority, which does not extend very far. Neither does the Legislature’s in general, at least not when it comes to looking into the goings-on in the executive branch.

To begin with, it’s not even certain that the Legislature (or General Assembly, to use its formal, legal, name) has subpoena power. Emily Bergquist, the Director and Chief Counsel of the Legislative Council’s Office, said the Legislature has “the authority to inform itself about issues,” and because “it’s been said that subpoena power goes with the power to inform,” subpoena power would be “sort of inherent.”

But only the Legislature as a whole has that power, she said. Individual committees do not. In fact, if a committee of either house wanted subpoena power, resolutions from both chambers would probably be required before the subpoenas could be issued.

All that rigmarole creates such a disincentive to use the subpoena power that it might as well not exist.

Legislators are aware of the situation, and increasingly dissatisfied with it. Earlier this year, the Senate passed a bill that would grant each committee the power to issue subpoenas. The bill was referred to the House Judiciary Committee.

House Speaker Shap Smith acknowledged that the Legislature was so “constrained by some of the tools we have” when it comes to its oversight function that it sometimes seemed to be “at the mercy of the executive branch, which can say, we don’t want to provide that information so we’re not going to.”

Smith, a Morrisville Democrat, said lawmakers “sometimes have questions about whether you’re getting everything that you should.”

Vermont is not the only state that does not give committees the right to issue subpoenas. Brenda Erickson, a senior research analyst at the Denver headquarters of the National Council of State Legislatures, said rules and procedures vary widely from state to state. But in many if not most states, legislative committees can issue subpoenas.

Erickson said that even where committees are authorized to issue subpoenas, they rarely do. Still, it requires expertise in neither political nor behavioral science to understand that a witness will provide more complete answers knowing that the committee asking the questions has the power to compel testimony if it is dissatisfied with the answers it first gets.

Then there is the question of which branch of government decides who will provide the answers to begin with. If, for instance, a Legislative committee heard reports of incompetence or corruption at Frogwart Hollow State Park (a hypothetical example; there is no such park) and wanted to question the director of that park, nothing now requires the Department of Forest Parks and Recreation or its parent Agency of Natural Resources to produce that director. It could send the Department head, or the Agency Secretary.

Or increasingly, a public relations spokesperson said House Majority Leader Floyd Nease, a Democrat from Johnson.

According to Anthony Iarrapino of the Conservation Law Foundation, the above hypothetical example about the park isn’t all that hypothetical. Iarrapino, an environmental lobbyists, said that in his experience lawmakers too often “get who the (Natural Resources) Agency wants to give them (at a committee appearance) instead of saying, ‘this is who I want to speak to.’”

Like most discussions in Montpelier, this one is at least partly political. The Legislature is run by Democrats, this administration by Republicans. Some Democrats say they think the Douglas Administration is more secretive and less straightforward than its predecessors, making vigorous legislative oversight more important than ever.

Grading administrations on how cooperative or evasive they are with legislative committees is close to impossible. And it may be that a Democratic administration would be no different. The modern political world – more professional, more formal, more communications (or maybe just “spin”)-oriented, more influenced by money and lobbyists – is invading Vermont.

All of which would tilt the balance of power in the direction of the executive even if the Legislature had more clout than Vermont’s.

MONDAY: Monitoring the Douglas Administration.

The speech-making went on long enough to drive a normal person to “spiritual liquors,” in the soon-to-be-immortal words of Rep. Ronald Huber, a Milton Republican.

When it finally ended, the Legislature overrode Gov. Jim Douglas’s veto of the Fiscal Year 2010 budget bill, giving the Democratic majority a victory and giving Douglas a (perhaps temporary) political black eye.

But first 24 House members, most though not all of them Republicans, droned on and on. Much of what they said was irrelevant, some of it was inconsistent, and some may even have been “duplicious,” which Rep. Duncan Kilmartin, a Newport Republican,  proclaimed was “the one word in the English lexicon,” that could describe what the Democrats were saying.

There is no such word.

But give Kilmartin a break. He is no fool. Thanks to the tension in the room – all the members in the Chamber, the spectator seats full, cameras, reporters, Marselis Parsons himself in the back of the room — Kilmartin may have gotten a bit carried away.

Besides, he was trying to keep talking,  not because he was carried away but because the Republicans were killing time while Douglas invited a few Democratic lawmakers for one-on-one sessions in his ceremonial office, trying to convince them to cast the one vote he’d need from their party to sustain the veto.

According to Democratic sources, Douglas told those Democrats that his aides and Legislative leaders were close to a budget compromise, the details of which he outlined to them, and that if one of them would vote against the override, the two sides could easily reach agreement.

“That was a lie,” said one Democrat.

Whatever it was, it didn’t work. All 94 Democrats voted to override, as did all five Progressive Party House members and one of the three independents. All 48 Republicans and two independents voted against the override resolution, making the final count 100-to-50, just enough to override.

An hour or so later, the Senate, as expected, voted 23-to-5 to override the veto.

In their effort to delay the vote, and perhaps even to convince one Democrat to switch, the Republicans had three basic themes. One was that instead of trying to ram through this budget, lawmakers should continue to try to compromise with the Governor. Another was that the $26 million in higher taxes would “tax our people into servitude,” as Kilmartin put it.

The third, repeated by several Republican lawmakers, was that the tax increases on alcohol and tobacco would hurt small businesses. especially those “on the east coast of Vermont,” as Hartland’s Steven Adams put it, right near low-tax New Hampshire. It was while making that point that Rep. Hubert assailed the increased tax on what he probably meant to call “spirituous liquors.”

As a concept, though, the way it came out sounded  much more intriguing.

The Republican problem here was that the “budget alternative” proposed by Douglas would raise cigarette taxes even higher. The Republicans tried to avoid, or evade, that problem by effectively pretending that the Douglas plan didn’t exist, that the only business before the House was the override of the budget bill.

Rep. Patricia McDonald of Berlin even raised a point of order when one Democrat mentioned the Douglas alternative.

“We are talking about the proposal before us,” she said.

Speaker Shap Smith ruled her point of order “not well taken.”

As the debate droned on, it seemed clear that Douglas might have done better had he never proposed his alternative plan. Even several of the Republican speakers started their remarks by noting, “I don’t like the Governor’s budget, either.” And try as they might to contend that it was irrelevant, it obviously was not. If the budget bill veto had been sustained, Douglas’s alternative would have been central to the negotiations that would have followed.

Douglas’s last-minute , slightly desperate, attempt to switch a Democratic vote or two did not prevent him from claiming, after the override, that “by definition, a veto-proof super-majority” could always get its way.

Then why was he trying, even during the final debate, to persuade some of that “supermajority” to vote with him?

Anyway, the Democrats have no supermajority, whatever that may be. A theoretically “veto proof majority” (which, by the way, U.S. Senate Democrats will not really have even when Al Franken of Minnesota is seated as the 60^th Democrat) would require 100 House Democrats, enough to override a vote without the support of any non-Democrats.

But there are only 94 Democrats in the House, where party leaders know they can’t always count on all (or sometimes any) of the Progressives, or on the independents.

Douglas, who invited reporters into his ceremonial office after the Senate vote, was firm, calm, and forceful. But he also looked a bit stunned, rather like a fighter who has taken a hard punch and knows he has to make an effort to stay on his feet.

Like such a fighter, Douglas fell back on routine. He kept throwing the same punches, continuing to assail the budget as though the override were still at issue. He said the budget spent too much (though too little on economic development), taxed too much, was  ”unsustainable,” and “does nor reflect reality.” The veto override, he said would “energize the Republican Party.”

Pretty much what politicians usually say after getting the stuffing knocked out of them. Whether there’s enough of a Republican Party in Vermont  left to energize is perhaps the relevant question.

Staggered though he might be, Douglas is still the political champ in this state.  Overridden twice in less than two months, he’s weaker now than he was after winning his fourth term last November. That doesn’t mean he’s a pushover if he runs for a fifth term a year from next November. He’s the guy in the corner office, and he’s the guy to beat.

Asked whether he felt weakened by the vote, the Governor said, “I’m going to keep fighting.”

No doubt he will. He’s good at it. If yesterday was any guide, he’s not likely to change either what he says or the way he says it. The Legislative session (after an anticlimactic mopping-up operation scheduled for today) is over.

If there is some doubt about how badly Douglas lost, there is none at all about who won. Speaker Shap Smith won, and he won big. Winning support from 93 other people on anything is difficult. Doing it from 93 other Democrats is close to impossible, especially in a structure with no patronage to speak of, or any other obvious lever of political coercion. He had to do it all by persuading, cajoling, and coaxing.

OK, and maybe a little horse-trading. That “Companion Bill” scheduled to be voted on today contains provisions that eased the concerns of some middle-of-the-road Democrats. And according to one knowledgeable source, Democratic leaders agreed Monday to support a summer “sales tax holiday” weekend even though they agree with economists that it’s a very bad idea.

“It was traded for one vote,” the source said, but would not say whose.

The secret to Smith’s success seems to be patience, an apparent diffidence that hides sturdy determination, and a quiet sense of humor. His size and appearance could help, too. He’s short, slight, and looks younger than his 44 years. In fact, he might have let his chin-whiskers grow because without them he’d look about twelve. This “anti-boss” image is just what a political boss needs.

Whatever the reason, Smith is good. He’s shepherded two veto overrides through the House. Right now, he’s not running for anything else. He has time.

But the end of this budget fight is not the end of this budget fight. Douglas made it clear that he plans to use it against the Democrats. Not starting next year. Starting now.

It could be an interesting battle. It could even be informative. But that depends on the substance of the debate. And substance there is. Today’s post centered on the politics of the override. We’ll deal with the substance tomorrow.

(NOTE: There were two conflicting critiques of one item in yesterday’s post. In noting that the number of Vermont millionaires went from zero in 2000 to 531 in 2007, the News Guy called that “a 531 percent increase.”

No, said one commentator: “a 0-to-531 increase in $ million earners is a 53,100 percent increase – not 531%.

But another reader said that “going from zero to any number 1, 531, or 20 million, is an infinite increase.”

I think he’s right. Any of you math whizzes want to weigh in?

Gentle Readers: The wry and somewhat theoretical examination of government budgets and their discontents originally scheduled for today will be postponed until Monday because yesterday the folks in Montpelier committed a new.

Which is to say, they made news, news of some magnitude as it turns out, and this being a news site, such news ought to be dealt with here.

Speaker Smith

For details, however, you are advised to consult your conventional print or electronic news source. Most of them employ quite competent if not excellent reporters, some of whom were actually on hand when this particular news was committed, as the News Guy, alas, was not.

Nonetheless, there is some advantage to being free from the constraints of the conventional news sources. If you can get more detail there, perhaps you can get more (or at least more free-wheeling) explanation here.

What happened was that the Democrats who run the Legislature announced some changes in their own $4.5 billion budget bill, the one that Gov. Jim Douglas has said he would veto.

The new provisions seem unlikely to persuade the Governor to do otherwise, though in some ways they move the total package slightly (perhaps minutely) closer to his point of view. One provision in the budget “Companion Bill” for instance, would encourage state workers to retire as a means of reducing the state work force, one of the Governor’s major goals.

Douglas opposes the budget bill because he says it spends too much and cuts too little. The changes made by the Democratic leaders, House Speaker Shap Smith of Morrisville, Senate President Pro Tem Peter Shumlin of Putney and some of their committee chairs, actually adds a little more spending.

But it’s the pro-business, pro “economic development”  kind of spending the Governor likes-new research and development tax credits for business, more money for expanding internet and cell phone service. The Democrats also agreed to cap unemployment compensation benefits (a Douglas position), and to postpone for another year the plan to limit the capital gains exemption in the state income tax.

That means they scaled back one of their proposed tax increases (though in a “revenue neutral” manner), also a small dip in the Douglas direction.

But perhaps more to the point, a dip in the direction of some of their own members. The capital gains preference is of special importance to some farmers and to folks in the forestry business. Farmers and folks in the forestry business have political clout in this state, and some of them are constituents of Democratic members of the House, all 95 of whom will probably be needed if Douglas’s veto is to be overridden.

Later, Speaker Smith said the changes were not made out of “a concern that we would lose votes on the override.” But then he acknowledged that the changes had not lost him any votes either. Asked if he was more confident of winning the override vote than he’d been the day before, Smith said, “these things are so fluid.”

Earlier, he’d been even blunter, saying, “I know it’s hard to take at face value, but I actually think this isn’t about shoring up votes or anything like that.”

Who would even suggest such a thing? Obviously, these Democrats leaders, votes to override safely in hand, simply sat around yesterday pondering how to make their budget even more brilliant and transform Vermont into a Utopia, until one of them just popped out with something like, “say, why don’t we put more R&D tax credits into the budget?”

Or maybe not.

As Smith sort of acknowledged in a statement he and Shumlin released, in which Smith said, “I’ve heard a lot of constructive feedback from small business owners, farmers, hi-tech innovators and working Vermonters about steps we can take to set the state on a more solid footing for the future”

Republican Leader Patti Komline of Dorset certainly thought there was as much politics as policy in the Democratic announcement.

“Despite the fact that they have a supermajority in the House and Senate, they did not have the votes, and so this is just meant to cherry pick and get those so they can override,” she said (on WCAX-TV, Channel 3, which had the best early coverage of the story)

Komline’s statement appeared both triumphant and submissive, asserting first that the Democrats didn’t have the votes then, but acknowledging that they may well have them now.

As usual, the truth may be more complicated than either the cynicism or the naiveté outlined above. Senators, representatives, members of the Joint Fiscal Office staff and even a few officials of the Douglas Administration have been talking for days. No one should be surprised that the lawmakers decided to tweak their budget.

It is possible to tweak and count votes at the same time.

Besides, if the Democrats are at risk of seeming a bit sly, Douglas is in danger of seeming downright irrelevant. The Governor has not had a good spring. The Legislature overrode his veto of the same-sex marriage bill. It probably would have overridden his veto of the renewable energy bill or he wouldn’t have let it become law without his signature earlier this week. Now he is about to become the first governor in Vermont history to veto a budget bill, perhaps the first to have that veto overridden.

He could spring back, of course. First of all, it’s still possible, of not likely, that the House will sustain his budget veto. Or maybe he won’t veto it. He could announce that these latest revisions moved the whole package just far enough in his direction to render it acceptable.

Not likely, either. Because the Companion bill says nothing at all about what seems to be the issue about which the Governor feels strongest – school costs. Douglas wants the schools to spend no more per pupil next year than this year. To persuade (or force?) them to do so, he wants the legislature to finance the annual  contribution for teacher retirement from the Education Fund rather than from the General Fund, from which the payments have always been made.

That switch would increase property taxes unless schools make the deep cuts Douglas has called for.

On this issue, the Democratic leaders did not move a bit in Douglas’s direction. They didn’t have to. Smith said not a single member of his caucus had taken the Governor’s side in this matter.

Neither, it seems, did many members of the Republican caucus. Republicans in the House have backed Douglas’s general fiscal conservatism, his insistence on deeper budget cuts and fewer tax increases. But if there has been any support for his contention that the current school financing system is ” fundamentally broken and beyond repair, it has been so muted as to be unnoticeable.

Jim Douglas is still a relatively popular governor who will be favored to be re-elected should he run for a fifth term next year. Right now, though, at least on this issue, he gives the impression of being a leader who proclaimed a crusade, buckled on his armor, mounted his steed, and looked behind him to see…effectively nobody in the ranks.

Speaker Smith

Do you suppose Shap Smith has the votes?

The Speaker of the House needs 100 of them – that would be 99 of his fellow-Democrats, Progressives, and independents (and possibly a Republican defector if needed?), plus himself, to over-ride Gov. Jim Douglas’s veto of the Fiscal Year 2010 budget and tax package.

“He’s got a hundred and two,” said a state official who tends to know what’s going on in the Legislature.

Could be. Though predicting what any legislative body is going to do two weeks hence is a fool’s errand (the Legislature will reconvene June 2), there are several signs that Smith may have commitments from at least 99 other House members.

The way Smith and Senate President Pro Tem Peter Shumlin have been talking the last few days betrays a bit of confidence, if not quite cockiness, that they can enact their budget over the Governor’s objections. Shumlin’s Senate has such a huge Democratic majority that the override is hardly in doubt. The House vote will be closer, but even Douglas, in announcing last week that he would veto the budget bill, conceded that it might well be over-ridden.

Thereby raising the question of why he’s going to risk the humiliation. It’s only been a month since he suffered the first over-ride of his governorship – and only the seventh in the history of the state – when both houses enacted same-sex marriage despite his veto. Politicians don’t like humiliating defeats. The possibility of two in a row might convince the average governor to make a deal, or even to let this bill become law without signing it.

But Douglas opted to fight, and in his letter to Shumlin and Smith he explained both the principle and the politics of his decision. The principle, from his perspective, is that “if my only choice is between allowing your fiscal 2010 budget to become law or a veto, I must choose veto. I cannot abandon Vermonters’ long-term economic security for short-lived political accord.”

In other words, he thinks that the Democratic spending and tax package is very bad public policy. But he also indicated he thinks it’s very bad politics, which will hurt them and help him before the next election.

“If this budget becomes law over my veto…I am prepared to accept that outcome. But understand that what you reap is what you sow; the adverse effects of your tax and spending choices will ripple through the Vermont economy for years to come and those consequences will be your sole responsibility.”

Allowing for the usual overwrought political rhetoric, the Governor has a point. How long or how deeply the Legislature’s budget/tax package “will ripple through the Vermont economy” is open to debate. But however the ripples flow, it is the Democrats who will be responsible for them.

For the moment, at least, the Democrats seem unconcerned. That’s because they’re convinced that Douglas is wrong on both the policy and politics. They think their budget is good policy that will help the state and therefore help them politically.

Who’s right? Who knows? Budgets, taxes, and economies are complicated, and hard to predict. No, make that impossible to predict. If this Democratic budget/tax package becomes law, it could perk up the state’s economy. Or it could tamp it down.

Or – and this comes close to being a prediction – it could do neither of the above, at least not to an extent that would be countable, much less verifiable. The package is simply not that  far-reaching. It raises taxes on some people, but not by much. It reduces taxes for more people, but not by much. It cuts spending on many programs, especially in health care and other human services,  enough to degrade the quality of life of the beneficiaries of those programs, but probably not enough to have an economic impact.

Don’t expect either side to allow these mere realities to inhibit their rhetoric. And remember this about budget and tax debates: The competing claims by politicians on both sides can be factually accurate even if they seem to be mutually exclusive.

Thus Douglas claims the Democratic plan raises taxes and increases spending. It does. The Democrats claim their budget reduces taxes and cuts spending. It does.

A budget can both cut and increase spending when some spending formulas are reduced and some programs cut back, but the total dollar amount spent goes up. In this case, the budget calls for spending five percent less than the state is spending this fiscal year from its own sources and from the usual aid it gets from the Federal Government. But then came the Stimulus, or American recovery and Reinvestment Act to be formal. Throw that money into the mix, and the FY2010 budget is higher than this year’s by roughly 3.5 percent.

Obviously, whether one describes this as fiscal responsibility or, as Douglas did, “unsustainable,” depends more on political position than on dispassionate analysis of the evidence.

The same is true of taxes. As Smith wrote in yesterday’s Burlington Free Press, taxes on most people who earn less than $250,00 a year will probably go down. Well, if they earn less than $250,00 a year, don’t smoke or drink (at least not much) and don’t get their television reception via satellite. But when Douglas says that taxes are going up, he’s right, too. Everybody’s income tax rates will go down, but taxpayers will no longer be able to deduct their state income tax payments from their state taxable income, and more capital gains income will become taxable. Add it all up and the state will collect more from its citizens next year under this Democratic plan.

The burden of the (slightly) higher taxes will fall on the wealthy. Their tax rates would go down, too, but they take the biggest state income tax deductions (though they’ll then get a bigger federal income tax deduction), and they tend to have lots of capital gains income. Heavy smokers and drinkers will pay more, too. Almost everyone else will pay less, possibly leading them to increase consumption and therefore help the state’s economy. The wealthy whose tax bills go up are more likely to reduce their savings than their consumption, so that won’t hurt the economy.

But suppose they move out of the state. Douglas did not mention this in his letter to Shumlin and Smith but in the past he and his associates have worried that Vermont’s relatively progressive income tax system inspires some wealthy taxpayers to move elsewhere, taking their job-creating capital with them.

No doubt some might. Just yesterday came word that billionaire Thomas Golisano is leaving New York, which is raising taxes on the wealthy, and moving to Florida, which has no personal income tax (though its economy is in much worse shape than either New York’s or Vermont’s).

But even for a billionaire, Golisano is rather an eccentric fellow who has thrice run for governor as an independent, financing his own campaigns that he had no hope of winning, accomplishing little except the enrichment of some lucky political consultants. By and large, the evidence does not indicate that many rich people move from one state to another because of taxes.

If the economics of the tax and budget dispute are murky, the politics is not. Another veto override would be a political disaster for the Governor. In and of itself, it would not be fatal. Governors have recovered from similar setbacks. But it would weaken him severely. And there is little reason to believe that the results of the Democratic package would be some kind of statewide economic disaster that would be evident by next election day.

That’s why it’s still possible that the detailed budget plan he said he would announce tomorrow might just be more conciliatory than he has indicated. So far, Douglas has talked tough. He even told the Democratic leaders that he doubted they’d like his proposal. He’s come across like a guy spoiling for a fight.

But it’s a fight he really can’t afford to lose. Facing the loss, he could just decide a little more negotiation wouldn’t be such a bad idea after all.