Posts Tagged ‘The Budget’

Override

Wednesday, June 3rd, 2009

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 60th 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?

Budgets and Bluffs

Monday, June 1st, 2009

Gov. Jim Douglas said the Legislature’s proposed budget is unacceptable because, among other things, it would lead to a $67 million deficit next year, and “a staggering shortfall of over $200 million over the next two years.”

He’s right.

He’s so right that the Democrats don’t argue with his figures, at least not for next year. They argue that a $67 million deficit isn’t that big a deal.

They might be right, too.

Not that it’s chump change, 67 million smackaroos. It sounds like a lot of money. But as Speaker Shap Smith said, much of  the projected shortfall deals with Medicaid, the details of which are renegotiated with the Federal Government every year.

House Appropriations Committee Chair Martha Heath of Westford agreed. “we’ve often had gaps of  comparable size ,” she said. “This (projected $67 million gap) is not that unusual.”

Besides, the Democrats say, Douglas’s budget alternative has problems of its own.

“He makes assumptions that ,if you believe them ,you’ll believe in the tooth fairy,” said Senate President Peter Shumlin of Putney, and at least one of Douglas’s assumptions does seems a little  far-fetched.

He “cuts” $20 million in spending by having  a ” goal…to make necessary reforms to find $20 million in annualized General Fund savings beginning in FY 2010.”

What reforms? Well, he includes “a partial list of structural reforms to be analyzed,” including some reorganization, “rethinking service delivery models,” consolidating some departments, and cutting office hours of state departments by relying more on the Internet than on personal service.

Ever heard the term “blue smoke and mirrors”? The above is a pretty god description.

On the other hand, it’s only $20 million. Budgetarily speaking, that is chump change. In a $4.5 billion plan for getting and spending over a one-year period, $20 million can be found (or lost) easily.

“Both budgets leave a hole,” Shumlin said, which is not only right, but an understatement. All government budgets leave holes, and so do most corporate, partnership, and even family budgets (if there are really families well organized enough to budget).

Those holes give both sides the opportunity to engage in honest criticism.

Uhhh, let’s rephrase that. The holes give both sides the opportunity to engage in accurate criticism. When Douglas says the Democrats risk a deficit next year, when the Democrats say Douglas’s budget is “balanced” only through gimmickry, they are both accurate. They are both irrelevant.

But it’s good political drama, which is what is going on right now. In fact, nothing else is going on right now. Douglas has the budget bill and is likely to veto it today. Tomorrow is the special session of the Legislature, when the veto either will or will not be overridden.

Don’t look for any predictions here.

But don’t rule out a deal, either. Yeah, both sides are talking tough. But that’s part of the drama. Douglas on one side, Smith and Shumlin on the other, they all know how to play the game: Wait for the other guy to blink first. The Governor said he would be reachable by phone all weekend. So, no doubt, was the Speaker, who only would have called if he knew he wouldn’t have the votes to override.

Even then, he probably wouldn’t call because as long as he doesn’t call, Douglas can’t be sure Smith doesn’t have enough votes.

Why, then, is a deal still possible?

Because it’s in everybody’s interest. Douglas couldn’t want to become the first Vermont governor to veto a budget bill and have it overridden. Not the kind of distinction for which a governor wants to be remembered for the long run. Not a boost for his clout in the short run, either.

But Smith couldn’t want to lose the override bill on the floor. And if the veto stands, everybody has to hang around Montpelier for the hours, days, or even weeks it will take to hammer out a compromise. The lawmakers want to go home. Most of them have day jobs at which they earn far more than they do while legislating, not to mention families and work to do around the house.

Maybe Smith knows that he’s got the votes. But as Terri Hallenbeck of the Burlington Free Press astutely observed the other day, Smith kept saying last week that he was confident he “will” have the votes to override the veto.

Meaning he didn’t have them yet?

So it’s face-off time, in which Douglas has one big advantage: He’s the governor, and you’re not. Neither are Smith, Shumlin, or any Democrat. Douglas is better known than any of the rest of them, and probably (though no one has lately taken a poll), held in higher regard statewide. One-on-one against any Democrat right now, he probably makes the shot (and maybe even draws a foul). In a political culture in which personality trumps policy, being the go-to guy helps.

Less helpful to him is that neither in the Legislature nor in the state at large does there seem to be much support for his insistence that public schools freeze per pupil spending next year, a step that would require steep budget cuts in many districts. Rep. Heath, a member of the Westford school board, said that in her district, which has cut its staff by 25 percent since 2001, a reduction of that size would result in “dismantling a quality education system.”

With little apparent support for cuts of that magnitude, it will be hard for the Governor to convince lawmakers to finance the teachers retirement system from the Education Fund, which relies largely on the statewide property tax. Absent those deep school budget cuts, property taxes would go way up.

Douglas’s other problem is that his supposed political trump card doesn’t trump much. The Governor himself has never said this, but some of his associates have suggested that Democrats should worry that if their budget goes through, they will be held responsible for the state’s economy.

To which the typical Democratic legislator might well say, “please don’t throw me in that there briar patch.” The Democratic budget would have almost exactly the same impact on Vermont’s economy as would Douglas’s budget alternative. That impact is roughly zero.

In 2007 (the most recent figures from the U.S. Commerce Department), Vermont had a gross state product of $21.245 billion. The Democrats want to impose some $13 million more in taxes than does Douglas. That’s well under one tenth of one percent of the state’s economy. They could double or triple that without leaving the tiniest footprint on the production and distribution of goods and services here. Besides, the bigger budget cuts the Governor wants would suppress economic activity by at least as much as the Democratic tax increases.

Meaning not by much.

Vermont will prosper, or not, along with the nation and the region. What the Legislature and the Governor do may make a big difference to a lot of people. The macro-economic impact will not be noticeable. There could be lots of good reasons for individual Democratic legislators to vote to uphold the veto. Worrying about being blamed for what happens to the state’s economy is not one of them.

Serious Democracy?

Thursday, May 28th, 2009

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

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

So who was right?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To be explored tomorrow.