The Final Days
Here is the latest from Montpelier in the final days of the 2009 Legislature:
–There will be deep budget cuts (but you knew that);
–There will be state tax increases, possibly including an income tax hike which will reduce everybody’s income tax rates;
–There will be local property tax increases even though the statewide property tax rate will be lower;
–There may (but probably will not) be a budget/tax confrontation followed by a stalemate followed by a crisis that threatens to shut down state government;
–The prison in St. Johnsbury might not close after all.
Let’s deal with that last one first because it’s the most fun. Two months ago Gov. Jim Douglas proposed closing the Northeast Regional Correctional Facility in St. Johnsbury to save money.
Needless to say, Corrections Commissioner Andy Pallito, a Douglas appointee, agreed. Just last week he was on Vermont Public Radio’s Vermont Edition program arguing that, regrettable though it might be, closing the St. J pokey was the department’s best alternative in this revenue-challenged era.
But of course Pallito doesn’t want to shut down the prison. An agency boss almost never wants to shut down one of his facilities. And even as he defended the move to the House Committee on Institutions and Corrections yesterday, he sowed the seeds of possibly reconsidering it.
Among the documents Pallito gave the committee was one showing that the number of women prisoners, which had been rising sharply for several years, is now heading downward. It isn’t that fewer women are breaking the law. It’s that most of them are non-violent offenders, often drug users, who are being diverted to treatment plans instead of prison.
As a result, the jail in St. Albans, to which all the women prisoners were moved just last year, now has plenty of room. At some point in the conversations inside and outside the committee room, emerged (though not from Pallito) this idea:
Move the women to St. Johnsbury. Then bring back 100 or more prisoners now housed out-of-state and put them in the larger St. Albans facility. This could save some $3 million, according to one source (the attribution here is deliberately vague to protect the identity of sources; suffice to say that there were at least two of them). It would also save Northeast Regional for St. Johnsbury, where it is considered vital to the local economy. It also might save the House seat of Rep. Robert South, who endangered it by voting for same-sex marriage last month. South is not a member of the committee, but was invited to yesterday’s meeting. Being seen as the savior of a local facility is a political plus St. J. Being seen as the decisive vote on the marriage bill perhaps is not.
There is no guarantee, however, that the Governor will go along. Obviously, the Republican governor has no interest in helping the Democratic representative. He seems at least as interested in reducing the state work force as in saving money. And he has been friendly toward the private corrections company that runs the out-of-state prisons, and that also contributes generously to his campaigns.
Now to the budget.
There were no meetings scheduled yesterday between Douglas and the Democratic leaders of the Legislature, and it was unclear whether there would be any today. As Speaker Shap Smith reported on the talks with Douglas to the Democratic Caucus, “it was clear yesterday (Monday) and this morning that we are not in a place where we can come to an agreement today.”
So the Democrats, while remaining open to more talks, are putting together their own budget package, which includes higher taxes.
And higher taxes there will be. In public, Douglas has not given an inch in his opposition to any new taxes. But according to those familiar with the talks between him and the Democrats, the Governor has acknowledged that cuts alone can not bridge the entire gap between revenue and expenses.
The Democratic “Budget Closing Construct” worked out by Smith and Senate President Pro Tem Peter Shumlin calls for $26.5 million in budget cuts including the elimination of a proposed new information technology system for the Human Resources Department and cutting $1.5 million in economic development funds. In addition, the Democrats have agreed to cut by $19.8 million (not nearly as much as Douglas proposed in January) the transfer from the General Fund into the Education Fund.
Schools would make up for that $19.8 million by making deep budget cuts or asking for higher property taxes, or both. Rep. George Till of Jericho predicted “a double digit property tax increase” in the towns he represents.
Under the Democratic “construct” there would be higher taxes on liquor and tobacco. Income tax rates would actually go down for everybody. But many taxpayers, most of them wealthy, would lose most of their 40 percent capital gains exclusion. The first $5,000 of everybody’s capital gains would be tax-free. But every penny above that would be taxable. In addition, taxpayers would no longer be able to deduct most of their state income tax payments (including payments to other states) from their taxable income.
Those two changes are projected to bring in another $31.7 million. Reducing the rates would cost $24 million. So the net revenue increase would be $7.2 million. Though the numbers-crunchers of the Legislature’s Joint Fiscal Office were still crunching the numbers yesterday, it did seem likely that most of the increase would be borne by upper-income earners. Smith said there was “a real element of progressivity” in the plan.
But the property tax hikes likely to result might be less progressive. The Democrats would allow the statewide education property tax for residential property to decline by two cents. But they would reduce the “basic education spending ” per pupil allocation to school districts. With less money from the state, the districts would have to raise more locally, and this money would be raised from all property owners.
Hovering in the air throughout the day, if rarely discussed, was the possibility of stalemate. The Democrats are determined to end the session by the weekend, if not by their original goal of Friday. If they can not work out an agreement with Douglas, they might just pass their own budget and tax package and go home, giving the Governor the option of accepting or vetoing it.
A political faceoff. What would happen then? A special session with more negotiation? Perhaps even a government shutdown when the new Fiscal Year begins July 1 with no budget?
Not likely. That’s a big political risk for both sides, with no one knowing which side would win or lose. But not impossible. Douglas has been firm in his opposition to higher state taxes. His budget proposal might require even higher property tax increases than the Democratic plan unveiled yesterday, but those are officially levied by someone else.
As for the Democrats, there is a limit to how much budget cutting the leaders can accept without provoking a rebellion among their rank-and-file. Some of the members think that limit has already been reached, if not exceeded. Fasten your seat belts. It’s going to be a bumpy few days.
Tags: St. Johnsbury Prison
