Notes from Montpelier
by Rep. Bill Frank

The legislature was called back to Montpelier by the Governor after he vetoed the FY10 budget bill, H.442, passed by the legislature.   Was there a great budget divide between the Governor and the legislature?  I think it was much narrower than all the speeches and news coverage would imply. There was general agreement on what needed to be done. The differences became narrower as the declining financial picture of the state became clearer. Both the Administration and the House Leadership came to recognize that reductions in state spending and increased revenues would be necessary to address Vermont’s fiscal problem.  The disagreement centered more on tax fairness and how to share the pain. The Federal Stimulus package (ARRA) of $175 million made it possible to spend more while raising less money from Vermont taxpayers than in 2008. The only reason the total budget increased was due to the use of these ARRA funds.

            To say that you just tighten your belts and spend less to solve the problems to get through this enormous economic downturn is taking a way too easy way out, and I feel it is in error.  Neglecting to use ARRA funds to stimulate the local economy at a time when businesses and individuals are cutting back is the worst thing we could do. It would create greater needs for middle and low income citizens while depriving the state of the means of meeting increased needs. ARRA funds need to be used very carefully so a financial cliff is not created when the funds run out.  This could happen if we were to use them for new programs that were not sustainable.  A cliff will be avoided by using the funds to create efficiencies and cost savings. If we were to refuse to use ARRA funds to their capacity as some suggest, and also cut programs, we would be creating that cliff today rather than preparing for the end of the current recession.

          The proposals offered by the administration between the end of the session and the special session were the same as the Governor gave in his budget address in January. It was a cost shift where educational costs that had been covered by the general fund, teacher’s retirement costs, would be paid from the education fund.  It was a plan that did not share the burden equitably.  Most agree that teacher’s retirement is an education expense, but it would have required a tax increase on residential property while making it appear that the general fund was balanced.   The House had previously voted on this plan on April 24th when an amendment was offered to the budget bill.  The amendment was defeated 0-130 as no one was willing to support it then, and no one was willing to defend it in June.

The Governor also proposed to eliminate the property tax adjustments for Vermont households with incomes over $75,000; the current level is $90,000.  The Joint Fiscal Office assessed the impact of this plan on every town in the state. In Underhill town, 129 families would have had an average increase of $690; in Jericho town, 199 families would see theirs rise by $535; in Bolton, 28 families, average increase $390.  If you live in the ID school district, 54 homes in Jericho would have an average increase of $676; 28 homes in Underhill would pay $554 more.  That’s a quarter of a million dollars more in property taxes middle class homeowners in our three towns would have paid.  This really attacks the middle class homeowner while giving a slight decrease in taxes for those making over $200,000.  

           The real budget differences are a matter of degree and tax fairness rather than a great divide. The legislative budget that I voted for reduces income-tax rates slightly for low and middle-income earners and increases taxes on those with incomes over $200,000 a year without the disastrous shift to the property tax that would have cost Vermonters a great deal more and attacked a homeowner’s life time savings. It is a budget that includes millions of dollars in difficult cuts while maintaining a safety net for critical state services. It addressed a $291 million revenue short fall over two years with reductions, ARRA funds, and only $21.3 million in new state revenues distributed among many different taxpayer groups. The alternative would have done none of these and would have effectively placed more of the burden on two wage earner families and decrease the burden on those with very high incomes. If supporting hard working middle-income families is a partisan vote, I will continue vote to support them. 

From agriculture to palliative care to alternative energy to balancing budgets and yes, marriage equality, the Vermont Legislature accomplished a long list of how to move Vermont forward in the 2009 session. These are hard times for Vermonters and in hard times, Vermonters work together to help Vermonters. I have written about many of these accomplishments in an end of session report that is on my web site at www.RepBillFrank.com