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May 09, 2009

The Final Countdown

Barring some last-minute item that throws a wrench into the works, the Vermont Legislature will wrap up the session later this afternoon. I will be down there later today after some family commitments this morning, and will provide updates on Twitter and the Fair Game Facebook page.

The House convenes at 10 a.m, while the Senate will start its work at 1 p.m.

Here are two summaries of yesterday's events from the Times Argus and the Burlington Free Press.

Today, the focus will be on two items: The economic development bill and the budget.

Conferees on the economic development bill worked late last night, with negotiations centering largely on tax increment finance districts, permitting changes, and control and use of the Clean Energy Fund, among others.

Top legislative leaders worked hard yesterday to shore up support for their budget plan. The plan is a tough sell to the more liberal members of the caucus due to its reliance on program cuts and regressive taxes.

Senate President Pro Tem Peter Shumlin and House Speaker Shap Smith argue that their plan is a solid balance between program cuts, transfers from the Education Fund, tax increases — mainly from closing the capital gains tax loophole. The latter item will raise about $35 million in taxes, but most of that money is used to provide across-the-board tax cuts.

The tax cuts mostly benefit "middle class" filers in the $100,000 to $300,000 range, and average more than $500. For those not in the middle class, reductions are: $14 if you make $25,000 to $49,000; $38 if you make $50,000 to $74,999 and $79 if you make $75,000 to $99,999.

Not sure how I'll spend my $14 yet, but glad I'll have some time to plan.

The leadership's plan doesn't take into account the increased taxes people will pay when they buy booze, tobacco, satellite TV, digital downloads and gas — or when it comes time to pay property taxes. Those taxes will go up under the Democrats' plan. The governor's original budget, it should be noted, would have raised property taxes by $65 million, and had more layoffs and program cuts, as well as plenty of fee increases (rather than gas taxes) to pay for repairs to roads and bridges.

A number of Progressive lawmakers, and liberal Democrats, do not like many aspects of the legislative leaders' package —they argue the budget still puts much of the burden on low-income Vermonters, as well as others including the disabled, elderly and children. See this week's "Fair Game" for my take (see additional note at bottom of the post).

The Senate's 18 to 10 vote shows just how unhappy some Dems are with the overall framework of the plan. Republicans, by and large, also don't support the plan — they don't believe it cuts enough spending.

Of the 10 in the Senate who voted against it, five were Democrats: Sens. Doug Racine, Ed Flanagan, and Tim Ashe of Chittenden County joined Dick McCormack (Windsor) and Mark MacDonald (Orange) to oppose the plan.

Racine told me before the Senate vote that he couldn't justify voting for a budget that cuts services, lays off workers, and at the same time gives him a personal tax break. After the vote, McCormack said he was impressed with Ashe's vote, and glad to welcome him into the gang of "usual suspects" in the Senate.

The Senate rift in the Democratic caucus is carrying over into the House.

As of last night, House leaders appeared to have the 76 votes needed to pass the plan, but only barely. Several Democratic House members told me they wouldn't vote for the budget, even if they were the 76th vote. Without 76 votes, lawmakers could find themselves working a bit later today than expected. We'll see.

That said, if Gov. Jim Douglas vetoes the budget — and it's likely he will along with a few other bills — a veto session would be held sometime in mid or late June. Other bills he's likely to veto include: a bill requiring Vermont Yankee's owners to pony up enough money to ensure the plant can be dismantled when it's shut down; a renewable energy bill; and possibly a bill requiring more legislative input during the off-session if there are budget cuts totaling more than 4 percent. With his veto of marriage equality that would bring to five the number of bills Douglas could veto during this session.

If you ask me, a veto session in June would give time for either additional budget talks between the Douglas administration and legislative leaders, or for Democrats to build their own budget — not one that is based on a compromise when one party (namely the guv) isn't truly at the table.

Also by early June, the first wave of 112 layoffs out of a potential 320 will hit, which could provide some evidence of the budget impacts on public services and programs.

It's unclear yet exactly how badly state workers will get hit in this budget. There is a provision in the budget to offer early retirement incentives to as many as 300 of the roughly 1000 workers who are near retirement.

On the good news side for state workers, union officials said the Douglas administration did not deliver any reduction-in-force (RIF) notices yesterday. In recent weeks, the administration has delivered RIFs to the union headquarters on late Friday afternoon. To date, 112 have been issued out of an announced 320. To get this payroll off the books by the end of FY 09, the state needed to issue these RIFs by Friday.

Jes Kraus, the union's executive director, said those notices could still come Monday or Tuesday, which would only mean some of the cost savings would be realized in FY 10.

Talks have broken down between the administration and the union, Kraus noted, but the union has formally requested mediation. Those mediation talks would not likely begin until sometime in June.

On another positive note, in this week's column I noted how the Douglas administration wanted to privatize portions of the safety net. Well, the administration was about to get the OK thanks to Senate language introduced into the budget. They would have been able to take bids for the $5.9 million in emergency housing and assistance money, and set up "pilot projects" around Vermont.

That concerned a number of advocates, who fear this is one step toward privatizing the state's safety net. They also worried that the level of services would vary from region to region, depending on the local provider.

Once the column hit the streets, Rep. Ann Pugh (D-South Burlington), chairwoman of the House Human Services Committee, introduced language to nix any privatization plan, even taking away the administration's ability to try pilot projects in the state.

Several advocates told me this week that the column mention tipped the scales in their favor. And they say print is dead.

One quick correction on this week's column: The sales tax increase signed into law by Gov. Dick Snelling did sunset, albeit briefly. Less than six months after rolling back the sales and rooms and meals taxes, the Legislature and Gov. Howard Dean raised them again. The progressive income tax structure, however, remained sunsetted. Just goes to show, progressive taxes come and go, regressive ones are here to stay.

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