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January 09, 2009

Douglas Inaugural: Bold or Boldest Speech Ever?

Yesterday was a busy day for this reporter, starting the morning pre-8 a.m. in Burlington for the mayor's debate hosted by the Burlington Business Association and Burlington Free Press. I had to skip out before it was over, but I'll have more to say on this in next week's "Fair Game."

It was then off to Plattsburgh to tape an episode of Mountain Lake Journal. It's a weekly public affairs program that includes a reporter's roundtable — usually one scribe from Vermont and the other from New York. I was on with Brian Mann of North Country Public Radio - a real pro and helluva guy. You'll catch his stuff on NPR from time to time, and he wrote a fantastic book about the Red State/Blue State divide called Welcome to the Homeland.

After that, I headed off to the big show — Gov. Jim Douglas' fourth inaugural address under the Golden Dome. (You can download the speech as a PDF by going to his official state website here).

The first days of the Legislature are always full of pomp and circumstance. And yesterday there was plenty of pomp. The circumstances are, perhaps, known.

Before speechifying, Douglas took time to swear in the other statewide officers — Treasurer Jeb Spaulding, Secretary of State Deb Markowitz and Attorney General Bill Sorrell. Auditor Tom Salmon was sworn in earlier in a separate ceremony. He called in from Iraq.

As I listened to the gov swear in the other elected officials, I had to chuckle — at least two of them are seriously considering challenging the gov in 2010 (Spaulding and Markowitz). Sen. Doug Racine announced earlier this week he is definitely a candidate.

Gov. Douglas promised that his inaugural would offer "bold" proposals. So, what were these bold proposals? A public works program a la Dick Snelling circa 1983? Nope. That was Speaker Shap Smith yesterday.

Douglas reverted to his tried-and-true hot-button issues: high taxes, the need for permit reform, and bloated school budgets.

The most dramatic was a call for a freeze on education funding, eliminating income sensitivity for people who earn more than $75,000 (it's now $90,000), and an open-ended call to reconsider how to fund education — i.e. toss out Act 60 and Act 68 and start again. He offered no details on how we could replace the current system. This is typical Douglas — offer the political poetry, but none of the prose.

But, hey, the guy's good at it and why stop using a winning formula? He's a pro at saying there is a problem, but not so great at offering details on how to solve the problem.

Besides, we're coming into school budget vote season — and few of us like paying more in taxes. I mean, it sounds pretty bad:

In the last five years, Vermont has experienced an education spending expansion funded by property tax increases and general funds. Assuming the fiscal 2010 current law projections, spending from the education fund will have increased by nearly $283 million since fiscal 2006, or a 23% increase. Over the same period, statewide school enrollment has dropped over 4,300 students, or a 4.4% decrease. This means that since 2006, for every student who left the rolls, schools added – not reduced – $65,000 in costs.

Douglas went even further. He directly blamed the cuts his administration is making in social service programs to the rise in school budgets. And, Douglas claims the most money being spent on education is coming in, personnel costs.

Damn unions! State employees didn't take much heat in his speech, but the old stand-by bogeyman the NEA was all he needed.

Here's Douglas:

In other words, the education fund has not shared any of the sacrifice seen by other areas of state government. If we continue to excuse education spending from equal treatment, we force health care and human services – the lion’s share of the remaining general fund – to shoulder the burden of balancing a responsible budget. That is not a realistic, or compassionate, option.

To put these disparities between the general and education funds in context, we should step back and look at the big picture. According to current estimates for the next fiscal year, we need to reduce benefits and cut programs – primarily in human services – by at least $150 million out of a general fund budget of less than $1.2 billion. Meanwhile, funding for K-12 education is expected to increase $63 million in the $1.4 billion education fund.

In fact, with current projections, while the education fund will have grown 23% since 2006, the general fund will have actually decreased 2% – meaning that we will be spending less in state government in our fiscal 2010 budget than we did in fiscal 2006.

Tough words. All that damned income sensitivity has made local voters insensitive to the budget decisions they make, so the theory goes. Isn't it amazing the hypnotic power that the all-mighty teacher's union has on voters, eh?

Douglas wants to take some of the savings generated from state K-12 education funding and spend it on higher ed and early ed. Hard to argue with that.

He did take the folks at UVM by surprise when he said he would appoint a task force to look at whether the UVM and the state college system should merge. Chatting with some UVM folk after the speech and they were not sure what to make of it.

The Homebuilders Association was eagerly awaiting the speech. If UVM didn't know about his bold step, the Homebuilders knew something was coming. Interesting, eh?

The Homebuilders enjoy the obligatory calls to reform Act 250 (you know, the law that was designed to protect Vermont from the boom / bust real estate cycles) as a way to boost the state's economy. The gov rolled into the speech a series of "ecomomic stimulus" proposals that he first raised on the campaign trail last fall. Nothing groundbreaking or bold, but largely plans Douglas has proposed and plans the Legislature disposed.

Douglas also reiterated his call to not raise taxes (except when it comes to income sensitivity for property taxes if you earn between $75,000-$90,000), briefly thanked public employees for their service (probably not the ones he's going to lay off soon), and devoted three paragraphs to agriculture. So much for buy local and agri-preneurs who are gaining national attention for their efforts.

He also called for a review of state public benefits programs to root out the welfare cheats who are ripping off the state. Nothing, however, to beef up tax reviews of people in the top income brackets who might be, um creatively, sheltering money.

Finally, Douglas continues to repeat the mantra, "Vermonters have no capacity for higher taxes – another approach advanced to shore up state coffers." He also continues to repeat the faulty notion that we're the most taxed people on the planet, or at least in the US. Sure, I don't like paying taxes anymore than the next person, but it's what you want in return that matters, right?

According to policy analyst Doug Hoffer that's pure bunk.

Here's Hoffer's latest take on the "we're too taxed" meme:

Since 2003, the number of filers reporting more than $500,000 in adjusted gross income (AGI) has more than doubled and their income has tripled to almost $2.3 billion. Big deal right. But here's the kicker. In 2003 those earning over $500,000 paid 5.9% of their AGI in state income taxes (not much when you consider our top marginal rate is 9.5%). But in 2007 this group paid only 5.4% of their AGI in state income taxes. That's right. The percentage of income they paid in state income taxes went down.

It should also be noted that our top marginal rate today, is about three to four points lower than it was during the recessions of 1983 and 1991.

Douglas comes from the old school that if you repeat the same thing over and over again, it becomes true. It works. Just ask Alan Greenspan. Or, Dick Cheney.

Speaker Smith and Senate President Pro Tem Peter Shumlin were quick to dismiss the gov's call to overhaul the state's education system. No surprise there. The Dems have staked a lot of their political fortunes to making education funding "equitable" and "fair".

For the Dems, it's all about sharing.

Speaking of which, earlier in the day, Speaker Smith was walking through the statehouse cafeteria looking for takers of some "free" ice cream, along with fresh-baked cookies and sticky buns courtesy of former House Speaker Gaye Symington.

No word yet on who paid for the ice cream, but perhaps it is coming out of Smith's proposed $150 million stimulus package. Hey, anything to win over a few votes, right?

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