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April 09, 2010

Are Vermont's Pols Severing the Social Contract with Vermonters?

Photo The left-leaning Public Assets Institute released a new report Wednesday claiming Gov. Jim Douglas and legislative leaders are going in the exact opposite direction than their predecessors during difficult times: Slashing, rather than strengthening, Vermont's safety net.

"We're now making our commitment to saving money rather than serving people," said Jack Hoffman, of PAI, and one of the report's authors.

Backing up the institute's report with some real-life perspective were former Agency of Human Services Secretary Con Hogan, who served under Govs. Richard Snelling (R) and Howard Dean (D), Tom Davis, who led the War on Poverty effort under Gov. Phil Hoff (D) and is the son of former Gov. Deane Davis (R), and Cheryl Mitchell, a former AHS official under Dean.

Davis noted that his father, in 1968, ran against creating a sales tax. But, after getting into office, and holding hearings on creating a sales tax versus cutting services to the needy, he changed his approach and urged the legislature to adopt the tax.

"Without the sales tax, he realized that the social contract with the people could not be sustained," said Davis.

In his 1969 inaugural address, Gov. Deane Davis told lawmakers: "The choices open are not pleasant. We could drastically cut education or welfare, the two major areas of spending, or we could impose an arbitrary percentage cut across the board. But these would not be valid alternatives and programs vital to our people would suffer. Last summer, I thought we had a choice open to us. We could either have an austerity program or increased taxes. It is crystal clear now that no such choice is available. We need both an austerity program and new taxes."

Hogan, too, decried the approach to Challenges to Change, which he said isn't giving a full accounting of the impacts that the cuts will have on services, and on the Vermonters who use those services. He said any proposal like Challenges should be clear, thorough, integrated and transparent.

Challenges, he claims, has none of those qualities.

"It seems calculated in such a way to avoid anyone taking responsibility for the impacts," said Hogan.

Hogan said the legislature, and administration, should slow down the process and give Vermonters a complete accounting of the cuts being considered as part of closing the $154 million budget gap, and the $38 million Challenges effort.

As I've noted in "Fair Game" recently, the impact on the human services budget is not simply $54 million, but close to $150 million when you account for lost federal funds and the impact of cuts related to Challenges. In some instance, federal funds have been returned to Washington, DC because too few staff were left in Vermont to dole out the grants.

Hogan said that figure may be too low. "We're talking several hundred million dollars over two years that will be cut from human services," he said.

The Public Assets Institute report shows that in the early 1990s the Snelling administration actually spent more on human service programs during the recession, including state general funds, while the budgets for the 2008-2011 years now show reductions in state spending. The only increase is the boost in federal spending as part of the stimulus budget, while state funds are being cut.

In 2008, while Vermont is spending more on human services than it was in 1989, that's largely because of increases in health care and corrections. It's not because we have a bigger safety net, argues Hoffman.

He adds that the institute's analysis shows that in the early 1990s, human services spending was higher then than it had been at any time in the 10 or 20 years prior, but that's because the state responded to an increased demand for services.

Today, Mitchell said, the response is completely opposite.

"This effort seems to be more about pencil pushing than providing services, and being only accountable to the bottom line, not the people," said Mitchell.

The report's authors say they are not necessarily advocating tax increases, but just a complete and honest debate so Vermonters understand the impacts of the budget cuts.

"Only when we can compare the full effect of the cuts and weigh that against using raining day funds or raising taxes can we have an honest discussion of what course to follow," said Hoffman.

In fact, despite some claims today's marginal tax rate on the top income-earners — those making $350,000 or more — is less today than it was during the recession that began in 1991.

Some elements of the Challenges legislation are being debated this month before lawmakers go home for the session, as I noted in this week's "Fair Game." Yet, another $9 million in savings, and how to achieve them, is not likely to be debated until well after folks have gone home, and by a much smaller group of lawmakers — the joint legislative government accountability committee chaired by Sen. Diane Snelling (R-Chittenden).

Hogan, however, didn't blame all the problems of today on budget-cutting axes in the administration or legislature. He said responsibility also rests on the shoulders of lawmakers who, during the 1990s, spent surpluses rather than socking them away for a rainy day.

Speaking as a candidate for the Vermont Legislature, I can tell you that the 'budget crisis' is a scam.

UVM showed the House Ways & Means Committee last year that the social contract didn't need to be broken, showed them how major corporations like Nestle and Entergy use natural resources in Vermont practically tax-free... $1.2 billion a year in potential revenue, gone into private pockets outside of Vermont... rather than reinvested in Vermont.

Add to that Vermont's share of the huge defence budget, hundreds of overseas military bases arranged in an aggressive posture. Add to that Vermont's pension funds, invested in Wall Street instead of at home, while teachers are told that they have to do without... and you begin to get the picture of a banana republic.

Shay's right, the power is in the Legislature, and you have the power to vote 'em out!

"Davis noted that his father, in 1968, ran against creating a sales tax. But, after getting into office, and holding hearings on creating a sales tax versus cutting services to the needy, he changed his approach and urged the legislature to adopt the tax."

Yeah, and what was the budget in 1968? The logic of what Davis did in 1969 does not mean that he would raise taxes in 2010.

The issue is that we've added more programs, and raised expectations that the public will pay for everything, and the budget has become unsustainable. Do we absolutely "need" all the programs that the state now pays for?

"Hogan, however, didn't blame all the problems of today on budget-cutting axes in the administration or legislature. He said responsibility also rests on the shoulders of lawmakers who, during the 1990s, spent surpluses rather than socking them away for a rainy day."

Amen to that.

I'm not voluntarily going to give the Legislature more of my money so they can just hand it out to interest groups who've become used to living on, or with, public subsidies.

The emperor has no clothes! As I point... and laugh my ass off at all of these status quo politicians that are afraid to point this out in fear they will lose their noble status.
(Belly Laugh can't stop it... oh my LARGE BELLY LAUGH!)

1.5 Billion is Vermont's Pro-rata share of the Empire's(United States) failed foreign policy. What could Vermont do with that money? Imagine... not sending that money to the Feds and being able to keep Vermont's social contract with the people.

It is not interest groups that are going to suffer under the challenges for change. All of us as taxpayers will suffer. Just yesterday there was more talk about how cutting services for the mentally ill actually cost us far more money (even in the near term) because folks with mental illness will sadly fall into the corrections system if they fall out of the human services systems. Guess which costs more?

While there are probably savings due to efficiencies, why have they not been found under the Douglas Administration for the last 8 years? I know...this is looking back. But while everyone was buying the rhetoric of his Party talking about running govt like a business (I.E. supposedly more efficient and with more productivity from workers), he and his top staff never did the hard work to actually put in place administrative changes to actually implement efficiencies and savings.

The legislature does not run the day to day operations of Government. If there were sensible ways to trim government without trimming services it could have been done long ago. What we are going to see is either a legislature that goes along with the Governors recommendations (many of which are slash and burn), or they are going to have to come up with other savings (a la...cuts) since leadership is unwilling to discuss temporary tax increases on those that can afford it (yes there are still people making $350,000 in annual income in this state in this recession), and by dipping into reserves.

Sadly, that balanced approach does not appear to be on the table.

Kudos to the Public Assets Institute. And I agree with the folks from the Gund institute regarding our public assets as well. But again...such legislation would take guts and leadership. Something that is lacking (On all sides) at the statehouse.

@ Zuckerman:

"cutting services for the mentally ill actually cost us far more money (even in the near term) because folks with mental illness will sadly fall into the corrections system if they fall out of the human services systems."

Obviously, someone used to take care of these people before they became the state's problem.

And the answer is: their own families.

Why is someone else's mentally-ill son, MY financial problem?

@ Sean: As someone who has written extensively about Vermont's mental health system in the past 15-plus years I can say that no, it wasn't always the families who cared for their kids, or adults, with developmental disabilities or who struggled with mental health issues.

In fact, the Brandon Training School was owned and run by the state to house many folks with developmental disabilities, and the state building complex in Waterbury was once the "state hospital" for the entire state, and where kids and adults were sent.

Kids like my own son with Asperger's. There was no community treatment, no supports in place. The pressure would have been to ship him off to Waterbury to live with more than 1000 other "patients" at the complex.

I dare say that the "care" back then was much more like an institutional warehouse or prison than being at home. In fact, the kind of supports in place today allow for people to remain at home, in the community and be cared for rather than institutionalized.

As for why someone else's "mentally-ill son" should be YOUR financial problem, I ask you to consider this: Before my son was receiving appropriate community supports through a mental health agency he was in crisis almost every day at school, wasting the resources and time of a principal, vice principal, special ed director, paraeducator, numerous teachers, and a school resource officer, among others. It also cost me and my spouse lost time at work to have to leave and collect him from the school. That's not even accounting for the self-inflicted emotional damage it caused him for being the target of incessant bullying and ridicule.

So, now that he has supports — thanks to the money you and me and my wife and others pay — he's in classes with his peers about 75% of the time, has made honor roll twice, student of the month once, and is enrolled in honors-level classes at BHS in the fall.

As a parent, I don't want to know where those ongoing crises would have led — especially for him given the high rate of suicide for teenage kids with Asperger's — without the supports. Or, he could have hurt someone else by being out of control.

Even with the supports, there is plenty we pay for out of pocket to provide him the kind of wraparound services he needs.

For what you, and everyone else who chips in a little bit via taxes to help him, I thank you. My family thanks you. And my son thanks you.

You're welcome.

I don't have a child with Asperger's, but I believe I already pay enough in taxes (between state and federal, about a full 1/3 of my middle-class income), don't you?

So if the solution is, raise taxes, the answer is no. I'm sorry. I'm not giving any more to the government.

@ Sean: Nowhere in my response did I claim the solution is raising taxes, nor am I advocating for it. I pay plenty in taxes, but I also know that some of those taxes are going to help my son, and others like him. I guess I don't have as much of a problem with it as you do.

I merely wanted to correct your erroneous assumption that somehow you're only now paying for services for "someone else's mentally-ill son". Just not true. Vermont's human services budget has long been a source of funds for folks with developmental disabilities and those in need of mental health treatment.

I'm glad you're not advocating for raising my taxes. I'm afraid your blog post above certainly implies that we're not taxing people enough.

Seems to me that saving the safety net is worth maxing out our state revenue sources, including Vermont Yankee. This plant contributes $15 mil a year in revenue AND keeps utility costs down so that we can pay our taxes AND helps keep manufacturing employees employed and paying income taxes and not adding to the unemployment rolls. What is not to like?

Good for Shay for pointing out something that's been woefully missing from the tendentious "nostalgia" on the Left for Gov. Snelling's tax increases in 1991. As reported by Shay in today's Fair Game column, referring to Gov. Snelling's action of (temporarily) raising taxes in 1991 to close the budget deficit at that time:

"There were also budget cuts and layoffs."

Ah, yes. Budget cuts and layoffs. This is the part that today's anti-budget-cut crowd completely fails to remember or mention when they remind us of how Snelling addressed the budget problem in 1991 by raising taxes.

And it's worth remembering why we had a budget deficit in the first place in 1990-91 that had to be fixed: Governor Kunin's deficit spending from 1986-1990. It's also worth remembering that Snelling's tax increases were scheduled to expire early on in the Dean tenure, and that Dean insisted that they be allowed to expire as planned, over the yelps of Dems in the Legislature at that time.

Those who yell, "But Snelling raised taxes!" are not telling the whole story and not putting the temporary tax increase in its true, total context. Snelling also slashed the budget and cur jobs. He also made sure that the tax increases were temporary and he included a specific susnset date for those taxes. And what was the total state budget in 1991 vs. today's?

Anyone who claims to predict with certainty that if Snelling were Governor today he'd raise taxes again is dishonest or ignorant.

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