2016-01-11 Letter to Colchester Legislators

2016-01-11 Letter to Colchester Legislators - Google Docs:

January 2016

Senator DIck Mazza, Representative Jim Condon, Representative Joey Purvis, Representative Pat Brennan, Representative Maureen Dakin

Thank you for your service to Colchester and Vermont! Another tough legislative session looms and your task will be no easier this year.

Below are my views/priorities on the issues that deserve your focus and that of your leaders.

Please resist any impulse to waste time on minutiae, including expansive legalization of recreational marijuana. All other arguments aside, do not be cajoled into believing that you will have the opportunity to create a new revenue stream. Instead, you would enable a robust black market while creating yet another regulatory bureaucracy.

Control Overall State Spending

Recognize that Vermont has a spending problem, not a revenue problem. Please adopt that mindset and resist the temptation to raise taxes and fees yet again to balance the budget. Focus on efficiency in state government and reduce services as necessary. The AHS budget in particular is out of control.

Resist the siren song of budgeting on the notion of a “moral economy” where Vermonters needs and wants are so conflated that runaway spending is sure to follow. Vermont’s government role is not to meet all the needs/wants of Vermonters.

Keep the Cap on Education Spending

While Act 46 and the details within it are controversial, the fundamental premise, capping statewide education spending at 2%, is absolutely correct. Retain that and work on the details if you must. Do not succumb to the argument that because health care or other costs may have risen, the cap should change. Hold the line on total spending.

Reduce the overly generous income sensitivity element of education funding so that taxpayers vote more rationally on school budgets.

Carefully Scrutinize the Administration’s All Payer Waiver Request

The Administration wisely abandoned its single payer ideology as unaffordable. Do not allow Vermont to create an alternative that would pull Medicare funding under state auspices. The Medicaid crisis was created by the Legislature as part of the Single Payer/VHC fiasco. Please do not aggravate Vermont’s demonstrated inability to manage health care by allowing the Administration/GMCB to tamper with Federal control Medicare funds. Instead, keep focused on constraining the costs of Vermont’s health care rather than fiddling with the payment stream..

Carbon Tax

No!

Vermont’s  Regulatory, Population and Workforce Infrastructure Problem is Critical

Vermont’s workforce and demographic trends portend yet deeper trouble for our economy. The excessive time, energy and costs for doing business in Vermont are serious debilitating burdens on businesses. Because we lack common-sense regulation with swift decisions, capital investments are unnecessarily delayed in far too many instances. The regulatory and bureaucratic overburden at all levels of government is a major factor in the unsustainable costs of housing, business development and growth. A serious overhaul is long overdue and substantial improvements would send a potent signal that Vermont is open for business and job growth.

Respectfully,

David Usher, 267 Biscayne Heights, Colchester VT 05446, 802 735-2233

cc: Colchester Sun

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Camapign for Vermont Electric/Energy Policy Statement

We are beginning to see some policy positions from Bruce Lisman's Campaign for Vermont Prosperity. Here is an excerpt from a recent statement about energy and electricity.

There's another by Jeanne Keller recently issued about Vermont's health care direction.

So far, I like what I'm reading. Whether the Campaign can generate momentum for a different direction remains to be seen because so many Vermont forces are aligned in a direction that relies on government rather than the private sector for prosperity.


Governments can only foster economic prosperity by creating an environment where private sector capitalism can thrive. That's not what this Vermont Administration and Legislature are about.

"Campaign for Vermont believes our state needs an electricity plan without empty sloganeering. Politicians say building a 90 percent renewable energy future will create jobs, save the climate and foster energy independence. It all sounds good. And it is, in the abstract, until we learn about the cost and reliability. For example, most renewable power

sources are intermittent; that is they don't operate reliably all the time. But citizens and job creators need affordable, on-demand "base load" electricity every minute of every day.

Furthermore, Vermont state law obliges utilities to provide customers with low-cost, reliable power."

State officials say Irene transportation repairs will cost less than half what they anticipated

I have long maintained that Vermont's very high 'transaction costs' (the overheads including regulatory and environmental compliance, permitting, administrative and judicial delays for reviews, appeals, etc.) that are incurred to build anything of consequence in this state add unnecessary delays, expense and increase the costs of doing business here.

The exceptional work done recovering from Irene's damage shows that Vermont could be far more efficient in using tax and private dollars. A wise Legislature would revamp how Vermont does business and set the state on a path of economic growth by reducing the wasteful burden created by a ponderous and expensive process that adds little value to our investments.

"...The dramatic shift brings the overall estimate of Irene damage built into state estimates well below the roughly $900 million mark state officials were citing in mid-October. The new grand total is about $500 million and includes $250 million for new emergency and long-term highway repair costs, $50 million to construct a new Vermont State Hospital, $50 million for stabilizing the old state office complex and renovating or building new space, about $19 million in individual assistance and $140 million in repairs to town roads, bridges and public facilities..."

"...The state also saved millions of dollars by taking short cuts during the post-Irene emergency that normally would be prohibited under state and federal laws. The standard pre-construction procedures for road and bridge repair were abandoned in order to expedite the process, according to Sue Minter, deputy commissioner of the Agency of Transportation. The processes that are normally followed for transportation projects — federal and state permitting, environmental mitigation, design review, planning, right-of-way purchases – went by the wayside..." 

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Digital devices divide -- and connect -- Vermont communities

A fascinating discussion on Vermont Digger about the use of electronic devices in public meetings. Jim Condos, Secretary of State, entered the discussion with this comment and a quote from Vermont's Open Meeting Law.

"It has been the position of this office with my predecessor and is now with me, that if you have a legislative body with a quorum discussing or doing the business under its control, then it is a public meeting and needs to be warned and minutes taken. It does not matter if its a work session or regular meeting."

Public officials and Town committee persons should take care to heed this warning (below). I had never thought of it before.

WHEN DOES THE OPEN MEETING LAW APPLY?
Whenever a quorum (a majority) of a public body meets to discuss the business of the board or to take action, the open meeting law will apply. This means that if a majority of a board find themselves together at a social function they must take care not to discuss the business of the board!

John McClaughry Traces the History of Vermont's Health Care Reform

Libertarian John McClaughry of the Ethan Allen Institute traces the history of health care reform in Vermont, a seemingly futile effort to control costs. Yet, less than 8% of Vermonters are not covered by some form of health insurance, a good outcome, but certainly not perfect. So access is really not the problem in Vermont. Cost is the culprit as it is everywhere. Vermont's proposal to go down the single-payer road is analyzed in historical context.


John's history posted on Vermont Tiger is worth a read, but for me here's his key point:

"The advocates are intoxicated with the fiction that “health care is a human right”. They harbor a deep seated animus to insurance companies, corporations in general, and anything smacking of informed consumer choice. They are convinced that their dissatisfactions with today’s health care are the result of “market failure” – even though most if not all problems can be traced back to an unwise policy choice, tax or mandate from either state or federal government.
The Senators ought to know better, but the majority party’s continued support for single payer seems to be a remarkable example of willing suspension of disbelief. It is also a major disservice to the people of Vermont, who are in line to bear the brunt of single payer’s inevitable – and possibly tragic - consequences."

Of course, the wild card in all this is the outcome of ObamaCare, which in its current form is by no means certain given the increasing pressure to constrain federal deficits...and the results of the 2012 elections. 

Employers Testify Against Vermont Healthcare Reform Plan

    Dealer.com and IBM testify against the rush to single payer in Vermont to VT Senate Committee on Health Care. (Credits: TrueNorthReports for the video clip.)


    Vermont's Democrat-controlled Legislature and Gov. Shumlin are hell-bent on rushing to health care reform that runs a very high risk of failure to meet cost containment goals. Multi-state companies who self insure health care for employees will not pay twice nor will employees stand for reduced (yet-to-be-defined) benefits. Who knows if they will pass these extra costs on to their employees? They certainly will not choose to pay twice for Vermont employees.


    The state will be downright stupid to take an action that at great risk of driving multi-state employers and jobs from Vermont.


    If Vermont chooses to eventually exempt companies in this category, that will further reduce the number of people who will be enrolled, because Medicare eligible folks will apparently not participate. ShummyCare as presently envisaged in H.202 is a mirage with no guarantee of success in reducing costs or providing any significant quality improvement. Wat we can expect if this plan comes to reality is RATIONING of services.

Gov. Shumlin Looking to Get Off the Hook?

This excerpt from TrueNorth Reports daily newsletter (01/28/11) reporting on Gov Shumlin's press conference earlier this week is very likely correct. Entergy won't walk away from its investment in Vermont Yankee without exhausting all its potential remedies.


I believe Entergy's chances are better than even that the Federal courts will side with them, but this case, if filed, will likely wind up at the Supreme Court. How much money Vermont will squander defending such a lawsuit is anybody's guess. Attorney General Sorrell, what's your budget for this?

"...The bad news is that Shumlin appears totally un-moveable from his insistence that Vermont Yankee be closed in 2012, despite being deemed safe for operation by the Nuclear Regulatory Commission. This, despite red flags raised this week by IBM that Vermont's largest private employer could be "outta here" if electric rates rise to un uncompetitive levels. Speculation in the State House is that Shumlin's looking for a federal lawsuit by Entergy denying the legislature the authority to close the plant to get him off the hook without overtly breaking his campaign promises...."

Vermont Tiger: We Cut Spending Already ... Didn't We?

Well worth a read for anyone following the budget crunch in Vermont state government.

Mr. Pelham's writing has appeared in many places recently. I have excerpted the essential elements. How can we trust our Legislature when its leaders tell us they have cut spending when if fact they have not as Mr. Pelham reports? And he reports from a position of authority in the previous Administration.

by Tom Pelham (Tom Pelham was the Commissioner of Finance for Howard Dean and Tax Commissioner and Deputy Secretary of Administration for Jim Douglas)

"It’s common knowledge that state budgets have been cut during the current recession, including deep cuts in human services. But is it true? Let's look at the record ... and this chart.

The truth is that the total state budget grew robustly during this recession. From fiscal 2008 through fiscal 2011 the state budget increased by $658.9 million, or 4.62% per year while the Agency of Human Services budget increased by $336.3 million or 6.53% per year. Much of this increase was fueled by ARRA funds which supplanted recession depleted general funds. General funds are broad based state taxes including income, sales, meals and rooms, and corporate. ARRA funds are temporary federal stimulus dollars granted to states to soften the recession, but will end after fiscal 2011.

Yet legislators, news reporters, editors, advocates, and bloggers routinely reference state budget cuts as fact. In a January 15 article, the Burlington Free Press quotes Martha Heath, House Appropriations Chair, as saying “Because this is our third or fourth year in a row making budget cuts, it just gets more and more difficult to find a way to cut the budget that won’t be painful to people….”. Whether to cut the budget or raise taxes is certainly debatable, but providing the public with factual reference points as to whether the budget has already been cut is fundamental to an informed debate. In this regard, the media has failed the public..."

Salmon: We must blame no one and engage everyone

Tom Salmon speaks to a lesson our culture must learn. Americans and Vermonters have become far too dependent on government for our wants and needs. Turning the corner, however, will not be easy or quick because so many people prefer their 'entitlements' and politicians are far too ready to accommodate them.

At the Federal level with deficit spending and in Vermont by high taxes and dependency on Federal handouts from this deficit spending we are creating government services and expectations that we can no longer afford.

But where to begin to turn the ship of state?

Vermont Digger Editor’s note: This op-ed is by Vermont State Auditor Thomas M. Salmon, a CPA and licensed teacher who lives in St. Johnsbury.

We just finished a brutal campaign season. Op-eds are popping up and “Where do we go from here?” is one catchy title. I feel the need to address that question.

My father often reminds me…. “It’s not what you say, it’s what they hear”, so I’m hoping you hear what I say in the spirit intended.

In 2010, the President’s Commission on Fiscal Responsibility and Reform report was issued. Commission co-chair Erskine Bowles said: “We have started an adult conversation that will dominate the debate until the elected leadership in Washington does something real.” So the question “where do we go from here?” remains fertile. Ruth Marcus of the Washington Post writes, “This means telling both sides what they don’t want to hear. Conservatives must accept..(x). Liberals must accept..(y)..” Sounds simple enough. Are Conservatives and Liberals showing signs of communication? Who is communicating with the real people between Main St. , School St. and State St. ?

Reform is going to require new players; people not usually involved in formal civic activities. Ms. Marcus fell prey to the same inclination many big brains do; they speak of the problem as if it lay on a table or under a glass case. Paralysis through analysis and no action. Politicians and “experts” need to push the “stop and listen” button.. Einstein reminds us to “find the opportunity in the problem” and that will call for a different strategy.

As Auditor of Accounts, I warn of dangers, and the loss of “listening” is a real danger. I have testified on sensitive subjects like Sarcoidosis at the Bennington state office building when the legislature almost paid for that illness out of Workers Comp. I warned during the Act 62 Pre K discussion that resources for education are not infinite and may require rethinking how we deal with grades 11 and 12 to pay for age 3 and 4 educations.

People are starving for the truth, bold ideas and direction. Let’s give them some. We are talking about problems we can fix. A year and a half ago I took ample criticism for speaking up on a sensitive unemployment issue. Leaders were afraid to discuss curbing benefits to protect the fund or warn citizens that unemployment benefits may run out before their old jobs reappeared. I was vilified in my attempt to call out that urgent self-preparation and adjustment is required because some of those jobs are not coming back. Now, leaders are still silent while those unemployed Vermonters start falling off unemployment support.

It is very expensive when leaders focus only on votes, or promises to mitigate pain, or increase access or resources, while remaining afraid of looking the public in the eye and giving them the harsh truth. This country has a well-documented history of overcoming adversity, the ability of standing up straight immediately after getting knocked down. One of my favorite quotes is “People do not lack strength, they lack will”; it is up to us to demonstrate that we have the will to address our problems. Any government that provides benefits (education, health, employment, etc) without clear expectations from its citizens, in return, is committing a disservice.

One of the promises I heard on the campaign trail was a “Single-Payer System in Vermont .” I didn’t hear much about the fact that 70% of our healthcare costs are attributable to preventable causes. Not only are more than one-fourth the number of potential military recruits too fat to join the military, but now a report released December 21 says nearly one in four of the students who try to join the U.S. Army fail its entrance exam. Many have found it easier to blame teachers and schools for such academic results or McDonald’s and soda for childhood obesity. A commitment to reality is long overdue and we must make personal responsibility germane to both of these discussions.

I could dazzle you with financial facts that are all big and all bad. I could stress the challenges of demographics, unfunded liabilities and our inability to create private sector jobs in Vermont since 1997. We’ve been there, done that. After you read this, you may crinkle it up to start your woodstove, or you may ask, how do we engage the general population to address the problems we face? How do we get the discussion started on issues of citizen participation in government and parent participation in our schools as a first step toward addressing the question “where do we go from here?”

We need participation, and the time of good intentions and “hoping for volunteers” is over. It’s time to get in the game, or watch our country, as we’ve known it, vanish.

The Corrosive Culture of Earmark/Pork Spending

The pre-Christmas controversy over earmarks or pork (depending on your ideology) is a valuable discussion. While Vermont’s targeted earmark/pork recipients whine about the loss of funding for their pet projects, the larger question deserves more attention. The culture of local slurping at the Federal trough that has fostered this entitlement mentality is corrosive to Americans’ trust in Congress and the federal government.

The massive spending bill that Majority Leader Harry Reid reluctantly pulled from consideration because he did not have the votes to assure passage in the lame duck Senate was laden with earmarks/pork.

According to the Heritage Foundation: “Gallup released a poll this morning (December 15, 2010) showing that the American people dislike this 111th Congress more than any other Congress. Specifically, a full 83% of Americans disapprove of the way Congress is handling its job while only 13% approve. That is the worst approval rating in more than 30 years of tracking congressional job performance.

Why do Americans so despise this Congress? The reckless way it spends other people’s money, for starters. One would have thought that after getting “shellacked” at the polls this November, Congress would have gotten the message. No luck. Majority Leader Harry Reid introduced a $1.27 trillion 1,924 page omnibus spending bill last night that contains 6,000 earmarks worth $8 billion. Oh, and all this has to be approved by midnight Saturday or the government shuts down.”

Many argue that earmarks represent minuscule spending in the big picture and promote valuable local benefits. However, the more important factor for the taxpayers is that earmarks/pork is part of a political spoils game played by both parties using taxpayer and borrowed money. At a time of economic pain and imperceptible growth, this culture erodes public confidence in a government that refuses to reign in spending. Congress, the body with the Constitutional authority for budgets and raising revenue, is seen as frivolous spendthrifts who abuse the system for their selfish political benefit.

Now that the massive spending bill has been derailed by the Senate, the new Congress, particularly in the Republican dominated House where spending bills originate, must soon decide what to cut in order to fulfill the November 2 voters mandate to control spending.

Government Workers Cannot Expect Job Security in a Sick Economy

Not all government jobs contribute to a healthy economy. Yet, most government employees do provide valuable essential services. We accept that certain functions of government are necessary to a healthy, vibrant society. Nevertheless, we should vigorously debate the degree of funding for government functions (protection and policing, education, transportation, courts, the justice system, et al).

Always, but especially in times of economic stress, we must closely examine the fundamental role of government in a free society. Career politicians are usually incapable and unwilling to do this, their rhetoric notwithstanding, because they desire to continue or enhance their careers by pandering to their constituencies. People in the private sector more realistically understand the pain in a faltering economy and adjust more quickly.

Those folks who choose government service or depend on government largess for their livelihood are subject to the vagaries of both the private sector economy and the will of the taxpayers and voters. In this unhealthy economy they can no longer expect a guarantee of job security. Some seem to be adjusting to this reality by accepting pay freezes and cuts. That's an encouraging sign.

Unless the Vermont Legislature chooses to deficit-spend (God forbid!), their budget cuts to eliminate the $150 Million gap WILL eliminate jobs. We should encourage legislators to cut expenditures intelligently, examining the services that government should sustainably provide over the long term.

We must also encourage Legislators that raising taxes is a VERY bad idea. Let's hope they'll listen.

Voters question budget defeat in well-off Charlotte | The Burlington Free Press | Burlington, Vermont

Voters question budget defeat in well-off Charlotte | The Burlington Free Press | Burlington, Vermont

Molly Walsh's excellent story in Saturday's Free Press spotlights the egregious shortcoming of Vermont's school funding mechanism. Income sensitivity, a politically correct term for subsidies, has become far too generous (See highlighted portion of story below).

Vermont legislative leadership apparently considers income sensitivity the 'third rail' of legislative spending programs. If they touch it, they must fear the wrath of the education establishment and the 65% of Vermont taxpayers who benefit from it. Meanwhile, as Ms Walsh points out, taxes and annual spending for the subsidy will soon reach $182 Million.

This travesty cannot be allowed to continue. It makes a mockery of local control because far too many taxpayers are insulated from the effects of their 'yes' vote for school budgets that continue to escalate the tax rate. The result is ever higher education spending and taxes for a declining student enrollment.

Legislators must change the rules of the game. Do they have the courage? No evidence of that to date.

"Are tax breaks fair?

Tax breaks based on income also play a role in the final tax rates. Discounts claimed under this exemption have grown dramatically statewide and are projected to keep ballooning by 53 percent from fiscal 2009 to fiscal 2012, from $119 million to $182 million.

Vermont Tax Commissioner Richard Westman flagged the scale of the tax break as a problem in December and noted that such exemptions diminish the tax base and place more pressure on remaining properties and taxpayers who aren’t exempted.

Charlotte is one of the wealthier towns in Vermont. However, even there, 41 percent of primary homes qualify for school property tax breaks. Thirty homes qualified for the maximum $8,000 tax break allowed under state law this year. Eighteen of the 30 homes were assessed at $1 million or more, and one home was assessed at $2.17 million. The lowest assessed value for a homestead qualifying for the full $8,000 tax break was $740,900, according to town records.

The tax breaks are based on a household’s income.

Some critics of the current system say it’s too easy for people with sizable wealth in real estate and other assets to qualify for tax breaks.

It’s unclear if concern over income sensitivity played any role in the Charlotte school budget outcome, but the pattern of tax breaks is prompting questions. Mary Mead, Charlotte’s town clerk and treasurer, said the formula doesn’t make sense.

“It needs a big fix,” she said."

Vermont Accepts "The Challenge" from Public Strategies Group

This week, Governor Douglas, Senator Shumlin and Representative Smith have agreed to accept the report of the Public Strategies Group (cost $300,000). I assume that means they have also agreed to implement all the recommendations that will allegedly save $38 Million in FY2011.

While the news is good that Governor Douglas and Legislative leaders have agreed to accept "The Challenge," I doubt that all the savings will be realized in FY2011.

Who will be responsible for tracking the progress and quantifying the savings. Will the same group who has been tracking and reporting the use of ARRA (stimulus) funds do this? Will the State Auditor of Accounts be responsible?

State government has only a few months to implement these recomendations in order to allow time for them to be in place long enough to realize the assumed savings. The devil is always in the details.

Restructure and Refinance of Vermont's Education System

What if... Vermont decided to radically revamp its school system to match 21st century expectations so that our graduates would be readily employable in the healthy private sector we believe we want.

Then, market the daylights out of the change Vermont has embraced and demonstrated it can produce. To make Vermont attractive to nimble, bright entrepreneurial companies will require a workforce from an education platform that has shown itself to be equally nimble and far-sighted.

Same old, same old gets us nowhere. No-brainer across-the-board-cost cutting without radical change won't deliver what we need. We require transformation of our K-12 education paradigm while simultaneously reducing costs. But the inertial forces (think VTNEA and various interest groups invested in resisting change) work against a new, vibrant vision.

Such a transformational change demands leadership and vision, both of which are sorely lacking in Vermont's political class. Or, if it's present, I haven't seen or heard it.

Next week we'll know more when the Legislative Interim Committee on "Financing and effectiveness of the Vermont education system in the 21st century" charged to "examine potential improvements to the structure and funding of the Vermont educational system in light of the state's limited financial resources.

Vermont Yankee Should Be Relicensed

This excerpt is from an editorial by Emerson Lynn, publisher of the St. Albans Messenger, which has appeared in his newspaper and at Vermont Tiger. We at VEH endorse his view.

Candidates whose rhetoric panders to 'green' constituencies should be pressed to explain why higher energy costs are good for Vermont's economy. The stark reality is that Vermont Yankee nuclear generated electricity is a very good deal for the state, particularly the beneficial revenue sharing agreement that would run until 2022, if VY is relicensed.

The appeal to 'feel-good' emotions that some people harbor about doing 'something' about global warming is a transparent attempt to solicit votes. The truth is that Vermont Yankee relicensing with fair pricing is the best deal for Vermont, providing both low energy costs and maintaining a minimal carbon footprint.

"...Vermont needs an energy portfolio that includes a robust mix of renewable
energy sources. We also need to continue our focus on conservation. But we also need to be honest about what can be accomplished, and at what costs. Even the advocates understand that Vermont does not currently have the potential to meet its energy needs through renewable energy projects dotted across the state. And they also understand that the price of renewables is considerably above that of Vermont Yankee and Hydro Quebec.

Our gubernatorial wannabes should work from this understanding as well. To shrink from this challenge cheats the debate. It also works in direct contradiction to what is going on in the rest of the world. It’s odd that five Democrats from the liberal state of Vermont are actually pushing – by default – a position that would increase the level of emissions the rest of the world wants to curb."

Weak Case for Jobs Created or Saved by Stimulus

TeamObama has an uphill battle to persuade people that stimulus spending is saving or creating jobs. This chart from the Heritage Foundation demonstrates that the claims and promises were optimistic, if not hollow.

In Vermont the initial claim touted by the senior and junior senators was for creating or saving ~8,000 jobs via stimulus spending in 2009 and 2010. Granted, keeping score accurately is nearly an impossible task, but using the Federal rules, the revised reported total to date is less than 1,600. I'm trying to find out the split between public sector and private sector jobs.

Portraying optimism at the time when the economy was plunging into deep recession is understandable, but to my knowledge, the 8,000 figure has never been revised. Certainly, as more stimulus money is spent, more jobs will be saved/created, but planned spending cannot possibly offset the loss of Vermont jobs during this recession.

But Vermont has deeper problems, even in 'good' times, because its reputation is not 'business-friendly' with high taxation, long-term government spending that has outstripped the state's tax capacity and little demonstrated willingness by Legislative leaders to seriously prioritize and take the needed actions to chart a different course. Until and unless they seriously cut back spending and encourage private sector job growth, Vermont's economic health will continue its 10 year decline.

California Tax Commission Releases Ground-Breaking Plan - WSJ.com

California Tax Commission Releases Ground-Breaking Plan - WSJ.com:

Our own Vermont Blue Ribbon Tax Structure Commission created by the Legislature in the 2009 session would do well to consider this recommendation by a similar group in California. Vermont, on a much smaller scale, has many of the same problems and underlying culture/ideologies driving the painful deficits that are staring us in the face in the next 2-3 years.

"...They [CA commission members] may be motivated by the reality that California's steeply progressive tax rates are defeating the purposes of progressive government. To wit, only a growing economy can create opportunity for the middle class and enough state revenues to finance schools and health care for the poor. A tax code that depends on 1% of taxpayers, 144,000 filers, to finance 50% of state income tax revenues has proven to be unsustainable, notwithstanding the liberal dogma that says tax rates don't matter."

Businesses have been fleeing California for tax-friendlier states. Meanwhile, Vermont has seen little economic growth and virtually no job growth in the private sector during the past decade.

More Thoughts on Henninger's Observations

Henninger: The Blue Dogs’ Final Dilemma is Health Care - WSJ.com:

Henninger's quote below certainly applies to Vermont. We are a state where the public sector is intentionally squeezing the private sector as it has increased government services and commensurate spending. Vermont's economy was unhealthy even before the recession began. Nevertheless, Vermont racheted up spending beyond the ability of the tax base to support it.

State government is now facing runaway pension and retiree health care liabilities and a massive (by Vermont standards) hole in its future revenue stream. The basic problem: Vermont for a decade or more has been on a "Cadillac" state spending binge fueled by a "clunker" private sector economy.

"The problem is that in Washington and many states the public sector’s revenue needs have arrived at a point where space for the private economy is more or less beside the point. That is the clear message of the California and New York budget crises and the difficulties of financing the Obama health-care plan.

For centrists in both parties the moment has come to decide which side of the public-private divide they want the U.S. and its future workers to be on. Trying to live in both has brought us, inevitably, to that decision."

My guess is that leaders in Montpelier are hoping that national health care reform will bail them out of the fiscal pit of Medicaid and Catamount Health. Yet none of this relief would kick in, as I understand it, until 2013 at the earliest if approved.

Now is the Time to Revamp Vermont State Government

Now that economists advising the state have rendered an even more dismal view of Vermont revenues (forecasts down by another $28 Million), some legislators have begun the predictable hand-wringing and 'woe is us' groaning. But the Governor and Legislative leadership have an enormous potential to revamp government and set spending on a far more rational path for the future. Opportunity is knocking.

Many government employees are choosing to accept incentives for early retirement. Others are losing their jobs. Yet, this painful downsizing of government opens a rare opportunity for an overhaul that will serve us more efficiently.

The economy may be in the tank for some extended period and far too many people have already lost their jobs in the private sector during this recession. Tax revenues will continue to deteriorate. Yet, now is absolutely the right time to seriously analyze and prioritize the services that government provides, eliminating those that are not essential. When you can't afford business-as-usual, business must adapt.

We must do this because the economy will unlikely rebound quickly, if ever, to former levels. Without a healthy private sector economy driving a future increase in the tax base, Vermont simply cannot support the present level of education, health care and social services spending. Lawmakers should not expect to see increased tax revenues anytime soon nor enough federal bailout. Banish the notion they should even entertain yet more new taxes in the next legislative session!

In the midst of myriad special interest groups jockeying for their dollars and programs, this will be very hard work. Perhaps the Governor's "Tiger Teams" searching for cost savings are a small step in the right direction. However, simply belt-tightening and chopping out a bit of cost here and there will not accomplish what's needed. We must insist on a far more comprehensive review of government.

Let's take advantage of this opportunity to seriously examine how much Vermont government can do a lower balanced budget. Government simultaneously must become more efficient, less costly and continue providing essential services of high quality. It may take a few years to accomplish this, but we must muster the will for it now.

Many people tell us that Vermont government is sorely lacking in effective technology, much of which is clunky and obsolete. Typically, legacy systems are underutilized and difficult to upgrade. It's not an easy task and one that is likely to fail if changing or replacing systems is done haphazardly without examining the processes, interrelationships and interactions necessary for efficient citizen service and internal operations. The worst mistake is to insert new technology into obsolete functions.

The tasks ahead for our government should be:

• Take a deep and thoughtful look at what government should be doing, consistent with reduced revenues.
• Determine the right combination of people, organization and technology to deliver those essential services with high quality.
• Source to the private sector (profit or non-profit) those functions that make sense and can be done more efficiently there.
  
• Spend money wisely to implement efficient systems based on proven, web-based technologies.
• Place people in the proper roles and train them on new systems.
• Demand performance-based accountability from managers and employees alike.
• Negotiate with unions the modifications in work rules needed to accomplish these changes.

Revamping government will surely cause great turmoil, yet we are already in the midst of that upheaval because of the recent budget reductions, layoffs and retirements.

Let's insist that government reinvent itself while it has this rare opportunity. Ask Governor Douglas and your legislators, particularly the leadership, to bury their political hatchets and step up to this effort. Government reform should be a centerpiece of 2010 political campaigns.

How the Crash Will Reshape America

This Atlantic piece is well worth reading as this recession and the events leading up to it will likely change the America we have known in a dramatic way.

(more discussion later)

"...But different eras favor different places, along with the industries and lifestyles those places embody. Band-Aids and bailouts cannot change that. Neither auto-company rescue packages nor policies designed to artificially prop up housing prices will position the country for renewed growth, at least not of the sustainable variety. We need to let demand for the key products and lifestyles of the old order fall, and begin building a new economy, based on a new geography.

What will this geography look like? It will likely be sparser in the Midwest and also, ultimately, in those parts of the Southeast that are dependent on manufacturing. Its suburbs will be thinner and its houses, perhaps, smaller. Some of its southwestern cities will grow less quickly. Its great mega-regions will rise farther upward and extend farther outward. It will feature a lower rate of homeownership, and a more mobile population of renters. In short, it will be a more concentrated geography, one that allows more people to mix more freely and interact more efficiently in a discrete number of dense, innovative mega-regions and creative cities. Serendipitously, it will be a landscape suited to a world in which petroleum is no longer cheap by any measure. But most of all, it will be a landscape that can accommodate and accelerate invention, innovation, and creation—the activities in which the U.S. still holds a big competitive advantage..."

If the analysis and predictions are accurate, my burning question is how can Vermont position itself to benefit from the shift in all the factors suggested in Richard Florida's writing. Can we? what must we do?

A couple of years ago we had a push by some for stimulating and expanding Vermont's 'creative economy. Should that continue? Are we part of the mega-city region of New York? Should we consider ourselves a 'haven,' a place of respite and relaxation for those inside Montreal-Boston-New York?

We succeeded in becoming a haven for captive insurance companies. If we are a haven for recreation and 'quality of life,' why not become a have for capital and other resources? Or are we just too small to be able to leverage anything meaningful on our own?

Are we better off joining forces regionally with upstate NY, eastern NH, or southern Quebec on certain matters? I think this makes more sense. The trick is finding areas of mutual interest? Recreation? Energy? Education? Health care?

How can we best position ourselves to emerge economically healthy from this recession. We are unlikely to go as deeply into it as other areas of the country, but we may well lag coming out of it as we have in the past.