Vermont's Legislature: 'The Good the Bad and the Ugly'

MONTPELIER-From the standpoint of preserving the state's solvency, making life easier for revenue-generating businesses, and defending our liberties, the 2010 legislature's work is a mixed bag of the good, the bad and the ugly.

Facing a $154 million deficit in January, the legislature produced what it claims is a balanced budget without broad based tax increases. In fact, in the face of Gov. JIM Douglas' not so veiled veto threat, it even lightened the business tax burden by allowing many Vermont businesses to claim the full 9 percent domestic production credit against state taxes as well as federal. It also liberalized capital gains treatment for investments in Vermont businesses.

To reach a putatively balanced general fund budget, the legislators made changes in the two state retirement plans ($17 million), and continued a state employee pay freeze ($9 million). But the remainder of this apparent fiscal miracle contains two highly suspect elements.

Internal human service program changes are credited with a $39 million spending reduction, and the "Challenges for Change" initiative is "assumed" to produce another $38 million. The former is too complicated to grasp, and the latter-amusingly touted by Douglas as "reforming government"-is highly speculative.

The "Challenges" effort was conceived as a way of streamlining state government and thereby saving money without reducing any programs or services. The $38 million in "assumed" savings put forth by the highly overpaid consultants last January was apparently based on no analysis at all. Next January, when another $122 million in savings must be found, be prepared to hear that much of the "assumed" Challenge for Change savings failed to materialize, and it was the other guy's fault.

Perhaps the most notable achievement, other than avoiding a veto battle, was putting the Unemployment Insurance program back on track, after recession-incurred payouts drove it well into the red. Businesses saw their taxable wage base rise from $8,000 to $16,000 (in 2012); unemployed workers saw their benefits delayed a week, and then frozen at the present $425 a week maximum. This issue will have to be revisited again, as early as next year.

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