Rep. Anne B. Donahue
Legislative Update: 2014 Wrap-Up
A Review of 2014
The vast majority of bills that come to the House
floor are passed on a voice vote, usually unanimously or nearly so. They
reflect necessary statutory updates or policy steps, but rarely have a major
impact on the direction of the state.
Some significant ones this year included the
battery recycling program, child product toxic chemical monitoring, criminal
court diversion for drug treatment, and banning smoking in a vehicle with a
young child.
The tough issues most often have to do with money,
both in amounts and in priorities.
This year, the governor told school boards that
they needed to keep their budgets below a three percent increase, but our general
fund increase was 3.8 percent. That was greater than our revenues, so the
difference was made up in discrete areas of new taxes.
We also maintained the structural deficit that
means the state will begin the 2016 fiscal year budget already $72 million in
the red, according to the nonpartisan Joint Fiscal Office.
Translation: we are not creating sustainable
budgets.
Property taxes also took a hit. We’d like to
blame that all on local spending, but we actually added to future school
budgets in two ways. One was requiring access to pre-kindergarten for all 3-
and 4-year-olds. The other was adding an assessment that starts at $1,072 next
year for every new teacher hired, as a component for bringing retirement
benefits into balance.
While the retirement pension issue was critical
to address, it didn’t need that particular assessment to begin this year, and I
believe it was bad timing to start it before we have done a comprehensive
overhaul of education funding.
Our business community had a bad year with the
legislature, and that won’t help with economic recovery or future tax revenues.
Businesses picked up some of the biggest tax impacts, making up for part of the
revenue shortfall through an increased health care assessment, and receiving a
disproportionate share of the property tax increase.
The tax bill also reduced the tax credit for
innovative, start-up businesses that we’ve been trying to foster.
The more conservative Senate Democrats and House
Republicans were able to push back on a minimum wage increase that would have
hit small businesses particularly hard by lumping it in a single year beginning
in January of 2015. Instead, it will end up at a higher point ($10.50), but it
will transition over four years.
Even without the new taxes, the 2014 ALEC-Laffer
State Economic Competitiveness Index ranked Vermont 49th among the
50 states in its economic outlook, based upon state policy variables. We were
listed number 48 in property tax burden, and 44 in the number of state
employees per population.
By its own measures, we may do better than the
outlook predicts. We’ve been 49th or 50th for the past
six years, but our actual performance rank for last year was 36, with a rank of
40 for the cumulative growth of the state gross domestic product between 2002
and 2012. Better, but that is still in the bottom fifth.
The Structural
Deficit
For years now, the Joint Fiscal Office has been
trying to educate us about the fact that our budgets are not sustainable under
current revenues. We may appear to end each year with a balanced budget, but in
fact simply pass the deficit buck(s) on to the next year.
We did nothing to change that this year.
I’ve gone into considerable detail on how this
works in a companion article that is too long for the purposes of this column,
but is available on my blog at www.representativeannedonahue.blogspot.com
Briefly, it uses two examples: the $7 million in
“new” resources that we included to combat opioid addiction, and an example
from Reach Up on the way “savings” are sometimes manipulated.
The money for substance abuse treatment actually
comes almost all from hypothetical savings to be achieved through better
service delivery. That is a terrific way to do it, if it works, but the
evidence that it will work is fairly weak.
When it falls short, the cost overrun will show
up in next year’s midyear budget adjustment and next year’s new base budget. So
we didn’t actually budget for the money intended to be spent this year and it
will be part of the new deficit next year.
On the other hand, my committee attempted an
initiative to help families succeed in getting off Reach Up assistance benefits
in a way that was truly budget-neutral. A reduction in everyone’s cash grant by
$4 per week created the ability to increase the income disregard (the amount a
person can earn and keep without losing the same amount in the grant) for those
working, from $200 to $300.
That is a work incentive that helps a family get
off of public benefits.
The Senate instead decided to fund it by making
it contingent on projected savings next year, assuming the Reach Up caseload
continues to drop in a recovering economy. That makes it sound as though it is
another net-neutral funding mechanism.
The reality is that if those savings are not used
to fund this new benefit, they would be used to balance other existing budget
pressures.
Just last week, the governor announced that he
was authorizing 16 new social work positions for the Department of Children and
Families in the wake of Vermont’s second child abuse toddler death. He said it
will have no budget impact, because it will be paid for by
higher-than-anticipated savings from further reductions in this year’s Reach Up
caseload.
No budget impact?
That money would be going somewhere else instead,
and furthermore, those added positions will be in next year’s base budget, as a
new piece of the increased costs of simply maintaining “what we already have.”
This is not to argue the merits of any of these.
The point is only that we can’t pretend they come for free, and when we add
costs, we have to increase revenues.
A Big Ticket Item
When it comes to under-estimating costs, the new
Vermont Psychiatric Care Hospital in Berlin budget ranks high. Two years ago,
in the governor’s proposal to reform the public mental health care system, the
estimated operating cost for a smaller state-run hospital was about $1,460 per
bed per year. Now it is opening at a cost of $2,250 per bed (other hospital
units in Vermont providing equivalent care are operating at about $1,450 per
bed apiece.)
That translates into bad news for the overall
vision of shifting more care (and money) from hospital to community services.
We have suspended some of the intended new community programs, because the
money isn’t available.
The community expansions were supposed to be net
neutral to the general fund because of federal matching funds that were not
available to the old state hospital.
Instead, as of now, we’re spending $1.6 million
in additional state funds.
Other Budget
Pressures
Another route to becoming “locked in” to budget
numbers is when we abdicate responsibility to set budget priorities. Last year,
we authorized independent home care providers to form a union in order to
negotiate for higher wages from… us. The contract came in at 1.8 million more
than the administration projected in its budget, and that was one of this
year’s last-minute budget pressures.
This year we authorized home child care
businesses to unionize to negotiate higher child care subsidy rates from… us. The
Joint Fiscal Office estimate of cost next year ranges from $1 to $2.5 million.
A Sleight of Appearance
One of the last bills of the session addressed
education funding, and it looked good. The House had passed a six cent property
tax increase to pay this year’s school budgets and the Senate cut it to four.
So less of a property tax increase? Not quite.
The bill also reduced the state payment per pupil, leaving more to be paid by
the local share of the property tax. You’ll pay the same; it will just be out
of your other pocket.
One theoretical effort to address cost
containment barely passed the House and failed to win Senate support: that was
the school consolidation bill. Although I could see some benefits to the plan,
it was misguided to assume this would have addressed our cost crisis.
A Lost Priority
I did have one priority for a budget item: to
have the state repay the federal government for the processing errors we made
in food stamp benefits, instead of leaving recipients to pay. Regrettably, my
committee’s bill did not make it past the Appropriations Committee.
These were all folks who had no way of knowing
they were receiving more than they should have. If they don’t have financial
resources, they are now being “billed” for repayment through a reduction in
current food stamps.
As our committee chair, Ann Pugh, told VT Digger,
“The vast majority of Vermonters who rely on 3SquaresVT are
children, elders and people with disabilities. They’re not squirreling away
their food stamps.”
Lost Budget
Language
The session ended on one sour note for me. In 2005, we
passed a law that required that persons in a psychiatric crisis be restrained
only to the degree necessary to protect safety when being transported to a
hospital, and never in prison shackles (medical restraints are available if
needed.)
There are only a few counties where sheriff’s departments
are out of compliance and still routinely shackle every patient they transport.
At my request, the House Appropriations Committee included budget language that
permitted the Department of Mental Health to contract for transportation
services only with departments that comply with the law.
The Senate struck the section, and it ended up as a request
for a report.
One wouldn’t think telling folks to follow the law would be
controversial.
…
I want to extend my
thanks to all those who have stayed connected with our state legislature’s
actions this year through my Northfield News columns, my email list, Front
Porch Forum, and through your direct contacts and inquiries. This connection
with constituents really helps make me feel that I can be effective as your
advocate and representative. Remember that I’m your representative off-session,
as well! Contact me any time with questions or comments, at 485-6431 or counterp@tds.net.
I will be running
again for the 2015-16 session, and I thank all of you who signed the petition
to place my name on the ballot. As long as I feel able to make a productive
impact -- and hopefully never for beyond that! -- I will continue the effort to
achieve a responsive, transparent state government that meets the needs of its
citizens, creates a sustainable budget, and promotes economic vitality.
Have a great summer.
Rep. Anne B. Donahue
Northfield
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