There were many major bills on the floor in the past week and I encourage folks to contact me or Rep. Ken Goslant if you want more background on any of them.
We have passed on to the Senate this year’s annual budget, the two-year capital construction bill, and the transportation budget. We also passed the education tax rate bill, a major economic development bill, broadband build-out, and child care support reforms. Most of these bills had my support.
There was a bombshell regarding the review of options to address the crisis in the pension for state employees and teachers. Rather than crafting a joint bill as a committee, the chair and vice-chair released a detailed proposal that uses increases in employee contributions to addresses the shortfall from past state mismanagement.
***
The Budget
I voted for the budget with a fair amount of trepidation. The base budget of revenues and programs is balanced and reasonable. It exercises fiscal restraint, which is particularly important given the uncertainties as we pull ourselves out of a pandemic. In conjunction with the amounts for the economic development and workforce and the broadband bills, it appropriates $650 million from the new federal COVID-19 “rescue” fund.These were all solid and constrained to single-time investments – not building new programs that will then require ongoing future state budget expenditures. In addition to the items in the bills above, it includes clean water, higher education, and sate IT system investments.
My concern is that we are looking at a total federal influx of about double that -- $1.3 billion -- in money that can be spent over the next three years, and are making spending decisions on half of it without establishing a big picture on overall priorities and how the full pie should be divided up. It is a bit like spending half the money to build part your house without knowing what you need for the rest of it and whether you will have enough money left.
The base budget does include $360 million from our state funds to sustain our current pension obligations ($100 million more than what was required last year) plus – by moving the new federal money to backfill state funds -- $150 million in addition to address the current shortfall. But that is only a drop in the bucket compared to what is needed...
***
The Pension Dilemma
I share in a strong desire to ensure that we don't back off our obligations based on our (as a state) prior mismanagement with the various state and teacher pension funds that have resulted in the $5.7 billion hole. I also agree that we should avoid decisions with a long-term impact, precipitously. Addressing those points have more complexity than may appear.
The shortfall has built up over many years due in significant part to the state’s failure to fund its obligations, but is also based on acceptance of misguided actuarial assumptions without regular review of actual performance of investments. The boards making those decisions included employee representatives and included increases in benefits over the years – and, incomprehensively, different boards made benefit decisions from those making investment decisions. Revision of that structure is part of the reforms needed. Delay in action even for a year would have a huge impact on the ongoing exponential growth of the current shortfall.
This past week was the first time that I and our caucus members were told about the plan presented by legislative leaders, so we hope there will be a great deal more testimony and input before a decision is made by the Government Operations Committee and brought to the House floor. When it reaches the floor, I will need to make a decision about whether a proposed resolution is fair and responsible. Once it leaves the House it goes to the Senate which will be able to change it as they see fit and then negotiate that with the House; it then goes to the Governor for his decision. So, we are still at a beginning phase.
If you or anyone you know would like to send written testimony to the Government Operations Committee regarding specifics you should do so here: testimony@leg.state.vt.us. The details on the current proposals for change can be found at the legislative web site, legislature.vermont.gov by going to the committee web page and looking under Documents, date tab for March 24, under Chris Rupe. Two public hearing were scheduled but both filled quickly. You can watch the hearings on the same committee page; click on livestream and then on the archived YouTube link for the dates of March 26 and 29.
***
Taxes: Education Fund
We voted out the base education property tax rate (the statewide one, which can shift locally based on town budget votes), which will go down next year by about 1.5 cents on the dollar. Before celebrating, we need to remember we’ve been in this place before, when costs continued to grow but tax increases were hidden because tax rates declined. Home sales are a hot market right now. The increased prices will drive up the grand list and thus revenues will increase while the rate stays the same or goes down. If your home value goes up on paper because other homes are being sold at higher prices, your taxes will go up even if the rate decreases. Increased spending doesn’t just vanish; we still pay for it.
***
More on Taxes
We also raised a tax; one that appeared to place a small burden on very wealthy folks – those buying homes worth more than $1 million -- to help out those struggling just to buy a mobile home, by expanding the current tax credit that helps them. But recall the current increases in the market. This is resulting in major increases in the existing property transfer tax revenues. The mobile home tax credit can be increased without an added tax.
The property transfer tax also applies to far more than high-end homes. It applies to purchasers of rental properties, where costs will be passed on to low income tenants. It applies to businesses, which have been hit hard by the pandemic – and those costs will be passed on to the purchasers of goods and services. This is terrible timing. I voted no. Although several moderate Democrats joined most Republicans in opposition, the tax increase passed.
***
Capital Bill
The only issue in contention in the capital bill was the construction of a new mental health facility that will replace a decrepit, temporary 7-bed building in Middlesex. The original was a set of trailers intended to last only a few years, set up after Tropical Storm Irene to replace state hospital beds that were used for a small group of patients who did not actually still need hospital-level care, but still did need a locked setting due to unresolved safety concerns. No one questioned the urgent need to replace that structure.
The concern was about the expansion of more state, institutional beds (the new program will be 16 beds) without addressing the need for residential supports in the community for other Vermonters who are also remaining in hospitals because of lack of access to the post-hospital support they need. A shortage of community services feeds on the need to increase higher levels (and higher cost) care. Over the past ten years, utilization of hospital beds has nearly doubled, while access to community support has been stagnant. We added 12 highest-needs beds two years ago, which are just now about to open. That’s backwards, and the cost of running this new facility will suck more money away from the ability to support other Vermonters’ needs.
My Health Care Committee, which is responsible for policy, took extensive testimony on this concern. We reached a compromise with the Institutions Committee, which is responsible for meeting the need for essential new state construction. That committee has been working for years to get this new facility built, and the construction will go forward.
Language from our committee that I drafted was added, however, to ensure flexibility in design to allow for future changes to address other needs. They also accepted policy language for a directive to the Department of Mental Health to identify community projects over the next nine months that might be able to be funded with the new federal infrastructure money. Operating costs then may be able to be addressed with the new federal bridge funding for several years, and then replaced by state funds saved as hospital levels are reduced.
***
Remote Vote Crisis
We had our first mini-crisis with remote voting. A thunderstorm rolling through briefly locked out several members from a vote, and when one member got up to ask if there was a way he could vote afterwards, he was told that House rules barred it.
We started on a new bill, and I jumped up (figuratively) to call a point of order. Given our unique status in functioning from home computers, I felt we needed to find a way to preserve members’ ability to vote. A path forward was found by voting to suspend our own rules to allow a revote on the bill. The Rules Committee will be meeting to review this issue more broadly.
After all, thunderstorm season is upon us...
***
It is an honor to represent you. Please contact me (adonahue@leg.state.vt.us) or Ken (kgoslant@leg.state.vt.us) any time for questions. Remember that you can access any of my updates from the past on my blog representativeannedonahue.blogspot.com.
No comments:
Post a Comment