June 6, 2020 Legislative Update

Water, water everywhere, nor any drop to drink.

That line from Samuel Taylor Coleridge’s “The Rime of the Ancient Mariner” has come to mind repeatedly for me over the past several weeks as we face huge deficits in our budgets despite having that $1.25 billion in federal COVID-19 bailout money. We have received far more from the Coronavirus Relief Fund (CRF) per person than most states, because the “small states” formula places a minimum amount in fund distributions. But the money is tightly limited to use for expenses caused by COVID-19 and to be fully expended by December 30.

It very explicitly is not permitted to be used to make up for revenues we’ve lost, or to pay for anything that was already in our usual state spending. Best guesses at this point put our lost revenues for next year’s budget at $400 million. Making up for that could result in very severe cuts to state services of all types.

There is a hope that Congress might relent and allow some of the CRF money to go directly to the bottom line for state budgets. For that reason, the legislative leadership has made the decision to hold back on spending $400 million of our CRF funds for several months, so that in September when we build the budget for October-July, the cash will still be there if it turns out we can use it.

The Governor is proposing getting all the relief funds out the door as soon as possible, because both businesses and our health care system are in deep financial trouble and need it to keep the doors open. That means the big chunks of spending proposed by the Governor in contrast to what the legislature is considering differ significantly, even though many priorities are similar.

Of the $1.25 billion, $275 million has been spent or committed already for urgent needs. The administration has proposed relief packages of $400 million for economic stabilization to help small businesses get back on their feet and restore jobs. The governor’s second major package was proposed this week: about $330 million more for health care providers at all levels, from hospitals to independent practices to nursing homes to community mental health. That’s getting pretty close to the full amount, but the governor has not spelled out other proposals yet.

This week, the House Speaker listed out assignments for our committees, with one week to make our recommendations to our Appropriations Committee on how to use the money so that we can pass a bill and get it to the Senate. Her figures show a total of $575 million to be allocated in our “Phase 1” of rescue money after deducting the $275 million “already spent” and the $400 million in reserve.

My committee’s allocation for health care is roughly $175 million for health care, with another $100 million for “Phase 2,” if we learn by September that we still have not gained authority to use CRF money in the regular budget. We haven’t been told exactly what the other committees have been given to work with, other than that the economic development money is the other major bucket (in line with the governor’s priorities), and that Human Services, Energy and Technology, and Agriculture also have significant pieces of it for elements not included in the governor’s plans. These are for such areas as child care, housing and broadband development.

The biggest immediate impact of the different approaches between the governor and the legislature – that $400 million reserve amount – was evident this week when we voted on the first quarter state budget. This budget only covers from July through September so that we can have more certain numbers before creating the full budget. The governor, based on current best estimates, proposed cutting spending from last year by eight percent across the full year. That would amount to bigger cuts than that, because upward pressures such as the state employees negotiated salary increases will cut into it as well.

The House budget proposes level funding instead (which will still mean a hiring freeze), with a key argument that we shouldn’t begin making cuts when we still know so little about our financial picture and how quickly the economy might begin to rebound. What that means is that come September, if Congress doesn’t change current rules so we can’t use the reserved $400 million, and the economy doesn’t perk up more than currently estimated, that eight percent in cuts will have to be spread over nine months instead of 12. That level of cuts would be even more devastating to state services, with more layoffs and greater reductions in every part of government.

Although I believe it is right to hold back that $400 million “just in case” we can rescue our budget with it, I think that’s a long shot. I think it’s an even bigger long shot to think our revenues will do better than expected. So, I did not vote to support the first quarter level-funding budget. I was only one of five who did not go along with our Appropriation Committee recommended budget, which had been a unanimous proposal by the committee.

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My committee has until Wednesday to propose how to spend the health care portion of the federal relief money. A coalition of providers has aligned with the administration’s proposal that it all go into one big bucket that the administration will dole out on needs-based criteria through a grant process.

In some ways, given the federal limits, it’s the only way to go. Whether it’s $175 million or $330 million, it still isn’t nearly enough to make up for the costs of gearing up for COVID and the amount of health care revenues lost. When your dentist’s office had to close, it had zero revenue, just like with any other business. However, as essential as our entire business community is, we particularly can’t let our health care providers go out of business or have hospitals close down.

My committee is looking at whether we can carve out small pieces of the money for direct aid to people who have lost income and can’t pay for a doctor’s visit and for some initiatives to begin to address health disparities. Our access to health care is inequitable and thus health outcomes worse, when it comes to minority populations: our Vermonters of color, migrants or immigrants, people with disabilities, and those in the LGBTQ community.

“Small pieces of money”: what a strange new world we are in, because for CRF money that might mean $5 million. In our typical budget, we debate over programs that cost less than $100,000, and we will be back at that when we start looking at cuts in September.

“Water, water everywhere, nor any drop to drink.”

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A few pieces of other business go on. I presented our health care committee bill on the (virtual) floor last week. It was pared down from the 13 initiatives we had been working on prior to March to the five we considered most essential.

I’m particularly glad about one, because it’s the first step towards addressing a real thorn-in-the-side for doctors: the pre-authorizations required by insurers for certain tests or specialty referrals that add heavy administrative costs. The bill puts insurers to work at developing two changes: cutting out the requirements for services that are virtually always approved and cutting out requirements for doctors whose requests are virtually always approved.

Other main components in the bill included establishing a council to implement the recommendations in a 10-year vision plan for finally fully integrating mental health into a holistic (mind-body) health care system. The plan was developed after “listening sessions” across the state and intensive work by stakeholder who provide and receive mental health care. This council will be focused on bringing the rest of the health care system to the table to review how to achieve the goals.

Finally, the bill adds some quality oversight requirements for the Brattleboro Retreat. We have needed to bail it out financially, repeatedly (even pre-COVID) because it provides more than half the inpatient psychiatric care in the state. There was $7 million more in April and another $10 million coming in July. But there have also been repeated quality concerns. This is Vermonters’ money being spent; we want to protect the quality of care Vermonters receive there.

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Please continue to stay in touch with me and with Rep. Ken Goslant. We’re both here to serve you, so contact us with questions or issues of concern. You can reach us anytime at adonahue@leg.state.vt.us or kgoslant@leg.state.vt.us.

May 23, 2020 Legislative Update

I stood on the House floor last week – correct that – I sat in front of my laptop on Zoom last week, and addressed my colleagues about the capital construction bill we were about to vote on.

“Last week, hundreds of my constituents from Berlin and Northfield waited in their cars in line for hours – not a couple of hours, but some for five, six hours – to get a box of food,” I told them. “How could I ever look them in the eye and say I voted for a bill today to spent $75,000 for new drapes and carpets in the statehouse?”

It was not a rhetorical question.

Every year we pass a capital bill, which authorizes bonding for major investments that are needed to keep our buildings safe and sound, and sometimes to replace them. This year’s bill was solid. It was well thought through and responsible. But all the work on the bill was completed before we left the House floor on March 13 as COVID-19 reached Vermont: before “stay at home”; before our businesses closed down and almost a quarter of Vermonters were left without jobs; before tax revenues plunged; before, in short, life as we knew it had completely changed.

The House Corrections and Institutions Committee had added an important clause to the bill. It noted the intent, and the importance of, investing these dollars as a part of rebuilding Vermont as we re-open. It went on to give authority to the Emergency Board, a group of Representatives and Senators who are chairs of the financial committees, to re-allocate any of the money from an approved project to a different capital project if a new COVID need emerges after the session adjourns next month.

I believed we needed to be more proactive as a legislative body. We are still very much in the dark about what the picture will look like in just a few months, enough so that for our operating budget, we are only planning to complete a first quarter bill in time for the new fiscal year that begins July 1. We will come back in late August to reassess and built the budget for the remaining three quarters.

I believed we needed that same process to occur for our capital budget – not to hold off on starting what is outlined in the bill, but to take stock of where we are and fully evaluate whether some priorities need to change, in August.

There is a difference between the bonding authorized in the capital bill for major expenditures, and the raising of taxes for the general fund. We can’t take some of that bonded money and shift it, for example, into buying food. But sometimes there is some wriggling that can be done to move some types of general fund expenses into the capital bill as longer-term investments, thereby giving some relief to the general fund.

As of right now, we are facing the need to cut every state program by eight percent or more. When you consider fixed costs and employee contracts, the impact could be massive, and could include major layoffs. There is also always the possibility that a necessary expense that we don’t even recognize right now will arise. If so, there could be a possibility of fitting it into a capital budget category.

We must take that deep look, in August, when we are building the rest of the budget and we know whether there are more federal support options and we know more about whether our re-opening of the economy is taking hold.

So, I introduced an amendment to require a report back from the administration in August that would identify all the impacts regarding the capital bill during these interim months, along with identifying any potential new needs that might be able to be shifted between budgets. In that way, we will have the opportunity, at the same time that we are building the general fund budget for the remaining three quarters of the year, to make changes that might help us get through this very difficult year ahead.

This, I told my colleagues, would enable me to stand behind the work done in the capital bill, and be able to assure my constituents that we are being appropriately cautious and responsible with the state’s resources in this crisis. I’m glad to say that when I presented the amendment to the Institutions Committee itself, the members worked with me to get the wording right, and then endorsed it. It was then accepted on the House floor.

It is a good capital bill. Even things like drapes in our historic statehouse do need to be maintained, and not left to crumble after years of damage by the sun. But we need to ensure that our capital investments do not in any way detract from our ability to respond to our more immediate crisis-level needs, and with my amendment, I believe we’ve done that. (And I received email notes of gratitude for the amendment from others on the House floor – the virtual floor – including Progressives, Democrats and Republicans alike. I think a lot of people were struggling with the idea of supporting a “business as usual” bill.)

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Last week we worked our way through several additional bills that waived ordinary requirements in the law to ensure folks are protected from the coronavirus. One of them waived the requirement for a physical visit to a property by members of a Board of Civil authority when they are hearing an appeal of a property appraisal.

That one worried me. We need to be cautious that in our efforts at protection, that we don’t harm people’s rights. I proposed an amendment, and once again it was members of the committee themselves who recognized that the change was needed, and helped with framing it. It now allows a property owner to request that there be a “virtual inspection” by video or still photo which is initiated by the board and physically created by the owner. It’s not perfect, but it helps.

We have also begun to take up our first non-COVID response bills, to the extent time permits between essential bills. A bill to clarify tree warden responsibilities, one of those that had been sitting on the House calendar since March 13, passed after a fair amount of debate over whether it encroached too much on the local municipal process. It eventually did pass, and I voted no, but not because I thought it was bad to protect our town shade trees. It was simply because the member presenting the bill couldn’t answer my questions about the current statute, and how it works.

Chalk it up to the challenges of legislating by Zoom; I couldn’t feel comfortable voting for a change I couldn’t quite follow.

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In my Health Care Committee, too, we have begun to take a small amount of time to try to finish a bill that was underway just before March 13. I’m particularly hoping that we can get a few key pieces through.

One is an effort to get insurers all on the same page to waive pre-authorization requirements in situations where they virtually always are approved, regardless. It’s a headache, and a big paperwork cost, for doctors to have to go through an approval process when approval will always be granted, and when among five different insurers there are five different sets of rules about when approval is required. We worked hard to get all the players on board with a process to jointly develop more streamlined approaches, so it would be a pity if we could not get this bill across the finish line.

Likewise with a part of the bill that requires some quality oversight components attached to the additional funding the state is giving to the Brattleboro Retreat to keep it afloat. We backed ourselves into a corner with the Retreat by creating greater and greater state dependence on one hospital to deliver so much of the inpatient psychiatric care in the state. Now they are too big to fail.

But the problems there are not just financial. In my regular job as the editor of Counterpoint, the state’s mental health newspaper, I see the firsthand accounts of patients who have suffered from poor quality of care there. The staff of my agency spend time there, and report about changes in policies that are demeaning and inappropriate, such as keeping bathrooms locked so that a patient must find a staff person to let them in.

So, one of the sections in our bill will require the Retreat to collaborate in clinical team meetings with the Department of Mental Health to foster quality improvements and improve patient experience of care.

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The first proposal for what to do with a really significant portion of the state’s $1.25 billion federal CARES Act coronavirus funds came from the governor last week. It suggests using about a third of it immediately to help bail out some of our businesses. If they fail, we all fail, since the jobs, taxes and economic base go with them. The legislature will need to dive in rapidly to assess the plan and make decisions, because it won’t do any good to help a business if it has already gone under.

It hasn’t been defined yet, but we know another major portion of money will be needed to shore up our health care system. This crisis has really underscored one of the things wrong with our current financing for health care. It is paid for as though it was any other sort of business, by the sale of goods: you get your cut stitched up and the doctor gets paid. But health care isn’t a commodity like shoes where the merchant is trying to entice you with the latest style. You’re never going to buy stitches unless you need them, but when you need them, you want the best ones, available right away.

We didn’t use care in March, April and May because we were preparing for a major health catastrophe. That was the public health priority. The result was that no one was paying for the system continuing to be there for us. We are going to need to pay that bill now. But if we believe that the system needs to exist for when we need it, then it needs a more reliable mechanism for maintaining its infrastructure. That’s one of the components of health care reform that we need to keep chipping away at.

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Please continue to stay in touch with me and with Rep. Ken Goslant. We’re both here to serve you, so contact us with questions or issues of concern. We were so glad to be able to intervene and help more than two dozen constituents from Berlin and Northfield who were jammed up in the unemployment system backlog. All but a few have finally been resolved. You can reach us anytime at adonahue@leg.state.vt.us or kgoslant@leg.state.vt.us 

May 9, 2020 Legislative Update

We should have been in our final week, this current week – the final days of legislators rushing around to get agreement on bills so that they make the final deadline, which is marked by the completion of the state budget. It isn’t going to happen that way this year.

In the next week or two we will wrap up a new bill making adjustments to the current fiscal year’s budget. The administration can only move small amounts of budgeted resources around without legislative approval, and there has been a need to move big amounts around. There is also a huge shortfall in the revenues to balance the current year’s existing budget. Because we have contingency reserves, we are going to be able to move money to offset those losses. A big chunk is due to the delay in the tax return deadline to after July 1. We will move those into the current fiscal year balance after they come in, and thus end the year in balance.

But the new budget year begins on July 1. A new budget must be passed by then, and the administration is scrambling to come up with a proposal for a three-month budget to carry us from July to September. Once the legislature gets that, it will be on a tight timeline to vet it and get it passed.

When we have a better financial picture of the real impact of the economic shutdown in late summer, we will need to be back at the statehouse to pass a budget for the remaining nine months. “Back at the statehouse” in corona-newspeak will likely still mean remotely, not physically. We’ve all converted to new meanings of language these days. In statehouse jargon, the budget has always been referred to as “the big bill,” presumably due to its length. The new jargon now references the contrasting “skinny bill” that will takes us through the first three months of the fiscal year.

For accounting reasons, the money that has been poured into COVID-19 emergency responses is not being included in the current budget adjustment. Those costs will show up in the skinny bill. At that point we should know which pot of federal money will cover them. This week, however, we received the first summary from the governor’s office on what those numbers look like.

Money already spent as of May 6: $48,702,376. Money not actually spent yet, but already committed and in the process of being spent through the end of the current fiscal year: $117,571,881, for a grand total of $166,274,257. Just as a reference point – since this would be small potatoes in some state’s budgets -- $48 million is roughly the amount in new budgets that is frequently fought over in a typical year when standard inflationary costs rise by that much above expected revenues. Even assuming we didn’t have major lost revenues, it would have been nearly inconceivable to pay this tab without federal relief. This does not include potential new uses for the federal CARES Act relief funds, such as the $60 million “hazard pay” bill passed by the Senate and under review in the House.

The chart released this past Friday divides the numbers up both between “already spent” and “already committed,” but also between those costs that the governor had the authority to spend and those that the legislature’s Joint Fiscal Committee will need to approve; I’m not going to do that breakout, but just where the totals end up. This is a long list of numbers, but I’m trying to present public accountability rather than just what gets caught by the news headlines.

The Department of Vermont Health Access (no surprise, the biggest piece of all): $33,022,266. Most of this is for health care provider relief to prevent medical practices and hospitals from collapse. It is only a small portion of their losses and what they will need for recovery; this is separate from the help they did receive directly from the federal relief bills.

The next mega-category, running a very close second, is the Department for Children and Families: a total of $31,911,329, but this is broken out among its many different departments. It includes $13,565,821 in the child development division, mostly in the “extraordinary relief” category for child care stabilization and essential persons payments and $13,503,862 in rental of motel rooms to help assure physical distancing for homeless folks who might have otherwise been in shelters. There is also $1,528,000 in the Office of Economic Opportunity for emergency shelter and response; $1,413,008 for increases in the Reach Up (aid to families) caseload; $1,256,000 for extraordinary relief for DCF residential provider agencies; plus overtime and remote workforce costs spread across those and other DCF administrative functions.

The Department of Health’s public health division is listed for $17,000,000; that’s primarily for the costs of COVID-19 testing and tracing. VDH also runs the state’s drug and alcohol division, and the costs there are $4,010,681, mostly in provider relief payments.

Other Agency of Human Services costs include $8,177,347 within the Department of Mental Health, listed as covering Vermont Psychiatric Care Hospital additional COVID-19 Costs, the fit up and operating costs for a special inpatient psychiatric unit for COVID-19 positive patients (beginning developed at Springfield Hospital) and financial relief for community mental health agencies, including enhanced pay for staff doing face to face contact work. I’m assuming the $7 million added support for the Brattleboro Retreat is listed under the statewide health provider ($33 million) figure.

Also under AHS is the Department of Aging and Independent Living, with $6,260,281 in the community mental health center relief category for their work with developmental disability clients and for flexible family crisis payments, and $5,573,500 in relief payments to nursing homes and adult day programs. The Department of Corrections has $2,970,714 in costs for remote workforce; enhanced hazard pay levels for facility and nursing staff; and room and board for staff. The AHS Secretary’s Office has an additional $6,177,458 in food assistance, isolation housing and recovery, and expanded 2-1-1 coverage. I have not broken out various AHS departments that have lesser costs attributed to remote workforce or overtime needs.

The Public Safety Division, including state police, is at $15,344,874. The bulk of it is for establishment and the running of the state emergency operations center. The Department of Buildings and General Services has $5,888,974 in added costs for COVID-19 related pay and operating costs and COVID-19 related lease agreements.

There are two other large categories on the list that are more indirect.

One is a contingency fund to account for the possibility that the federal government will not reimburse the state for the advance payments it sent when unemployment applicants were not getting any payments due to the massive backlog. That’s $10,661,205.

Finally, there are supplemental operating costs that are specifically listed as probably not eligible for federal relief funding, the largest of them in transportation at $6,112,016, but other miscellaneous departments, including the Agency of Natural Resources and the Agency of Commerce and Economic Development, at a total of $4,078,359.

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Elections

COVID-19 will have all sorts of impacts on this year’s election cycle. State candidates don’t need signatures on petitions to run for office (too much face-to-face contact required). Incumbents will be filing petitions before the end of the current session, and since they can’t accept money from lobbyists while still in session, that will impact fundraising for those who receive such contributions. Door-to-door campaigning will be off the table. The impact of that is speculative right now. More money raised and spent on advertising in lieu of direct voter contact? Will it increase the imbalance in the advantage incumbents have?

Primary elections will not be changed, because there isn’t the time to set up an all-mail system, but voters will be encouraged to vote by absentee ballot. Unless there is a random hot local primary for a state office, there aren’t likely to be problems with big crowds at ballot boxes.

November is a different question. Vermont already has one of the most open absentee voting processes in the country, and in the last presidential cycle, 2016, almost 30% of votes came through early absentee ballot. No change would be needed to simply increase encouragement for more people to vote by mail-in ballot, and there doesn’t appear to be much concern over aspects of the bill we passed in March that permits safety measures such as drive-by ballot collection.

What is under debate is implementing the provision that would require town clerks to send ballots by mail to all registered voters, in other words, not based on a request. I think it that’s a tougher issue, philosophically, but I’m not very clear on why it is being perceived as partisan. I think the question is whether or not that encourages voting by people who are not invested enough to show up at a poll or ask for an advance ballot – and if not invested enough to do that, have not educated themselves at all regarding who they believe represents them best. If those folks do vote, I don’t know that it favors one party over another.

Yet I do have a gut feeling that although we want people to be involved and vote – I’ve supported our initiatives for expansive automatic voter registration – they ought to want to be involved enough to take some initiative on their own to exercise this fundamental civil right and duty. The legislature played its role in authorizing the Secretary of State and Governor to make what changes might be needed for safety, so I’ll be watching from the sidelines to see how it plays out.

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Unemployment

The nightmare continues, but the system is inching forward in the catch-up on the onslaught of applicants – including for the new program for self-employed folks and others not eligible for regular UI because of issues such as an insufficient work history. With some of the new business re-openings, weekly claim numbers have also begun to drop.

As of the weekend, there were 7,576 unemployment claims still being processed out of the 61,835 eligible claims; 54,277 are receiving benefits. For PUA (Pandemic Unemployment Assistance), there are 3,334 who are eligible but still being processed; 8,623 are receiving benefits. An additional 8,808 applicants are still awaiting determination, and some of these will end up being determined ineligible.

If you are someone who has still not heard anything from DOL, let Rep. Goslant or me know, and we can put you on the legislative volunteer assistance team list for individual follow up.

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Feel free to get in touch any time during the session with Rep. Goslant and me. It is an honor to serve you. (kgoslant@leg.state.vt.us; adonahue@leg.state.vt.us)

April 26, 2020 Legislative Update

How fast can we spend $1.25 billion in extra money?

Everyone is eyeing it, and sales pitches are already being made to the legislature for worthy causes. This is the federal CARES Act windfall that is suddenly in Vermont’s bank account in response to COVID-19.

The irony is that we are going to desperately need that kind of money to keep the ship of state afloat, because of the huge – not yet measurable – lost tax revenues from the closing down of the economy. We are facing major shortfalls in the education fund ($69 million just for the rest of the current fiscal year, ending June 30) and the general fund.

The CARES Act money is not allowed to be used, however, to fill in lost revenue. It is only allowed to be used for things we spend specifically for COVID-19.

It is already beginning to look like it will buy a lot of big gifts under the Christmas tree while the cupboard is left bare of food.

A VT Digger news brief proclaimed on Friday, “Lawmakers designate $90 million for the state’s hazard pay program.” It went on to say that, “The Senate Appropriations Committee has nailed down how much money Vermont’s essential workers will be receiving over the next three months to supplement their base pay as they continue working through the pandemic.” 

It’s a bit premature to say that lawmakers have done this and that workers will be receiving it. A Senate committee has made a proposal; the Senate will need to vote on it; it will come to the House for committee review and a House vote; and then it goes to the governor.

But right now, it’s an initiative that has gained momentum.

It’s being referred to, variously, as “hazard pay” or “appreciation pay,” and it is to thank workers across the state for keeping stocking our grocery shelves when they could be making more money if they were laid off and collecting unemployment insurance, thanks to the $600 a week extra that people are getting right now from federal dollars.

Under the proposal, anyone who works as an essential employee in a job that brings them into public exposure to COVID-19, who makes less than $25 per hour and works at least 25 hours per week would be eligible for a $1,000 monthly grant in April, May and June.

As the bill stands now, according to the Digger article, the program covers grocers, pharmacists, trash collectors, dentists, child care workers, homeless shelter staff and others who are required to interact with the public in some capacity.

I’m not questioning the good intentions of this proposal.

It would, however, use up a big starting chunk of the $1.25 billion before we really have much of an idea of what bills we’ve already run up, and what the competing needs will be.

In another legislative committee last week, a homeless coalition proposed a $100 million program to create longer term solutions for the folks we’ve been maintaining in motels to support social distancing.

The University of Vermont is asking for $25 million to help bail it out; the Vermont State Colleges needs $25 million just to keep from closing down three campuses (that amount doesn’t get it back on its feet.)

And we have been spending a lot, already. State employees are all receiving $1.50 pay bump if they are being exposed publicly, and an additional 20 percent pay increase if they are working in a 24/7 facility.

Last week, this was extended to similarly situated employees of community mental health centers, who are filling a state, Medicaid-funded function through private non-profits (that cost $7 million).

Those pay increases are very significantly less than the new private employee proposal.

We’ve issued grants to child care centers to help keep them afloat. We’ve poured money into contingency plans, creating emergency overflow hospitals and recovery housing and buying equipment and protective gear. We’ve bailed out the Brattleboro Retreat (again) to the tune of $7 million.

This is only a sampling, and it is nickel and dime stuff compared to the $90 million for the proposed grants to employees of private businesses. But a million here – a million there – and pretty soon it adds up to real money.  

Meanwhile, Rep. Peter Welch met with House and Senate leaders Friday and said that he was trying to help push for more flexibility for states in how they can use the CARES Act money. He gets it: the lost revenue to pay for what we already do it the biggest crisis we face.

If we gain more flexibility, it could mean having more money to put food in the cupboard and less for the Christmas presents. That’s an even more important reason for not spending the money too quickly, before we know all of our existing COVID-19 bills, and how we will be allowed to use the CARES cash.

Otherwise, we’re facing some pretty big cuts to our base budget, and there isn’t much in it that’s easy to cut. Roughly a third is Medicaid and another third is K-12 education. The rest is roads, child and family services, corrections, police, the court system … all core government functions.

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Speaking of the Vermont State College System: COVID-19 costs (largely in room and board refunds to students who were sent home) were only the last straw in the fiscal crisis that has been building for years.

I’m not sure whether the announcement that VSC was closing three campuses, including Randolph’s Technical College, was a ploy to draw public attention to the crisis and to get on the priority list for CARES Act money or just a badly managed information-sharing process.

It certainly got attention. But it won’t be easy to change course, because it isn’t just about the interim $25 million.

First, in a very foreseeable way, the number of available college students is dropping quickly. Remember how our K-12 student numbers kept shrinking? Those kids grow up, and those numbers are now hitting colleges.

But Vermont’s state colleges have been more expensive than most others for a long time, because they get so little state funding. Vermont ranks number one on all sorts of good stuff, including being one of the highest in what we pay per student to educate our kids in our public schools.

When it comes to supporting our state colleges, however, we have ranked 49^th or 50^th in the country for decades. I was horrified when I first learned, some years back, that we were at the bottom of the barrel in supporting accessible college for Vermont kids.

But every year, we face a budget where the existing spending trajectory and the revenue forecast leaves a gap in the tens of millions of dollars. New spending, even if it’s something we should be supporting, means either draconian cuts elsewhere or new taxes.

For now, the general plan it to try to keep the existing campuses going for a bridge year while a deeper reevaluation goes on to look at long term sustainability plans. One debate that will be on the table: if we are spending the most per pupil for K-12 and the least among states for college, shouldn’t we be focused there as the means to realign resources?

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Many of us have been sharing the good news that all health insurance (thanks to our Department of Financial Regulation, via the emergency authority we gave it) must now cover not just testing but also treatment for COVID-19, without any cost sharing (co-pays or deductibles) by consumers.

Despite everything I know about the insurance market, even I briefly believed this was true -- that maybe it was based on it being a federal emergency.

We had testimony about the new rule at a committee hearing this week, and it is not accurate. Nothing that we do on the state level can impose a mandate on private businesses that are self-insured. This has always been the case, and still is. It’s federal law.

About 22 to 25 percent of Vermonters get their insurance from an employer who pays health claims directly. They usually have back-up insurance to protect against an unusual spike in costs, and the coverage is administered by a health insurance company.

 If you work for a large employer, odds are that your employer is self-insured. You might not know it, because the administrator is one of the state’s health insurance companies.

Blue Cross/Blue Shield told us that a majority of those employers are choosing voluntarily to provide testing and treatment without cost sharing, but not all of them.

They believe that those who are not are making that choice based on one of two reasons: first, some are under too much financial stress to feel able to take on that potential added cost; second, those who combine a high deductible insurance plan with a health savings account feel they are already contributing enough towards cost sharing.

If you hear about someone whose insurance is not covering for all their COVID-19 treatment, that might be correct, despite the news about “no cost sharing.” It could well be that their employer decided against this coverage expansion.

There is an important lesson here. As insurance costs rise, large employers have increasingly turned away from the large group market to becoming self-insured, and this is at least in part because they can save money by avoiding state mandates.

When we choose to add coverage requirements -- as beneficial as they may sound for our constituents -- we push more large businesses in this direction, and the outcome is that they are not required to provide any of those additional benefits that we are trying to add.

Feel free to get in touch any time during the session with Rep. Goslant and me. It is an honor to serve you. (kgoslant@leg.state.vt.us; adonahue@leg.state.vt.us)

April 11, 2020 Legislative Update

Nothing hits home in a pandemic as much as the death of a friend and colleague.

The legislature lost one of its own on Wednesday, Bernie Juskiewicz, who had served in the House with me from 2013 through 2018. In his last term, he was on the Appropriations Committee, across the hall from my committee room.

We all know that every death represents a person with a family and loved ones left behind, and yet, in the face of so many deaths across the country and the world, they sometimes become just another number.

In sorrowing the loss of this good man, father and grandfather, active in his community, perhaps the one solace is in knowing that there could have been so many others: all those unknown Vermonters whose lives have been saved because we have, thus far, staved off the worst effects of the coronavirus through early and aggressive actions.

I am grateful to Gov. Phil Scott for having the political courage to set restrictions in place “ahead of the curve” (in both meanings). All of the data now shows that it has had a major protective impact.

Godspeed, Bernie.

***

We are in fact doing well as a state in abiding by the restrictions to prevent the spread of the coronavirus, and while we are not out of the woods, there is hope that the level of preparations that are in place for a major surge of patients will never have to be used.

We could end up feeling a bit like those southern states that evacuate in the face of the projected impact of a massive hurricane only to have it swing offshore and out of harm’s way, wondering, perhaps, if the threat was overstated.

We do not have to wonder that, because we have only to look at places not far from here to see the deadly impact. Indeed, we need to remain on guard against slipping into complacency, and allowing a backlash to strike us.

As House committees began to resume quasi-regular meetings remotely with Zoom conferencing two weeks ago, my Health Care Committee started by lining up testimony from key players – Commissioners, hospital directors, health agencies – to get updates from the front lines.

Then we realized that was a mistake. Last month we worked long hours to draft legislation that would empower quick actions by the administration and health care providers during the crisis. With the crisis upon us, the last thing they need is to be called away from urgent duties to provide updates to us. Our most important work right now is to keep out of their way.

Other committees do have COVID-19 work to do, so they are meeting more frequently and collaborating with Senate committees on areas that need immediate responses.

Note, as a result of meeting remotely, committee meetings are now broadcast (and archived) on YouTube live by direct link from each committee’s web page on the legislative web site, legislature.vermont.gov.

Our committee’s big lift will be a month or more down the line, when we will need to evaluate the new landscape of health care in Vermont and what the future will look like.

One thing is certain: the push we were giving to make tele-health a more active feature has received a major jump start. The enabling and reimbursement mechanisms that we were already working on came just in time.

In addition, we’ve had a first chance at seeing the potential for the value of the all-payer model for health care payment reform. Because the model provides advance per-person payments to health providers and hospitals, rather than individual payments per service, it can create reliable revenue.

In a situation such as this, when regular patient care is being deferred and revenue has dropped sharply, they would not be wholly reliant on meeting patient targets in order to keep the doors open.

This payment reform is not yet broad based, so it isn’t solving the current cash flow crises these providers are facing but it is helping, and it is demonstrating one of its long-term values.

We will have to seek some federal adjustments to the current agreement for the model, because it also has quality measure requirements – things like the percentage of patients getting regular check-ups that are on hold right now.

***

We have yet to determine how or whether a 150-member body will be able to gather remotely in the House chambers to vote on bills. We are learning the systems but it will be urgent to resolve this when essential legislation is ready to move.

Much of that “essential legislation” will itself be in the form of short-term fixes to tide us over until there is more information about the impact of the pandemic mitigation measures on our economy.

We know it will be massive. We do not yet know how long it will last.

We know there is substantial federal money on its way. We don’t know what its permitted uses will be.

The current likely scenario is that we will end up with three budget bills this year. Sometime in May, we will pass a budget adjustment act that changes the budgeted spending for the current year (which ends June 30) and a budget that carries us for the first three months of the 2021 fiscal year (which starts July 1.)

We will need to return in late August or early September to pass a budget for the remaining nine months, once there is more of a handle on our finances.

Here is what we know – subject to ongoing change – as of now.

The Education Fund is made up roughly three-quarters from property taxes and one quarter from the state’s general funds, and the general fund part comes primarily from the sales tax.

The expected revenue to the Ed Fund from the general fund for March through June was $180 million. The current projected revenue loss is $142 million.

A little more than a third of that may still come in after July 1 – the losses are due to deferred rooms and meals taxes – but a full $89 million is the direct loss of sales taxes. Revenue estimates for fy 2021 will be downgraded for certain, although it is yet unknown by how much, but at the same time, increases in budgets passed at town meetings totaled $77 million.

The general fund itself was projected to have $592 million in revenues to maintain budget expenditures from March through June.

That is now down by $202 million. Of that, $62 million is direct economic impacts, and $140 million is from deferred taxes; some of that last might come in, in fy 2021.

The transportation fund was projected at $110 million for the same period, and has been downgraded by $45 million, virtually all from reduced gas sales.

Again, this is just current year. All revenue projections are expected to be downgraded for the year that begins in July. As to how much, we are at this point, in the words of our leading fiscal staff person, “flying blind.”

In addition, we have been spending a great deal of added money on the pandemic itself, in the tens of millions already.

But what about all the federal stimulus money coming into the state? The $1.25 billion?

The catch is that it cannot be used to backfill lost revenue that would have covered the existing budget.

It can cover all new state budget costs expended on the pandemic itself, which will certainly be a big help.

One of the mega-details that remains unknown is the direct guidance the federal government will provide on what is considered to be “already planned for” versus new expenses. There is also some hope that follow up federal legislation will relax some of the requirements.

Our direct cash flow situation is challenging, but we have built emergency reserve funds over the past several years. They will be almost wholly decimated, but we will be able to pay all of our necessary bills without hitting a deficit.

All of these state fiscal revenue projection figures, in much further detail, are available on the Joint Fiscal Office web site, https://ljfo.vermont.gov/

This bleak picture is only looking at the state budget. Separate are our family budgets and our business’ budgets. When incomes are down, taxes revenues across the board are down – that’s the “flying blind” aspect of state revenue loss projections.

Separate, too, is the federal budget, which is expending vast funds of money to keep families, businesses and states afloat that this will come at a huge long-term cost.

Unlike the state, the federal government can print more money when revenues don’t match expenses. If the price we pay for that is massive inflation, it becomes another way that money is sucked from our pockets.

With the coronavirus itself, we are standing together to support one another. Both Berlin and Northfield have created local Mutual Aid volunteer resources. We can remain socially connected even if physically distanced!

We are going to be needing to do a whole lot more of that in the months, and potentially years, ahead.

***

Feel free to get in touch any time during the session with Rep. Goslant and me. There is a lot going on, so if you have questions about something – ask, and we can try to find out for you. It is an honor to serve you. kgoslant@leg.state.vt.us; adonahue@leg.state.vt.us Please note that the archives of my legislative updates can be found at representativeannedonahue.blogspot.com