Vermont Tiger

Trouble Ahead

The legislature and governor are trying to get a budget in place for FY10.  They are both relying on federal stimulus money to help muddle through the coming fiscal year, to the tune of somewhere between $100 and $150 million.  The consensus (executive and legislative) revenue forecast (p.22) has revenues rising by about $60 million from FY10 to FY11.  Simple arithmetic tells me that there is a gap of somewhere between $40 and $90 million in the FY11 budget.  And it will probably be larger than that.  

Roll Call

Enrollment in Vermont's schools declined.  Again.

Every year, we have fewer children to educate and every year we spend more money doing it. 

Hmmm.

We'll Get Back To You On That

While Douglas' originally proposed budget would have relied on level-funding schools — requiring districts to either cut costs or raise local property taxes — the House budget instead relies on $24 million in new taxes. While the exact nature of those tax increases is not yet known, another House committee is considering income tax proposals among other ideas.
    Herald

Details, details.

The Science of Galt

Like we've been saying for a long time now...

An article in the Journal of Economic Psychology discovers the reality of Galt. That is, the paper discovered:

"Whether out of reason or out of emotion, taxpayers may also be willing to punish intentionally unfair tax setters by working less than they would under the same exogenous circumstances."

"Consistent with the history of tax revolts, the working partner overreacts to the perceived unfairness of taxation when the tax rate exceeds 50%, most strongly so in the high effort treatment..."

With Vermont's tax burden exceeding 10% and the top end of the top federal income rate at 35% we can only hope the remaining incidental taxes don't push too many high-effort Vermonters over the top. Fortunate for Vermont, I suppose, that redistribution brings an excess of low-utility free riders who will never approach the 50% threshold.

The Vermontmobile

Volvo Vermont: A sporty wagon that runs on anything from Whole Foods. The limited Carl Kassel edition has a sound system that lowers all music and voices a full octave. The Vermont horn blasts Howard Dean's "Yeah!," which has proved to stop momentum dead in its tracks.

The news that Barack Obama has fired Rick Wagoner, CEO of General Motors, recalled this wonderful bit of whimsy by Greg Decker.  Maybe the new CEO, who will be answerable to – among others – Bernie Sanders, will be able to get the GM engineers to come up with the perfect Vermont automobile.  Something that runs on wood chips or methane and is manufactured completely out of recycled newsprint. 

Who's Afraid Of Global Warming?

Not this eminent man of science.  So maybe we shouldn't be, either.

Tax Dodge

Eternal Tax Increases 
 by
John McClaughry

Four months ago, I stuck my neck out and advocated a nickel a gallon increase in the gasoline and diesel taxes. I did that because Vermonters cannot expect to have good highways and safe bridges while paying the same motor fuel user fee rate that they paid in 1997.

Now the House is about to pass a bill (H.438) that raises the gas and diesel taxes by a nickel a gallon. The new revenues would be assigned to retire some $120 million of bonds, whose proceeds would pay for catching up on repairs of our disintegrating bridges.

So far so good – and this time they didn’t try to hide the tax increase by calling it something else. But the House transportation committee majority hit upon another bad idea. They want to index the motor fuel tax rates to an inflation measure, so the rates in effect go up every year without anybody voting to increase them.

This is a completely anti-democratic idea, promoted as usual by the party labeled Democratic. Our system of government is based on legislators who vote openly, and are held accountable to the people in the next election. The Democrats want to put tax increases on automatic pilot, so future legislators don’t have to answer to the people who elected them.

I still support a nickel increase in motor fuel taxes, but I hope responsible legislators will vote No on this eternal automatic tax increase.

The Education Conversation (part 2)

(continuing the discussion of K-12 education – and its funding – with Hugh Kemper)

VT: Last time we focused on the mission of the Education Funding Task Force and the adverse economic implications of unrestrained education spending.  But while all Vermonters would like to see costs contained and, therefore, taxes reduced, there is the remaining and essential question of quality.  Parents in particular would be concerned if education spending were reduced at the expense of educational quality. What makes you so confident that it can be reduced without hurting the kids?

HTK: Public education is, of course, about the kids and clearly we want to provide them with the skills and knowledge to lead productive and useful lives. Education at public expense, however, is also about the taxpayer. And it is important to make the distinction between the requisite capacity to provide a quality education and quality outcomes, i.e. the actual provision of a quality education.

VT: Could you expand on that.

A Simple Plan

The only real way to keep businesses that are teetering on the edge of folding from going out of business boils down to two things – the business needs to increase revenues or reduce costs, or both.  It’s that simple.  If the business becomes unprofitable, the doors close, and everyone goes home, signs up for unemployment, and state/federal spending increases on the backs of the people and businesses still employed.  The Tiger has been reporting on Vermont’s non-existent to negative job growth in the last year prior to last fall’s meltdown.  Sadly, it’s only gotten worse with job growth almost at a negative 2% in December 2008.

Summing Up ...

... the case against the Vermont Yankee decommissioning bill.  This Reformer op-ed, by Milton Eaton says it all and quite well.