Tightening the Noose

by Art Woolf

The state is facing a $150 million deficit in FY11 and, if our legislators don't do anything to fix the problem, even larger deficits for the following three years.   Then we fall off a cliff (actually, no one forecasts farther out than FY14).

All of the state's political leaders agree (at least now) that the state has no capacity for higher taxes.  We'll see if that sentiment still holds by April.  That means cutting spending.

How about saving $1.6 million in the current use program? 

"We don't think this is the place to cut," said Jonathan Wood, secretary of the Agency of Natural Resources. The program is too valuable to the state's rural economy, the administration argues. It promotes the use of land for agriculture and forest products.

How about saving a few million by cutting the state contribution to the Housing and Conservation Trust Fund? 

Former Gov. Howard Dean singled out one state program, urging Democratic lawmakers for whom he was collecting campaign cash not to cut funding for the Vermont Housing and Conservation Board...."We need that program," Dean said. "It is the perfect public-private partnership."

Instead, legislators and the governor rally around a dubious plan to save an unspecified $38 million through "efficiency" savings (assuming it does work, that still leaves a $110 million hole).  And it's highly unlikely that legislators, or the public at town meeting, will put the 800 pound gorilla on the same diet the rest of government has been put on.

Every state program has its vocal advocates and every one of them is going to protest loudly if their program is touched.  It's still early in the session, but I'm already beginning to get the feeling that the tax option is going to be put on the table sooner, rather than later.

Comments

[Chris Campion]

In other years, as state spending increased, all kinds of justifications are given for increasing program X or program Y. Now that it's known the dollars won't be there to support the spending, the same justifications are going to be trotted out to support program X or program Y.

In other words, the revenues don't matter. In prior years, taxes would be increased, in cherry-picked areas (like increases in inelastic sin taxes), and you wouldn't hear a lot of complaints in the legislature about that because, well, who cares what a dwindling demographic (smokers) think? Now that we're saddled with the accretion of spending, and the legislature isn't going to be able to raise taxes (well, I hope they won't be), we'll be treated to loud keening and wailing regarding programs that we probably could not afford anyway in years past. In other words, those programs (specifically some of the ones Art mentions above) should never have been part of the budget, and their inclusions are part of the reason why the aggregate tax burden is so high in Vermont - which tends to retard economic growth.

Again - raise taxes high enough, long enough, and business gets the message. It's not as if businesses are leaving in droves in the last few years - they've already left, or never even thought about opening a door here. The things the legislature should be doing this session (creating economic growth zones with permanent, irrevocable tax easements, permanently cutting corporate taxes, permanently cutting taxes on capital gains) won't pass the laugh test for many on the left - because they do not understand how economic growth benefits Vermonters. Only the legislature can benefit Vermonters, by granting them "things" in the form of additional state spending.

Liberty isn't about having things given to you. It's being given the freedom to earn the things you want. Our elected "leadership" throughout the last decade have done a great job of making sure that opportunity doesn't exist for Vermonters.

[Lazarus Long]

Art: I've got $50 that says the tax increases will be on the table by Feb. 14. Feel the love, ya know.

[GreggB]

We're not supposed to laugh or be smug- I'm trying it's hard.

[Vermont Woodchuck]

The next step is confiscation of bank accounts for temporary use (sort of like the TARP funds)with IOU's handed out.

The public will be taxed to pay back these IOU's because "We don't want to hurt the children."

Much easier than having a tax bill on the table by 2/14 with hearts!

[Gary Richardson]

I'm uncertain of the amount the Legislature sends directly to Vermont non-profits, but I suspect it's an area that we should look at with the idea of reducing government spending. Recently (about four weeks ago) an article appeared in the Rutland Herald stating that the Legislature appropriates $250M each year to Mental Health. It caught my eye. Vermont has (a/o 2006-07)about 4,000 non-profits. Obviously not all non-profits receive the same amount from the Legislature and what is appropriated to non-profits each year I don't know. Since all non-profits have the power to raise their own tax-deductable money to support themselves, let's look at the elimination of the state support of non-profits or, at least, an across-the-board reduction in this area.

[Dennis Lukas]

I really think that taxes will be increased and Vermont will continue on its present course of being the environmental/education state. As a teacher said we are far bellow the $28,000.00 per student per year Washington DC pays.Such logic is hard to comprehend.Maybe not so, looking at the increased school spending in a recession.A particular type of people chose to move to Vermont with no regard for the local people and values, they like many others of their kind do as they wish and implement their agenders.
With all due respect to those on this blog, there are only about 40 people on this blog out of the seven hundred thousand in the state. Does the word "Custer" mean any thing to you? We would all hope for common sence to kick in, in Montpelier,but do you really beleive it.Taxes increase every year and will continue to. Socialist countries followed the same path and continue to exsist, as Vermont will.

[Vermont Woodchuck]

The people in DC don't have to stay there.

The EU is losing business to countries outside the Market. There are limits; as long as one has feet; keep the nation free of the socialist pestilence, there are "free" homes.

I don't mind the Socialists spending their own money. When they want to spend mine,that's the line not to be crossed.