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Let’s not be “penny wise and pound foolish”. Campaign for Vermont needs your help now and here is just one good reason.
In 2011, state government extracted from the Vermont economy $2.954 billion. These revenues from taxes and fees are deposited collectively into the state’s general fund, transportation fund, special fund, and education fund among others. For the current fiscal year, 2016, the equivalent extraction from the Vermont economy in taxes and fees is $3.598 billion, up $644 million over the 2011 level. That’s a whopping 22 percent increase in just 5 years and equates to an increase of more than $1,000 for every man, woman and child in Vermont. The burdens of these increases fall most heavily on Vermont’s middle class and business communities.
It’s common knowledge by now that Vermont’s economy is struggling. It has not grown by 22 percent over the last five years to keep pace with state spending. Campaign for Vermont has been a leading source of factual information profiling the state’s unsustainable budget. We’ve consistently called for specific reforms in this regard.
Certainly, your voice as a Campaign for Vermonter will be sorely missed if Campaign for Vermont does not have the resources to sustain our efforts to constrain state spending and nurture and defend Vermont’s economy. While our statehouse leaders extract from Vermont’s economy on average $1,000 more per person this year when compared to 2011, we ask for your support to push back on such increases.
Our nation’s Declaration of Independence ends with this phrase, “we mutually pledge to each other our Lives, our Fortunes and our sacred Honor”. The men and women of that era acted with passion to make sure their government represented them. Today, clicking “like” or “dislike” allows some to believe they are a participant in shaping their government when in fact it’s the hard work of participatory democracy that shapes our government.
The choice is clear. You can continue to pay the higher and higher taxes and fees imposed on you by our state house leaders or you can contribute to and participate in Campaign for Vermont’s efforts to refocus our state government. If everyone receiving this email contributed just $20, Campaign for Vermont can continue forward during this important legislative session and election year. We recognize that not all our supporters can afford $20, so if a contribution of $50 or $100 is possible, it would be greatly appreciated and well used.
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An Open Letter to Minority Leader Don Turner
I write to you because legislation dealing with state spending and taxes are first considered by the House of Representatives. Truth be told, the current fiscal dysfunction of state government has been a tri-partisan affair. All republicans and democrats on the House and Senate Appropriations Committees voted favorably for the current 2016 budget. Now, near halfway through the fiscal year, that budget appears seriously out of balance by about $40 million. Similarly, the school consolidation bill, now Act 46 and driving school boards nuts, was supported favorably by all House and Senate Education Committee members on a tri-partisan basis.
During the Dean administration, we worked very hard to successfully build centrist support for the Governor’s common sense positions on state spending and education funding. Now that the public sees the fumbled roll-out of the 2016 budget and Act 46, hopefully these matters can be revisited in the coming legislative session and that you can organize a “coalition of the sensible”, including corralling your own caucus as well as moderate democrats and mindful progressives, to unwind the poor choices recently enacted.
In addition to the budget and Act 46, the accumulation of credit authority and interfund borrowing from the state’s cash flows is another risky fiscal adventure, especially as the 2016 budget adjustment and the 2017 budget seem on track to further Vermont’s fiscal train wreck. You might consider a provision in the 2016 budget adjustment that walks back the use of these newly created lending authorities and requires that any unused authority allowed the Treasurer pursuant to Act 199 of 2014 be rescinded.
Vermont’s budget stabilization reserves were established to better accommodate annual fluctuations in state revenues as well as buffer general, transportation and education fund appropriations during revenue shortfalls. They are especially important to Vermont’s most vulnerable as a stabilizing resource supporting program appropriations. These supposedly undesignated reserves are embedded in the cash flows of their respective funds. At their origin, it was never conceived that these reserves be utilized as pools of cash for loans to fund expansions of state programs. Unfortunately, over recent years the legislature and administration now obligate these funds for terms up to 10 – 12 years. Thus, should an economic downturn or revenue short fall squeeze the state’s cash flows, rather than cash available to underpin appropriations, Treasurer Pearce now holds loan receivables that are not useful to that purpose.
First, Act 179 of 2014 allowed the Treasurer to execute an interfund loan to the Retired Teachers’ Health and Medical Benefits fund (RTHMBF) in an amount up to $30 million. Here’s a link to this statutory provision (see Sec. E.514.1) and a power point slide profiling the associated cash flows on page 12.
Further, Act 87 of 2013 Section 8 as amended by Act 199 of 2014 Sections 23-25 allows the Treasurer, in addition to that authorized above for the RTHMBF, to create credit facilities equaling 10 percent of average monthly cash flows. The calculation of this percentage equates to about $35 million as summarized on the last page of the Local Investment Advisory Report linked here.
Given the above, the loan authorizations from cash flow amount to $65 million. Keeping in mind that the general fund budget stabilization reserve target is just over $70 million for fiscal 2016, one can see that authorized interfund loan and credit facilities relative to this target are sizable.
A few observations.
First, as noted above, budget stabilization reserves are not available for their intended purposes when they are simultaneously committed to interfund loans and credit facilities.
Second, state government already sponsors and funds programmatic areas such as affordable housing and energy efficiency, among the targets for these new “credit facilities”. The establishment of another layer of effort in these areas at the Treasurer’s Office is an unnecessary and duplicative expansion of state bureaucracy that end runs the appropriations process.
Thirdly, the interfund loan to the RTHMBF is specific to the general fund while the 10 percent provision of Act 199 is more generally stated at “10 percent of average cash balance”. However, given that the “average cash balance” intermingles cash from restricted/dedicated funds such as Federal Funds, Special Funds, Transportation Funds, Education Funds, Fish and Wildlife Funds, among all others, such restrictions may limit the interim use of these funds for loans beyond their statutorily established purposes. Thus, should the state’s cash flow get squeezed, the burden of these loans from cash flow will primarily diminish the general fund stabilization reserve.
Hopefully you can bring together a “coalition of the sensible” so that legislation leaving the House for the Senate in areas such as those profiled above gets Vermont back on a sensible, less risky fiscal track.
This commentary is by Tom Pelham, formerly finance commissioner in the Dean administration, tax commissioner in the Douglas administration, a state representative elected as an independent and who served on the Appropriations Committee, and now a co-founder of Campaign for Vermont.
This story appeared in the Brattleboro Reformer on September 13th. Read the full story here.
"After much discussion and disagreement, the Shaftsbury School District board voted to send Jeff Leake to represent their interests at the Southwest Vermont Supervisory Union's Act 46 study committee."
"Board member Larry Johnson brought the board's attention back to the Regional Education District meetings of 2010, which did not end up resulting in consolidation, and asked what the difference was this time.
'What's different is that the state has put teeth into Act 46 that is king of holding our feet to the fire on this,' said Culkeen. 'We can't ignore it, we have to study it, or we run the risk that within five years they could come down here and consolidate us to their liking, and not ours."
"Johnson brought up the efforts by members of the legislature and outside groups to overturn Act 46, most notably a threatened lawsuit by the American Civil Liberties Union, on the grounds that the spending cap imposed by the law violates the state's equity provision, and Campaign for Vermont, which is also targeting the spending cap, and says that the law will actually raise taxes for Vermonters, rather than lower them. Tom Pelham, co-founder of Campaign for Vermont, has pointed out that the tax relief incentives for districts that merge is being paid for by other districts.
'That doesn't come from God, it comes from the districts that decide not to merge,' he was quoted by Vermont Digger as saying."
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Vermont ranks 43rd in government integrity laws
Most of Vermont’s elected officials are honorable and ethical, but some might fall short. However, without clear lines of what is and what is not ethical, the mere perception of waste, fraud, abuse or corruption undermines confidence in government and public servants.
Vermont affords its residents the pleasure of knowing their neighbors. Our state is full of small towns where we all know just about everyone. However, we should not mistake seeing elected officials at a meeting or bumping into them at a gas station, grocery store or high school athletic event as transparency or accountability. This is accessibility, not transparency.
Current laws address criminal activity, but not ethics and professional conduct in each branch – and at each level – of state government. That’s why Vermont ranks 43rd in government integrity laws according to the Better Government Association. And, as a practical matter, there is no process to which everyday Vermonters can turn if a government officials’ behavior is ethically questionable. We can do better.
In 2017, Campaign for Vermont was successful in pushing the House of Representatives to modify their rules and strengthen the standards for ethical behavior. Among other changes, lawmakers are now required to disclosed a comprehensive list of who compensates them. There is now an independent Ethics Committee charged with overseeing legislator behavior. This was a major step forward, but there is more work to be done.
The next step in the process is to pass a statewide code of ethics that applies to all public officials in state government. This will set the standard for what behavior Vermonters can expect from their representatives in government and allow us to move towards the end goal of giving the Ethics Commission enforcement powers so there is independent oversight.
Potential Legislative Conflicts Around Pensions
Research Paper (updated 6/24/2021)
Without Standards, Nothing is Unethical
Press Statement (released 7/20/2015)
Statement on Revolving Door
Press Statement (released 1/28/14)
State Employees Deserve Clear Whistleblower Protections
Press Statement (released 1/20/14)
Achieving Vermont Ethics Standards and Accountability in State Government
Position Paper (released 12/30/2013)