Budget recommendations letter

August 10, 2017

The Honorable Janet Ancel, Chair of the Joint Fiscal Committee
The Honorable Ann Cummings, Vice Chair of the Joint Fiscal Committee
Vermont State House
115 State Street
Montpelier, VT 05633

OVrescissionletterDear Representative Ancel, Senator Cummings, and Members of the Joint Fiscal Committee,

The vision of One Vermont is a state that works for everyone—where everyone has access to opportunity and can thrive, and where government improves the people’s lives.

As you consider your response to the latest revenue forecast, we urge you to carry out the intent of the “purpose of the state budget” statute adopted five years ago. The statute states: “The State budget should be designed to address the needs of the people of Vermont in a way that advances human dignity and equity” and that “Spending and revenue policies will reflect the public policy goals established in State law and recognize every person’s need for health, housing, dignified work, education, food, social security, and a healthy environment (32 VSA § 306a).”

Despite passage of the law, the budget process has continued to focus on simply making state spending fit revenue estimates. Since Vermont began facing annual budget gaps in the wake of the Great Recession, policymakers typically start with estimates of available revenue and then cut spending to make things balance. To better serve Vermonters, the process should start with an assessment of Vermonters’ needs in addition to available revenue, followed by a discussion of spending and revenue policy changes required to address those needs. The current discussion of potential rescissions and 2 to 4 percent agency reductions are the latest examples of revenue (or the lack of it) driving the conversation about state spending, instead of addressing the measurable, unmet needs of Vermonters.

Vermont has structural fiscal problems. Health care has been consuming a bigger and bigger share of available revenue, which has squeezed the rest of state government. And since 2000, revenue growth has not kept pace with economic growth. Vermont will continue to have budget gaps until these problems are solved. And the cuts, transfers, one-time solutions and other tweaks to the state budget do not address these underlying problems.

Meanwhile, these cuts are hurting Vermonters. The $5 million in administrative savings assumed in the fiscal 2018 budget, for example, may seem innocuous, but combined with previous cuts and rescissions, the ability of state government to do its job for Vermonters is being eroded.

Vermonters want a vision for what the state can be in five or 10 or 20 years and a path to a more prosperous future. It’s time to begin to address the state’s chronic problems like poverty, especially among young single mothers; the lack of affordable, high quality child care; unaffordable higher education; underfunding of the mental health care system; pollution of the state’s waters; and jobs that don’t pay enough to support a family. Waiting and hoping that the revenue will become available to make needed investments is not working. Until we reform our revenue policies to secure more resources and create greater equity, we cannot begin to substantially improve Vermonters lives.

Before you approve any rescission plan that includes additional cuts to public services, please consider these points:

  1. Vermont has been making cuts to the budget for years and continues to face gaps.
  2. Budget cuts tend to have larger negative effects on the economy than modest broad-based revenue increases.
  3. Budget cuts tend to hurt the most vulnerable Vermonters.

We hope you will consider beginning now to make a shift in the state budget process. We recognize that this is not easy. We also recognize that revenue reform is not within the purview of the Joint Fiscal Committee, but needs to be taken up by the entire Legislature. But by resisting rescissions early in this fiscal year and urging the Legislature to begin to address revenue reform in 2018, you can start to move the state in a sustainable direction for the benefit of all Vermonters.

Until and unless we address both our spending policies and our revenue policies, we are not taking to heart the lawful purpose of the state budget: to address the needs of the people of Vermont and advance equity.

Sincerely,

One Vermont Coalition
Dan Barlow, Public Policy Manager, Vermont Businesses for Social Responsibility
Paul Cillo, Executive Director, Public Assets Institute
Carlen Finn, Executive Director, Voices for Vermont’s Children
John Freidin, Middlebury
Christopher Gagné, Founder, Chairman of National Board of Directors, Director for Prisoners’ Rights Investigations
Bud Haas, Bradford
Dan Hoxworth, Executive Director, Capstone Community Action
Dr. Grace Johnstone, Hardwick Chiropractic
James Duff Lyall, Executive Director, ACLU of Vermont
Karen Lafayette, Legislative Advocate, Vermont Low Income Advocacy Council (VLIAC)
Traven Leyshon, President Green Mountain Labor Council, AFL-CIO
Charlie Murphy, Bennington
Kirsten Murphy, Executive Director, Vermont Developmental Disabilities Council
Scudder Parker, Middlesex
John and Fiona Patterson, Burlington
Ed Paquin, Executive Director, Disability Rights Vermont
Sandy Paritz, Poverty Law Project Director, Vermont Legal Aid
Julie Raboin, Newport
Colin Robinson, Political Director, VT NEA
Karen Tronsgard-Scott, Executive Director, Vermont Network Against Domestic and Sexual Violence

cc: The Honorable Mitzi Johnson, Speaker of the House
The Honorable Tim Ashe, President Pro Tempore of the Senate
The Honorable Phil Scott, Governor
The Honorable David Zuckerman, Lieutenant Governor

Letter to legislative leaders

April 13, 2017

The Honorable Mitzi Johnson, Speaker of the House
The Honorable Tim Ashe, President Pro Tempore of the Senate
Vermont State House
115 State Street
Montpelier, VT 05633

Dear Speaker Johnson and President Pro Tempore Ashe,coverOVletter2017

We’re writing with a plea for bold action. Last fall’s election demonstrated one thing loudly and clearly: people want political leaders to act, to address the problems that are all around us. Across the political spectrum, people feel ignored by government and left behind by an economy that rewards those at the top.

Vermonters want a vision for what the state can be in five or 10 or 20 years and a path to a more prosperous future. The state budget should be part of that vision, but for over a decade Montpelier has focused on immediate, yearly budget gaps. The Great Recession was clearly a major crisis that required everyone’s full attention. But the recession officially ended almost eight years ago. It’s time for Montpelier to begin to address the state’s chronic problems like poverty, especially among young single mothers; the lack of affordable, high quality child care; the high cost of higher education; the underfunding of the mental health care system; pollution of the state’s waters, and jobs that don’t pay enough to support a family.

Vermont has structural fiscal problems. Health care has been consuming a bigger and bigger share of available revenue, which has squeezed the rest of state government. Meanwhile, revenue growth has not kept pace with economic growth. These structural problems will take time to solve, but the sooner elected leaders begin to address them the sooner they will be solved.

Here is what the Legislature can do now:

1. Begin to make smart investments, starting with the governor’s recommended new funding for early care and learning and higher education. The governor’s vision to expand our idea of public education—from early childhood through college and beyond—is the right one. Quality child care and early education are critical to preparing kids for adulthood, and postsecondary or technical education is a prerequisite for a successful career. Additional funding for the child care financial assistance program and institutions of higher education is a good step toward achieving that vision, but it shouldn’t come at the expense of pre-K to 12 schools. The state also needs to make other strategic investments in affordable housing, the developmental and mental health system, services that provide pathways out of poverty, cleaning up the state’s waters, and other key areas.

2. Fill the budget gap without additional damaging cuts. Cuts over the past decade or more and the growth in health care costs have already undermined the state’s ability to competently deliver the services that Vermonters need and want. Two years ago, for example, Vermont reduced Reach Up grants for families with adults receiving disability benefits, leaving 700 families already facing poverty in worse shape. Diverting funding for housing programs to help balance the General Fund means fewer Vermonters have access to affordable housing.

3. Eliminate income tax loopholes that primarily benefit the wealthy, and lower tax rates for everyone. By reducing all the income tax rates and eliminating the top bracket, most Vermonters will see a tax cut. The top marginal rate will go down, making Vermont more competitive with other states. And Vermont can make the tax system more progressive by eliminating itemized deductions and phasing out the benefits of the lower tax brackets for Vermonters making more than $300,000 annually.

Most states with an income tax use federal adjusted gross income (AGI)—income before deductions and exemptions are applied—as the starting point for calculating their state taxes. Vermont is one of only seven states that start with federal taxable income—the amount left over after deductions and exemptions—which is substantially less than federal adjusted gross income.

Taken together, these changes produce savings to support needed strategic investments and make the tax system more fair.

As the attached Public Assets Institute analysis shows, taking these steps will allow the Legislature to lower income tax rates, balance the budget, and start to make smart investments that will begin to address Vermonters’ needs.

We hope you will consider this approach to the fiscal 2018 budget. We recognize that this is not easy. But it’s the right direction for Vermont and will put us on the path to becoming a state that works for all Vermonters.

For One Vermont,

Dan Barlow, Public Policy Manager, Vermont Businesses for Social Responsibility

Melissa Battah, Community Organizer, Vermont Interfaith Action

Paul Cillo, Executive Director, Public Assets Institute

Jan F. Demers, Executive Director, CVOEO

Carlen Finn, Executive Director, Voices for Vermont’s Children

Dan Hoxworth, Executive Director, Capstone Community Action

Karen Lafayette, Legislative Advocate, Vermont Low Income Advocacy Council (VLIAC)

Ed Paquin, Executive Director, Disability Rights Vermont

Colin Robinson, Political Director, VT NEA

Julie Tessler, Executive Director, Vermont Council of Developmental and Mental Health Services

cc: The Honorable Phil Scott, Governor
The Honorable David Zuckerman, Lt. Governor
Members of the General Assembly

Attachment

One Vermont meeting

****ONE VERMONT MEETING****

Monday, February 27, 2017, 1:30-3:30 p.m.
Hayes Room, Kellogg-Hubbard Library, 135 Main Street, Montpelier

Agenda:
Analysis and response to the governor’s fiscal 2018 budget proposal
2017 Legislative Agenda
Ways to engage with One Vermont

Any questions to Stephanie Yu, One Vermont Coordinator
steph@publicassets.org, 802-223-6677

Brigham Is 20! Celebration Feb. 7 at State House

FOR IMMEDIATE RELEASE: February 1, 2017    

MONTPELIER — A celebration noting the 20th anniversary of the Vermont Supreme Court’s Brigham v. State decision will be held Tuesday, Feb. 7, from 4 to 6 p.m. in the Cedar Creek Room of the State House.

Handed down on Feb. 5, 1997, the Brigham decision led to sweeping changes in Vermont’s school funding formula. The court determined that the system then in place, the “Foundation Formula,” did not provide equal access to school funds for all children. It ordered the legislature to devise a system that did.

“The State has not provided a persuasive rationale for the undisputed inequities in the current educational funding system,” the justices said in their unanimous decision. “Accordingly, we conclude that the current system, which concededly denies equal educational opportunities, is constitutionally deficient.”

The Legislature, which had previously considered but rejected many reform proposals, immediately focused its attention on school finance reform. Within three months it had fashioned a bill that addressed the court’s concerns about the raising and distributing of school funds and included a new set of school quality standards. Gov. Howard Dean signed the bill, which became Act 60, into law on June 26, 1997, at the school of the lawsuit’s lead plaintiff, eight-year-old student Amanda Brigham.

The lawsuit had been brought by the American Civil Liberties Union of Vermont on behalf of 13 different plaintiffs representing students, school districts, and taxpayers.

The lead attorney in the suit, Robert Gensburg of St. Johnsbury, argued successfully that Vermont’s Constitution established education as a fundamental right and access to that right had to be provided equally under the constitution’s “common benefits” clause (Article 7). The “common benefits” clause would be used as the foundation of another precedent-setting case two years later, the Supreme Court’s Baker v. Vermont marriage equality case.

Speakers at the Feb. 7 event include attorney Gensburg; Carol Brigham, mother of Amanda and a long-time Whiting School Board member; and Allen Gilbert, civil liberties advocate and chair of the plaintiff Worcester School Board in 1995.

The event is free and open to the public.

##

One Vermont is a coalition of citizens, organizations, and businesses committed to state policies, programs, and public structures that help build a society that works for all Vermonters.

Seven Days: On 20th Anniversary, Brigham Court Decision is Back in the Debate

From Seven Days
by Alicia Freese | February 1, 2017

Carol Brigham, whose 5th grade daughter was a plaintiff in a landmark Vermont Supreme Court case that reshaped education funding law, is traveling to the Statehouse next Tuesday to mark the 20th anniversary of her legal victory.

But the mood at the event, billed as “a celebration of Vermont’s constitutional commitment to equity,” may be somewhat tempered by what’s happening elsewhere in the building. Lawmakers are discussing whether Gov. Phil Scott’s education funding proposal runs afoul of the Brigham decision.

Minutes after Scott finished unveiling his plan last week to require districts to level-fund their budgets, lawmakers began expressing concern. This Tuesday, one of the legislature’s lawyers, Peter Griffin, confirmed that they have reason to worry.

In Brigham v. State, the court concluded that Vermont — by allowing districts to supplement school funding with local property tax money — had violated the constitutional right to equal opportunity.

Summarizing the decision to members of the House Appropriations Committee, Griffin said, “You can’t have property wealth be a proxy for the amount of educational resources you get.” For that reason, “I was concerned when I saw the governor’s proposal to allow towns to raise money on their own,” he told them.

Scott’s budget plan calls on schools to freeze their budgets indefinitely, but for Fiscal Year 2018 it would allow districts to raise additional money — an amount up to 5 percent of their current spending — by levying a local property tax.

Asked about the likelihood that the state would get sued for codifying this plan, Griffin told lawmakers, “It’s probably significant.”

He also flagged two other “litigation risks.” Scott’s plan could create additional inequity because it locks in districts at their current spending rates, which vary widely.

And since the plan would require level-funding indefinitely, the state could be sued for depriving districts of adequate resources. (Scott’s plan allows funding adjustments for student population changes, but not for inflation.) Griffin said he could envision a lawsuit being brought “when someone says, in 2024, ‘Why am I locked into 2017 spending levels? That’s not enough to do what we used to be able to do.’”

A spokesperson for Scott didn’t directly address Griffin’s arguments, instead suggesting that Vermont’s current funding system violates Brigham. “The Governor believes there is tremendous inequality in the current system — in part because the system directs so much money towards overhead costs, rather than in opportunities to increase equal access. So, perhaps it is time for a Brigham challenge so we can recalibrate and move towards its intentions for equal access across districts.”

Having delivered his assessment to the committee Tuesday, Griffin was packing up his papers and heading toward the door. Rep. Kitty Toll (D-Danville), who chairs the Appropriations Committee, called out, “Did you have another proposal you’d like to offer up?”

Letter to Legislative Leaders: Budget Cuts Unnecessary

March 16, 2015

The Honorable Shap Smith, Speaker of the House
The Honorable John Campbell, President Pro Tempore of the Senate
State House
115 State Street
Montpelier, VT   05633

Dear Speaker Smith and President Pro Tempore Campbell,

We’re writing with concern about the current budget situation and with a proposal for a possible solution.
As has been stated repeatedly this session, Vermont has a structural budget problem. But, this is not a simple mismatch between revenue and appropriations that can be fixed with budget cuts. In fact, budget cuts do not necessarily eliminate costs and often create other fiscal problems.

The General Fund transfer to the Education Fund is a case in point. When the Legislature cut the transfer, it didn’t reduce the cost of education; it merely shifted the cost to the property tax.

Medicaid is another example. Reducing payments to Medicaid providers does not reduce the cost of the services delivered by doctors and hospitals and other providers, but shifts the costs not covered by the state reimbursements to other payers—those with private health insurance or who pay for health care out of pocket. Gov. Peter Shumlin acknowledged this Medicaid cost shift when he proposed a 0.7 percent payroll tax, which would allow Vermont to start paying reimbursements that are closer to the real cost of the services being provided.

One structural budget problem the state faces is that its overall tax system is regressive. While Vermont does have a progressive income tax, which is projected to perform better than the other major General Fund taxes next year as it has in the past, the wealthiest Vermonters still contribute a smaller share of their income overall to pay for schools, roads, prisons, and child protection services than do middle- and lower-income Vermonters. That becomes a greater problem for revenue growth as more and more of the income of the state goes to those at the top, which has been the trend in Vermont, and the rest of the country, for more than 30 years.

The focus this session has been on the projected $113 million gap in the General Fund budget for fiscal 2016. But the $1.4 billion General Fund accounts for only a quarter of the state’s annual spending, and it is necessary to look at the entire budget to understand another major structural problem: health care.

The $5.6 billion budget the governor proposed for fiscal 2016 represents an increase of $283 million over fiscal 2010 after adjusting for inflation. Within that total budget, health care-related spending will be up $367 million. That means spending for all of the rest of state government will have declined by $84 million.

Rapidly rising health care costs have been a problem for years, and Vermont took a big step toward addressing the problem when it created the Green Mountain Care Board with authority to regulate health care costs. But we can’t continue to cut everything else state government is obligated to do while we wait for the growth in health care costs to come down to a sustainable level.

What the Legislature can do now:

  1. Adopt the administration’s 0.7 percent health care payroll tax.
    The governor has proposed a 0.7 percent payroll tax to raise the revenue the state needs to increase its payments to hospitals, doctors, and other health care providers. Meanwhile, the Green Mountain Care Board is making progress in slowing the growth of health care costs through regulation and redesign of the system for paying for health services. Both of these steps can begin to take the pressure off the rest of state government.
  1. Refrain from making additional cuts to state services.
    Cuts over the past decade or more have already undermined the state’s ability to competently deliver the services that Vermonters need and want. The failure to raise sufficient General Fund revenue to support these services has shifted costs onto the property tax and pushed up health insurance premiums. The recession has driven up demand for public services, and much of that demand continues. Nevertheless, for everything but health care-related services, the governor has proposed to spend less in fiscal 2016 than the state spent in inflation-adjusted dollars in fiscal 2010.
  1. Eliminate income tax breaks and lower tax rates.
    Many Vermonters may be surprised to learn that the state has had the second fastest growing economy in New England since the bottom of the recession in June 2009. Despite the comparatively strong economic growth, state revenues are growing more slowly than they were before the recession.

Vermont is one of six states in the country that still uses federal taxable income rather than adjusted gross income as the base for the state income tax. That means our top marginal rate is higher than necessary to raise the needed revenue. Additionally, tax breaks that primarily benefit upper-income taxpayers are undermining the progressivity and performance of the state’s tax system. The state can lower marginal rates, increase revenue, and improve the progressivity of the tax system by eliminating itemized deductions and replacing personal exemptions with a refundable tax credit.

As the attached Public Assets Institute analysis based on projected fiscal 2016 budget gap data from JFO shows, taking these steps will allow the Legislature to balance the budget while lowering income tax rates and make progress on addressing the structural problems that create budget gaps year after year.

We hope you will consider this approach to balancing the state budget this year and help Vermont to be a state that works for all of its residents into the future.

Sincerely,

One Vermont Steering Committee 

Paul A. Cillo, President
Public Assets Institute

Andrea Cohen, Executive Director
Vermont Businesses for Social Responsibility

Joel Cook, Executive Director
VT-NEA

Karen Lafayette, Legislative Advocate
Vermont Low Income Advocacy Council (VLIAC)

Ed Paquin, Executive Director
Disability Rights Vermont

Sheila Reed, Associate Director
Voices for Vermont’s Children

Julie Tessler, Executive Director,
Vermont Council of Developmental and Mental Health Services

Cc:   The Honorable Peter Shumlin, Governor
The Honorable Phil Scott, Lt. Governor
Members of the General Assembly

Attachment

VTDigger: Legislative Wrap-up: Child care

From Vermont Digger
by Alicia Freese | May 16, 2013

Nothing fell flatter this session than Gov. Peter Shumlin’s proposal to decrease the state’s Earned Income Tax Credit (EITC) to fund an expansion in the state’s child care program.

Shumlin asked the Legislature to support his plan to divert $16.7 million from the EITC to do three things:

• Update the federal poverty level (FPL) from 2010 to the 2013 level, which would make more families eligible to receive a child-care subsidy;

• Reconstruct the subsidy “cliff,” to give a larger subsidy to families at the higher end of the eligible income bracket;

• Increase the market rate by 40 percent for child-care providers. Continue reading

VTDigger: Legislative Wrap-up: Welfare reform

Full article at Vermont Digger
by Alicia Freese | May 15, 2013

Lawmakers had immediate reservations when Gov. Peter Shumlin first unveiled his “welfare reform” scheme in January. But they gradually warmed to the proposal, and four months later they followed suit, putting a five-year cap on welfare benefits for families.

The Legislature took a softer approach than Shumlin pushed for; lawmakers decided to delay or waive the cap for families in certain situations.

Reach Up is the state’s family welfare program. Currently families can receive cash assistance for an unlimited period of time.

Starting in May 2014, families will lose their benefits if they’ve been on Reach Up for five years. Any time they spend on welfare in other states will count toward the limit. But families can extend their cash grant beyond five years through a “hardship exemption” by either doing community service or securing employment. Continue reading