MIDDLEBURY — Gov. Peter Shumlin on Monday praised lawmakers for supporting a 2011 legislative agenda he predicted will lift the state to economy to heights unseen since the tech boom of the 1990s.
“I am really proud of the work that the Legislature has done,” Shumlin said at the weekly Legislative Breakfast held at the Middlebury American Legion. “We are united in what the challenge has been.”
That challenge, Shumlin said, has included overcoming a projected state budget deficit of more than $170 million, creating more jobs, crafting a health care reform plan, plotting a new energy course (that he said should not include Vermont Yankee), and extending broadband Internet and cell phone coverage throughout the state within the next two years.
“Vermonters are making around the same amount of money they were 10 years ago,” Shumlin said. “We are making progress for the unemployed, but we are not making as quick progress as we would like on raising the incomes of those who have jobs.”
Shumlin acknowledged a tough fiscal year 2012 budget process, one that saw him propose some substantial cuts that drew protests from human service providers. The House ultimately restored a portion of the cuts he had recommended.
“I think when we’re done, we’ll have a budget that meets the needs of Vermonters and balances our appetite for spending with the ability of Vermonters to pay the bill, so we won’t be back here next year with a $150 million deficit, or $160 million, like we have for four years in a row,” Shumlin said.
Looking forward, Shumlin said he sees blue economic skies on the horizon. His optimism is fueled by what he said are new business opportunities that will be made possible by enhanced broadband and cell phone coverage and by an emerging renewable energy industry.
“I am convinced this will be true if we make the right decisions,” Shumlin said. “As we move off of the oil-based economy to other ways of powering the world, there is going to be a huge ton of money to be made.
“I think it’s going to make the industrial revolution and the tech boom look small.”
Shumlin said he believes that oil prices will never again be as low as $70 per barrel. He said prices will only get higher as developing nations become more affluent and become bigger consumers of a fossil fuel that is getting increasingly scarce.
“The price is going up, and we’ve got to get off it for financial reasons,” Shumlin said. “If we don’t, the Saudis are going to own us. We are going to be fighting wars all the time and we can’t even keep up with the wars we’re fighting now.”
The governor said he can envision a time in the near future when Addison County farmland will be used to raise crops for local food and renewable energy.
Shumlin added that enhancing the state’s telecommunications system will open the door for a lot of new companies that would suddenly be able to give their employees the quality of life of the Green Mountain State while staying electronically connected to the major business hubs.
“We’ve got to do it,” Shumlin said of extending good broadband and cell phone coverage to the last rural mile.
HEALTH CARE REFORM
Vermont’s business climate would also benefit from having a single-payer health care system, according to Shumlin. He noted the state currently spends $5 billion annually on health care. Nine percent of that figure is related to administration of the system, he said. The governor envisions a time when each Vermonter will be issued a Green Mountain Care policy card that will not only expedite billing and administration, but also instantly link physicians to the patient’s health care records.
He said the current health care system in not financially sustainable.
“We’ve got 20-percent increases, 30-percent increases, on an annual basis, in our health insurance premiums,” Shumlin said. “We are paying more and more insurance for less and less coverage.”
He said the state can’t afford to not implement health care reform.
“We are not doing this health care thing because it’s popular; we’re not doing it because it’s easy,” Shumlin said. “We’re doing it because we have to.”
Shumlin applauded the House for doing a “tremendous job” on H.202, a bill that lays the foundation for a single-payer health care system in Vermont called “Green Mountain Care.” H.202, among other things, calls for the creation of a Green Mountain Care Board to help the state contain health care costs. The legislation would also set up a “Vermont Health Benefit Exchange” to begin enrolling individuals and small business for coverage beginning Jan. 1, 2014.
Addison County legislators said at Monday’s breakfast that many aspects of Green Mountain Care still need to be sorted out — not the least of which is how it will be financed. They added future Legislatures could decide to pull the plug on the program if it appears untenable.
A single-payer system, Shumlin argued, would relieve businesses from the responsibility of covering workers and therefore give Vermont an advantage over the other 49 states in attracting economic development.
Shumlin predicted that the state’s smaller hospitals — like Middlebury’s Porter Medical Center — will not last much longer in a current health care system in which providers are reimbursed (by Medicaid and other programs) at around 40 cents for each dollar of service they provide.
“You can’t run a business that way,” said Shumlin, who added the state needs better training programs in schools to prepare students for job openings.
“If we can be the state training more kids for science, math, technology and engineering, we get the jobs, we get the bright economic future,” Shumlin said.
The governor acknowledged his agenda has drawn some criticism from some who argue that Vermont should not proceed unilaterally on health care and other major initiatives, as federal action could force the state to reverse course.
“I say not much is going to happen in Congress,” Shumlin said. “We’ve got the (U.S.) House over there and they want to slash everything … It’s a mess. We’ve got a time here where in Washington, we can’t count on them for much change.”
Shumlin’s message drew polite applause from the approximately 50 residents and lawmakers at Monday’s breakfast. But the governor did not go unchallenged on his priorities — particularly those related to health care and taxes.
Three county residents questioned Shumlin’s refusal to consider an increase in broad-based taxes — in particular the state income tax — to generate more revenue to sustain some of the human services programs currently on the chopping block.
Bridport resident George Klohck said he recently learned from his accountant that his household will, for the first time, be receiving a state income tax refund.
“This doesn’t seem right to me, given that I am not suffering and that there are people in need in many ways in Vermont that we need to support,” Klohck said.
He alluded to a March 22 letter signed by 50 of the state’s most prosperous Vermonters urging Shumlin to support bill H.401, which would slightly raise the state income tax rate for the highest two income brackets.
“As you know, H.401 would raise a relatively small amount of money ($17 million) given our state deficit and the fact that the wealthiest Vermonters (top 5 percent) will receive a $180 million tax cut this year thanks to extension of the Bush tax cuts,” reads the letter, which includes several Addison County signers. “But that money will go a long way in helping vulnerable Vermonters though these hard times.”
Shumlin invited the letter writers to “send it to the state; we’d love to have the money.” But he reiterated his opposition to an increase in Vermont’s income tax, which he said was already one of the highest in the nation.
“I think the fact that the Obama administration was unable to return us to the Clinton tax rates is a real tragedy for America, and I hope they will see the light,” Shumlin said. “And I agree with you that wealthier people are getting a better deal from taxes than they ever have in the history of America, and they should pay more.”
Burt Shumlin argued that Vermont already has the most progressive state income taxes in the country, and that an increase in that assessment would result in more affluent people leaving the state — thereby eroding the tax base and discouraging job creation.
“The dumbest thing we could do is raise our already progressive income tax even higher,” said Shumlin, who last year declared a net worth of $10.67 million.
“There are 162 Vermonters who made $500,000 or more , more than once, in the last nine years,” Shumlin said. “What we know is that they pay the lion’s share of income taxes to the state of Vermont — roughly 32 percent. We know that when you get roughly 10 percent of your check going to the state of Vermont, people start to say, ‘Wow, I’m sending a lot of change to the state of Vermont.’ And there is a point where you lose more than you gain.”
Shumlin said his job is to keep the 162 top wage earners in Vermont and “grow the base. What if we doubled it in the next two years? We would have all sorts of revenue that we don’t have now.”
NUCLEAR POWER PLANT
The governor was also asked about the future of the Vermont Yankee (VY) nuclear power plant in Vernon. Shumlin reiterated his desire to see the plant closed when its current license expires next year — in spite of the fact that the federal Nuclear Regulatory Commission has issued VY a renewal.
Ultimately, VY’s future might have to be decided in court, even if the Vermont Legislature demands that the facility be closed, according to Shumlin. He said the plant’s owners, Entergy, might argue that the Vermont Legislature doesn’t have the right to decide the facility’s fate; or Entergy might try to continue operation past 2012 with its NRC permit in hand, forcing the state to take court action.
“We’re in for a tough, long battle,” Shumlin said.
Reporter John Flowers is at johnf@addisonindependent