Douglas calls for ‘difficult choices’

MIDDLEBURY — Gov. James Douglas on Monday said he will resist growing calls for the state to raise income or gasoline taxes to compensate for declining state revenue, and vowed instead to continue to push for cuts in programs and personnel to balance the state’s books.
Douglas, a Middlebury Republican, made his comments during a legislative breakfast at the Middlebury Legion Hall and during a follow-up interview at the Addison Independent. His appearance came on the heels of news that Vermont will receive just under $1 billion in federal stimulus aid, including $130 million for transportation projects throughout the state. Additionally, a large chunk of that money will help Vermont with Medicaid reimbursement — which in turn will help Vermont avoid some of the red ink that had been forecast for the balance of this year’s state budget and the fiscal year 2010 spending plan.
Still, Douglas believes the state needs to trim approximately $3.2 million this year and faces as much as a $100 million shortfall next year — about half of what had been forecast before details of the federal stimulus aid became known. The governor is continuing his call for trimming the state workforce by more than 600 jobs, though he said he would listen to alternative suggestions from the employees’ union.
“We have to learn how to do more with less,” Douglas said. “This is what businesses and families are doing, and government has to do the same.
“We have to make some difficult choices; we can’t do everything,” he added.
Douglas said he has been frustrated by what he said has been a lack of cooperation from legislative budget writers. He said his recent call for an additional $3.2 million in rescissions to this year’s state budget culminated in $800,000 being added to the spending plan by the House and another $1 million on top of that by the Senate.
“They are going in exactly the wrong direction,” Douglas said. “I just think there is a disconnect between what is happening in the ‘real world’ and some of the actions I see in the Statehouse.’”
Douglas said that while he does not believe he and the Legislature need to agree on the same cuts, he said lawmakers need to come up with some additional economies.
“Make some decisions,” he said.
“This is serious.”
Underscoring the seriousness of the situation, according to Douglas, are recent statistics showing 10,900 Vermonters lost their jobs in 2008.
“More and more people are seeing their nest eggs shriveling,” Douglas said. “In so many ways, Vermonters are really feeling the pinch, and we have to do everything we can to help the state get back on the road to recovery — and at the same time use restraint and fiscal responsibility in state government so that we can come out of this stronger than ever before.”
Douglas cautioned that Vermont “can’t rely on federal money alone, because it’s temporary.” The stimulus aid is intended to help Vermont for nine fiscal quarters, according to Douglas. As for the prospect of additional federal stimulus support in the future, Douglas said, “How many times can the U.S. Congress spend $1 trillion that we don’t have.”
With that in mind, Douglas said Vermont will need to “bend the curve on state spending, or we’ll begin to go up and up during the next few years and we’re going to hit a cliff … We can’t continue on the track we’re on.”
Some participants at Monday’s breakfast urged Douglas to look not only at cuts, but new revenues, in order to minimize layoffs and preserve social service programs for the state’s neediest residents.
Specifically, Weybridge resident Spence Putnam said the state should consider raising the gas tax (to repair state infrastructure) and placing a three-year surcharge on taxpayers’ state income tax liability. Rep. Michael Fisher, D-Lincoln, has filed a bill to institute the so-called “Snelling surcharge,” first implemented by the late Gov. Richard Snelling during the early 1990s.
“That won’t affect people who don’t have an income and it does help to spread the pain,” Putnam, co-leader of the Addison County Democratic Committee, said. “I think Vermonters are ready to step up … and pay part of the price for this downturn.”
John Macon, also of Weybridge, echoed Putnam’s remarks.
“Europeans are paying about twice or three times what we are for gasoline,” he said, adding Vermont would benefit from having non-residents contributing through such a tax. “If the gas tax is put on in an appropriate way, it can always be taken off if the price of gas rises.”
Douglas said he is opposed to a gas tax increase, in part because many Vermonters — particularly those in the Northeast Kingdom — do not have access to much public transportation and are therefore reliant on their cars. He said he is not opposed to increasing the state’s bonding to finance future road/bridge repairs, but believes the federal stimulus aid will give Vermont a good start on infrastructure upgrades.
As for raising the income tax, Douglas believes such a move would drive away entrepreneurs considering establishing, or expanding, their business interests in the Green Mountain State.
“We have the most progressive income tax in America; as your income rises, you pay more,” Douglas said. “At the top level, we now have the second-highest rate in America (behind California). I don’t think we want to be even less competitive than we are now.”
Vermonters who want to voluntarily contribute more money to the state’s coffers can currently do so, Douglas said.
“For people who really feel under-taxed, there is a remedy,” Douglas said of voluntary tax contributions. “I’ll make the pitch — send it in. But I think the burden here is already quite high, and we want to remain competitive.”
Other participants at Monday’s breakfast suggested the state could harness more revenues by eliminating the state’s current tax loophole on capital gains assets. Middlebury resident Ellen Oxfeld added she believes Vermont could also save substantial dollars by converting to a single-payer health care system. She listed two bills in the Legislature — H.100 and S.88 — that seek to implement such a system in Vermont.
Douglas said he has supported eliminating the state’s capital gains tax exclusion. As for a single-payer health care system, he said, “I’m not persuaded (such a system) is less expensive.” He added he has been content with the state’s smaller strides in advancing health care coverage, such as through Vermont’s Catamount Health program that provides basic benefits to the state’s uninsured and under-insured. Such programs, he said, have helped Vermont trim the ranks of its uninsured to 7.6 percent, which he said “is one of the lowest rates in the country.”
He acknowledged, however, that more work needs to be done.
“We won’t be satisfied until everyone has access to affordable coverage,” Douglas said.
Other topics fielded by Douglas included:
• The recent closing of the Middlebury Probation and Parole office. Douglas said he supported the move as a way to control costs during a tough budget year. The change — which has drawn widespread criticism form Addison County advocates — has resulted in the Middlebury probation and parole staff being reassigned to offices in Rutland and Burlington. Some of those staff will commute to Middlebury two days per week to deal with clients in the Frank Mahady Courthouse. Local officials are concerned the change will result in less oversight of offenders, many of whom will now have to travel greater distances for probation and or parole obligations.
Douglas rejected assertions by critics that closing the Middlebury office will save few dollars for a potential greater cost — more offenders winding up in prison — down the road.
“I’m hearing arguments that just about every rescission is not cost-effective and that can’t be true,” Douglas said.
• Public transportation: Douglas said he will support initiatives to cut Vermonters’ transportation costs — such as expanding park-and-ride facilities.
“We hope at some point to have a multi-modal system so that public transit buses will stop at all the car pool areas, in some cases with some train options nearby… ” Douglas said.
• Dairy Farming: With farmers struggling to get by, Douglas said he anticipates some subsidies to arrive from Washington through the federal Milk Income Loss Contract (MILC) program. He said the state will continue to encourage farmers to diversify their operations, to include artisan cheese making, energy crops and organic practices. Douglas said he will also support milk pricing reform to help farmers get a better price for their product.
“The dairy industry is in a state of stress,” Douglas said. “We have to look for alternatives to lend them a hand.”
• Caring for the state’s most vulnerable residents. Some county residents were candid in their criticism of Douglas for using what they described as a “slash and burn mentality” in cutting human services during the current budget crisis.
“I care about each and every Vermonter,” Douglas said in the most forceful tone he used Monday morning. “(The most vulnerable) are first and foremost in my mind, and will continue to be, as long as I hold this job.”

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