Governor-elect sets his priorities for term

MIDDLEBURY — Ask Gov.-elect Peter Shumlin what’s on his mind as he prepares to take over the reins of state government on Jan. 6, and he’ll tell you about tackling the biggest battles: getting broadband to every last mile in Vermont; getting health care costs under control; figuring out how to pay for the early education and corrections initiatives he proposed during the campaign; and reducing a projected $150 million deficit so he can balance the next state budget.
He’ll also tell you that none of it will be easy.
In a brief interview at the Addison Independentthis Tuesday, he provided clues as to how he will address those issues, and others, and what challenges and obstacles he expects to face.
Why do you consider health care a priority?
We’ve got to get (health care reform) done… We’re going to bankrupt the system, if we don’t… The problem is that the state has made promises that we can’t keep. And Vermonters can understand that. But it’s going to make them really mad, really sad, really unhappy… You can’t tell people (as we did in the past decade) that you’re going to give them the best health care benefit in the world, that everyone to 350 percent of poverty is going to enjoy it, and then not come up with a way to pay for it.
I’m talking about what the state government of Vermont has done (under Gov. James Douglas). I wouldn’t have signed the Catamount (health care) bill… It was fiscally irresponsible to sign Catamount. So we have to unwind from that, and the only way we can do that is by telling the truth. Listen, we have more bills piling up than we can pay; there’s no cost containment in this plan (Catamount); we’re adding a million bucks a day to our costs. We’re part of the problem not part of the solution, and the party’s over.
How does that position match up with your campaign promises on implementing a single-payer health care system?
Single payer is all about containing cost, not spending money…You can’t make a promise that can’t be kept, but we did with Catamount… which is a beautiful benefit package that would be paid for by the taxpayers that invites cost increases of a million a day. It’s just not the real world.
The real world is finding ways in the entire health care system to reform it so that we’re maintaining quality, maintaining access and containing cost… I will not sign a health care bill that does not reduce cost, does not reduce the amount of money we’re spending… There’s no sense in trying. Our problem is not access in Vermont, it’s cost.
Are you concerned that tackling this battle could sidetrack other important initiatives?
It’s a huge political challenge, and it’s a challenge that has killed more politicians, including Barack Obama. But go back to if you don’t think Obama’s plan works, or look at the state legislature or Howard Dean, who had to walk away from it… (but it has to be done) and I understand the perils of that.
Will you raise revenue to help pay for it?
No. We’re going to do this the old fashion way… by curbing costs, adjusting benefits, and living within our means.
What are the challenges in getting broadband to every last mile of the state?
One challenge is that you have competing providers who carry all the balls to getting it done and you have some tough personalities there… When you really dig into this, you learn you have to use every dollar you have in a coordinated fashion… The smart grid, for example, is a huge amount of money and a huge amount of fiber being run for different reasons. If we can coordinate the smart grid with the existing providers with the resources we have coming from the federal government, I think we’ll be able to pull this off… But it’s a real tough battle because everyone has their own turf and they distrust each other. It’s going to take investment and political capital, and it’s going to take some toughness… We have to figure out a way to unify these providers, while at the same time maintain some leverage over insisting that we get a universal plan.
Vermont has one of the highest graduation rates from high school in the nation (85 percent), but we drop dramatically when it comes to Vermont students graduating from a four-year college. How do you address that issue and what’s your overall approach on education?
We have to ask the question, what is causing that dramatic shift in outcomes? I think it’s more about money, than readiness. We have more options for higher education per capita than almost any state in the country… but it’s more expensive than most other states… Our students just don’t think they can afford to accumulate the debt.
What we’re looking at, and this is expensive at first, is the Maine model where you give an income tax credit for students who come back and work here for their college debt or some portion of it. That seems to work, but when people see how much tax credit that is potentially for Vermont, they’re going to get a little nervous. So we’re looking at easing into it in the areas where we desperately need jobs creators, and that tends to be science, math, IT and engineering. Those are the areas where if you talk to employers across Vermont there are openings they can’t fill. So, maybe we start out by targeting the tax credit to jobs we desperately need.
I also really feel strongly about the early education/corrections piece. That’s going to require huge capital to be spent there because we’re going to have to take some risks to bend the curve, and we’re going to have to spend resources.
What are employers saying about the quality of training and education in our work force?
It doesn’t matter where I go, who I talk to, the challenge isn’t that we don’t have jobs, it’s that we don’t have workers who are trained to do the jobs… I was talking to the owner of a Ford dealership, and they can’t find enough technicians to run the computer system to do the service work, and these are good-paying jobs in Vermont… We have to ask why our educational system doesn’t have more courses in auto mechanics, and other trades where there is demand to train Vermont students in those disciplines.
That’s where we have to make a sea change, and the question is: How do we get there quickly? You can change the structure of the board or the commissioner, but I’m not sure any of that gets you quick results… How do you pick the three or four wars that would really make a difference and really go after them… You could pick a 100 wars. It’s an issue we’re still working on….
What challenges have you faced in this transition?
One of the things I’ve learned is that there is a lack of resources for transitions that don’t allow you to come in on Jan. 6 with all the answers… Everyone thinks you do, everything thinks you have it all in your head, everyone thinks you have this army and that you know everything, but that’s not the case.
(Shumlin noted that the transition budget had been set at $400,000 last year, but had been cut to $75,000 in a budget-cutting frenzy to help balance this budget. “I can see why the budget address, which is more specific, comes after the inaugural address,” he quipped.)
How are you planning on dealing with a projected $150 million deficit?
My orders to my administration are that I do not want to be back here next year dealing with the same problems because we postponed the tough decisions. We’re going to do this in the first year. We are not going to use smoke and mirrors. We are going to balance the budget and actually deliver on what government can deliver… and that’s really going to be tough stuff.
We are facing a $150 million deficit, but the really tough choices boil down to about $70-$80 million bucks… We’re going to do some things that anyone would do in terms of trying to leverage federal dollars … but you know we’re going to maximize all that because we have to. Every state is facing it. The states are bankrupt; the only thing that kept them alive was the federal dollars and that’s all going away all at once, and Vermont is in better shape than most.
You’ve said you’re against raising income taxes any higher in Vermont. Why?
Simple. States are competitive; there is just no doubt about that in my mind. You cannot afford for your state’s state (tax) rates to get out of whack and, frankly, ours are. I do not believe there is more tax capacity here that can be garnered without being a disincentive to job creation. We’re on the edge now.
Furthermore, you’re not going to solve this problem we have (by increasing) revenue. You’re just not. That’s the reality. If you could do it to all 50 states, I’d say raise income taxes on people who make $250,000 or more; that’s what I do. But we don’t have that luxury. We compete with New Hampshire; we lose wealthy residents to Florida, and we lose them to the other states around us at the top margins.
Democrats always say that we bring in more wealthy residents than we lose, and they’re right… The only problem is, I’m a business guy and I want more customers. So let’s keep the ones we have and bring in more and we’ll have a much rosier revenue picture.
In short, this theory that you can milk the wealthiest residents as hard as you can milk them and somehow more are going to come than leave, just doesn’t work. The question should be, “How do we double our customers?” You’re not going to do it by raising your income taxes higher than they already are at the top margins.
Any new ideas in agriculture?
We have a lot of great ideas being discussed between Chuck Ross, the incoming secretary of agriculture, and Lawrence Miller, the incoming secretary of commerce. One example of many is that they’re talking about establishing seasonal processing cooperatives all over the state partially funded by the EB-5 program, which we also have a task force working on as quickly as possible. That’s just a small idea, but if you add 10 of those, along with the existing dairy industry, and we have a bright future… I really do think, however, that if we keep doing agriculture the way we’re doing it, we’re going to keep losing farms.
Since becoming the governor-elect, have you experienced things in that capacity that have been especially memorable?
One of the most heartwarming experiences you can have is to stand and watch our men and women in the Vermont National Guard come back and be reunited with their families. It brings you to tears.
But while we all support the mission of Vermont soldiers, which has been incredibly tough, it’s appropriate to ask the question if this is an appropriate use of guard troops. As I said to President Obama, we have the best National Guard in the country, but we’re not using them for what they were trained or intended to be used for, and as the commander in chief of the guard I am going to tell Washington that it isn’t the job the National Guard to be at the front lines of conflicts around the world, period.
Their job has always been to protect our health and safety and welfare at home; they have been at the front lines of many national crises, including Katrina, and that’s appropriate. They should be called up to keep our country safe within our borders, but traditionally it’s the role of the U.S. Army, Navy and Air Force to fight wars in foreign countries.
What did Obama say?
They hear it, but they have a challenge, which is too many fights and too many fronts. But from a policy perspective, frankly, they have to look at that too. We can’t possibly be fighting every war and mediating every single conflict around the world.

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