The Difficult Legislative Agenda of 2018 (January, 2018)

By John McClaughryJohn 2

The biennial session of the Legislature that convenes this week will face more than its share of hot button issues. Here’s a quick survey of the 2018 agenda.

State finances: The legislature faces a FY2019 General Fund budget deficit projected to surpass $40 million. The bright side of this coin is that covering a deficit puts a strong damper on everpresent demands for new spending that would require tax increases.

Retirement Plans: The two state-managed retirement plans – for state employees and teachers – are now an astounding $3.8 billion out of actuarial balance. Treasurers Spaulding and Pearce have tried to make headway in bringing this number down, without much success. Vermont still has a AAA bond rating, but the rating services have pointedly noted that “pension liabilities are growing and funding is not keeping pace.”

Property Taxes: Last June’s budget agreement made it certain that school property taxes would resume their upward march in 2018-19. In December the administration announced that school property tax rates would increase by 9.4 cents per $100 FMV, or 7 percent.

Last April Gov. Scott proposed a plan whereby he would negotiate health insurance coverage with the Vermont-NEA on behalf of all school districts. The union, and thus its legislative allies, vocally objected.

There is a solution for this. As with teachers’ retirement in 1946, put teacher health benefits into state law, and drop the idea of Governor-union negotiations. The union pushed to get agency fee out of local negotiations and into statute in 2014, and needs to see the wisdom of doing the same thing now for health benefits.

All Payer Health Care: When single payer health care failed in 2014, thanks to its enormous tax costs, All Payer sprang to life. It’s based on creating one big Accountable Care Organization called One Care, essentially a subsidiary of the UVM Medical Center empire. The Green Mountain Care Board will instruct Medicare, Medicaid and commercial insurers how much to pay into One Care on behalf of their respective insured populations. OneCare will then parcel out the funds to favored providers to achieve significant savings. Or so they say.

The Board just approved a $621 million OneCare budget, which has not yet become the complete monopoly its leaders urgently desire. When it does, Vermont will have universal managed care operated by a bonus-motivated rationing organization only feebly accountable to the public.

Health Care Mandate: Last week, after Congress’s repeal of the individual tax mandate to purchase ObamaCare policies, health care officials started musing about getting the legislature to impose a mandate on every Vermonter to buy state-approved health insurance. Or else what? Fines? Wage garnishment? Loss of driver’s and hunting licenses? Incarceration?

Minimum Wage: The state’s progressive element is eager to jack up the state’s minimum wage mandate from $10.50 (in 2018) to $15. (New Hampshire: $7.25).They are in serious denial about what their pet proposal would do to low-skilled workers (disproportionally young and non-white) in this age of automation and robotics, plus the impact on businesses dependent on those workers.

Carbon Tax: The Climate Action Network will press hard for their new version of the carbon tax, The Essex Plan. The previous version would tax gasoline, diesel, heating oil, natural gas and propane to the tune of $500 million a year by 2027. The new carbon tax would “only” tax those fuels $240 million a year by 2025. The proceeds would be used to lower electric rates and compensate lower income families and “rural residents” harmed by the higher costs of heating their homes and getting to work, school, shopping, and church. Gov. Scott is, happily, adamantly opposed to a carbon tax.

Lake Champlain Cleanup: EPA has calculated that cleaning up phosphorus-fed pollution in Lake Champlain will require $2 billion over twenty years. Legislators don’t want to tax the phosphorus users (40% of them farms), and few of them are eager to impose a “per parcel fee” on every landowner in the state.

Opiates: The opiate abuse and trafficking crisis is still waxing strong – a nearly 160% increase in overdose deaths from 2010 to 2016. Modest steps have been taken to cut back on the overprescribing of pain medications, but heroin is cheap, and there is no clear path out of the problem.

These are major challenges for our legislators. Stay tuned for five months of struggle in Montpelier.

John McClaughry is the vice president of the Ethan Allen Institute (www.ethanallen.org).

{ 1 comment… read it below or add one }

Willem Post January 7, 2018 at 3:37 pm

Carbon Taxes, Subsidies and Cost Shifting: Senator Bray of Vermont does not get it. He wants to SHIFT taxes from a few upscale-income buyers of electric vehicle onto many other taxpayers. He announced he wants to eliminate the sales tax on the first $30,000 cost of buying an EV. That means the upscale-income people benefit.

This amounts to an $1800 saving for the upscale-income buyers, the state having less revenue and having bigger CHRONIC deficits, and other taxpayers paying more. There is no free lunch, except in LaLaLand.

People like Bray have been giving away the store to please RE folks for at least a decade.
Did Vermont’s annual CO2 go down these last 10 years? No!!!
Throw more money at it? Oh yes, says Bray and others!!!
All the hyping about reducing CO2 was just to bamboozle the long-suffering Vermonters.

Legislators and Vermonters have no idea how much has been given away over the years.
No rational central accounting exists. The numbers are all spread over the place, likely on purpose.
Nothing it properly vetted and exposed to the public.
The state auditor, who loves RE, likely knows about some of it, but apparently ignores it.

Efficiency Vermont, annual budget about $65 million, is a notoriously wasteful, quasi-government program, audited on a cozy basis, by the PUC.
http://www.windtaskforce.org/profiles/blogs/efficiency-vermont

The RE shenanigan factor is much bigger than the $200 million EB-5 fraud (the largest ever in the US), and $200 million healthcare website fiascos.

When recurring revenue gaps occur, legislators and bureaucrats pretend to have not a clue as to how that came about.

A unilateral carbon tax, $240 to $300 million PER YEAR, would further aggrandize state government, would raise the ante of foolish spending by about a factor of 5, and increase social discord.

In the meantime, Vermont ranks 48th on business climate.
A carbon tax, and more socialist-style schemes would make it even worse.

1) Vermont Unilateral Carbon Tax an Economic Headwind:

Various RE interests and lobbyists are going around the state to promote a unilateral carbon tax to save RE businesses, because future federal subsidies will be decreasing.

The unilateral carbon tax would take $240 to $300 million out of people’s pockets and transfer it to the state government. A unilateral carbon tax would significantly increase the cost of gasoline and diesel for driving, and of fuel oil and propane for heating.

As part of various state programs, some people would get some money back as rebates, many others would get nothing back, or much less than paid in.

For Vermont to impose a unilateral carbon tax would make its economy less competitive versus other states, i.e., more brain drain, more tax-paying households leaving the state and fewer good-paying, steady, full-time jobs, with good benefits in the private sector. A unilateral carbon tax would be another headwind for the anemic, near-zero, real-growth Vermont economy.

A unilateral carbon tax would further aggrandize Vermont’s government, which is too large, too inefficient, spending too much money, is bloated with programs, and is running annual deficits, that are offset with annual increases of taxes, fees and surcharges, as if money grows on trees.

After six long years of out-of-control spending, Vermont finally has a governor, who aims to reduce the bloated, wasteful state government to enable the anemic, hollowed-out private sector to start growing again.

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