2013 Town Meeting Report

Introductory note

Thank you for the opportunity to serve you in Vermont’s citizen legislature.  It is a humbling experience, and it is a privilege we take very seriously. As our state and nation continue to face unprecedented economic challenges, the Legislature is determined to do what we can to help Vermonters survive intact.  This includes ensuring that we budget wisely; help business and industries develop jobs that put people in dignified and well-paying jobs; and continuing to build our future energy and information infrastructure.  We must also ensure that we protect the programs that do the most good for the most vulnerable populations, and that we create a quality health care exchange, so we may begin to make health insurance more affordable to more people.   This report briefly summarizes the progress we are making in some of these areas.  We welcome your comments and suggestions.

Introduction

This year marked the seventh year in a row we have started our annual financial journey with a large gap in our budget between revenues and projected expenditures. This continuous difference is largely due to the drop in revenues, and while Vermont is much healthier than most other states, we are still waiting for elements of our economy to recover after the Great Recession. Some of it has, and we were the only state in the United States to see our wages increase last year. Our unemployment rate is lower than most, and many of our systems are recovering, albeit slowly. Our recovery from Tropical Storm Irene continues, and we have noticed that some of our colleagues, especially those in communities not directly affected by the storm, are “moving on,” sometimes forgetting that we still have a long way to go in our recovery. Still, we face the same challenge we have faced over the past several years — how much more can we cut from our services, especially those that affect our most vulnerable neighbors, without severely challenging our social safety net. And if we need to retain those services, where will we find the revenue?

You will hear a lot this year about increases in taxes. Most of them are unavoidable. Collectively, towns and villages vote on their school budgets, and the state is responsible for finding the funds. This year’s increase, once again, is related more directly to fixed costs rather than programming, and in some cases programming or administration is being trimmed. Legislation passed over the last two years has offered temporary reductions to local tax rates if school districts if districts are merged, but that has been an extraordinarily difficult bridge for our communities to cross.

The Legislature is also focused on results-based accountability, making sure that your public dollars are well-spent and will go as far as possible.

At this point in the session, it is too soon to tell what the outcome of these deliberations will be. We can tell you that it has been difficult to balance the sacrifices we have to make across the economic spectrum, both in policy and finances.

What we do not forget, however, is the pride Vermonters feel in their state, and in their close connections to their community, both local and global. We have been faced with many difficult choices as we work to craft a responsible and balanced budget, and we will use all the tools at our disposal to reach a final resolution.           ❖

Budget Realities

For the seventh year in row budget deliberations began with the need to fill a hole. This year it was $67M. The Governor presented his budget in late January, and from there our Appropriations committee started to consider our annual allocations with this hole in mind.

The job of the House Appropriations Committee is to evaluate every line item in that budget proposal, working with the other Committees of the House and Administration Agencies, and to present these recommendations to the full House where it will be debated and possibly modified before it eventually passes on to the Senate.

This budget proposal presents dilemmas that we have not faced before, even during the height of the recession.  In order to reduce spending in some categories, the only options are to curtail benefits to others, the loss of which is likely to hurt our investments in economic growth.  And all the while we must look over our shoulder at the loss of Federal funding in many, many categories.

We will produce a balanced budget, as we always do, even though Vermont has no Constitutional requirement to do so.  And in that budget we will do our best to keep Vermont’s economic engine moving forward, maintain our roads, our parks, and our schools, our services to oversee our health, our environment, and our communities, even as we continue our recovery from Irene.

Irene Recovery

On a local level, Waterbury continues to model to the rest of the state how to recovery from a catastrophe. On the state level, we are still waiting for the many moving parts to stop so we can begin the restoration of the Vermont State Office Complex and the Vermont State Hospital. FEMA continues to be a roadblock in these conversations, especially as to the VSOC in Waterbury. The administration continues to work with FEMA to finalize negotiations. Once they do, we expect work to start within days after an announcement, and within two months see buildings taken down and, in places, replaced. The Institutions committees in the House and Senate continue to support these projects, as well as others in the state, and we are all very anxious to see these projects begin in earnest. Statewide, there are continuing negotiations with FEMA with respect to culverts and other public assistance. We will continue to monitor the work of the committees and the administration and FEMA to make sure our renaissance stays on track.

Conservation and Housing

While not a direct legislative issue, the preservation of the Bolton Nordic trails is closer to reality. A portion of our real estate transfer tax provides money for the Vermont Housing and Conservation Board, which has made a substantial grant to the project. Once the purchase closes, hundreds of acres of Nordic skiing trails will be conserved for public use. This is a huge bonus for Bolton, as it creates an important destination to the town.

VHCB also made a key investment in the Maple Wind Farm’s expansion to Richmond, where they also hope to develop a chicken processing business.

And VHCB’s contribution to the affordable housing project in downtown Waterbury has attracted other key funds, including disaster relief development money. These grants will help the Central Vermont Community Land Trust build 27 units of perpetually affordable housing in Ladd Hall on Main Street.

Local Agriculture

Led by schools such as Brewster-Pierce, Smilie, Thatcher Brook, Crossett Brook and Harwood, our ongoing efforts to promote Farm-to-Plate, Farm-to-School and other initiatives have been successful. And Waterbury, with its recent growth in restaurants serving quality, locally produced food, is leading the way on the streets. Simply put, more high-quality Vermont food is being produced and processed and more folks are eating it, including kids at school, state workers and private sector employees. We continue to hear testimony about the productive and proactive investments the state has made in endeavors such as the Vermont Sustainable Jobs Fund,  VHCB, UVM Extension, Farm-to-Plate, and especially the recently established Working Lands Enterprise Board, which is budgeted to receive $1.5 million in funding for FY14. These efforts are paying dividends and proving integral to a holistic approach to economic development, land stewardship and healthier communities.

Vermont Health Connect

In 2014, Vermont’s individuals, families and small businesses will have access to a new insurance marketplace in 2014 that will allow them to make apples-to-apples comparisons of their health coverage options. Vermont Health Connect will serve as the place where Vermonters can access tax credits to help pay their health care premiums. For a family of four making up to $94,000, Vermont Health Connect will offer financial assistance paying for health insurance that has never been available before.

Many more Vermonters will receive reliable, comprehensive coverage through Vermont Health Connect in 2014. Currently, individuals in the private insurance market have an average deductible of $10,000 and the average out-of-pocket cost to Vermonters is $12,000 a year. Under the Affordable Care Act, Vermont Health Connect will offer insurance plans where the out-of-pocket maximum will be almost half that amount.

Health insurance plans in Vermont Health Connect will offer real value to Vermonters and will help them to stay healthy. Plans will cover primary care services without a deductible and, keeping a focus on health, preventive care will be covered without a deductible or co-pay. Additionally, Vermont is one of only two states (along with Massachusetts) that is considering a state supplement to federal premium and cost sharing assistance. Vermonters currently using VHAP or Catamount, along with 40,000 Vermonters at similar income levels will be offered additional assistance.

In 2017 the federal government will allow states to apply for a waiver from the Affordable Care Act exchanges. Vermont is on a path to apply for a waiver in 2017 that would allow Vermont to create a universal health care system. Once this system is in place, Vermont could save $500 million compared to our current system. In order to embark on a new health system, Vermont needs to do more work to be sure our health care is affordable, offers high quality and contains growth. If we don’t change health care so that it is keeping people well, it won’t matter how we pay for it, we won’t be able to afford it. The Green Mountain Care Board is working on quality and cost containment projects to make Vermont’s health care delivery system the most efficient and highest quality in the nation.

A Changing of the Guard

On February 21, the General Assembly elected Brigadier General Steven Cray of Essex, Adjutant General of the Vermont National Guard. Our statutes require that the adjutant general be elected by a majority vote of the General Assembly and, after several weeks of interviews and campaigning, General Cray garnered 125 out of 178 votes. He will replace former Adjutant General Michael Dubie and interim Adjutant General Tom Drew.
The new adjutant general will lead our Guard through massive changes over the next 7-10 years. Between the Afghanistan war winding down to the controversy over the F-35, he will be navigating through some choppy waters. General Cray showed the General Assembly that he had a thorough knowledge of our strengths and weaknesses as we move forward, and we are confident he will keep our Guard trained and ready for any state disaster or federal need in the years ahead.

Funding our State Infrastructure

Even without the demands of fixing the estimated $124.7 million for the Waterbury State Complex, there are enormous pressures on the capital fund this year. For example, $43 million is needed to support construction and reconfiguration costs associated with replacing our mental health care facility, $30 million is needed to replace our health department laboratory, $5.5 million is needed for our state police barracks, and $8 million for necessary work on Lamoille County Courthouse. Our needs exceed our budget by a sizeable amount.

The House Institutions and Corrections Committee is challenged in making funding decisions without final figures on either insurance payouts or FEMA reimbursements for Irene damages to the Waterbury complex. Assuming that the awards will not be enough to alleviate the financial gap, the committee is reviewing capital bill thoroughly with an eye toward reallocating funds in order to meet our most pressing needs.

Pension Forfeiture

Public employees must not betray the trust placed in them by the public.  This trust is special and a privileged expectation of all public employees.  If the trust is broken, there is a mechanism that may be used to make taxpayers ‘whole’ and also to restore the public trust.

House Government Operations and House Judiciary worked on legislation defining the consequences for a public employee convicted of financially-related felonies, including “an attempt to commit, or aiding in the commission of” such felonies.  The consequence in addition to the sentence in the criminal proceedings is that the public employee’s retirement benefits may be subject to forfeiture, “in whole or in part,” in proceedings before the Civil Division of the Superior Court.  The Court has discretion in considering the extent of the forfeiture, and may consider the severity of the crime, the degree of public trust placed in the public employee, and whether or not there are innocent family members such as children or an unknowing spouse when determining the extent of the forfeiture.

The House passed this bill in February.  It is now in the Senate Government Operations committee for its consideration.

Working Parents Help Our Economy
Working outside the home is a financial necessity for most families – making access to affordable, quality childcare simply imperative. Studies show our children aren’t the only beneficiaries when they access high-quality childcare, local and state economies benefit as well. Parents are able to participate in the workforce, unemployment subsidies decrease, and disposable income levels rise. Employers confirm a notable rise in worker productivity when parents know that their children are safe and well cared-for.

The Governor’s budget recognizes the importance of quality childcare by adding $17 million into the childcare subsidy program to help low-income families. He proposes that money be reallocated from the state share of the Earned Income Tax credit (EITC). The EITC is widely believed to be one of the most successful programs existing to help move working people out of poverty. The House Human Services Committee is wrestling with the short- and long-term impacts of reducing our support for one successful program in order to invest in another.