Category Archives: Appropriations

Economists predict continued, moderate growth in Vermont

MONTPELIER — Economists for the Shumlin administration and the Legislature provided an updated economic forecast Monday that predicts continued moderate growth for the state’s economy into the foreseeable future.

Thomas Kavet and Jeffrey Carr, economists for the Legislature and administration, respectively, presented a consensus economic forecast to the Emergency Board Monday that predicts a 3 percent increase in general fund revenues over the last forecast in January for the 2016 fiscal year. That means the state is expected to collected about $40 million more in revenue than expected in January.

Economists Jeffrey Carr, left, and Thomas Kavet brief the Emergency Board.

Economists Jeffrey Carr, left, and Thomas Kavet brief the Emergency Board.

The 2016 expected revenues are aided by about $30 million in news taxes and fees signed into law following the recent legislative session.

The new forecast also predicts about $30 million more in general fund revenues in the 2017 fiscal year, which represents about 2 percent growth.

“It’s nice that we’re finally seeing some signs of the economic recovery that’s taking place in Vermont. We’ve got the fourth-lowest unemployment rate in America. We’ve got a lot of folks who want to hire and can’t find qualified workers,” Shumlin told reporters after Monday’s meeting. “The days of dark, deep-red ink were pretty depressing, and we’re starting to see the labor of our hard work.”

The Emergency Board is comprised of the governor and the chairs of the money committees in the House and Senate. The five-member panel voted unanimously to accept the consensus forecast.

The forecast also predicts the state’s education fund is expected to grow by $1.6 million and $1.7 million in 2016 and 2017, a growth of 0.8 and 0.9 percent, respectively. The transportation fund, however, is expected to decline by $800,000 in 2016 and $600,000 in 2017, a drop of 0.3 and 0.2 percent, respectively. The expected decline is based on oil prices.

Kavet said the forecast is “uneventful” because the 2015 fiscal year forecast was very close to year-end results. The national economy also did not deviate from expectations, he said.

“The external economy hasn’t changed that much either. We’re looking at this very slow, steady kind of expansion and there’s not a big shift in that,” Kavet said.

Gov. Peter Shumlin and Secretary of Administration Justin Johnson, right, at a meeting of the Emergency Board on Monday, July 27, 2015.

Gov. Peter Shumlin and Secretary of Administration Justin Johnson, right, at a meeting of the Emergency Board on Monday, July 27, 2015.

Meanwhile, the state’s relatively low unemployment rate, the fourth-lowest in the country, is a strong indication of a growing economy, according to Kavet.

“The fact is it’s a very good proxy for the state of the economy in general. When the unemployment rate is really high lots of other indicators show that bad things are happening at the same time. And when it gets really low that also is coincident with lots of other things being good,” Kavet said. “As a general yardstick for what’s happening … it’s a timely indicator.”

He said the state is “about a year away from full employment,” which should lead to wage and income growth.

Shumlin, who frequently touts the state’s low unemployment rate, said the state is on the right track.

“It sure is better than what I inherited in 2010 when we were seeing negative economic growth. I think we all recognize that we’re making the right choices, we’re heading in the right direction and we still have more work to do,” he said.

The economists warned of structural problems with the state’s tax code, however. There is a shrinking sales and use tax base because of online commerce and the proximity to sales tax-free New Hampshire, they said. And the state saw minimal growth in personal income tax withholdings in 2015.

Senate Finance Committee Chairman Tim Ashe, D/P-Chittenden, began a discussion earlier this year about expanding the sales tax to services. That effort did not gain traction, however, and Shumlin said he does not favor it.

“I think we should be careful not to misdiagnose the problem. The problem with the sales tax is being experienced by any state that has a sales tax. The Internet is killing Main Street sales of goods,” Shumlin said.

Shumlin signed a 2016 fiscal year state budget into law earlier this year that assumed a 3 percent growth in state revenues. That followed a January consensus forecast that called on the state to downgrade projections from 5 percent growth to 3 percent growth.

Reach Up cuts challenged in federal court

MONTPELIER — Vermont Legal Aid has filed a class action lawsuit in federal court against the state hoping to block a new statute that calls for a reduction in Reach Up benefits for some Vermonters.

Legislation recently signed into law by Gov. Peter Shumlin reduces the temporary cash assistance by $125 per month for as many as 860 households in Vermont.

That’s because of a provision in the approved 2016 fiscal year budget that counts $125 per month of federal Supplemental Security Income assistance, or SSI, against a family’s income when determining benefits under the state’s Reach Up program.

Department for Children and Families Commissioner Ken Schatz.

Department for Children and Families Commissioner Ken Schatz.

Under current law, an individual’s SSI disability benefits are not counted when determining a family’s Reach Up assistance. The change is part of a $1.6 million cut to the 2016 state budget.

“The approach we looked at was that we recognized that these are vulnerable families, but these families with SSI benefits did have more income available than other families (receiving Reach Up benefits),” said Ken Schatz, commissioner of the Department for Children and Families. “We geared this in such a manner to try to minimize the impact and also recognize that this approach, because it does deal with families that have more income available, was a better approach than an across-the-board cut to all families.”

But Christopher Curtis, the attorney with Vermont Legal Aid who filed the suit, said the cut to a subset of Vermonters receiving state benefits is unconstitutional.

“I think the single most striking thing about this proposed benefit cut is it singles out a distinct class of Vermonters,” he said. “That just jumps out on its face as discriminatory.”

Christopher Curtis (VPR photo)

Christopher Curtis (VPR photo)

“Supplemental security income is to meet the needs of disabled Vermonters who have very specific needs. It’s not necessarily to meet the needs of an entire household,” Curtis added. “We do not think that supplemental security income should be counted against the Reach Up grant and there’s a provision in federal law that supports that.”

Curtis said he is hoping the court will grant an injunction to stop the cut from taking effect on Aug. 1. A letter sent to Agency of Human Services Secretary Hal Cohen, asking that the state not implement the cut, did not work, he said. Cohen, according to Curtis, responded that the Legislature had acted and the administration is required to follow the law.

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Welch, Minter seek long-term transportation funds

EAST MONTPELIER — U.S. Rep. Peter Welch and Vermont Agency of Transportation Secretary Sue Minter are urging Congress to pass a long-term transportation spending plan before federal spending authorization expires on July 31, which would put dozens of Vermont projects at risk.

Welch and Minter held a news conference Tuesday at a Route 14 bridge in East Montpelier that intersects with Route 2. The bridge has been deemed structurally deficient and has visible signs of degradation, including at least one hole in the deck offering a view of the water below.

“We in Vermont have bridges that are crumbling,” Welch said. “This bridge next to us is falling apart, and I hate to say that because I don’t want to scare the driving public, but the driving public knows how bad our roads and bridges are.”

Rep. Peter Welch, right, examines a hole on the deck of a bridge on Route 14 in East Montpelier.

Rep. Peter Welch, right, examines a hole on the deck of a bridge on Route 14 in East Montpelier.

In the recent past Congress has passed short-term spending resolutions to keep transportation and infrastructure projects around the country funded. But that approach has made it difficult for states to undertake long-term planning for needed projects. Minter said more than 40 projects totaling about $136 million set to be advertised in the coming weeks are at risk if Congress does not pass funding.

“If we don’t have the authority to spend federal money, they are off the table,” Minter said, also noting that Vermont could foot the bill in the near-term if Congress does not meet the July 31 deadline.

Welch said he and Rep. Reid Ribble, R-Wisc., have sent a letter to House Speaker John Boehner, R-Ohio, urging him to use the so-called “Queen of the Hill” strategy to pass a long-term transportation funding plan. It would allow the House to vote on multiple funding options and the proposal with the most votes would be adopted by the House.

Welch said he hopes Boehner will help break prolonged gridlock in the House and pass a long-term funding plan, rather than another “dim-witted, temporary fix.” He said the previous short-term extension allowed corporations to lower their pension obligations, which in turn boosted corporate taxes — a “temporary and irresponsible” solution.

“A confident country, a competent country, will do what needs to be done to keep the roads and the bridges repaired and take the steps that are required to have a modern infrastructure. The thing that mystifies me in Washington is that this, traditionally, has never been a partisan issue. We all have potholes in our roads. We all have bridges that need repair, whether you’re in the most conservative district … or in Vermont,” Welch said.

Some ideas floated in Congress include repatriation of corporate profits, corporate tax reform and boosting the federal gas tax. Welch said he has no favorite funding source. However, collecting taxes on repatriation of corporate profits would provide a five to six year cushion for developing a sustainable funding source, he said.

“The worst thing we can do is come up with yet another short-term solution where we go into the general fund, take money that needs to be spent for education, for National Institute of Health or scientific research, and then use it as a patch to try and get us through a few more months of maintenance of our highways and bridges,” Welch said.

Vermont Agency of Transportation Secretary Sue Minter speaks at a news conference as Rep. Peter Welch listens.

Vermont Agency of Transportation Secretary Sue Minter speaks at a news conference as Rep. Peter Welch listens.

Minter, meanwhile, praised President Barack Obama’s Grow America Act, which would appropriate $475 billion for transportation projects across the country over five years through repatriation and corporate tax reform. Sen. Bernie Sanders, Vermont’s junior senator and a candidate for the Democratic nomination for president, has also advocated for funding, she said.

“There are proposals out there. The president put forth a very important proposal,” Minter said. “Sen. Sanders, another plan. A trillion dollar investment. It’s called rebuild America. What we need isn’t just to cobble together and put the duct tape on these old bridges, we actually need to be thinking about the future and especially our economy.”

The country’s infrastructure “used to be the envy of the world,” Minter said. But the U.S. now spends just 2 percent of its gross domestic product on infrastructure. By comparison, most of Europe spends between 5 and 6 percent, while China spends 9 percent of its GDP, she said.

In Vermont, significant progress has been made on replacing aging bridges, according to Minter. In 2009, she said, 19 percent of Vermont’s bridges were structurally deficient. That has since dropped to 7 percent.

“We have been doing things differently. We have been focusing more on bridges and we’ve been innovating and doing them more quickly and at lower cost,” she said. “We want to keep going, and that’s why we need Congress to act, because we don’t want to slow down.

Rep. Tony Klein, D-East Montpelier, also called on Boehner to allow long-term funding solutions to be voted on. He said local residents fear crossing the Route 14 bridge.

A guardrail is severely degraded on a Route 14 bridge in East Montpelier.

A guardrail is severely degraded on a Route 14 bridge in East Montpelier.

“Shame on Congress. I dare Speaker Boehner to come here and drive across this bridge. This bridge is a nightmare. People in East Montpelier are afraid to drive across this bridge,” Klein said. “This has got to stop. This is ridiculous, and Americans should not have to potentially pay with their lives to get people to change their minds.”

Wayne Symonds, the state’s bridge engineer, said the span is now inspected every year and remains suitable for traffic.

“Right now the bridge is safe but it is nearing the end of its useful life,” he said.

neal.goswami@timesargus.com

Lawmakers strike tax deal without gov’s approval

MONTPELIER — House and Senate negotiators were nearing a deal on a $30 million revenue package early Saturday morning that will help balance the 2016 fiscal year budget and close a projected $113 million gap — but includes provisions Gov. Peter Shumlin has said he does not support.

The bulk of the new revenue comes from changes to the income tax code. Both the House and Senate have agreed with the governor to raise $15 million by eliminating taxpayers’ ability to deduct their prior year local and state taxes on their state returns.

Senate Finance Committee Chairman Tim Ashe, D/P-Chittenden, briefs reporters late Friday night on a tax plan. (Photo by Erin Sigrist)

Senate Finance Committee Chairman Tim Ashe, D/P-Chittenden, briefs reporters late Friday night on a tax plan. (Photo by Erin Sigrist)

But the House and Senate are also looking to raise about $10.5 million by making changes to how much taxpayers can deduct. Under the plan lawmakers were nearing agreement on, income tax deductions would be capped at two times the standard deduction — about $25,000 for a couple. The plan exempts charitable donations and deductions for catastrophic health care costs, however.

In total, lawmakers are looking to raise $26 million in new income taxes with the changes.

Shumlin has spent much of the week restating his opposition to lawmakers’ plans to limit deductions. He made that case again to the Vermont Press Bureau in an interview Friday morning.

“The reason states don’t tend to cap these deductions … is because they all provide an important role in ensuring you have a strong economy and a strong state and an economy that works for every single member of that state,” Shumlin told the Vermont Press Bureau in an interview. “Among the tax choices that are going to be made, let’s not make illogical choices.”

Senate President Pro Tem John Campbell, D-Windsor, has said Shumlin has threatened to veto the revenue bill because of his opposition to deduction limits.

But that didn’t stop lawmakers from forging ahead.

Senate Finance Committee Chairman Tim Ashe, D/P-Chittenden, said he worked with the House to complete a revenue plan both chambers could agree on.

“The governor’s made no hesitation to say that he would prefer that the only income tax that’s raised be the $15 million that he raised,” Ashe said. “We arrived at what we thought was a fair way to raise the money and that we could reach agreement with the House.”

House Ways and Means Committee Chairwoman Janet Ancel, D-Calais, echoed Ashe’s comments, saying the revenue plan is one that both sides have agreed to.

“We’re trying to get a revenue bill and trying to get out of here,” Ancel said.

House Speaker Shap Smith, D-Morrisville, acknowledged the tax deal was arrived at without the governor’s approval.

“That is true, yes,” the speaker said.

But the plan addresses many of the concerns Shumlin has raised, according to Smith.

“We’ve responded to a number of the concerns that the governor expressed, particularly around the health care and the charitable deduction. We tried to address that. So, my hope is that in addressing those things we can move closer together. I’m eternally optimistic, but perhaps it is unwarranted in this instance,” he said.

The deduction cap included in the deal is fair, Smith said.

“You’re going to get a $25,000 cap on your itemized deductions. That’s a significant amount of allowable deductions, including, on top of that, charitable deductions and for medical. It seems to me pretty reasonable,” he said.

Lawmakers planned to complete the deal early Saturday morning and return later in the day to have both chambers vote on it. Smith declined to comment on how lawmakers would address a potential veto by Shumlin.

“We’ll take it one step at a time,” Smith said.

Scott Coriell, spokesman for Shumlin, left the State House around 11:30 p.m. Friday and said the administration was reviewing the proposal and would have no comment until later on Saturday.

House Appropriations Committee Chairwoman Mitzi Johnson, D-South Hero, left, and Senate Appropriations Committee Chairwoman Jane Kitchel, D-Caledonia, speak during budget negotiations Friday.

House Appropriations Committee Chairwoman Mitzi Johnson, D-South Hero, left, and Senate Appropriations Committee Chairwoman Jane Kitchel, D-Caledonia, speak during budget negotiations Friday.

The revenue plan also includes extending the state’s 6 percent sales tax to soft drinks, which will raise $5.1 million, extending the 9 percent rooms and meals tax to vending machine purchases, and includes a 3 percent minimum tax on taxpayers earning at least $150,000.

“That’s more of a floor payment on people with larger incomes,” he said.

The House and Senate had also agreed in principal to the budget and were expected to sign off on it early Saturday morning.

Capitol Beat with the Governor 5-15-15

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Gov. Peter Shumlin and Vermont Press Bureau chief Neal Goswami chat about the end of the session and the bills that are still in play.

Gov. Peter Shumlin on the Capitol Beat podcast Friday, May 15, 2015.

Gov. Peter Shumlin on the Capitol Beat podcast Friday, May 15, 2015.

Capitol Beat 5-11-15

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Barre-Montpelier Times Argus Editor Steve Pappas and Vermont Press Bureau chief Neal Goswami discuss the sexual assault case against Sen. Norm McAllister, R-Franklin, the last week of the session and Bernie Sanders.

Capitol Beat with the Governor 5-8-15

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Gov. Peter Shumlin discusses  end-of-session issues that remain unresolved, the possibility that lawmakers will vote to remove the state’s philosophical vaccine exemption and the arrest of Franklin County Sen. Norm McAllister on sex charges.

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Shumlin defends late budget push

MONTPELIER — Gov. Peter Shumlin said Friday he is asking lawmakers to cut an additional $10 million from the budget because they have rejected his proposal to institute a payroll tax to help pay for Medicaid costs.

Shumlin summoned the chairs of Senate money committees Wednesday — one day before the Senate took up the annual budget bill — to tell them they needed to cut more and tax less. The move frustrated lawmakers who are grinding toward adjournment, which is to come in mid-May.

On Thursday, administration officials presented a list of $8 million in further cuts to the Senate Appropriations Committee and made clear the third-term Democrat did not favor their tax plans.

Gov. Peter Shumlin speaks at a recent State House news conference.

Gov. Peter Shumlin speaks at a recent State House news conference.

“I really feel strongly that the tax packages being contemplated in this building will hurt our economy and hurt Vermonters,” Shumlin said in an interview with the Vermont Press Bureau on Friday. “I believe that the current budget framework needs to cut more and tax less.”

At the heart of the matter, Shumlin said, is how lawmakers have chosen to fund Medicaid case loads, which expanded under the federal Affordable Care Act to the tune of $16 million. The governor’s budget proposal used a 0.7 percent payroll tax on Vermont businesses to raise $90 million to cover that cost as well as to boost payments to Medicaid providers.

Lawmakers have rejected that, however, and funded Medicaid case loads through various taxes. But Shumlin, while now acknowledging his plan is unlikely, wants lawmakers to cut deeper rather than raise taxes.

“That idea has been an uphill slog and it looks like it’s possible that it may not come to fruition,” he said. “Unless they suddenly … see the light, which doesn’t seem extraordinarily likely, but I’m still hopeful, we have a $16 million budget challenge that we didn’t have, that we had taken care of.”

Shumlin said his proposal created an ongoing, dedicated source for Medicaid. Lawmakers, meanwhile, have created a host of new taxes to balance the general fund, he said.

“They want to take away your home mortgage deduction because you bought a home, they want to take away your charitable deduction because you want to support charities in your community, they want to take away the catastrophic health care deduction,” he said. “They want to tax soda and everything else with sugar in it because they say that drinking that stuff isn’t healthy for you, which it probably isn’t, but they also want to tax water. Tax water? Really? I thought you just said you shouldn’t drink sugary things, now they’re saying we’re going to tax water.”

Lawmakers are not amused with the governor’s late push to adjust their work. House Majority Leader Sarah Copeland Hanzas, D-Bradford, noted that lawmakers used the same amount of new revenue to support the general fund as Shumlin did in his proposal, but their challenge was even greater since the state saw an additional $18 million revenue downgrade after his budget address.

“We closed the $113 million budget gap with the same $35 million that the governor closed his $94 million gap. The same amount, not the same kind of revenue. So, to have the governor suggest that we are spending too much and raising too much in taxes is really perplexing,” she said. “I don’t know where they’re doing their math, but $35 million is $35 million.”

Rep. Sarah Copeland Hanzas

Rep. Sarah Copeland Hanzas

Hanzas said the governor should have made his pitch earlier — before the House passed its budget and sent it to the Senate.

“Where were you on Jan. 20 because it’s three months later and we’ve been through the painful process of vetting all of our painful priorities,” she said. “We would have appreciated them in January, not so much now.”

House Appropriations Committee Chairwoman Rep. Mitzi Johnson, D-South Hero, echoed that sentiment.

“It’s frustrating that he’s had opportunities for the last three months to weigh in on the budget and we don’t have a balanced budget proposal from him. He’s choosing to sort of nit-pick at different things,” Johnson said.

Both Johnson and House Speaker Shap Smith said Friday that the House-passed budget does fully fund the Medicaid case loads, but does not do it the way Shumlin sought.

Shumlin dismissed criticism of his timing, saying previous governors have also pushed for priorities late in the process.

“I don’t know where they’ve been. I’ve served under [Former Gov. Howard] Dean, [former Gov. Jim] Douglas, and I cannot remember as a legislative leader right before we’ve passed the budget not having the governor sit down with us and explain their concerns about budget and taxes. That’s what governors do. So, I understand it’s a time of year where folks get emotional,” Shumlin said.

Late-season requests are part of the budget process, Shumlin said.

“Folks get frustrated this time of year, I understand that, and I’m sympathetic to it. I’ve been on both sides of it in the governor’s office and the legislative leadership end of it,” he said. “The only thing I want to point out is this is not unusual and we shouldn’t be fearing frustration we should be fearing raising taxes on Vermonters at a time when they’re having a difficult time paying their bills, and we should be fearing passing a budget that isn’t sustainable for the years going forward.”

“I believe that my judgement is correct. We should cut $10 million more from the budget and not raise taxes on Vermonters by that $10 million,” Shumlin added.

The Senate appeared ready Friday to reject most of the $8 million in cuts the governor proposed this week. A $1.3 million savings pharmacy costs looked likely, but bigger ticket items, including an additional $2.8 million in labor savings on top of the $10.8 million Shumlin previously requested, appeared to lack support.

neal.goswami@timesargus.com

Capitol Beat with the Governor 5-1-15

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Gov. Peter Shumlin chats with Vermont Press Bureau chief Neal Goswami about his budget disagreements with lawmakers.

Shumlin steps into Senate budget process

MONTPELIER — The Shumlin administration is pushing back against the Senate’s budget plan as the chamber prepares to take it up on the floor Thursday.

“Less spending and fewer taxes,” Gov. Peter Shumlin said Thursday morning.

Administration officials were preparing to meet with the Senate Appropriations Committee Thursday morning to discuss further cuts and ease back some of the tax increases included in the Senate’s budget and tax bills.

“There’s not a set number for anything,” Secretary of Administration Justin Johnson said. “This is not an uncommon conversation for the end of the legislative session.”

A House-passed budget bill closes a $113 million projected gap in the 2016 fiscal year budget. It uses $53 million in spending cuts, $35 million in new revenue and about $25 million in one-time funds to balance the budget.

The Senate version balances the budget in a similar way.

But Shumlin is not pleased with the direction lawmakers have chosen.

“He’s not loving all the revenue. We think that in order to keep taxes down — tax increases down — we have to have a budget that’s as efficient as possible,” Johnson said. “We know that our growth is forecast over the next few years to be around 3 (percent) and the expenditures have been around 5 (percent). We’d like to get them under 5. It’s not a problem you’re going to solve all at once but one that we can solve over time

Johnson said the administration’s late-stage interest in negotiating different terms in the budget and tax bills is not out of the ordinary.

“It’s just sort of putting some pressure back on to make sure we do the best we can,” he said.

Sanders sounds alarm on GOP budget

MONTPELIER — Vermont Sen. Bernie Sanders warned governors in all 50 states Monday of pending cuts headed their way if a GOP spending plan being negotiated this week by House and Senate conferees is approved.

In separate letters to each state, the independent Sanders, ranking member on the Senate Budget Committee, characterized the potential cuts as ‘devastating.” He said they would impact working families, the elderly, the sick, the poor and children.

“It is an embarrassingly disastrous document,” Sanders said of the budget proposal in a telephone interview Monday.

According to Sanders, who is mulling a run for president to promote progressive ideals, Vermont could face dire consequences under the House and Senate budget resolutions that outline federal spending for the next decade. House and Senate conferees were working Monday to reconcile differences between the two chambers and are expected to reach agreement early this week.

Sen. Bernie Sanders

Sen. Bernie Sanders

Among the potential impacts in Vermont that Sanders outlined in his letter to Democratic Gov. Peter Shumlin are:

— 32,000 people could lose health coverage
— 5,000 jobs could be lost as a result of cuts to education, transportation and other programs
— Cuts to Pell grants could lead to higher tuition for 12,000 college students
— Investments for roads and bridges could be reduced by as much as $261 million

The cuts to programs and services that serve the poor “will be devastating for the middle class and working families of our country,” Sanders wrote in his letter.

“At a time of massive income and wealth inequality the Republican budget will make the very rich even richer, while causing increased pain and suffering for the middle class and the most vulnerable people in our state as a result of draconian cuts to important programs,” Sanders wrote.

Similar letters were sent to the other 49 governors outlining potential cuts in their states.

“I will do my best to see that (the budget plan) is defeated and I hope that some of these governors that we have written to will weigh in on this discussion,” Sanders said.

The GOP spending plan looks to “terminate” the Affordable Care Act, commonly known as Obamacare, and cut $40 billion from Medicaid over the next 10 years, according to Sanders. Doing so, he said, would mean a loss of health coverage for millions.

“They’re just going to throw another 27 million people off of health insurance with no plan to address that. None,” the senator said. “That will be a disaster for states who will have to figure out what to do. There is no question that people will die as a result of that.”

The plan that the GOP is finalizing drops a previous proposal to institute a voucher system for Medicare that would provide the elderly with subsidies to purchase private insurance.

Sanders also decried a nearly 100 billion cut to Pell grants for college students, cuts to nutrition programs and the elimination of the estate tax, which he said would provide about $270 billion in relief to the richest 0.2 percent of Americans over the next 10 years.

“It is a budget that is so bad that I think it’s hard for people to believe it’s true, but it is,” Sanders said.

Shumlin released a statement Monday expressing confidence that the state’s congressional delegation will advocate for a budget that serves Vermont well.

“As Senator Sanders outlines, the effects of federal budget decisions on Vermont are real and will have an impact on the services Vermonters rely on,” the governor said. “As we await the final budget from Washington, we do so knowing that we have fighting for us on the Budget Committee one of America’s greatest champions for the middle class in Bernie Sanders. Combined with Senator Patrick Leahy and Congressman Peter Welch, Vermont is well represented in Washington by the best Congressional Delegation in America.”

The budget resolution provides a broad spending plan but does not actually appropriate funds. Its passage would pave the way for spending bills that do appropriate funds to advance.

Sanders said he will look to prevent such spending bills from passing.

“I will certainly do everything I can to urge the president to veto any piece of legislation that comes out that has this framework in it,” he said. “Whether the president vetoes it or not, that’s another story. I certainly hope he will.”

According to Sanders, the impacts he identified are based on an evaluation of House and Senate versions of the budget resolutions by the Office of Management and Budget, the Economic Policy Institute and the Institution of Taxation and Economic Policy. Some data was generated based on projections from the Census Bureau and the Centers for Medicare and Medicaid Services.

neal.goswami@timesargus.com

Read Sanders’ letter to Gov. Peter Shumlin below:

Lawmakers look to retirement bonuses to save the state money

MONTPELIER — The Shumlin administration has proposed a retirement incentive package for state employees that could save the state $2.5 million, providing most of the retirees are not replaced.

Monday morning, the Senate Appropriations Committee reviewed a proposal that would offer financial bonus to as many as 300 employees who are already eligible to retire, with the goal of leaving 75 percent of those positions vacant after the employees retire.

The offer would be open to employees who are at least 62 years old and have put in at least 5 years of service; employees with at least 30 years of service; and employees whose age and years of service totals 87 or more.

The proposal would pay employees who have worked at least 5 years and less than 15 years a bonus of $750 for every year worked. Employees who have 15 or more years would receive $1,000 for every year worked.

Bonuses would be capped at $15,000 per employee and would be paid out either in one lump sum or in two payments, with no additional money for employees who choose to take two payments.

Currently, there are 915 state employees who are eligible for the incentives. The proposal would cap the maximum number of people who could take advantage of the incentives at 300. If more than 300 workers want to take the retirement bonus, the state will hold a lottery.

Committee Chairwoman Jane Kitchel, D-Caledonia, asked why the offer isn’t being made to employees who have been with the state the longest. Sec. of Administration Justin Johnson said the state needs to be very careful not to give the appearance of engaging in any behavior that could be construed as age discrimination.

Sen. Richard McCormack, D-Windsor, questioned the message some people might take from a proposal that ultimately looks to reduce the state’s work force by as many as 225 employees.

“Are we assuming their work was not being done efficiently?” McCormack asked. ““Either we’re saying these people weren’t pulling their weight in the first place, or their work was not essential.”

The retirement proposal is part of a plan by administration to save $10.8 million in state employee costs, one possible step to close the state’s $113 million budget gap. Shumlin has proposed reopening the state employee contract for renegotiation, a move opposed by the employees’ union.

The administration has warned that failing to reopen the contract could result in hundreds of layoffs, but on Monday, Johnson said that is not what the administration wants.

“It’s important that we don’t do across-the-board cookie-cutter cuts,” Johnson said.

Steve Howard, executive director of the Vermont State Employees Association, said the proposal — which could reduce the number of employee layoffs to fewer than 50 — has the support of his organization..

“We brought the issue of voluntary retirement incentives to the table for negotiation with the Shumlin administration,” Howard said. “While were not thrilled that we might see 300 fewer positions, we like the idea that this might result in fewer (layoffs).”

State Treasurer Beth Pearce warned that savings from offering retirement bonuses will only be found with a commitment to leave unfilled the positions vacated by the retiring employees.

In 2009, the state offered retirement bonuses to employees under a system that Johnson said “mirrors” the current proposal. A total of 243 people took advantage of the incentives.

However, that proposal was coupled with the plan to leave one-third — or 81 — of the positions unfilled. Instead, during the next four years, the state added 543 positions, according to Pearce.

Sen. Diane Snelling, R-Chittenden, referred to the 2009 round of retirements as “disruptive.”

“Will we ever get to the point when we have the right number of employees in the right places?” Snelling asked.

State workers, supporters rally against cuts

MONTPELIER — Hundreds rallied at the State House Saturday to oppose cuts to the state budget and $10.8 million in labor savings sought by both the Shumlin administration and lawmakers in an event organized by the Vermont State Employees Association.

The state employees’s union was joined by other unions and groups, including the Vermont NEA, AFSCME and the Vermont Workers Center, to protest the the budget plan sought by Gov. Peter Shumlin and lawmakers.

VSEA members and supporters held a rally at the State House Saturday, April 11, 2015.

VSEA members and supporters held a rally at the State House Saturday, April 11, 2015.

The House has passed a budget that uses $33 million in new tax revenue, $53 million in cuts and $25 million in one-time funds to close a $113 million budget gap. The VSEA and others, however, want to see more tax revenue raised and fewer cuts.

The House-passed budget includes $10.8 million in labor savings that Shumlin, a Democrat, proposed. He has asked the VSEA to renegotiate its contract to help achieve the savings. Failing to do so will result in hundreds of layoffs, according to the administration.

About $2 million in labor savings has been identified by the administration, but $8.8 million remains of its target. It wants to delay by six months a 2.5 percent cost of living increase due to state employees in the 2016 fiscal year, and delay by one-year step-increases that average out to an additional 1.7 percent pay increase next year. Those steps would require union approval.

The union has so far refused to renegotiate, and has proposed ways to raise additional revenue instead. The 500 or so people gathered at the State House Saturday heard from Ed Olsen, a snow plow driver for the Agency of Transportation, about why the union is not willing to renegotiate.

“I pay taxes to this great state of Vermont, just like all the other hardworking, middle-class people. As a matter of fact, we, the middle-class Vermonters, pay more than 10 percent of our wages to this beautiful statehouse behind me, unlike the wealthy citizens who pay back 8 percent of their wages to our economy,” Olsen said. “That ain’t right. It pisses me off. That’s the biggest reason why I came here today.”

Olsen said the state’s wealthiest residents “aren’t being asked to give up anything.”

Agency of Transportation worker Ed Olsen speaks at State House rally Saturday, April 11, 2015.

Agency of Transportation worker Ed Olsen speaks at State House rally Saturday, April 11, 2015.

“I’m tired of being asked to give back more and more of my wages and benefits to help rescue Vermont’s economy,” he said. “I need every bit of the cash I earn. Vermont has a budget deficit and they always want to balance the budget on the backs of hardworking, middle-class citizens of Vermont.”

Several speakers compared Shumlin to Wisconsin Republican Gov. Scott Walker, who has sought concessions from union workers to help save money in that state, including Rev. Earl Kooperkamp of Church of the Good Shepherd in Barre.

“Vermont is not Wisconsin. Peter Shumlin is not Scott Walker. But it’s getting pretty damn hard to tell the difference,” he said.

Kooperkamp equated the effort to obtain savings from state workers to the seventh commandment — thou shalt not steal.

“It’s wrong, it’s immoral, and we’re here to say that,” Kooperkamp said.

The Shumlin administration is expected to meet again early next week to continue negotiations.

neal.goswami@timesargus.com

Capitol Beat with the Governor 04-10-15

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Gov. Peter Shumlin chats with Vermont Press Bureau chief Neal Goswami about the ongoing process to find $10.8 million in labor savings from the Vermont State Employees Association. He also discusses a failed effort to ban teacher strikes and lawmakers’ efforts pare down his legislative proposals.

Administration, VSEA find some savings, still far short of $10.8 million target

MONTPELIER — Ongoing talks between the Shumlin administration and the Vermont State Employees Association have resulted in some identified savings, but the union is still not interested in reopening its contract to help secure the remainder of the $10.8 million in labor savings the administration is seeking.

The administration says it needs to cut $10.8 million in labor costs in order to close a $113 million budget gap. The union, meanwhile, has proposed ways to raise revenue instead. The administration has shrugged off those proposals, however, and says it will seek as many as 300 layoffs to achieve the requisite savings if the union does not renegotiate some terms.

The House has passed a passed a budget that incorporates a generic $10.8 million in labor savings.

Justin Johnson

Justin Johnson

Secretary of Administration Justin Johnson, following another meeting with the union Thursday, said his team has found about $2 million in savings by freezing salaries for exempt employees earning more than $100,000 a year, reducing the use of temporary employees and rescinding some benefits to designated managers.

The administration is also considering encouraging employee retirements.

“We have had a long conversation about the idea of retirement incentives,” Johnson said.

But the full benefit of offering retirement incentives is unclear. Johnson said the state treasurer’s office has some concerns because savings to the general fund would be offset elsewhere because of the need to begin paying out benefits. He said the expected savings is between $500,000 and $1 million.

“That would require us not to fill any of the positions that retired. That’s problematic,” Johnson said.

If all of the proposed savings were realized, that would leave about $7.3 million that still needs to be achieved.

With the union’s blessing, Johnson said the administration would look to institute a six-month delay in the 2.5 percent cost of living salary increase the contract calls for in the 2016 fiscal year. That would save about $2.5 million.

“It wouldn’t cost anyone anything because no one’s pay would go down,” he said.

Eliminating one year of “step increases” would save $3.9 million. State workers are grouped into various pay grades, each containing 15 steps. The first five step increases occur in successive years. The next few step increases come every two years, and the remaining step increases come every three years. The pay raises average out to 1.7 percent annually.

Those ideas would require approval from the union.

“There are some big chunks of money that you could save by doing things, but they are contractual,” Johnson said.

The administration is also considering instituting five furlough days to save $3.5 million.

“That in some ways is worse than delaying the cost of living because it means people would actually get a cut in pay,” Johnson said.

Finally, a 50 percent reduction in mileage reimbursements would save more than $800,000.

All of those ideas were outlined in a memo to VSEA President Shelley Martin following a meeting between the two sides on Thursday.

“We’re just making the point that you could get to the numbers by doing some of these things. But, we can get to the numbers anyway,” Johnson said.

VSEA Executive Director Steve Howard said the union is willing to work with the administration on savings “right up to the last hour of the legislative session, but we’re not opening our contract.”

Steve Howard

Steve Howard

“We have been consistent throughout the whole effort … that state employees cannot be asked to dip into their paychecks to balance the state budget before wealthy Vermonters are asked to pay more,” he said.

Union members have been “actively engaged” in the process are not interested in renegotiating the terms of their contract.

The two sides are expected to meet early next week to continue discussions.

neal.goswami@timesargus.com

Read the memo to VSEA President Shelley Martin:

 

Read the Response from VSEA: