Shumlin seeks disaster declaration

MONTPELIER – Gov. Peter Shumlin made a formal request Friday for federal disaster relief to help 10 of Vermont’s 14 counties pay for repairs to the power grid and other public infrastructure damaged in a winter storm last month.

The administration said Addison, Chittenden, Essex, Franklin, Lamoille, Orange, Orleans, Rutland, Washington and Windsor counties have damages that meet federal standards to qualify for a Public Assistance disaster declaration.

The disaster declaration, if granted, would allow communities and public utilities in impacted counties to receive a 75 percent reimbursement for storm response and recovery. Those costs include debris removal and repairs to the power grid, public roads, bridges and other infrastructure damaged during the storm.

A preliminary assessment by the Federal Emergency Management Agency that started on December 17 has identified nearly $4 million in damages in Vermont during the storm between December 9 and 12. The state is required to show $1 million in damages to qualify for a disaster declaration. Continue reading

Browning files public records request bill

MONTPELIER — A lawmaker who sued Gov. Peter Shumlin for documents related to his now-shelved single payer health care proposal has introduced legislation that would require the documents to be revealed in the future in similar situations.

Rep. Cynthia Browning, D-Arlington, plans to introduce a bill to require greater access to public records under certain conditions and require judicial rulings on appeals of denials of access within a certain period of time. Browning said the legislation is needed based on her own legal case against the governor.

Browning, though she lost her case in superior court, maintains the administration inappropriately used executive privilege to prevent the release of information prior to his announcement on Dec. 17 that he was no longer pursuing a universal, publicly financed health care system because of its cost.

Rep. Cynthia Browning

Rep. Cynthia Browning

“My understanding is that executive privilege is intended to serve the public by ensuring that government officials can have thorough and confidential discussions of policy alternatives. It is not intended to protect those officials from inconvenience or embarrassment. If a person
claims to believe in the principles of transparency and accountability they must uphold them when it is hard as well as when it is easy,” Browning said in a release Friday. “I think that in this case executive privilege was used to conceal the politically difficult facts related to how much the single payer plan might cost and how much taxes might have to increase to
finance it. Ironically, this concealment did not serve the Governor well politically with either supporters or skeptics of the plan.”

Browning’s bill contains several provisions, including:

— If reports or documents have been shared by executive branch staff with people who are not part of that branch or working for it outside of the presence of the governor, executive privilege would be waived.

— If an official or public agency is required by law to produce a report on a date certain and it is not produced it and the law is not amended to extend the date, any records related to that report cannot be covered by executive privilege.

— If a public records request is denied by the government a Vermonter can appeal that denial to Superior Court. The current statute requires that such an appeal receive a judicial ruling “expeditiously,” and that such dockets should be handled before other cases, but the word
“expeditious” is not given a time definition. The bill would define “expeditious” as 45 calendar days after the last brief filed by the complainant.

Browning said the Shumlin administration shared documents and reports with some legislators, including House Speaker Shap Smith when the governor was not present and still claimed executive privilege. She argues that executive privilege should not be extended to a separate branch of government.

Shumlin, according to Act 48, was originally supposed to release a financing plan for his health care plan in January 2013 but did not. Browning said the Legislature did nothing to enforce that deadline and the administration was allowed to withhold information. Browning filed a public records request to the administration in March 2014 seeking documents and reports. The Legislature did not act to extend the governor’s deadline in law until May 2014, she said.

Browning said Vermonters should be able to obtain materials when a report is overdue, even when the Legislature does not try to enforce the law.

The 45-day timeline for judicial rulings is needed to speed up the process of records request, Browning said. She filed her case on Sept. 4, 2014, but the judge did not issue a ruling until Dec. 10 — a span of 14 weeks. Browning said the length “does not meet a common sense definition of expeditious.”

Read the proposed legislation below:

Capitol Beat with the Governor 1-23-15


Gov. Peter Shumlin and Vermont Press Bureau chief Neal Goswami discuss a recent revenue downgrade, the president’s support for paid sick leave, gun legislation introduced in the Senate and legislators’ efforts to scuttle Vermont Health Connect.



New law proposed to aid investigations of gasoline price fixing

MONTPELIER — Lawmakers will consider a bill to collect data to see if drivers are facing price fixing at the gas pump.

Rep. Christopher Pearson, P-Burlington, will introduce a bill that would require gas distributors to disclose how much fuel they deliver to a filling station.
The effort comes as his region continues to see some of the highest gas prices in the state, and provides some of the highest profit margins of any region in the United States.

“This is not an outlier phenomenon,” Pearson said. “When you start digging into it, you see something is going on.”

Pearson’s remarks came Thursday evening during a joint session of the House Transportation and Commerce Committees.

According to Pearson, his bill would provide the Attorney General’s Office with data that could be used to investigate accusations of price collusion. The bill also includes a whistle-blower provision that would allow a person who reports price fixing to have a share of any fines and financial penalties collected.

Assistant Attorney General Ryan Kriger noted there is a big difference between price fixing — which is illegal — and “price following,” which is legal and is common in many industries.

“What’s happening in Burlington alone might not be enough to go forward with a charge of conspiracy,” Kriger said. “Looking at a competitor’s sign is legal, but talking with them about prices is not.”

The hearing comes on the heels of a massive drop in the price of gasoline in Vermont and across the country. According to Gas Buddy, a website that tracks gas prices, during the past six months, the average price for a gallon of gas in Vermont has fallen from $3.70 to $2.41.

Vermont is host to a wide gulf in gas prices, which range from $2.10 a gallon in Bellows Falls to $2.79 in Bridgewater Corners. Looking around the state, geographical trends emerge.

When looking at the 15 locations with the cheapest gas, 12 are in towns along the Vermont-New Hampshire border. When looking at the top-15 most-expensive locations, eight are located in Chittenden County, three are in Washington County — in Moretown, Waitsfield and Warren — and one location, in Killington, is in Rutland County.

Pearson said the recent drop in gas prices have distracted people from the fact they are still paying too much. Vermont’s average price is 37 cents higher than the national average, and is the highest in New England.

Only four states — Alaska, California, Hawaii and New York — have average prices per gallon that are higher than Vermont.

“Gas prices across the country have come way down around the country, but the fall in Vermont has been relative. Don’t be fooled by the low prices at the pump right now,” Pearson said.

Ben Brockwell is the director of data and pricing for Oil Price Information Service. According to Brockwell, at 66 percent, “the Burlington market has been among the most profitable in the nation.”

Jim Harrison, president of the Vermont Retailers and Grocers Association, noted that, per capita, Vermont convenience stores see a volume of customers that is much lower than the national average.

“Our stores have less volume, on average, to spread out their fixed costs,” Harrison said. “Property taxes don’t change because you’re selling fewer gallons per customer.”

Harrison noted existing laws on the books that allow for the prosecution of price fixing and protect whistle-blowers, and opposed the notion of offering whistle-blowers financial rewards.

Some lawmakers suggested that the wide range in gas prices in the state is a result of several factors. Rep. Timothy Corcoran, D-Bennington, suggested higher prices in and around Burlington might be a function of real estate prices in the area.

Rep. Loren Shaw, R-Derby, suggested filling station owners in the Burlington area pay higher taxes than those in other parts of the state. He also expressed his skepticism of a bill that would add more business regulations.

“The free enterprise system is what built this country and built this state,” Shaw said. “If there’s price fixing going on, that’s a different story.”

Gun bill introduced in the Vermont Senate

MONTPELIER — Legislation to expand background checks for all gun purchases in Vermont was introduced in the Senate Thursday and sets the stage for vigorous debate.

Democratic Sens. John Campbell, D-Windsor, Claire Ayer, D-Addison and Philip Baruth, D-Chittenden, all members of Senate Democratic leadership, have sponsored the bill.

Current law requires background checks when purchasing a gun from a federally licensed dealer. But background checks are not required when purchasing firearms at a gun show or online. The bill introduced Thursday would expand background checks for those purchases.

The bill is strongly backed by Gun Sense, a gun control advocacy group. It is vigorously opposed by several pro-gun groups, including Gun Owners of Vermont.

Democratic Gov. Peter Shumlin said Thursday he remains opposed to new gun regulations in Vermont, preferring instead, for the federal government to enforce laws on the books. He said anyone breaking federal law to purchase a gun is also likely to break a state law.

“Vermont is currently well-served by the laws we have on the books. I want to keep what we have in place. Obviously, the Legislature is going to debate all kinds of issues. This will be one of them. We always welcome a robust debate. My feeling is the gun laws that we have in Vermont are the ones that we should keep,” he said. “Federal law precludes them from buying guns. I would hope that we would enforce the law.”

The governor refused to say Thursday if he would veto the legislation if it clears the House and Senate and reaches his desk.

“I never issue veto threats unless I am going to veto a bill. Let’s let the process work and have the debate,” he said.

Read the proposed legislation below:

House members pitch new exchange proposal

MONTPELIER — A bipartisan group of House members are pushing a new proposal to move the state away from Vermont Health Connect, but the consequences remain unclear if the state were to adopt the proposal.

On Thursday, Reps. Patti Komline, R-Dorset, Heidi Scheuermann, R-Stowe, Jim Condon D-Colchester, and Adam Greshin, I-Warren, called for the state to transition from Vermont Health Connect to a Supported State-Based Marketplace Exchange. Oregon and Nevada have adopted the hybrid state-federal model after their state-based exchanges faced significant problems.

Vermont’s exchange, which also experienced significant tech challenges and is still not fully functional, allows some individuals to sign up for insurance plans through the website. But other individuals and all small businesses are enrolling through a paper process. And users cannot currently make changes to their information online in an automated way.

Rep. Patti Komline

Rep. Patti Komline

Komline said by adopting the model used by other states the state could shed its IT woes while maintaining control of the plans offered, and without losing the ability to provide federal and state subsidies to help make insurance more affordable to Vermont residents.

“We can control the plans that we’re offering, but when it comes to handling the IT, we can call on to do that,” she said. “The transition costs for Oregon was $7 million. They were able to use the grant money from the feds. It took them six months to make that transition and so far it’s gone very smoothly for them.”

“It’s a viable alternative. We’re not just playing political games with it, but it’s something that we can really do,” Komline added.

Condon said his goal is to provide Vermonters with a fully functioning insurance marketplace.

“Vermonters deserve a functioning insurance portal. They don’t have that yet, but citizens deserve the ability to be able to go online and get their business done and take care of this. It’s just not happening as well as it should be,” he said. “My own personal opinion is that we should have gone the fed way to begin with. I think it would have saved a lot of hassles.”

The federal government is not charging Oregon and Nevada, at least for 2015, for the use of the federal site. But, it could begin charging them 3.5 percent of the cost of premiums as it does for other states that fully use the federal exchange. With Vermont’s $200 million in premium spending, that would mean a $7 million tax for Vermonters in total.

Previous opposition to moving to the federal exchange included the likely scenario that Vermont would not longer be able to provide state-level subsidies, among other reasons. Massachusetts is the only other state to do so, and it is not clear if CMS would allow that to continue.

“A key point is that we keep our subsidies with this,” Komline told reporters Thursday. “The officials in Oregon and New Mexico and in Nevada are all saying that they’re covered. That they’re subsidies are fully covered.

But the Centers for Medicaid and Medicare, which oversees state and federal exchanges, has never before considered whether a state could continue to provide state-level subsidies through the hybrid model.

The state expects to spend about $8 million this year on operating the portion of Vermont Health Connect that deals with exchange plans. That cost would be gone under the proposal released Thursday, according to Komline.

But their plan does not address Medicaid, which also flows through the state exchange. Komline said the state’s Medicaid program would continue to be run by the state. Lawrence Miller, Gov. Peter Shumlin’s chief of health care reform, said Vermont Health Connect would continue to be needed and built out in order for the state to effectively manage the Medicaid program.

There would still be a savings to the state, Komline insisted.

And Scheuermann said state officials would work with the federal government to answer questions that remain unknown.

“These are the questions that we do want answered and we want to work with. But this is relatively new,” Scheuermann said. “We want to work with the feds to do that, both with regard to Medicaid and with regard to the state subsidies.”

Lawrence Miller

Lawrence Miller

Miller acknowledged Thursday that Vermont Health Connect’s “current operations are unacceptable.” But he said many of the functions needed for the state’s Medicaid program are also needed for the part of the exchange the proposal revealed Thursday would jettison to the federal site.

“It’s a viable alternative to the qualified health plan component. The concern, of course, is that Vermont Health Connect is also the Medicaid eligibility and enrollment engine,” Miller said. “It’s a question of how to accomplish multiple goals most effectively. It certainly address the qualified health plan issue, but the exchange is primarily, by volume and users, Medicaid eligibility and enrollment.”

Miller said the administration has already engaged with CMS in discussions of several options and will continue to explore the best path forward for the state.

“We’ve discussed everything with CMS. Nobody’s particular happy with where we are,” he said.

The legislation proposed Thursday calls for the administration to have a transition plan ready by March 31. Miller said the administration will be prepared to offer a formal response if the bill advances.

“We’re not waiting for the Legislature to make a decision about this. If this is passed we would have begun our groundwork well before,” he said.

The so-called change of circumstance function that is still not part of the exchange, which would allow automated changes to be made by users, is on track to be completed in April, according to Miller. He said the state will continue to ask its contractor, Optum, to complete that work. Other recent deadlines have been met by the company, he said.

“I would support continuing to complete the change of circumstance functionality because we need that for the Medicaid … eligibility, anyway. It’s not something we can just stop doing. We don’t have another way of doing Medicaid enrollment or redetermination. That is the path,” Miller said.

Read the proposed legislation below:

Family of Vermont hazing, suicide victim backs hazing bill

MONTPELIER, Vt. (AP) — The family of a 17-year old Milton football player who killed himself after being a victim of hazing and sexual assault on the team is pushing for tougher reporting requirements for school officials.

Jordan Preavy’s parents and stepmother traveled to Montpelier on Thursday, more than two years after his death, to watch as the bill was introduced by Rep. Ron Hubert, R-Milton.

Preavy was one of the victims in a hazing scandal that authorities said involved victims being sexually assaulted with a broomstick. The Associated Press generally doesn’t identify sexual assault victims, but Preavy’s parents have spoken about him openly.

His family says school officials weren’t quick enough to report the abuse to law enforcement officials. The bill introduced Thursday would make such notification more automatic.

Congressional members ask for FairPoint assessment

CONCORD, N.H. (AP) — Members of Congress from Vermont and New Hampshire have called on the Federal Communications Commission to assess the ability of FairPoint Communications to operate emergency communications networks in both states following outages last year.

There was a six-hour outage of Vermont’s 911 system in November and a four-hour outage of Portsmouth, New Hampshire 911 services in December.

With about 1,800 FairPoint workers on strike in Maine, New Hampshire and Vermont since October, the lawmakers said in their letter Wednesday that FairPoint’s networks and equipment have failed with increasing frequency and customer complaints have soared.

A FairPoint spokeswoman says the utility is making progress daily to reduce load trouble caused by the strike and “incredibly bad” weather over the past three months.

Vermont Sens. Bernie Sanders and Patrick Leahy and Rep. Peter Welch; and New Hampshire Sen. Jeanne Shaheen and Rep. Annie Kuster sent the letter.

Authors of consolidation study respond to criticism

Daniella Hall and Ian Burfoot-Rochford, authors of a study that asserts the consolidation of schools and school districts will not save money or result in better educational outcomes for students, have offered a reply to criticism from the Agency of Education that the study is flawed.

Below is their response in its entirety.

“Thank you for giving us the opportunity to respond to the rebuttal that was recently sent out by the Vermont Agency of Education (AOE). We appreciate the rebuttal, as we believe it adds to Vermont’s understanding and discussion of educational reform initiatives. Our goal in writing this brief was to contribute to the debate, as well as support communities and legislators as they evaluate the cost-benefits of consolidation. We use rural education research to provide additional insights to these many, complex issues.

The AOE rebuttal highlights the complexities of the debate on both district and school consolidation. Some of the points raised in the rebuttal were valid and helpful for researchers like us engaging in work on consolidation. The AOE argues district consolidation has been found to have financial benefits due to economies of scale. Our stance however is that empirical evidence for the economic benefits of consolidation are inconsistent. Through our policy brief, we highlight some of the potential pitfalls of consolidation, including unanticipated costs.

The AOE also notes that some of the school and district size classifications found in the research differ from Vermont’s definitions. Although this is an important distinction, the concept of different outcomes based on school size are still important issues relevant for Vermont’s educational system. To clarify this point regarding research and school size, we spoke with Dr. Craig Howley at Ohio University. Howley wrote in a personal correspondence:

“The overall findings about size break down when one looks at students, schools, and districts of different poverty levels (higher and lower, or on a continuum from highest to lowest rates of poverty). Achievement levels in the most affluent communities are positively related to school size. But achievement levels in poorer communities are negatively related to size. Bigger is better for the rich; smaller is better for the poor. Studies have examined this relationship, for instance, in Alaska, Arkansas, California, Georgia, Maine, Montana, Ohio, Texas…

This finding is in general, and not in every case, and it’s not precisely the same everywhere. Maybe it seems confusing. But here’s the practical rule-of-thumb: if a state has smaller schools serving mixed-income communities, it should probably keep them. The related reasons are (1) closing these school predictably harms kids’ achievement levels; (2) closing small schools in the 21st century is very surely not a cost-efficiency measure (the cost benefit ratio is not promising); and (3) smaller communities are centered on and need their smaller schools—economic damage is done by the closures (this result contributes to the poor cost-benefit-ratio).”

As can be seen from this statement, size is a complicated issue. This does not mean research on size is not valid because it does not use the same criteria as Vermont. Rather, it reveals the importance of evaluating the impact of school size on student learning, particularly given Vermont’s interest in reducing the achievement gap between high- and low-income students.

Finally, we appreciate the rebuttal’s concurrence with our findings that rural schools play critical roles in supporting their communities. However, the statement that “the brief tasks schools with supporting and driving community and economic development, improving the tax base, and bringing new business investment to towns… We ask that we not put the responsibility of saving our rural towns purely on the shoulders of our schools and students,” misrepresents our proposal recommendations. We will be addressing this element of our proposal in detail tomorrow at our briefing with the House Committee on Education to clarify our stance.

While we respectfully disagree with many of the critiques offered by the Agency of Education, we appreciate how this response has expanded the conversation about Vermont’s rural schools and communities, and the need to use research to inform decision making. We feel that this type of dialogue is extremely important in understanding the needs of Vermont, and developing informed policy statewide.”

Agency of Education criticizes consolidation study

BARRE — The Agency of Education is criticizing a recent study that suggests the consolidation of schools and districts will not save money or provide better outcomes for students.

Last week, Daniella Hall and Ian Burfoot-Rochford, researchers at Penn State University, released a study titled “Vermont Educational Reform: A Balanced Approach to Equity and Funding.” Burfoot-Rochford is a Vermont native and a former elementary school teacher in Cabot, while Hall hails from Maine, which in recent years has undergone statewide school district consolidation.

The study asserts that, “Drawing from over a century of research on the outcomes of district and school consolidation, we found no evidence that consolidation will produce beneficial or educational outcomes for Vermont.”

Wednesday, the Agency of Education offered a rebuttal — authored by Secretary Rebecca Holcombe and Wendy Geller, data administration director for the agency — that questions the authors’ interpretation of the data they used for their study.

“We feel compelled to respond, because with respect to school and district size, this report seriously misrepresents much of the peer-reviewed research on which it claims to be based,” states the rebuttal from the Agency of Education. “Because it overgeneralizes and oversimplifies, we are concerned this report does a disservice to the powerful conversations some of our school boards and communities are having about how they can ensure stability for their schools and children – both the ones they serve today and the ones they are likely to serve in the future.”

Holcombe and Geller note that the research cited in the study actually supports the notion that consolidation will save money and result in better educational outcomes.

For example, a 2002 study from Syracuse University professors William Duncombe and John Yinger cited in the Hall and Burfoot-Rochford study claims that “sizable cost savings may exist by moving from a very small district … to a district with 2,000 to 4,000 pupils, both in instructional and educational costs.”

Another study cited in their study notes a positive relationship between the size of a high school’s graduating class and the variety of courses offered by the school.

Holcombe and Geller also take issue with the notion of what it means to be a “small school” in the first place, and the discrepancy between the way it’s defined in the research cited by the study and the way it’s defined in the state.

In the study, the definition “small school” varies from researcher to researcher. Some define a small school as having 250 to 690 students, where others define a small elementary school as having fewer than 350 students and a small high school as having fewer than 900 students.

However, according to Holcombe and Geller, those definitions don’t reflect small schools in the state, which are defined by statute as having 100 pupils or fewer. In Vermont, 61 percent of elementary schools have enrollments of fewer than 200 students, and 34 percent have enrollments below 100.

At the high school level, nearly high school in state would fall into the category of “small school” as defined by the researchers cited in the study.

That smaller sense of scale in Vermont also applies to school districts.

“The smallest districts discussed in the literature were districts of 275 students or less. We have districts in Vermont of 15 students that need to meet all the same federal and state obligations as our largest districts,” states the rebuttal from the Agency of Education. “Almost 70 percent of our school districts have an average daily membership of 300 or less.”

The Agency of Education also questions a suggestion in the study to both increase the amount of money awarded in small-schools grants, and to make the grant application process competitive.

“Moreover, we note that a strategy that competitively awards small-schools grants to those communities that can demonstrate strong school-business partnerships, as described in the report, is a strategy that rewards more affluent towns and towns with more human resources at the expense of the less affluent and more isolated rural towns that need support the most,” states the rebuttal from the Agency of education.

Holcombe and Geller conclude by saying, “Over the last year, we have worked hard to support this conversation and to encourage our local partners to think broadly about how to achieve their goals locally, given the specifics of their situation, and on the basis of solid, rigorous empirical analysis. This (study) does not contribute to these discussions in an accurate or empirically sound way.”

When reached for comment Wednesday, study authors Burfoot-Rochford and Hall seemed to take the criticism in stride.

Hall noted that the twin issues of education costs and education quality are points of concern for many, and solutions to those problems are typically fraught with controversy.

“What’s happening in Vermont is very typical of the discussion that is happening around the country,” Hall said.

Burfoot-Rochford said he and Hall had not yet had the chance to get into the “nitty gritty” of the Agency of Education’s rebuttal to their study, but did say, “We appreciate the rebuttal that was posted. Our goal as researchers is to add to the discussion.”

Burfoot-Rochford and Hall are scheduled to testify today before the House and Senate education committees.

Health advocates propose tax on sugary drinks

MONTPELIER — Health advocates are calling for a tax on sugary drinks that could raise as much as $34 million in new revenue.

Members of Alliance for a Healthier Vermont — a coalition of more than 30 state organizations — gathered Tuesday at the State House to urge lawmakers to pass legislation that would impose a tax of 2 cents an ounce on sugary drinks.

“Some of you may have seen stories on a report that claims Vermont is the second-healthiest state in the nation. But beyond that happy-sounding headline, there is a sadder reality that deserves to be reported,” said Anthony Iarrapino, campaign director of Alliance for a Healthier Vermont. “The reality is, Vermont is not immune from obesity and the preventative diseases it causes.”

According to the state Department of Health, 60 percent of Vermonters are overweight or obese; for children, that number is 29 percent. Obesity is not just unhealthy, it’s expensive. In the United States, 21 percent of health care costs are spent on obesity-related conditions.

Alliance for a Healthier Vermont argues that raising the price on sugary drinks will result in a decline in consumption, which has risen 500 percent in the United States during the past 50 years. In January 2014, Mexico — the largest consumer of sugary drinks in the world — implemented a sugary-drink tax, and saw consumption decline 10 percent during the first six months of the year.

Rep. Alison Clarkson, D-Woodstock, has joined lead sponsor Rep George Till, D-Jericho, on a bill to tax sugary drinks. The bill is being crafted and is expected to be introduced next week.

“I’m a big support of — instead of paying for the problem, which is what we’re currently doing, for the obesity and the diabetes and all the issues that surround high-fructose corn syrup and sugar-sweetened beverages — I would rather tax its consumption,” Clarkson said. “I’d rather put the money into prevention than paying for the problem at the far end.”

According to the medical journal “Obesity Research,” obesity -related health issues cost Vermonters $200 million annually, including $41 million in Medicare costs and $57 million in Medicaid costs.

A tax on sugary drinks has been proposed in past sessions and has failed to garner much support among lawmakers.

“I don’t know what the current support is within the House. I think the challenge on this kind of revenue source always is this: you are building a revenue source that you hope is going to decline, because it will change behavior,” said House Speaker Shap Smith. “Great health benefit, but from a revenue perspective it’s problematic. We don’t need more declining sources of revenue in the general fund.”

Senate Pro Tem John Campbell, D-Windsor, voiced his opposition to the idea of a sugary drink tax, saying it will hurt merchants who operate along the state border in his county.

“I believe very strongly in advancing policy that will help Vermonters lead healthier lives. However, the proposal to tax beverages containing added sugar is not the way to address our shared goal,” Campbell said. “Taxation is not the way to encourage healthy behavior. This proposal will not only increase the cost of living for working families, it will also harm the businesses that produce these beverages and those who bottle, distribute and sell them.”

Jim Harrison, president of the Vermont Retailers & Grocers Association, voiced his opposition to taxing sugary drinks.

“A two-cents-per-ounce tax on certain beverages puts local businesses at a disadvantage to neighboring communities and will have a negative impact on family budgets,” Harrison said. “Politicians should focus on what matters most — education, jobs and the economy — and leave the grocery shopping to us and our customers.”

Economists: Revenue downgrade for general fund, despite drop in oil prices

MONTPELIER — Gov. Peter Shumlin and lawmakers crafting the 2016 fiscal year budget will have to dig a little deeper after state economists provided a downgrade to the general fund revenue forecast Tuesday, despite positive signs in the economy related to lower oil prices.

The Emergency Board, comprised of the governor and the chairs of the Legislature’s money committees, were told Tuesday that revenues are projected to be $18 million lower than previously expected in the 2016 fiscal year budget. The state was already facing a $94 million projected gap, which Shumlin’s proposed budget would close through a combination of cuts and tax increases.

Jeff Carr, left, and Tom Kavet

Jeff Carr, left, and Tom Kavet

Economists Jeffrey Carr and Tom Kavet, who provide revenue forecasts to the state twice a year, also downgraded revenues for the current fiscal year by $10 million. The Shumlin administration and lawmakers, anticipating that, are working to lower the current budget in the annual budget adjustment process by $17 million. That follows about $31 million in rescissions that took place in August.

The downgrade is projected despite an expected uptick in spending by Vermont residents as oil process drop.

“We’re looking at the economy finally starting to pick up like we haven’t seen in some time. A big part of that is the drop in oil prices,” Kavet told the board. “That’s something that’s very substantial to Vermont and other New England states.”

The Emergency Board receives an updated revenue forecast Tuesday inside Gov. Peter Shumlin's ceremonial State House office.

The Emergency Board receives an updated revenue forecast Tuesday inside Gov. Peter Shumlin’s ceremonial State House office.

Vermonters spend more than $2 billion annually on petroleum-based energy, mostly in transportation and home heating. With the price of oil around $60 per barrel, and projected to drop to around $40 per barrel this year before rising to $70 to $80 per barrel, Vermonters are projected to save about $600 million in 2015, according to Kavet.

“That’s a phenomenal stimulus to the economy and it really hasn’t been felt in full at all,” he said. “The projections right now are coming down not up.”

“To get an additional $2,500 (per family) in spending money … is bigger than any raise that anybody’s gotten for a long, long, time,” Kavet added.

Lower energy costs acts like a tax cut in the economy, without the corresponding decreases in government spending that actual taxes cause.

It also changes the psychology of residents and alters their spending habits, Carr said.

“The critical thing is it will help with psychology. Part of the reason that we really haven’t broken out of our funk is that people have been looking for some reason, there has got to be some catalyst,” Carr said. “I think that there still is kind of a residual hangover in households. Some of us now know what our parents and grandparents went through when we went through the Great Recession that they went through during the Great Depression. It changes you. It fundamentally alters the way that you approach things. You weren’t quite so aggressive in your spending.”

Oil prices in previous forecasts were projected at $103 per barrel. The current forecast projects prices at $63 per barrel, but prices will likely drop lower. As a result, the two economists boosted expected consumption taxes based on expected spending in their latest forecast.

Still, despite the relief in energy prices, unstable corporate income taxes and uncertainty surrounding some high-earning taxpayers has led to the near-term downgrade, according to the economists. Additionally, businesses are expected to hire, but profits will drop as they train and bring new hires up to speed, they said. That will likely lead to larger state refunds for businesses.

The state’s revenue growth should see improvements down the road.

“There is some good news. It’s a little farther out on the horizon than we might like,” Kavet said. “There’s some very good things happening right now.”

Shumlin said Tuesday that his administration anticipated a further downgrade in the current budget and moved to make cuts ahead of the annual budget adjustment in each January. He said a downgrade to the 2016 fiscal year budget was also expected, but the administration did not plan further efforts to patch it without knowing how much it would be.

“We didn’t know what to expect,” the governor said. “Obviously, we don’t guess. We have to actually build a budget based on the facts and we now have to work together with the Legislature to balance the budget, which is what I’ve done every term that I’ve been governor.”

He said he is “heartened” that the downgrade isn’t larger, and noted that the economists said there could even be revenue growth later in the year.

“I just heard a pretty upbeat report in terms of their hopes for their future, so we’re going to manage to the money but this is not an insurmountable challenge,” Shumlin said. “My job as governor is to roll with the punches and deal with the numbers as they come in. My job is to balance the budget and be fiscally responsible when we do it and we’re going to continue to do that.”

House Speaker Shap Smith laid the onus of addressing the $18 million additional gap in the 2016 fiscal year budget directly at Shumlin’s feet on Tuesday.

“Vermont joins other states in continuing to experience slower than expected revenue growth. The data presented today presents challenges for our money committees. I look forward to receiving a proposal from the administration on how they will address the additional shortfall,” Smith said.

Tuesday’s updated revenue forecast projected no changes to the transportation fund for the remained of the 2015 fiscal year, and a 1 percent increase in revenue, amounting to $2.7 million, for the 2016 fiscal year.

The education fund, meanwhile, is projected to see a revenue increase of $1.6 million, or about 0.9 percent, for the remainder of the 2015 fiscal year. In fiscal year 2016, the education fund is expected to see a 1.5 percent growth in revenue, which would amount to $2.8 million.

Larson to leave DVHA in March

MONTPELIER – Department of Vermont Health Access Commissioner Mark Larson is stepping down from his post in March and will be replaced by Deputy Commissioner Lori Collins on an interim basis, the Shumlin administration announced Tuesday.

Larson has had a rocky tenure as commissioner. It included overseeing the botched rollout of Vermont Health Connect, the state’s online health insurance marketplace that is part of the federal Affordable Care Act.

Larson, a former state representative from Burlington and chairman of the House Health Care Committee, was eventually stripped of his oversight of the exchange in September of last year by Gov. Peter Shumlin. The site was taken offline by the state after the federal government raised concerns over its security and threatened to disconnect the state from a federal data hub.

Larson oversight role was taken over by Chief of Health Care Reform Lawrence Miller, Shumlin’s former Commerce secretary, who was first brought on in January 2014 to help the Shumlin administration right the ship after the botched exchange rollout in October 2013.

Larson was also chastised last year by Shumlin and legislative leaders after he offered misleading statements concerning an exchange security breach to the House Health Care Committee.

Mark Larson

Mark Larson

Still, Shumlin praised Larson’s work as commissioner in a statement Tuesday.

“Mark has worked as hard as anyone on my team over the last four years,” Shumlin said. “Mark led the Department through some challenging times, but no one cared more or tried harder to overcome those challenges so Vermonters could access affordable health care than Mark. Thanks to the work of Mark and others, tens of thousands more Vermonters are now insured. I appreciate his service and understand his desire to take some time to step back and explore new opportunities.”

Larson, in his statement released by the administration, acknowledged the challenges during his tenure, but also noted the decrease in Vermont’s uninsured population.

“The last three years have involved a historic transition in health care for Vermont and our country, and has not been without its challenges. I am proud of the fact that in Vermont we have reduced by half the number of uninsured Vermonters and are on track to significantly reform how Medicaid pay providers for health services,” Larson said. “I am proud to have been part of this tremendous effort. As the Department prepares to engage its next phase of work, it is time for me to move on to new opportunities. I look forward to stepping back to the role of citizen and witnessing the continued progress toward coverage for all Vermonters and more rational ways to pay for health services.”

DVHA, which oversees the state’s Medicaid program, implemented an expansion of Medicaid services available under the ACA. That resulted in thousands of Vermonters obtaining new coverage through Medicaid. The administration also highlighted DVHA’s role in the Blueprint for Health, which has allowed most Vermonters to receive primary care from an enrolled provider.

A search is ongoing for a permanent replacement, according to the administration.

Report: State leases with ski resorts out of date

MONTPELIER — A new report released Tuesday by State Auditor Doug Hoffer highlights the shortfalls in long-term leases signed by seven ski resorts that utilize state lands.

One key issue, the report found, is that lease payments to the state have not kept pace with revenues generated by the resorts as they expanded their offerings over the years.

According to the report, the long-term leases that range between 50 and 100 years, began in 1942, when Bromley Mountain struck a deal with then-State Forester Perry Merrill. The value of the leases have fallen this decade when adjusted for inflation.Screen Shot 2015-01-20 at 8.10.59 AM

The state originally used the leases to help resorts grow on and around state land while generating revenues for state forests and parks, according to the report.

But over the last 50 years, locally owned resorts that once had just a handful of lifts and a few facilities have become year-round enterprises. And many are now owned by large out-of-state corporations, according to the report. The resorts now feature new lodges, hotels, condominiums, retail stores, golf courses, waterparks and other amenities. Between 2003 and 2013, development at the seven resorts led to increases in sales of goods and services, property values and revenues from excise taxes.

“It’s clear that these leases are now over half a century old. I think it’s perfectly reasonable to look at them and see if they’re consistent with how the state is managing its land,” Hoffer said Tueday.

Screen Shot 2015-01-19 at 2.27.21 PMBut lease payments for the 8,500 acres of public lands used by resorts over this decade have not kept the same pace of growth as other tax revenues generated from the resorts. The leases, according to the report, were designed to capture a percentage of lift tickets, typically 5 percent of lift ticket sales. However, lift ticket sales have become a secondary source of revenue as the resorts evolved.

“I think it’s a fair question as to whether limiting lease revenues to that one source is suitable given the resorts’ growth,” Hoffer said.

Additionally, the leases were not crafted in any standard way and have inconsistencies including lengths, indemnity clauses, remedies for a breach of contract and audit provisions, according to the report.

“The lack of uniformity between the leases has produced a system that is difficult to administer and generates added costs for taxpayers,” the report states.

Other resorts leasing state land include Okemo, Killington, Stowe, Smuggler’s Notch, Burke and Jay Peak.Screen Shot 2015-01-20 at 8.13.32 AM

The report found additional problems with the leases, including:

— Since state lands are not subject to local property taxes, Vermonters pay for land and facilities used by the ski areas through the Payment in Lieu of Taxes programs, which reduce the value of the lease revenues to the State.

—There is variation in assigning title to property on state land, which has obstructed two towns’ power to tax and gives some resorts a tax advantage because property that belongs to the state is tax-exempt.

—Dated liability insurance language in the leases also poses potential risk for the State.

— The leases provide sole authority to extend contracts with the resorts, with the state having no authority to deny or amend requested extensions.

— When the State negotiated the lease agreements, it made a crucial error by not stipulating regular opportunities to update the agreements, as the federal government does in its standardized 40-year permits with ski areas.

According to the report, private property values at the seven ski areas grew by almost 150 percent between 2003 and 2013, generating about $5.3 million in property taxes for the state’s education fund.

During that same decade, the report found that inflation-adjusted sales of meals at these resorts grew by 40 percent, alcohol sales grew by 49 percent and rooms’ sales grew by 61 percent. That growth has resulted in greater tax revenue for the state, and most of that tax burden is paid by non-residents who come to Vermont as tourists.

During the same timeframe, however, the resorts’ inflation-adjusted lease payments to the State fell by 14 percent.

Because of how the leases are structured, the resorts are under not obligation to renegotiate.

“In the event that ski areas are not willing, or collectively willing, to negotiate new contracts, then the state has to wait,” he said. “Who knows, with enough pressure maybe they could be persuaded.”

Offer said it’s up to lawmakers to decide if they will renew conversations about the leases. He said it is justifiable since the original goal, to encourage growth in the ski industry, has worked well and resorts have “no doubt got a fair return.”

“As it turns out, I think it’s pretty clear that the Legislature could justifiable have a conversation about a number of aspects of these leases,” Hoffer said. “The question of the lease payments kind of jumps out.”

A full story will appear in Wednesday’s editions of the Rutland Herald and the Barre-Montpelier Times Argus.

Read the report below:

Video: Capitol Beat on ORCA with Speaker Shap Smith

House Speaker Shap Smith sits down with Vermont Press Bureau chief Neal Goswami and VPB reporter Josh O’Gorman to discuss the first two weeks of the legislative session.