Vermont Governor Stuck in the Manage-to-the-Money Ditch

It’s been barely a week since the administration held its public budget hearings, and there has been no analysis yet of what is needed to “address the needs of the people of Vermont” for the coming year.

Nevertheless, Gov. Peter Shumlin said in a Vermont Public Radio interview this week that new taxes were off the table and that cuts alone should be used to close the $50 -$70 million budget gap currently projected for fiscal 2014.  The governor appears to be ignoring the new people-first budget direction embraced by the Legislature last session.  Instead, he is stuck in the manage-to-the-money ditch, continuing to undermine the economic health of low and middle income Vermonters.

Thanks to the efforts of the Vermont Workers Center last session, Vermont has new criteria for developing the state’s annual budget. A new law shifts the focus from money to people. The budget process is no longer just an exercise in balancing spending with available revenues. Rather, in the words of the new statute, “The state budget should be designed to address the needs of the people of Vermont in a way that advances human dignity and equity.”

The changes are aimed at moving Vermont toward a “people’s budget.” Spending and revenue policies are supposed to promote Vermonters’ economic well being, and the state is supposed to measure its progress in meeting that goal. Spending and revenue policies also are supposed to recognize “every person’s need for health, housing, dignified work, education, food, social security, and a healthy environment.”

As part of the new budget process, Vermonters also were given a chance to express their views to the administration before the governor put together his spending recommendations for the coming fiscal year.

Given these important changes, it was disappointing to hear the governor’s pronouncement this week that sounded like a throwback to the Douglas administration. Justifying his position, the governor said that new taxes would hurt Vermont’s “fragile” economy. Well, economists will tell you that spending cuts also hurt the economy. And they say that tax increases on the wealthy actually create less drag on the economy than spending cuts.

But the point of Vermont’s new budget process is to analyze the choices to determine what will best meet Vermonters’ needs. It’s supposed to force us to weigh, for example, the consequences of higher taxes on some well-to-do residents against continued poverty for tens of thousands of Vermonters.

Without seeing the proposed cuts and understanding what they would mean for people, we don’t want to make the same mistake as the governor and declare that new taxes are the only answer. We can’t know whether more revenue or less spending should be used to close the budget gap until we know what taxes might be raised, what cuts might be made, and the effects of each. Maybe we shouldn’t make cuts or raise taxes, but rather take money out of the rainy day funds that were created to address budget gaps in the first place.

Creating a people’s budget requires a new way of thinking that better serves Vermonters. That may take getting used to. The governor could provide leadership here by dropping the tired, disproven rhetoric about taxes and spending and focusing instead on improving Vermonters’ lives.