Finances Are ‘Challenging,’ But It’s Worse in Other States: Gov.

By M. D. Drysdale

Though admitting that 2008 will be a "challenging" year financially, Gov. Jim Douglas was doggedly upbeat Monday as he addressed a well-attended breakfast hosted by the Randolph Chamber of Commerce, assisted by Two Rivers Regional Planning Commission.

"We’re doing relatively well," in spite of an estimated budget shortfall of $25 million, Douglas said. That’s in contrast to some states where dramatic budget cuts are being made, he said.

The 2% cut in Vermont’s budget, hd said, should be "do-able."

In fact, the expected shortfall in tax receipts this year are far less severe than in 1991, when there was a "10% collapse of revenues" that came without warning, he said. This year’s decrease is estimated at 3%, and there has been plenty of warning.

The governor showed that he has taken to heart the criticism voiced last year by House Speaker Gaye Symington, a possible political opponent. Symington and some other Democrats criticized the governor for badmouthing Vermont by frequently referring to its high tax burden.

Monday, Gov. Douglas repeated his tax fears, saying that Vermont has the highest state and local tax burden per capita, and focusing also on workers compensation taxes and housing shortages. But he quickly pointed out areas in which the state has been coming out on top of state-by-state comparisons.

"We’re the healthiest state, the greenest state, the best state to raise a child, and the smartest state," he allowed.

Douglas was introduced by past Chamber President Marty Strange, who got a laugh when he started by asking whether anybody had any new ideas about where to put the town offices. Planning for the meeting at the Three Stallion Inn was by the Chamber’s new executive director, Deb Jones.

School Policies

In a question period, Douglas said he supports the bill just passed by the Senate that would eliminate the State Board of Education and fashion that department to be like other departments—run by a commissioner appointed by the governor.

"When you elect a governor, you assume you’re selecting somebody who’s in charge of he whole shooting match," he said. However, the governor is not "in charge of" the Education Department, he noted.

The change is not meant as a way to cut education costs, however, he said.

He repeated oft-stated criticism of the growth of education budgets in the state, even though the number of school children is decreasing by about 1% a year.

School budgets increased about 4% this year, compared to 6% in some recent years, but that doesn’t accurately reflect what will happen to tax bills, he said. Because the "income sensitivity" clause will keep those increases down for a large number of people, the actual taxes on those who do not qualify for "sensitivity" will climb much more than the 4%, he said.

In fact, he noted, residential tax bills are slated to go up an average of 7.2% in Vermont and taxes on non-residential properties will rise a whopping 9.8%.

The income sensitivity provisions benefit families with incomes up to $95,000, and he agreed with questioner Stephen Webster that that threshold has gotten too high.

He was asked why the increase in the sales tax from 5% to 6% four years ago did not result in a reduction in property taxes.

"It didn’t work," he admitted. Although there was an immediate property tax reduction in 82% of the towns, that tax has already climbed higher than it was before the sales tax increase, he said.

"That’s why I resist a shift (proposed by some legislators) to the income tax to fund schools," Douglas said. "I have no doubt but that the outcome would be the same," meaning that property taxes would be reduced at first but would spring right back.

Jobs Cut

Douglas also defended his decision to reduce the number of state jobs by 400. In fact, he said, it might have to be more than that.

Vermont has 50% more state employees per capita than the average state, he said. "I think we can do better."

Then, reverting to the positive, he concluded, "This is the best place to live. It’s the state of choice."