A Governor has the primary leadership
role for making policy. Governor Shumlin laid out his policy agenda
in two major speeches, in his inaugural speech and, a week later, in
his budget address. In the latter he focused on health care,
education, and the economy.
Gov. Shumlin addresses the General Assembly
Because Vermont's economy has been
growing at a roughly 3% rate while expenses have grown by about 5%,
the projected gap between revenues and spending for next fiscal year
is $94M. Governor Shumlin's first priority was to propose a way to
balance the budget. To do this he is looking for a combination of
efficiency improvements through restructuring of departments and
programs and cuts to some services while simultaneously investing in
programs that deliver more economic value than they cost. But
efficiency improvements and program cuts won't bridge the gap without
additional revenues. So, he is proposing to close an income tax
loophole that allows Vermonters to deduct from the current year’s
income the state taxes they paid the previous year. Reforming this
loophole will cost taxpayers who use it an average of $175 and raise
an expected $15.5 million.
Since the Governor stepped back from
his "single payer" health care initiative, he still
recognizes the need to pursue health care reform. Vermont needs to
continue to move from the current quantity based, fee for service
system to one that pays providers for the quality outcomes they
produce. To build on the early success this effort has shown in
bending the cost curve while ensuring high quality health care for
Vermonters, the Governor’s budget more than doubles payments to
Medicaid providers with a new $4.5 million appropriation. Since the
Medicaid cost shift drives up private insurance premiums by $150
million every year, the Governor is proposing to invest $25 million
beginning in 2016 when new insurance rates begin for increased
payments to health care providers. This will mean $50 million in cost
shift reduction per year and enable a reduction in insurance premiums
by up to 5 percent from what they would have been for all Vermonters.
To pay for these health investments, the Governor is proposing a 0.7%
payroll tax on Vermont businesses. Every dollar raised will draw down
$1.10 in federal funds, more than doubling the money raised through
the payroll tax. This tax would amount to 7 cents for every $10 of
payroll expense. For a small business that pays employees $10/hour,
it would mean an extra $2.80 per 40 hour week per employee, but would
reap big benefits for both employers and employees.
With student enrollments down 20
percent since 1998, a 10 to 1 average student to staff ratio, and
property taxes rising fast, the Governor outlined a number of
proposals to help address the education spending problem in Vermont
while improving education quality. These include placing a
moratorium on any new legislation that adds costs to districts,
phasing out expensive incentives including the small schools grant
and the phantom student provision, targeting construction aid for
districts that are actively trying to right-size through a merger,
and prohibiting strikes and board-imposed contracts while requiring
arbitration when contract negotiations reach impasse. Some of these
ideas are already being discussed in the House Education Committee
which has had more than 500 suggestions submitted by legislators,
organizations and citizens.
Building on expanded dual enrollment
and early college programs, the Governor hopes to implement a new
program to create a pathway for Vermont Technical College (VTC)
students to earn a free Associates Degree in Engineering Technology
as a pipeline for Vermont employers looking for skilled employees.
Through a partnership of the state, VTC, and private employers, high
school seniors who sign up for an Engineering Technology degree at
VTC will get their first year of higher education free while
finishing high school, then will be guaranteed a summer internship at
the partnering employer to gain critical job skills. When they return
to VTC for their second year, the employer will pay for their first
semester’s tuition (about $5,000). The Vermont Strong Scholars
program will then pay back their loans for their final semester if
they stay and work in Vermont after graduation.
Now it is up the the legislature to
take those ideas, meld them with their own, and change Vermont's laws
to accomplish the desired results. I continue to welcome your
thoughts and questions and can be reached by phone (802-233-5238) or
by email (myantachka.dfa@gmail.com).
