Summer Speaking Tour 2013
Each summer, Public Assets goes on the road with its Summer Speaking Tour. Executive Director Paul Cillo and Senior Analyst Jack Hoffman visit five communities. The tour includes Rotary Club presentations, visits with local newspapers, meetings with community leaders, and regional seminars on school funding.
This summer they visited Berlin, Killington, Northfield, Warren, and Waterbury. The 2013 Rotary Club presentation, “Smart Investments to Move Vermont Forward” begins with a brief introduction to Public Assets Institute and some examples of our recent work. What follows are the speaker’s notes for the focus of this presentation: smart public investments.
Smart investments to move Vermont forward
Here’s a quote from a Vermont Governor:
“Having to trim budgets is not a tragedy unless it is used as an excuse for turning away from responsibility. We cannot and will not set lower standards for the education of our children, for the health of the population, for assistance to the troubled, jobless or homeless, or for the protection of the environment. But we clearly must rethink how those goals are to be achieved.”
Anyone want to guess which governor said that?
That governor was Dick Snelling, and the quote is from 1991. At that time, the state was facing a 25 percent shortfall—the equivalent of $400 million in today’s budget terms. Governor Snelling understood that the state’s budget and tax system shows who we are as a people and sets our priorities. That’s why he—a Republican—worked with a Democratically controlled Legislature to temporarily raise taxes on Vermont’s top earners —in addition to making budget cuts— to ensure that Vermont’s most vulnerable citizens were appropriately cared for.
Snelling knew that budgets must be counter-cyclical—when the economy is bad, more spending is needed to make sure that people get the assistance they need. When times are better, you can make investments to get ahead and also cut some of the spending for assistance programs, as people are able to do better on their own.
In addition to understanding counter-cyclical budgeting, Snelling was interested in results. Con Hogan, who now serves on the Green Mountain Care Board, worked for Snelling, and then later for Governor Dean as secretary of human services. It was Hogan who committed the Agency of Human Services to establishing indicators of Vermonters’ well-being and to managing the agency to move those indicators in the desired direction. Take teen pregnancy, for example, the agency wanted to reduce the incidence of teen pregnancy so it developed a methodology to count the number of teen pregnancies each year and then developed the programs to reduce that number. There were many indicators of Vermonters’ well-being published annually in the Vermont Well-being Report.
Unfortunately, since Snelling’s time, Vermont has moved away from this smart thinking and towards a “manage to the money” approach to government, which tries to limit the budget to the amount the state is projected to collect at current tax rates.
While “manage to the money” may seem like a sensible, fiscally responsible approach, it unfortunately fails to consider what Vermonters actually need, and the consequences of not spending to address those needs. In some cases, it means Vermonters incur greater costs like when car repairs increase from traveling over poorly maintained roads. Other times, it means reductions in state assistance—fuel assistance, housing, job training, health care—at times when Vermonters need it most. Just as homeowners need to fix their roofs when the repairs are needed, not just when there is cash available, the state needs to provide services when Vermonters need them, not just when there’s extra money in the till. This isn’t to say that money is not a consideration— of course it is. But it’s not the only consideration. We need to also consider what Vermonters need as we are debating how much to spend.
When the Great Recession hit, we heard the opposite from Governor Douglas: families are cutting back, businesses are cutting back, government has to cut back, too. Taking care of people was secondary. It was during the Douglas administration that the last Vermont Well-Being report was published—in 2006. In order to cut the budget and in the name of smaller government, the administration cut the researchers who monitored how the state was spending its money and how Vermonters were doing. It was as if they no longer wanted to know.
This year, the administration did suggest making some smart investments in certain priority areas, like the education of our children and energy efficiency. However, at the same time, the administration proposed cuts to other priority areas. Rather than taking Snelling’s counter-cyclical approach, this year’s budget was austere and fiscally conservative: designed to manage to the money. This approach frustrated many Vermonters because we know it cannot lead to long-term security, and because it does not accurately reflect who we are as a people.
We can have clean water in Vermont and we can have safe roads and bridges and safe food. But we need to make smart budget and tax decisions that make these values real.
We’ve looked at the difference in tax policies now and under Snelling. Twenty years ago, Vermont’s highest earners were paying a much higher marginal tax rate and a larger share of their income went to state income taxes. But those kinds of “facts” aren’t going to win the day either. The truth is, if the discussion is just about taxes and whether they are too high or not high enough, we’re already in a conversation that will stifle prosperity.
We need to remember that our state budget and tax system reflects our priorities and our commitments to each other. If our priorities are those that Snelling articulated: the education of children, the health of the population, assistance for those who need it, and protection of the environment, then we need to begin the budget conversation with those priorities in mind and develop budget and tax policies that reflect those priorities.
Re-instituting the Vermont Well-Being reports and rebuilding the staff to develop and analyze the indicators each year would be a good start. They help make it clear where the state intends to go, and whether we’re or not we’re getting closer to our goals.
We know that austerity never leads to prosperity. If we want to move Vermont forward and create a state that works for everyone, we have to make smart investments. That means putting people first again and developing our state budget with Vermonters’ needs in mind.
I’d be happy to take questions.