To: Steve Klein, Legislative Joint Fiscal Office
From: Tom Kavet
CC: Senate Finance Committee
Date: April 8, 2009
Re: Requested Review of Proposed “Vermont Recovery and Reinvestment Act of 2009,” S.137
Per your request, I have summarized perspectives on the: 1) Costs, 2) Near-Term Economic Stimulus Effects and 3) Policy Considerations, associated with the 121 relevant sections proposed in S.137, the “Vermont Recovery and Reinvestment Act of 2009.”
While the bleak economic conditions that were originally cited as the rationale for this legislation are real and present, the efficacy of many of the 121 measures contained within them to address these conditions can only be described as minor, and in some cases, misguided. Many of the measures are revised versions of programs that have either had little or no beneficial impact as previously enacted or proposed measures that have been rejected in prior legislative sessions.
Many of the measures represent substantial State expenditures of revenues – whether as tax expenditures that reduce revenues, loan loss guarantees that may reduce revenues, or direct expenditures – at a time of severe revenue stress. Virtually none of the proposed programs that reduce revenues or increase spending represent any net economic stimulus benefit to the State. This is because they must be funded with offsetting tax increases or spending cuts (see page 2 insert for more a more detailed discussion). Few of the proposed measures provide clear goals stating expected public benefits for these public expenditures, and fewer still provide transparent public oversight to insure that these benefits are achieved.
Most importantly, the larger policy framework and supporting analysis within which these measures fit, is absent. As noted in comparable pending House legislation, “Vermont lacks a shared statewide vision of its economic future…[and] lacks a single, holistic, integrated state plan for economic development.”1