Guest column (1/7/10)

Budget writers take note: Vermonters not just taxpayers

Jan. 7, 2010

By Jack Hoffman

Because of the recession, more Vermont families are struggling, just as the state’s ability to help them has shrunk. To solve the state’s budget problems in a way that protects families and keeps our economy strong, the Legislature and the administration should take a balanced approach. They should raise new revenue to match the cuts and remember that Vermonters use services as well as pay taxes. So far, that’s not what has happened.

Since the start of the recession two years ago, Vermont’s main response to its fiscal problems has been to reduce the services that all of us pay for and all of us depend on, and that are essential to Vermont’s economic health. In the last two years, the Legislature balanced the budget by making $4 in cuts for every $1 in new revenues.

We were told that no one raises taxes in a recession. But the fact is, states always raise taxes during recessions. Vermont raised taxes in the recessions of the early 1980s and early 1990s — and so did a majority of other states. At least 30 states have raised taxes in this recession — and Vermont was among them. Twenty years ago, Republican Gov. Richard Snelling made cuts — but he also raised taxes.

This time, however, our state’s response to its budget problems was skewed heavily — 4 to 1 — toward cuts.

Given the anti-government rhetoric of the last 30 years, it may not be surprising that elected officials find it easier to join the chorus calling for cuts. For one thing, the effects of cuts are often hidden — like the corrosion of the Champlain Bridge just below the water line. But sooner or later they show, and we end up paying more in time, money, lost business and disrupted lives.

Some cuts also produce false savings. These are the cuts that reduce the state budget but shift costs onto individual Vermonters, often those who can least afford them. A good example was the decision this year to use $25 million that should have gone to schools to help fill the revenue shortfall in the General Fund budget. That simply shifted costs onto the property tax, which is already over-used, and which burdens lower-income homeowners more heavily than better-off ones.

This recession is a temporary problem. As with previous slowdowns, the economy will eventually turn around and state revenues will rebound. But if the administration and the Legislature keep reducing services as they have, they risk doing permanent damage to our state’s public structures and our economy. Vermont’s public schools, for example, are among the best in the country. Do we really want to make cuts that will result in average schools with average costs, which is what some elected officials are proposing?

This is not to say that we shouldn’t look for ways to deliver services more efficiently or even eliminate some expenditures, like certain tax credits. But that’s not how the budget cuts of the last couple of years have been made. Cutting back on meal preparations for homebound seniors or keeping disabled Vermonters on waiting lists for nursing care isn’t being done because it’s more efficient. Rather, it’s been politically safer to curb those services than to ask people still prospering in this economy to contribute more.

Elected officials often speak to voters as if they were taxpayers only. But all Vermonters also rely on the services those taxes pay for: safe food and drinking water, education, health care, highway maintenance, police protection, courts, care for those who are old, sick, or disabled, help for the unemployed and more. The administration and the Legislature need to recognize this dual role when they approach the budget this year. To protect what we have, maintain a state we can be proud of and prepare for a prosperous future, Vermont needs a balanced approach to balancing the budget. It must raise new revenues, not just cut services.

 

Jack Hoffman is a policy analyst for Public Assets Institute (www.publicassets.org), a non-partisan, non-profit organization based in Montpelier.