May 25, 2018

GUEST COLUMN: Restoring fiscal health first step toward real reform

By Bruce Lisman

The economic challenges Vermont faces are much bigger than “business as usual” policies are capable of solving. We need to implement big ideas—transformational reforms—that will build an economy where everyone is secure and can prosper.  But to do this, lawmakers must first restore the basic fiscal sustainability of the state budget. This is the conclusion of an analysis of the state budget recently released by Campaign for Vermont.

The need for bold investments in areas like education, healthcare and human services is widely recognized. But chronic, recurring budget gaps and shortfalls prevent lawmakers from focusing on rethinking our outdated and inefficient systems and programs.

From 2009 to 2012, one-time money from the federal government seduced our leaders and allowed them to sidestep comprehensive analysis and reforms. Since then, we’ve experienced budget gaps filled by property tax and income tax increases (while household income has remained about the same, or declined). This year there’s another “budget gap” of $50 to $70 million. Lawmakers need to understand the depth of the problem and seek solutions beyond just spending cuts or tax increases to fund old systems producing inefficient or inadequate results.

Montpelier should start by limiting budget increase to inflation, plus population growth (2.55 percent). This formula was a basic and long-held principle of fiscal sustainability advocated by governors Snelling, Dean and Douglas.

But restraint alone is not enough. We must also move to modern and more effective management systems, beginning first with human services.

Since 2008, human service spending has increased 29 percent. During this period, our population has grown by less than one-half percent per year. And, despite these expenditures, outcomes for low income Vermonters have not improved. In fact, the Shumlin administration recently said they don’t know why certain human service caseloads are growing. That’s revealing.

Our highest priority must be the systems used to move Vermonters out of poverty, because they’re not getting adequate results. In fact, lawmakers have created an inefficient system of “stove pipe” services that is too complicated, inflexible and ineffective. In many cases, Vermonters are trapped in poverty, unable to work, because of “benefit” systems that make it impossible for them to get ahead. That’s a disgrace and we must do better.

As a first step, we recommend a “shared-view-of-the-client”—a modern management system that groups each state benefit and service (regardless of agency or department) by client. Such a system would create an individual, and far more efficient, plan for each client, eliminate benefit cliffs and chart a clear and realistic path to financial security and independence.

Our analysis also notes that “cost shifting”—the practice of hiding the cost of state programs on the books of non-state entities—allows lawmakers to hide from the fiscal consequences of their decisions. Cost shifting is the opposite of fiscal transparency. It’s a budgetary practice we should reduce and eventually end.

Achieving real reforms requires leadership. There are fundamentally unsustainable trends that are getting worse, not better. Like Washington, they have to stop kicking the can down the road and return the state to full fiscal health. From there, reforms can be made that will grow the economy, create jobs and put every Vermonter on a real path to prosperity.

Bruce Lisman launched Campaign for Vermont, an advocacy organization that promotes economic opportunity.


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