Ship of state on the right course
Recently, Paul Cillo, the founder of Vermont’s left-leaning Public Assets Institute, penned an op-ed piece claiming that the Shumlin administration isn’t spending enough to serve Vermonters and calling for taxes to be raised to match the increased level of services Cillo believes are warranted.
Shortly afterward, Tom Pelham, co-founder of the decidedly more conservative Campaign for Vermont, published an op-ed (see opposite) describing Vermont’s spending as a “pending fiscal shipwreck,” and calling for significant reductions in current state spending.
In the face of critics from opposite poles of the same budgetary debate, what is an administration to do?
Exactly what we have been doing: maintaining our focus on creating jobs and meeting the critical needs of Vermonters, while carefully protecting the public purse.
The Shumlin administration has made tough and responsible budget choices, even while it has met considerable challenges, such as the damage from Tropical Storm Irene, a slow economic recovery, the end of federal stimulus dollars from the Great Recession, and continued dysfunction in Washington, D.C.
Administration leaders are being asked by Gov. Peter Shumlin to work across agencies to make state government work better by increasing efficiency and reducing waste. All the while, Governor Shumlin has fought off legislative efforts to raise taxes for General Fund spending.
Though the Shumlin administration is meeting the challenges of today while planning for the future, some of our critics seem stuck in the past. As someone who has worked with both Paul Cillo and Tom Pelham over many years and across many roles, I respect their right to advocate for their own views of our state’s budget. But as a state official who must actually deal with the practical art of governing, I am not as free as a clever advocate to paint the state’s budget situation in stark monochrome.
Pelham’s prescription for our claimed woes boils down to the familiar remedies he has promoted for years: cutting government services, shifting responsibilities to others, and coming up with gimmicks that sound promising but usually don’t work. He claims our financial practices have put Vermont’s bond rating at risk by citing a report from Standard & Poor’s that actually improved the outlook on the state’s rating.
Tellingly, in recent days, Moody’s Investors Services reaffirmed Vermont’s best in New England Triple A rating, explaining, “Moody’s highest rating level reflects Vermont’s strong history of financial management, which includes conservative fiscal policies and the maintenance of healthy reserve balances that continue to provide a cushion against any unexpended revenue declines; and manageable debt profile that reflects the State’s focused efforts to reduce its debt ratios and maintain well-funded pension systems.”
Nowhere is Vermont’s solid progress clearer than in our path out of the Great Recession, where Vermont’s economy “has recovered more quickly than the rest of New England, and much faster than many other parts of the country,” according to Eric Rosengren, CEO of the Federal Reserve Bank of Boston, when he spoke in Burlington earlier this month. And our recovery shows in the numbers: Vermont remains one of the lowest unemployment-rate states in the country, currently tied for fifth.
Pelham performs historical sleights of hand in his review of government spending in Vermont. He begins his analysis with 2008, when the economy began the most significant decline since the Great Depression. Only he could be surprised that spending by government, much of it in the form of federal stimulus money, would — and should — increase as unemployment rose, incomes stagnated and home values faltered.
Pelham correctly expresses concern about the long-standing challenges of funding Vermont’s pension systems, a problem stretching back over many administrations, but then fails to mention the name of the person who routinely made the trip from a former administration’s offices in the Pavilion Building to the State House to convince lawmakers that we should not fully fund the actuarial recommendation for the pension funds: Tom Pelham. When he left his position as commissioner of finance, Vermont was not the Triple A-rated state it is now, and it couldn’t possibly have become one with that kind of budgetary practice. The truth is that Vermont was ahead of the curve in enacting changes, like increasing the normal retirement age, increasing employee contributions, and linking retiree health coverage to length of employment, to make our public pension plans sustainable. Further, we now routinely fully fund the annual pension actuarial recommendation.
Meanwhile, in stark contrast to Tom Pelham, Paul Cillo reaches back more than 20 years and cherry-picks one quote to fault the Shumlin administration for not emulating Gov. Richard Snelling, characterized by Cillo as a leader who felt comfortable raising taxes in order to support increases in state services and programs. It is important to note that Governor Snelling inherited a budget gap several times larger than the funding gap currently anticipated for the next fiscal year. I doubt very much Governor Snelling would endorse Cillo’s whitewash portrait of the extremely difficult choices his administration made during that crisis.
A more accurate view of Snelling’s budgetary philosophy, one shared by Governor Shumlin, is reflected in his January 1991 budget speech to the Legislature, when he said, “Our citizens expect their government to balance the need for services and the burden of taxes. They will not tolerate excessive taxes any more than they will accept neglect of social interests.” The former governor continued, “Consequently, Vermont does not and never has had the option of simply deciding which government programs or services it wants and then levying taxes at whatever levels might be required.”
Cillo believes that the Shumlin administration has failed to focus support on Vermont’s most needy, ignoring the facts in the process: increased state spending for low-income housing and homelessness; the first base-budgeted contribution to low-income heating assistance in state history; becoming the first state in the country to extend free school lunch to all low-income public schoolchildren; an increase in the coverage limits for Medicaid; and increased subsidies for child care. No one could take a clear-eyed look at the facts and claim that Governor Shumlin does not value and support the state’s anti-poverty programs.
Finally, claims from both Cillo and Pelham that we are spending state dollars on public assistance programs without concern for results ring false. Following the governor’s lead on a statewide strategic plan, Secretary Doug Racine and his team at the Agency of Human Services have aggressively rebuilt its capacity to measure and report results, something that was done for years but abandoned during the last decade.
The agency has identified 21 outcomes for the well-being of Vermonters. Contracts with our community partners now require these measures of performance so that we can see whether we are getting desired results for the money we are spending. Soon, an e-scorecard will allow Vermonters to see how the agency is doing on its performance measures. In addition, Governor Shumlin has launched both an e-dashboard (governor.vermont.gov/govdash) to track a host of social, economic, and environmental indicators and a financial transparency website (spotlight.vermont.gov/) which allows citizens to see “Where the Money Comes From” that is used to operate state government and “Where the Money Goes” when it is spent. Greater accountability, more effective programs and better results for Vermonters will result.
While our critics continue to replay the last 20 years of tired legislative fights, the Shumlin administration will stay focused on the future by focusing on creating good paying jobs and prudent management of the state’s finances. This budget year and those beyond will undoubtedly bring new challenges. Vermonters expect state government to act responsibly and to meet critical needs within the means we have, and they deserve nothing less.
Jeb Spaulding is the state secretary of administration. He is a former state senator and treasurer.