2012 Legislative Update: Week 10 (3/13 – 3/16)

by Jeff Wilson

There was a flurry of committee activity in Week 10, as Legislators got back to work after Town Meeting break. Friday (3/16) was “crossover day”; the informal deadline for bills to make the leap from one branch (House or Senate) to the other. This means that the non-money bills that didn’t clear the crossover hurdle are (typically) dead for the year. One of the high profile bills that didn’t make the cut in the Senate was the so-called “death with dignity” initiative.

School Budgets/Taxes – Of the 248 school budgets voted across Vermont on Town Meeting day, only 7 were defeated. This was one of the highest approval rates over the last twenty years and would seem to mean that School Boards did an exceptional job in preparing/presenting their budgets, and that Vermonters remain committed in their support of education. It appears that, in the aggregate, education spending will increase by around 3% statewide next year; higher than the 1.7% previously anticipated by the House. This means that the Senate will probably have to increase the base education tax rate by 2 cents, instead of the 1 cent increase approved by the House a few weeks back.

Although it may be little too early to tell, the Education Fund could be in for a tough slog in FY 14. With grand lists falling and school spending increasing, it may prove to be quite the daunting challenge to keep the Fund in the black next year. Based upon this concern, I put my foot pretty close to the proverbial political third rail at the end of last week by recommending that we phase out most Small School Grants. Specifically, I offered an amendment to the Miscellaneous Tax Bill in Ways and Means to end these grants for 81 of 104 schools over the next three years. Based upon a 2011 Department of Education report, the 23 schools that would keep the grant are ones that deserve additional aid due to “geographic necessity”. This proposal would have saved the Ed Fund around $5.3 million annually after the three year phase-in. But alas, I couldn’t quite get a majority of my Ways and Means colleagues to make this politically unpopular decision. My amendment failed on a 6 to 5 committee vote.

Good News /Bad News – The Legislature’s Economist (Tom Kavet) briefed returning Ways and Means members on Wednesday (3/14). On the positive side of the ledger, Vermont’s unemployment rate dipped to 5.0% in January. This rate is well below the national average (8.3%) and represents the fourth lowest state unemployment rate in the U.S. The only states with lower rates are Nebraska, South Dakota and North Dakota. Yup – we are even lower than New Hampshire (5.2%) by a whisker. The not-so-good news, however, is that the revenue report for February was once again below the consensus forecast. February was the third month in a row where actual state income dropped below projections. February General Fund receipts were a worrisome 15.4% below estimates. This leaves the General Fund about $14 million, or 1.85%, off the mark for fiscal year. The biggest culprits in the weak returns were the personal and corporate income taxes (although the latter may be due to the correction of an earlier reporting error that overstated corporate income from July thru January). Kavet indicated that it was still too early to be overly alarmed by the soft revenue numbers, noting that March and April will be the important months in determining the State’s fiscal picture.

– Jeff Wilson, Manchester, Vermont, State Representative

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