Vermonters for Economic Health

This Legislative update by Rep. Jim Condon was originally published in
the Colchester Sun on January
28, 2010. It is presented here with Rep. Condon's permissio.

"There was more circumstance than pomp last week when Governor Jim Douglas delivered his final budget address to the state legislature.

Comparing Vermont’s current economic situation to the Great Flood of 1927, Douglas suggested our state’s economic foundation should be rebuilt, much like our roads and bridges were reconstructed and our infrastructure strengthened after the big flood.

The circumstances are worrisome.  We face a 150 million dollar shortfall for Fiscal Year 2011, which begins July 1. The average Vermont family earned two-thousand dollars less last year than the year before, and nearly ten-thousand jobs have disappeared over the past two years.

The loss of jobs and income has meant less tax revenue for the state, down by 100 million dollars over the past two years. And, in the past year alone, spending on social services ballooned by another 100 million dollars.  When you add in a 43 percent increase in required pension fund contributions, a projected two percent increase in statewide education spending and a fully-depleted unemployment trust fund, you begin to recognize that producing a balanced budget will not be a simple task this year.

Furthermore, when we look at ways to address this challenge, we see that one-time cuts will not do the trick. The projections for fiscal years 2012 and 2013 are not optimistic, and in fact our situation will only get worse without some fundamental changes.

The state emergency board, which includes the governor and members of the main money committees, has endorsed a “Challenge for Change” protocol, which calls on most state departments to find up to eight percent in budget savings, a total of 38 million dollars.

Governor Douglas called for 53 million dollars in cuts to social service programs. He is calling for the elimination of some programs altogether, and a tightening of eligibility for other programs.

The governor has also endorsed the findings of a pension restructuring committee chaired by State Treasurer Jeb Spaulding. A full eight percent of the state budget this year will be used to fund required pension contributions for state employees and public school teachers.

Spaulding’s committee made a series of recommendations, some of which will surely be controversial.  The committee has suggested that employee contributions be increased, the retirement age be raised from 62 to 65 and that the pension benefit a retiree receives be determined by the average of the last five years of pay instead of three.  It’s difficult to fathom how a defined benefits plan could continue to be
offered without some basic changes.

Similarly, asking school boards to impose 20 percent employee health care contributions will also be difficult.  The state cannot impose those changes of its own accord.  It’s up to the local board and union to come to an agreement on salary and insurance contribution issues.

Some labor organizations are trying to help out, and deserve our thanks.  Last Friday, the Stowe Teacher Association voted to forego a five and a half percent salary increase they were to receive under their current contract.  And the agreement by the Vermont State Employees Association to take a pay cut of three and a half percent will help our state recover more quickly from the recession. I appreciate their willingness to help out!

The good news is that a recovery appears to be on the way.  Two weeks ago, the state’s economists predicted that, in their opinion, the recession has bottomed out in Vermont.  The situation has stabilized, they reported, and revised revenue projections actually show a five million dollar increase over what had been
expected. They caution the recovery will be slow.

Another welcome sign involves plans by four companies to expand or start new businesses in Vermont using state economic growth incentives.  Both Dealer.com and Colchester’s own Hayward Tyler Pump Company want to expand operations.  The two businesses seeking to start new operations in Vermont include Skypoint Solar and Business Financial Publishing.  If they meet their goals, these companies will create more than 800 new jobs, a welcome development in any economic climate.

As always, I’m eager to hear your thoughts and comments.  My email address is jcondon@leg.state.vt.us and my home telephone number is 655-5764."