John Klar: Panic at the Statehouse — Vermont’s emperors have no clothes

By John Klar

Vermont’s legislators, like all of us, must process the threats of the coronavirus. But that stress is quite distinct from the rightful accountability for reckless legislative spending and overregulation that has proliferated from the Bloated Dome for years — the people elected to protect us have left Vermont extraordinarily vulnerable in this economic downturn.

Surely it was foreseeable that the good times would not last forever. Indeed, our left-wing legislators have been planning for the best while hoping for the worst: they have been openly critical of President Donald Trump’s handling of the national economy even while they themselves have increased education and “climate initiative” spending, refused to fully fund our state pensions, and otherwise make no provision for economic decline.

John Klar

I attended the Dec. 4, 2019 “Vermont State Budget Overview All Legislative Briefing” in Montpelier. I was shocked that our government employees and leaders chuckled at repeated jokes against the Trump administration, while displaying rosy projections for Vermont’s budget. For me, this was not about partisanship but math — how can economists credibly (gleefully) predict (as they did) that the national economy would decline due to Donald Trump’s tax policies and trade war with China, while at the same time assuming rosy tax receipts and federal funding for Vermont’s bloated budget?

On Dec. 4, the Vermont Legislative Joint Fiscal Office distributed materials reflecting that Vermont receives the fifth largest federal grants per capita in the nation (excluding Washington, D.C.). It also distributed full-color cartoons within the materials mocking President Trump: one depicts him walking off a cliff over the words “recession likelihood,” with economists walking behind him and looking down anxiously. If our state economists are so brilliant at forecasting, why have they not advised Vermont to save for this rainy day?

The liberals who say Donald Trump should have prepared for the coronavirus will of course argue that they should not be held to that standard. After all, they were not allowing for the virus threat because they were predicting that Trump’s tax plan and trade war with China would be the cause of implosion — one chart in their presentation is titled “As Trade War Threats Heat Up, Year-Ahead Recession Risks Rise to About 1 in 3.” But they then planned for 0 in 3. Another page is titled “The Expansion Endures, But How Long Can it Last?” and states “Escalating trade wars represent the greatest threat to continuation of the current economic expansion…” We now face a greater threat.

With their partisan eyes on the wrong ball, our legislators and economists certainly foresaw economic hard times — but still they set out to spend more money. The March 25 House Calendar recites “action list” items that include H. 942, which greatly increases spending on Electric Vehicles and other “climate initiative” projects, and increases spending from $2.5 million to $7 million for the Lamoille Valley Rail Trail ($1.4 million of state dollars — the other $5.6 million is expected from the federal government). It is hoped that these plans (along with the gasoline tax anticipated by the Transportation Climate Initiative) will now be tabled.

Vermont’s chief fiscal officer, Stephen Klein, says that our state potentially faces a “staggering” budget shortfall, even as the Legislature is weighing an unplanned $40 to $70 million dollars in additional spending due to the virus. One (unconstitutional) solution being contemplated is to hand the state’s spending authority over to the Joint Fiscal Committee! (Maybe they would now spend less taxpayer money on full-color cartoons of the President… or at least use black-and-white).

Behind this short-term crisis lurks a much greater threat due to past myopic economic policies — a bloated state bureaucracy that could not be sustained even before this crisis. Act 46 was touted as the solution to Vermont’s skyrocketing education costs, but education expenses have instead increased. Vermont’s state employee pensions are grossly underfunded, but now existing pension investments have almost surely been decimated by the sudden stock market plummet. (It is to be hoped that Vermont Treasurer Beth Pearce withdrew the funds weeks ago for safe haven, but our teachers shouldn’t hold their breaths in reliance).

Vermont’s economic and financial health is in deep water now, because shortsighted and arrogant leadership dragged us there. There is no “prosperity” in government-mandated purchases of vehicles and solar panels manufactured out-of-state (more likely out-of-country, in the midst of those trade wars), only the giant sucking sound of wealth squandered for special interests. There must be a new sound coming out of Montpelier — the sound of frugality, of nurturing Vermont-based businesses and innovations.

The least of our problems is a trade war with China. Vermont needs an actual economic plan that addresses the most serious problems we face — pensions, schools, over-regulation and an unwieldy bureaucracy. Governments are funded by businesses and workers, not the other way around. Now that the Elitist Emperors are scurrying around in panic, at least we can see that truth laid bare, however unsightly it may be.

John Klar is an attorney and farmer residing in Brookfield, and former pastor of the First Congregational Church of Westfield. He is running for governor in 2020.

Image courtesy of Flickr/401kcalculator.org
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16 thoughts on “John Klar: Panic at the Statehouse — Vermont’s emperors have no clothes

  1. I’ve heard it’s much easier to tar & feather people when they have no clothes. Montpelier should take notice.

  2. There will be a serious shortage of tax collections in the order of $500 million for the remainder of the fiscal year.

    The state government is not laying off any people, but companies in the private sector are laying off.

    WHAT ARE THEY WAITING FOR?

    A government bail-out to fill the gap?

    Very little of that federal money will be going to anybody.

    All sorts of hucksters are lining up to get their hands on that money.

    RE-subsidy chasers are proposing their latest scheme “TO MEET PARIS”, because, if we don’t, the world goes to hell in a hand-basket.

    Energy Action Network, an umbrella organization supported by RE entities, claims there would be $800 million in energy cost savings/y, if its recommendations to reduce CO2 by 2.281 million metric ton to meet the Paris Agreement were implemented by 2025.

    SEE URL
    http://www.windtaskforce.org/profiles/blogs/response-to-energy-action-report-2019-to-reduce-co2-in-vermont

    The measures are a multi-billion-dollar wish list of EAN members with a cost well over $10.533 billion during 2020 – 2025, about $2.107 billion/y. EAN members want these heavily subsidized measures, because it is good for RE businesses.

  3. Coronavirus or not

    There will be a serious shortage of tax collections in the order of $500 million for the remainder of the fiscal year.

    The state government is not laying off any people, but companies in the private sector are laying off.

    WHAT ARE THEY WAITING FOR?

    A government bail-out to fill the gap?

    Very little of that federal money will be going to anybody.

    All sorts of hucksters are lining up to get their hands on that money.

    RE-subsidy chasers are proposing their latest scheme “TO MEET PARIS”, because, if we don’t, the world goes to hell in a hand-basket.

    Energy Action Network, an umbrella organization supported by RE entities, claims there would be $800 million in energy cost savings/y, if its recommendations to reduce CO2 by 2.281 million metric ton to meet the Paris Agreement were implemented by 2025.

    SEE URL
    http://www.windtaskforce.org/profiles/blogs/response-to-energy-action-report-2019-to-reduce-co2-in-vermont

    The measures are a multi-billion-dollar wish list of EAN members with a cost well over $11.433 billion during 2020 – 2025, about $2.287 billion/y. EAN members want these heavily subsidized measures, because it is good for RE businesses.

    It took about 20 years (2000 – 2020) to achieve the existing conditions by spending about $210 million/y, including Efficiency Vermont. The level of annual spending to achieve Paris would be at least 10 times greater.

    These measures would be major burdens on the Vermont people, businesses, ratepayers, taxpayers, etc., in addition to Vermont being in the middle of a major recession, with decreasing tax collections by state government (room & meals, sales, income, gasoline, etc.), due to the coronavirus.

    Playing multi-billion-dollar energy games, to produce expensive, in-state electricity, would make the Vermont economy even less competitive, plus would divert major investments from long-overdue, state-wide rebuilding/upgrading of crumbling infrastructures.

    Based my analysis, I see:

    – Costs of $11.433 billion during 2020 – 2025, about $2.287 billion/y
    – CO2 reduction less than stated in the EAN report
    – More wind, solar, hydro, etc., which need subsidies to build, plus Standard Offer/Net-metering subsidies to operate, increasing the average price/kWh of the Vermont electricity mix.
    – Amortizing the cost of the short-life assets, at 5% over 15 years, would require annual payments of $1.085 billion, or $905 million over 20 years, more than offsetting the $800 million/y energy cost savings.
    – The implementation of this wish list would be major headwind for the stagnant Vermont economy, and would have ZERO impact on the climate.

  4. The state is going to be seriously short money coming up.

    We’ve been notified through Realtors that we can lose our license if we show a house due to unprofessional conduct, by violating the law….his Executive Order. Can we send him our bills? Same for inspectors and appraisers.

    Our state with the transfer tax makes as much as an agent on every single transaction. This would essentially stop ALL real estate transaction for over a month. On a small vacation condo selling for $100k, that $1,250 the state is losing.

    Numbers don’t lie….

    9% They’ll be losing on all meals, that’ll be catastrophic for the state too, and when the restaurants are closed for 30 days that may put them out of business, which will mean not 9% for some time after too.

    Getting a 9% return, guaranteed with no worries about if a business is making money or not…they are going to discover how much this golden goose was floating our state. Same for all the rooms and hotel rooms that get taxed at that rate. Although it’s convenient when somebody breaks the law on a hotel stay, they are required to stay for 14 days or a possible $10k fine and loss of lodging license, police monitoring our hotels….

    These businesses are the life blood for our state. We better come up with some plan pretty soon, as this is definitely not sustainable long term, or even short term.

    It would be really nice to have the governors addresses and weekly briefings up on news sites so people could see them online.

    Send that check you got to the people…….keep your hands off it.

    • Neil, I got lucky..after decades in VT, I saw the handwriting on the wall….for a state I used ti love dearly. I got out. I had a higher end house and I grabbed first (and only) offer. Higher end homes are dead now and will only get worse. We moved to low tax & sunny AZ. When we closed on our house I sheepishly asked, “Okay, how much do I have to pay in Property Transfer Tax”….I was scared to death that it woudl be 1.5% (on a highjer end home) like VT…the reply I got was: ‘Well, we don’t call it a Transfer Tax here in AZ….we call it a Propery Transfer Fee.”….” i asked, ‘Okay how much do I have to pay”….they said, ” “It’s a flat transfer fee. It’s $25.”….at that very moment I knew we made the best decision of our lives….we only live once…we got OUT of VT just in time. I figured the fiscal crisis would hit VT, 3-5 years out.. This virus just sped it up by three years. The 2020 tax revenue figures will be devastating to VT…the loss of Capital Gains taxes coming in is huge and no one see’s…..Credit rating places will be at the ready to downgrade VT. As long as the “Progressive Liberal Kumbaya’s” run Vermont…you can be assured of one thing…and that is :”Reality is the last at bat.”….but it will be too late.

      • Close friends moved to North Carolina, property taxes for the house were $934 a year, where here it would have been $4,213 a year in Vermont.

        They get trash removal with that too!

        Nice transfer tax, that’s almost 1/2 the cost of registering a car, I think we charge more to register a trailer here….

        I’m not sure which contagion is worse, but I’d have to say socialism is far worse than the corona virus. Maybe Vermonters will have statues of the corona virus in years to come as it fell the scourge known as crony capitalism, socialism…

  5. Idiots are running the asylum. They all hatre Trump or any Republican….but Trump’s sound economic policies created (until virus hit) a 12,000 point rise in the narket. The BIGGEST SECRET in Montpelier is this….VT is highly dependant on about 30,000 people who have (THEy pay 65% of ALL VT INCOME TAXES!)….Dividends, Interest and CAPITAL GAINS. CApital gains is included in personal income data from state, but they DO NOT BREAK OUT HOW MUCH CAPITAL GAINS ARE PAID TO VT! SO? For last 5-6 years all these GREAT budget numbers were turbo charged by people who make money in stocks and THEY take all the risk. THEN? If they make money, VT takes their cut! The Mafia can’t get a better no risk deal. You make a profit in stocks? YOU PAY US. You l;ose? Tough luck. VT will have a RUDE AWAKENING fo 2020 tax filings…capital gains FREE MNONEY…is gone, gone, gone.. THUS? THat portion or personal income is DOWN! Add that in to the other losses in regular tax income…and you get a Two- fer slap down. Be prepared for a two notch downgrade in VT credit ratinng. OH! I figure the VT Pensuion fund has LOST about $150- $170 million on their stocks….STOCKS are 44% of VT Pension investments! Bonds did better.

    HEY, did the Legislature pass their wished for bill to freely give access of CONDOMS to iddlle and High Schoolers? That was on the docket. CAn you imagine how importamt that is to our survival 🙂

    • They’ll have to use paper bags for latex condoms….wonder if they see any irony there?

  6. Due to the current drastic drop in employment as a result of the mandated business shutdown, Vermont would be wise to re-do the budget now in anticipation of a drop in tax revenue that is sure to come. Items to address: 1. Lower expenses for Vermonters by renegotiating state pensions to defined contribution instead of defined benefits; 2. Allow parents to choose what they deem are safer learning environments through universal school choice (including home schooling) with tuition money transferred to the family; 3. Deregulate child care services to increase the number of affordable child care opportunities; 4. Cut all programs’ expenditures by at least 10%. And that’s just the start!

  7. This is your chance to vote these people out, and show them we are not standing for their miss use of are tax dollars their over budget is getting out of hand, we also need to set their salary, not themselves giving each other raises, for the little work they do,

  8. It’s amusing and sad that the pollyannas in Montpelier mock President Trump while they thrived on the good times the President has helped create. As for blaming him for not anticipating the onset of the coronavirus pandemic, one has the wonder if his majesty Obama or either of the Clintons would have foreseen the future any better. Answer is a simple NO. These pundits are the laughing stock. Only problem is “it ain’t funny McGee!!!!”

  9. Unfortunately the majority of the lawmakers in Montpelier are there to serve their own interests. Most have no business knowledge and rely on others who at best are poorly prepared to handle such amounts of money. The states financial adviser who calls himself an economist should have been replaced a long time ago. That being said the only way to correct our present situation is for a drastic change in the structure in Montpelier. This last maneuver by the Speaker to strip Represeantive Browning of her position on the tax committee was a show of just how childish they behave up there. Instead of removing the remote voting article as requested the Speaker pressed on and was the one to blame for making the reps to return. Removing Browning from the tax committee because you got angry at them shows a lack of true interests in what’s best for the state. She is a financial expert who is probably one of the most knowledgeable lawmakers when it comes to financial matters.

  10. Yes, Vermont’s reckless legislative spending and overregulation that has proliferated
    from the ” Bloated” Dome for years !!

    The brain trust we have in Montpelier is scarier than this Wuhan Virus, now that’s
    saying something …………………….

  11. The legislature should pass a limited budget and adjourn instead of legislating behind closed doors and without public oversight, which should be avoided at all costs,Just Adjourn and go home to preserve freedom and liberty of all Vermonters .

  12. Shock.. in the gold dome.. what a rude awakening for them! Finally!! Too bad these people are taking the whole state down with them..
    The “good times” could not go on forever and this is just the kind of situation that the gold dome did not plan for.they can milk the taxpayers all they want,but even now there will be less and less till we fall even further as a state. Pretty scary unless something changes now!!

  13. Titanic Outcome was Predictable !

    The Vermont “Ship of State” was taking on water, floundering during the nationwide financial boom. Now that the nation is experiencing a gigantic financial contraction, Vermont’s economy will be completely swamped and the “ship of state’s” destination is most probably near “Davy Jones’ Locker !”

    Sadly, this is the rosy view of our predicament. With the state’s primary reliance on Recreation, Tourism, Hospitality and Higher Education as the primary “engine” of economic power and all of these sectors currently “dead in the water” and their chances of returning to “full speed ahead” are slim or none.

    As John Klar points out, this is not something that should come as a big surprise – it is the course the “ship” has been on for the past 20 years and outcome of the current captain and crew decided to steer the ship directly at the iceberg was inevitable !

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