McClaughry: Gov. Phil Scott’s diamond mine

By John Mclaughry

Some years ago, faced with the many competing spending demands before the Senate, I would say “all this state needs is a diamond mine.” That is, with an inexhaustible supply of dollars in the till, all worthwhile projects and programs could be funded — and a quite a few that weren’t worthwhile — without laying higher taxes on our voters.

John McClaughry

John McClaughry is vice president of the Ethan Allen Institute.

Last week in his budget message Gov. Phil Scott announced that, in effect, Vermont has at last found its diamond mine. It arrived in the form of half a billion in unspent American Rescue Plan funds, plus another $2.2 billion in the congressional infrastructure bill. In addition, despite COVID, our own tax base has produced a $320 million surplus across the three major funds.

Did Congress discover a diamond mine to be able to bestow this staggering benefaction on our little state? Not exactly. Congress has voted more than $10 trillion in deficits over the past 10 fiscal years, signed into law by Presidents Obama, Trump and Biden. The 2020 Trump budget ran $3.16 trillion in the red, and the 2021 Biden budget added another $2.8 trillion. There’s no end in sight.

One consequence of this fantastic deficit spending is a 7 percent rise of the Consumer Price Index over the 12 months ending in December, the largest 12-month increase since June 1982.

But let’s disregard that and look at the far happier Vermont budget situation.

For Vermont, 2022 will be a once in a lifetime” historic moment.” The governor proposed to pay off $52 million in state debt, provide a one-time $45 million property tax rebate, reduce tax rates on Social Security and military pension income, and increase the nation’s most generous Earned Income Tax Credit. Those proposals should be relatively noncontroversial. The debate will be over the distribution of the vast spending of this windfall.

Once again the governor focused on the lack of workers to take 23,000 good jobs going begging, even as in the past year our workforce shrank by 24,000. The governor wants lots more workforce training, and more money for health care workers, technical education centers, child care, housing subsidies, colleges and mental health.

There are some important conclusions one can extract from the budget message. First is the governor’s commendable view of fiscal responsibility: we can’t commit a billion dollars to pay for continuing programs when there’s no assurance that we’ll have the money to keep those programs going once launched. That means that we can’t risk future tax increases.

Second, the governor wants to address climate change but not by new taxes and mandates. His offer to the climate change advocates is $216 million to support home weatherization and “community resiliency,” an indistinct category that includes steps to reduce flood damage. This will certainly be a flash point with the Democratic legislators eager to fund their sweeping Climate Action Plan.

The climateers’ goal is driving down carbon dioxide emissions by 80% by 2050 by inflicting higher gasoline and diesel prices on cars, trucks and buses, plus higher heating oil and gas prices paid by businesses and homeowners. That runs aground on the governor’s constant opposition to carbon taxes, and to “mandates that Vermonters can’t afford.” He’ll need to make that clear to his agency heads, who will be under pressure from the Vermont Climate Council majority to adopt burdensome rules (that the legislators don’t want to vote on) to slay the climate beast.

Third, while the governor vowed to commit the full $395 million required by the teachers’ and state employees’ retirement plans, he did not make any commitment to pouring maybe $200 million into the two funds reduce the $5 billion-plus actuarial deficit. The recent agreement between the two unions and the state, while not an optimal fix, is nonetheless a step in the right direction, and should have a strong claim on available funds.

Finally, the governor’s budget proposals do not involve any significant structural changes in the way government systems work. There’s no welfare reform, no consolidation of the state’s five housing assistance programs, no relaxing of stringent land use regulations that defeat affordable housing, no proposed change in the health care system increasingly dominated by the high-overhead UVM Health Network, no concern for building a power transmission system to support the grand plan for electrifying everything, and no expansion of parental choice in education that would make providers compete for customers,

To be fair, the budget message is not the place to unveil any such transformative steps. What is long overdue in Vermont is a thorough-going performance review — that saved billions of tax dollars in Texas and Michigan. The Democrats proposed that in their 2004 platform, but it hasn’t been heard of since. There are plenty of ways to make state government more efficient and state economies more vigorous — perhaps enough to attract back those 24,000 missing workers. But Vermont is not looking for those ways.

John McClaughry is vice president of the Ethan Allen Institute.

Images courtesy of Wikimedia Commons and John McClaughry

5 thoughts on “McClaughry: Gov. Phil Scott’s diamond mine

  1. It will only continue to get worse as long as the politicians don’t care about bankrupting our children and the majority blindly follow their fearless leaders further down the rabbit hole.
    I can’t believe working people would move here to take jobs that don’t at least match the cost of living. But keep subsidizing things with taxpayer money and maybe it will get better.

  2. John tells us: “……. the budget message is not the place to unveil any such transformative steps.”……Oh, so painfully true!

    It looks like the State is going on a $2.7 billion dollar spending spree with very little hard thinking behind its actions considering the sheer size of the undertaking. The Governor and legislature seem to be acting like they just won the lottery, are hell bent on spending it today with nothing left to take care of tomorrow……..And tomorrow is sure to bring more problems needing resources the State won’t have.

    This is no diamond mine……It’s a welfare check that’s here today and gone tomorrow.

  3. It is all quite simple. Vermont is a Federal Whore, nothing more. As people Bernie and his like have come into the state and “changed things” we have no more real employers who help to employ so many of VT’s people. No more real contracts to build this or that. Scandles to rock the country like the EB-5 program. Family/wives/husbands of elected officals running ruffshod over the rules and cleaning up finanically for their incompetance and greed. Laws to hinder growth. I can go on all day .
    Also lets not forget the “law” about billboards. I see them all the time now. BIG, SHINY and ugly, all selling “clean”energy to the masses. Just not the masses here in VT. What about the constant free money Vt gets to “fix” this problem or that, like the sewage problems up and down the northern end of Lake Champlain. I have a hard time with the charities that give substandard food to all but the “refugees ” that come in the dark of night to brand new houses they do not pay for and in some cases anyway. We need proper fiscal management and a way to attract businesses and people to the state. These people are very up for spending other peoples money and well if it doesn’t work they are not out a dime.

  4. John, We are shipping all this debt and inflation, and the demise of the US$ onto our kids and grands

    No joy here for use of ‘worthless Confederate money”. A reoconing will our kids and grands

  5. Exactly my question when I read those numbers:
    How does lil’ole Vermont prostitute or reinvent itself in some image that could produce anywhere close to that in maintenance costs alone, of these superfluous infrastructures not only robbing the citizenry blind and keeping us hostage to their whims – how does Vermont make itself into THAT machine?
    I’m pretty getting AWAY from machines is what BUILT Vermont. Coerced into fancier not better, the machinery that was functional and lasted is sitting in fields around Vermont, rusting into the ground.
    I’d hang onto all that old machinery, cuz Vermont is going to ice itself into a lake, and when Spring comes and the flood starts, Vermont is going to have no place to go but ask China to bail us out.
    This is how it goes: debt slavery.
    Indentured servitude.
    Let me say that again: debt slavery.

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