Scott calls for ‘restoring our fiscal foundation’ in budget address

Michael Bielawski/TNR

NO NEW TAXES: Keeping true to his campaign message, Gov. Phil Scott, in his second budget address, pledged no new taxes and controlled budget spending.

MONTPELIER, Vt. — In his second budget address, Gov. Phil Scott kept close to his campaign promises and continued his crusade to keep state spending in line with Vermonters’ annual wage growth — about 2 percent.

“Today I present to you a balanced budget that makes strategic investments to grow the economy, make Vermont more affordable and protect the most vulnerable. And for the second consecutive year, it does not raise taxes or fees,” Scott said Tuesday before a joint session of the House and Senate.

Keeping spending flat

To keep spending under control, Scott cited a new “growth rate calculation,” a six-year rolling average of wage growth to be used as a benchmark for each new budget. For the fiscal year 2019 budget, the estimated growth rate is 2.36 percent, Scott said.

State spending in the governor’s budget is $3.87 billion, up $82 million from last year’s spending of $3.79 billion. Scott said the increase is within the confines of the wage-growth formula.

The governor’s budget priorities saw a number of important changes, from phasing out taxes on Social Security benefits and paying down debt on state pensions to establishing a new statewide funding system for education.

Social Security

On revenues, the governor announced that he wants Vermont to part with the five remaining states that fully tax social security benefits. To that end, Scott urged lawmakers to phase out taxes on Social Security benefits for seniors living on law and moderate incomes. The request earned him one of the longest and loudest applauses of the speech.

Pension debt

On Vermont’s pension liability, Scott proposed paying an additional funds to ensure that the state doesn’t lose its top credit rating.

“Our per capita debt assigned to every Vermonter has increased since 2013 while it declined in all other triple-A states,” he said. “Additionally, Vermont’s pension liabilities – the money owed retired public employees, including teachers – is the second highest among these same states.”

The governor’s budget proposes $20 million more than required to keep pension debt under control.

Education

On the education front, he said school boards continue an uphill battle to maintain education quality while keeping property taxes under control.

“We have districts which trimmed programs for kids to restrain budget growth to one, two or three percent each year, only to learn their tax rates are going up eight, nine or 10 percent because others have increased spending dramatically,” he said.

“With only 76,000 students in an education infrastructure built for well over 100,000, inefficiency prevents us from investing more in educational programs for our kids even as taxes skyrocket.”

The governor’s plan to save money is to getting staff-to-student ratio a little closer to the national average.

“We should chart a course that steadily moves us from an average of one adult for every four students to having one adult for every five students, over the next fiver years – using the natural retirement and attrition of the current workforce.”

Changing the ratio stands to save Vermont over $100 million a year while leaving the state with the lowest ratio in the nation.

The workforce

Also on the economy, Scott once again highlighted Vermont’s ever-shrinking workforce and promoted career readiness with his “cradle-to-career” initiative. He noted that 50 percent of all high school graduates don’t pursue postsecondary education.

To deal with this, Scott is calling for more adult career and technical education efforts and he’s asking the state for $500,000 to purchase training equipment and more spaces for this more job-specific form of training.

While getting more Vermonters to work was one theme, so was getting more workers to Vermont. Scott announced a new $3.2 million targeted ad campaign called “Think Vermont,” which will reach out to people who may be interested in the state, such as former Vermont college students or frequent Vermont vacationers.

“These (conventional) efforts aren’t working in today’s competitive world. In 2018, the technology exists to identify people who want to hear our story. So, let’s use these tools coupled with direct contact to close the deal.”

Opioid crisis

To help address the opioid crisis, Scott highlighted a new initiative to get Department of Labor employment services directly into Vermont’s Recovery Centers.

“This work has already begun. Employment counselors will serve three recovery centers by the end of this Spring, and all of them by the end of the year – at no additional cost to Vermonters,” he said.

Green energy

On green energy, Scott said that by “focusing on chimneys and tailpipes” – the two greatest sources of emissions – the state could stimulate more economic investment and job creation.”

He said the state’s Clean Energy Plan has identified wood-heat as an essential piece to achieving 90 percent renewable energy by 2050. He said that his Climate Action Commission has recommended $300,000 to help homeowners replace non-EPA certified wood stoves for more efficient modern stoves. He said in addition to achieving cleaner energy, this wood-heat strategy will help support the local forest-products economy.

And on his push for more electric vehicles, Scott wants to use $1.8 million from Vermont’s share of the Volkswagen emissions settlement to double the number of renewable energy vehicles in Vermont by 2022.

Also, on the EV push, he said his administration would work for less expensive charging rates at times when it has the least strain of the electric grid. And he would like to see Vermont take a lead role in the manufacturing of battery storage.

Water pollution

Another big challenge for the state has been the high cost of the Lake Champlain cleanup of phosphorus pollution. Scott now sees the challenge as a potential economic opportunity.

“My administration is exploring how the state can help create a commercial enterprise that captures a large amount of Vermont’s excess phosphorous and convert it to a wholesale or retail product,” he said. “We’ll soon be looking to harness the imagination and competitive nature of entrepreneurs, scientists and inventors, seeking proposals for the most efficient and commercially viable ways to segregate, process, package and sell phosphorous.”

Scott said with the right innovation and technology, Vermont could tap into the large market for phosphorus in the energy, fertilizer and compost industries.

Reaction

State Rep. Vicki Strong, R-Albany, said the item that caught her attention was the governor’s push to fix the state’s broken education funding.

“I like his courage to address the funding issue, the formula we’ve been using, and to say it’s not working,” Strong said.

She added that one way to help fix education funding is to expand school choice. She said she’s hopeful that as the education funding discussion advances, so will greater opportunities for school choice.

Michael Bielawski is a reporter for True North Reports. Send him news tips at bielawski82@yahoo.com and follow him on Twitter @TrueNorthMikeB.

Image courtesy of Michael Bielawski/TNR
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5 thoughts on “Scott calls for ‘restoring our fiscal foundation’ in budget address

  1. EVs and Plug-in Hybrids in Norway

    As of December 2017, the Norwegian light-duty, plug-in fleet consisted 141,951 plug-in EVs, and 67,171 plug-in hybrids. The fleet included more than 24,000 used plug-in vehicles that were imported.

    Very High Gasoline Prices: Regarding plug-ins, Norway is a special case. Gasoline prices are about 9 – 10/gallon; 70+% is tax. It has plug-in subsidies up to the armpits. With enough subsidies in rich Norway (household income over $105,000/y), the government can make it look like Norwegians are “voluntarily” buying plug-ins.

    “What we have proven in Norway is, if you give enough subsidies and impose enough restrictions on fossil fuel vehicles, people will buy electric,” says Andreas Halse, the environmental spokesman in Oslo for the opposition Labor party. But he adds: “If we want to continue to be an example for the rest of the world, we need to show how this can be commercial. We need to get there, because we can’t rely on public finances forever.”

    Hans Olav Halvorsen is a government employee who drives the 200 km between Oslo and Lillehammer 2 – 3 times a week. His Tesla Model S is not subject to tolls on the motorway, saving him up to NKr 810 ($105) every week. Charging at one of the 20 Tesla superchargers — there are eight more for other electric cars — is free. More importantly, his Tesla is free from VAT and the high purchase taxes of IC vehicles, such as a BMW — cutting the price roughly in half. “To be honest, the reason for buying the Tesla was a little bit about the environment, but mostly the savings,” he says. “I think most of the owners are thinking about their economy.” According to NEVA, about 72% of buyers are choosing a plug-in for economic reasons, i.e., the generous monetary subsidies, and just 26 per cent for environmental ones.

    Taxes on New Cars, Except Plug-ins: Norway taxes cars more heavily than most European countries. For instance, a BMW 5-series, with a four-liter gas engine, attracts a purchase tax of NKr 230,000, bringing its total cost, including VAT, to about NKr 770,000 ($100,100).

    The basic versions of Tesla’s Model S and Model X, the SUV model, if fully taxed would cost about $150,000. But the price is about the same as a BMW 5-series, if no purchase tax, and no 25% VAT. No wonder Norskis love them EVs!!

    A proposal to raise the road tax for plug-ins while cutting it for IC cars caused a crisis in the minority center-right government last year.

    EV drivers may use bus/taxi lanes; a great advantage during peak hour travel on Oslo*.
    EV drivers pay no parking fees, anywhere in the country, except at private garages.
    EV drivers pay no tolls on roads, bridges and ferries; a major saving for many drivers.

    *An Oslo newspaper survey found a total of 829 vehicles used a bus/taxi lane between 7:30 and 8:30 a.m., of which, 618 vehicles were plug-ins (74.5%). Buses were only 7.5% of the traffic, and taxis, two-wheelers and mini-buses made up the rest.

  2. EVS AND PLUG-IN HYBRIDS IN NEW ENGLAND AND NORWAY

    The all-knowing state bureaucrats, working together with self-styled transportation gurus, and RE activists, want to force people to drive electric vehicles.

    The same folks pushing for a unilateral carbon tax also are pushing for plug-in EVs and plug-in hybrids, including light duty vehicles, LDVs, buses and trucks. Never mind the plug-in buses and trucks are still in their infancy. Vermont, with chronic budget deficits, must have money to burn on various follies.

    Because of their short electric range, plug-in EVs are next to useless in Vermont, especially in winter, on cold days, with snow and ice and no 4-wheel drive. If they had larger batteries, 85 – 100 kWh, and 4-wheel drive, such as a Tesla, they would have ample range, but be more expensive.

    The only approach that makes sense in New England is plug-in hybrids with 10 – 15 kWh batteries. They would have an electric range of about 30 – 45 miles, and then automatically switch to gas for another 500 miles. Public charging stations would not be required; owners would charge at home.

    Market Penetration: Here are some facts on plug-ins (EVs and plug-in hybrids)

    US:
    The number of plug-ins on US roads has increased during the past 6 years.
    Plug-in sales are expected to be about 200,000, or 1.2% of all LDV sales at end 2017.
    Almost half of plug-in sales in 2017 were in California.

    Vermont:
    Plug-ins increased from 88 in July 2012 to 1522 in January 2016.
    Pure EVs totaled 330, about 330/1522 = 22% of all plug-ins.
    The plug-in increase was about 1522 – 1113 = 409 from Jan. 2015 to Jan. 2016.
    Total plug-ins could be as much as 2000 at end 2017
    New vehicle registrations were 41000 in 2016.
    Plug-in registration was about 409/41000 = 1.0% of all new vehicle registrations.
    The Comprehensive Energy Plan goal is 4700 new plug-in registrations in 2025. See page 164 of CEP.

    People favor hybrids over EVs, because EVs just do not have the range and are terrible performers under Vermont winter conditions. See below.

    In Vermont, the two vehicles shown in the table totaled about 48% of all plug-in hybrids. The Chevy-Bolt, a pure EV (not a hybrid), was added to the table, because it was the second-best selling EV in the US in 2017.

  3. Electric autos? What fuels will be used to generate the electricity consumed at the charging stations? Who will pay for it? How much carbon will be spewed out from the generating process unless wood will be used. As for the ever rising cost of education in juxtaposition to a declining student population, I cannot understand why year after year costs rise. Has anyone ever thought of reducing the teacher/administrative population to keep the teacher/student ratio constant? This would force those responsible to insure that the cost/student remains level. As matters now stand the current cost/student is way out of line with most states. It would seem reasonable to expect that as the student population declines, the attendant costs would decline proportionally.

  4. The quality of education has nothing to do with property taxes. When these legislators get that through their thick heads, maybe something can be done. They don’t get it. Those property taxes….about 75% of them…….go towards TEACHER COMFORT! Not the students. They actually think that throwing money at a teacher makes them a better teacher? Really? Then why is it that home schools and private schools, whose teachers make considerably less, pump out better education students than the public schools? And don’t give me the old song and dance of how public teachers have more to deal with. Doesn’t fly.

    • Peter , ” Teachers Comfort ” that’s an understatement !! I worked in the public
      sector for over forty plus years , yes I’m retired so quit taxing my retirement I
      already paid .

      But in my forty plus years , I had never seen every one in our organization get a
      raise every year , even those that excelled !! But every year the Teachers ( NEA )
      force a budget with pay increases ( 6-7% ) while the test scores and enrollment
      are both down……NO Shame !!

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