Part II: Nice Guy’s Finish
David Moats, in his excellent editorial aimed at deciphering Governor Scott’s “weirdly disproportionate use of a governor’s veto threat,” exposes the governor’s endgame: to usurp local authority over school employee compensation while pulling savings already anticipated for local school budgets into Montpelier’s coffers. How did we get here? Let’s rewind to the beginning of the year.
In January, the governor presented his budget outline to the legislature. While some items were enticing – more funding for the State College system and for preschool education – as the funding mechanisms came into focus, his plan got little serious consideration in the legislature, including from Republicans. Governor Scott’s budget shifted spending between the Education Fund and the General Fund in a manner that would have raised the property tax about $0.06 (or 4%). Remarkably, his plan mandated a freeze in all local school budgets just as school boards were finishing up their school budgets for Town Meeting.
With the governor’s budget lacking credibility, the VT House had to undertake creating the 2018 state budget from scratch. The House put together a budget that kept spending increases to about 1%, tightened the belt on a number of state programs, and allocated desperately needed additional funding to programs like mental health care, affordable housing, and addiction treatment. Importantly, the House budget raised taxes not at all. Not in fees, not in income taxes, not in property taxes. At the end of March, the House budget passed by the unheard of margin of 143-1. Governor Scott called the House budget “a positive step.”
The VT Senate in a sign of encouraging bipartisanship passed their version of the state budget on a unanimous vote in late-April. In what is typically the last action of the legislative session, the House and Senate began the process of ironing out the differences between the two budget bills before presenting the final budget to the governor.
In was at this point, as the four-month budget process was heading to a fiscally responsible, tripartisan conclusion, that the governor injected a degree of chaos into the proceedings.
Claiming to have found up to $75 million of savings for the state budget, the governor demanded two changes from the legislature in order to capture these savings. First, he required that local health care benefit negotiations between school boards and teachers instead be conducted by his Administration in a single statewide contract. Second, he insisted that savings derived from those negotiations be pulled away from local school districts and into the state budget.
The governor’s talking point on projected savings was soon lowered to $26 million. Since the savings would only start to materialize halfway through the 2018 fiscal year, his estimate was ultimately lowered to $13 million. That’s real money. And the average VT property tax payer could save $22 annually. But was it worth threatening a budget veto and overturning a bipartisan process that had worked so well for 22-bucks?
How would the governor generate these savings, and why hadn’t anyone else come up with such a plan?
As the discussion unfolded in early May, it became clear that these savings would materialize regardless of what the governor or the legislature did. The $13 million in estimated savings will occur in 2018 as teachers transition to health care plans offered through the Vermont Education Health Initiative (VEHI). VEHI is essentially a cooperative that buys health insurance plans in bulk to get better pricing. It’s a collaboration between school boards, teachers, and administrators. Of course, as things now stand, the savings generated from the 2018 transition to VEHI will go into local school budgets. The governor’s plan: with his office negotiating one contract for the entire state, those savings will instead be requisitioned into the state budget.
What about the governor’s threat to veto the budget if negotiations for teachers’ health care benefits weren’t moved to one statewide contract negotiated by his administration? I have heard from several local school board members supportive of the governor’s entreaty. They feel that school boards are totally over-matched in these local negotiations. The teachers with whom they negotiate are better trained and have better access to information as to how contracts are settling in area schools. The VT teachers union also has a professional staff of negotiators supporting their local members. Since the Vermont School Board Association can’t compete, the argument is that negotiations would best be centralized in Montpelier.
I’ve heard a different perspective from many of our local teachers. To say they are concerned about the governor’s proposal would be putting it mildly. Collective bargaining, by definition, is a negotiation between an employer and a group of employees. With the governor’s demand that his office negotiate teachers’ health care, teachers would no longer be negotiating with their employer. They’d be negotiating with the governor. Legal questions have been raised regarding the governor’s mandate. No doubt his plan could wind up in the courts.
Setting aside the fact that there are legitimate concerns on both sides of this question, and the fact that it is a massively controversial political (if not constitutional) question, Governor Scott dropped both his idea and his threatened veto in the legislature’s lap days before scheduled adjournment. Under normal circumstances, how does the legislature deal with complex policy issues like this? We would take testimony from legal experts, interested parties (school boards, teachers, union representatives, school superintendents), health benefit experts, and members of the governor’s administration. This issue would probably be looked at by the Education Committee, the Housing General Committee (which deals with labor issues), and possibly the Judiciary Committee (which deals with constitutional questions). And, of course, the House and the Senate might come to different conclusions on the matter.
Considering that Governor Scott is no political neophyte in Montpelier, he knew precisely the challenge he put in front of the legislature three weeks ago. The negotiation between the governor and the legislature has been revealing. Leaders in the House and in the Senate came up with three different compromise proposals. Frankly, I liked none of them, but I did appreciate that they were proffered in the vein of compromise; no one is supposed to be happy. The extent the legislature was offering very creative – and very imperfect – policy options to the governor demonstrated the legislature’s willingness to compromise, get a really good budget passed, and adjourn.
At each juncture, the governor expressed interest. Days of discussion ensued. And the governor walked away. Finally, on Wednesday this week, the House Speaker and the Senate Pro Temp declared an impasse in the negotiations. They informed legislators that on Thursday we would pass the state’s budget and adjourn.
And a funny thing happened on Thursday afternoon. The governor picked up the phone and one last scramble of a negotiation was on. At 3:30pm, the Speaker laid out to a small group of state reps the compromise proposal she had hammered out with the President Pro Temp and the Governor. The Senate very quickly consented to go along. It took the Speaker a little longer to pull her caucus together, but by the end of the afternoon House members were on board. And then another funny thing happened. The governor changed his mind. When it looked like a deal had been struck, he made additional demands and the deal collapsed.
The budget passed by the legislature late Thursday night was very similar to the House version passed back in March. 1% spending growth, no tax increases. Interestingly, 40 Republicans chose to change their votes and vote against the budget. The education funding bill (the “yield bill”) that also passed on Thursday night included the last compromise proposal being discussed with the governor. It lowers the property tax rate by 1.5-cents; it sets up a commission equally divided between teachers and school boards to develop legislative ideas to be considered by the legislature in January; and it mandates that all teachers’ health care contracts expire by September 2019 in preparation for the possibility of moving toward a statewide system of school employees’ benefits. Who knows? Maybe the governor will change his mind again and he won’t be the second governor in 227 years to veto a state budget.
If the governor vetos the state budget and the education funding bill, the state of Vermont will be in a precarious financial situation. Unlike the federal government, if we don’t have a budget in place on July 1st, the funding stops. No funding for the government, for social services, or for schools. Does the state continue to pay interest on state bonds? Did I mention that Vermont is up for a rating agency review in June to determine if we keep our triple-A bond rating? Could the timing be worse for this political tomfoolery?
As for the path down which the governor has led us in the last three weeks, I believe that what is at stake goes beyond the fiscal health of our state. Whether it’s the demonization of political adversaries or the weaponization of information or the degradation of policy discussion to a point where no middle ground is even sought. We have our political battles in Vermont, and while I cling to the hope that we’re immune to the polarized hysteria going on “out there,” I’m less hopeful today.
In recent weeks, I’ve heard from many of you with suggestions, criticisms, and words of support. I hear you. Thanks for paying attention.
In early-May, I chaired the conference committee as the House and Senate resolved their differences on S.50, a bill to expand the use of telemedicine in Vermont. We worked with primary care doctors, hospitals, mental health providers, insurance companies, and patient advocates to make this service more available in our state. My hope is that seeing a doctor won't always have to involve getting into the car or making an appointment.
On May 4th, Michael Caduto, the Director of the Friends of the Justin Morrill Homestead, and John Freitag, a member of the Strafford Selectboard, were in Montpelier to accept an award on behalf of Strafford from the Vermont
Department of Forests, Parks & Recreation. Strafford was being honored with a Community Tree Steward Award for the community's forestry work and JMH's initiative to restore Senator Morrill's apple orchards.
Finally, a shout out to The Road to the Pogue, the best running race in the state. My wife Laurel and I have been running the race for a decade and, in spite of being in terrible running shape (me, not her), we did it again last Saturday. Saw dozens of Norwich and Thetford runners there, as well as freshman Woodstock State Rep. Charlie Kimbell. Charlie was the race director of TRTTP for a number of years. That work is now being done by Norwich resident and trail enthusiast Gered Dunne. Great job, Gered!