Fighting Fiscal Obesity in Montpelier 
By John McClaughry

On January 16, five days after the Governor's state of the state message, the Emergency Board got a rude shock. The consensus projection of state economist Jeff Carr and legislative economist Tom Kavet contained the bad news. Although Vermont ought to weather Fiscal Year 2008 (ending in June), FY09 is likely to see a $25 million reduction in expected revenues.  At the same time, there is a 52% probability of a recession, inflation will continue its upward march, and legislators and agencies are clamoring as 
always for more spending on their favorite programs and interests.

After six high-pressure days of reworking of the FY09 state budget, Governor Douglas delivered a somber budget message. In view of the economic uncertainty, he said, the next budget year will be the tightest of his tenure, with "little margin for error."

The most watched General Fund number is probably the Medicaid budget. During the Dean years Medicaid coverage expanded dramatically. It has become the Monster that Ate Montpelier, chronically plunging into the red, always more expensive than the cost predictions made at every expansion.

Next year the Governor wants to put another $27 million into Medicaid, increase patient premiums and copays, and add $7.5 million to keep higher income Catamount Health enrollees on the rolls. This runs directly counter to the legislative leadership's desire. That is to eliminate copays, eliminate premiums, eliminate private health insurance, put the government in charge of everyone's health care, and send the $2 billion bill to the 
taxpayers.

The Douglas proposal that has attracted the most lightning is his proposal to lease the state lottery to a private company. That deal would drop $50 million on the treasury up front, to be used for school construction and a (desperate) one-year slowdown of rising education property taxes. The private operator would of course hype lottery marketing 
to earn back enough to pay off the state and please its investors. The era of "please play responsibly" would come to a sudden end.

Beyond those leading items, the Governor makes the point that in straitened times the state needs to "evaluate every program, every service and every investment to ensure maximum effectiveness and efficiency." This is a worthy objective, but rarely if ever achieved in Vermont.

Can anyone remember a state spending program, launched with great fanfare, then found to be inefficient, worthless or counterproductive, and scrapped?  Probably not.

Take low income heating assistance. For twenty years or more the state has financed the weatherization of low-income homes. For as many years the real incomes plus benefits of the lowest quintile of Vermonters has been rising. Vermont has happily experienced twenty years of warmer winters, thanks to the global warming that the Democrats in Montpelier are determined to reverse.

But despite high heating oil prices (that the Democrats want to increase to pay for their program to advise people to stop burning so much fuel), one would think that by now the state ought to at least be leveling off in heating fuel assistance. But our "most generous in the nation" heating benefit program keeps on going up, and the Governor wants $8 million for new weatherization grants.

The Governor himself notes that "the money saved in the first few years [from weatherization and energy audits] would easily repay the loans, and all the savings after that is money back in the pocket of the home or small business owner." How about asking the home and small business owner to use the savings that are "back in their pocket" to pay back the taxpayers from whom the government took the money to make those savings possible?

The Governor wants $4.6 million more to subsidize more college scholarships.  The students who use those scholarships will over their lifetimes (probably lived elsewhere) earn hundreds of thousands of dollars more than those who didn't go through college. Why couldn't those fortunate students pay back their college costs out of their much higher lifetime earnings? 

There are many other examples of Vermont's chronic penchant for showering taxpayer-financed benefits on non-poor people, while asking little or nothing in return.

A new spending feature in this year's budget is an appropriation for twelve new obesity counselors to be deployed around the state, consuming perhaps half a million dollars in compensation. A useful addition would be an Obesity Czar in Montpelier, who would put state government on a serious diet.
 

John McClaughry is President of the Ethan Allen Institute