The Legislature 
By John McClaughry

On May 12 the exhausted 2007 legislature wrapped up its work and went home. Rarely has a legislature so eager to make fundamental change failed so utterly in that task.

The legislative centerpiece of the session, at least in the eyes of Senate President Peter Shumlin, was the need to mobilize Vermonters in the great battle against Anthropogenic Global Warming, that is, against the menace of carbon dioxide.

The technique of choice was the creation of a new taxpayer-funded monopoly called the "thermal efficiency utility", to explain to supposedly dim-witted Vermonters that using less heating oil, natural gas, and propane would save them money. Finding the needed 25 million new dollars every year became the obsession of the session.

Shumlin's first idea was to levy a tax on heating oil, natural gas, and propane. That sank like a stone. Then he went after Entergy's Vermont Yankee nuclear power plant.

His first attempt was to be a tax the plant for storing used fuel rods on the plant's own property at its own expense. That idea violated a 2005 agreement by which Yankee agreed to pay some $28 million for that "privilege". Even some conscientious liberals balked at that breach of faith.

Shumlin then proposed a tax on "excess revenues" that Yankee might earn by selling 20% of its power into a rising electricity market. (The other 80% is sold at bargain rates to Vermont utilities.)  That would have set such a horrendous taxing precedent that the business world, led by IBM and GE, raised a vocal opposition.

The Senate passed the measure 15-14, but it was replaced in conference committee with yet another Shumlin scheme. As finally passed, the bill tripled the electrical generation tax on Vermont Yankee to raise the "thermal efficiency utility" money.

Also included in the bill was another handout to VPIRG's favorite corporate welfare recipient, the commercial wind energy industry. The bill gave wind towers a large education property tax discount to go along with its Federal production tax credit, accelerated depreciation, and sale of so-called green energy credits.

The legislature nervously passed the energy bill and sent it to Gov. Douglas, who announced Friday that he would veto it. Shumlin and Speaker Symington will be very hard pressed to find the votes to overturn a veto.

Meanwhile the legislature made a run at doing something about an issue that people really care about: restraining soaring education costs. The result was a feeble bill with all sorts of studies, but little relief. It did cut by two cents the education tax rates on both residential and non-residential property. The most notable provision tells high spending school districts that (starting in 2009) they must present two ballot questions to the voters.

One will ask approval of a budget that does not exceed the state's overspending threshold. If they approve that question, the voters will then vote to decide if they want to spend additional dollars that will trigger the state's penalty for overspending.

This provision caught the educational establishment by surprise and put it into full panic mode. The teachers' union and its allies understand that fed-up taxpayers are very likely to vote down the excess part of the budget.

The legislature also bought into taxpayer-funded "preschool for everybody". This has been a high priority of the education spenders, even though there is no evidence that providing "education" to 3- and 4-year olds will yield any identifiable educational results three years later.

The legislature rejected limiting preschool spending to at-risk children who might actually benefit. Instead the bill purports to place some limits on the growth of universal preschooling, and directs school districts to make use of "qualified" private day care providers. Parental choice and faith-based schools were conspicuously omitted. Welcome to the 15-grade public school system.

The legislature did pass a bill creating a $40 million revenue-bond financed Vermont Telecommunications Authority, to build and lease towers and cables to private companies that will provide broadband coverage to the backwoods. The key part of the bill, a relaxed regulatory regime for tower siting, survived a threat from Senate enviros. The new Authority will hopefully earn back its investments.

About the only other worthwhile bill sent to the governor was a Catamount Health amendment to not tax employers on their part-time and seasonal employees who have health insurance through another job or a spouse.

Verdict: a very liberal legislature balanced the budget, offered a desperate and embarrassing tax grabbing spectacle to combat the alleged menace of global warming, did little to stem the rise in education costs, and failed to do anything to improve the economic prospects of Vermonters.
 

John McClaughry is President of the Ethan Allen Institute (www.ethanallen.org).