report from montpelier

In this two-week series, Representatives Joan Lenes and Kate Webb give an update on goings-on in Montepelier, providing glimpses of what legislators are doing to close the budget gap, increase economic development, and address health care issues.

By Representatives Joan Lenes and Kate Webb

This year we are highly focused on working together to bring forth a school funding reform bill; make sustainable changes in state spending to address a widening budget gap; set forth resources to address a new plan to clean up Lake Champlain, and address health care reform beyond single-payer. With challenges come great opportunities, and one is to see that we have truly moved into what we have come to call the “new normal.”

Funding State Government

As Vermont comes out of the Great Recession and Tropical Storm Irene repair, the big focus in the Legislature this year is the identification of structural changes needed to bring our long term spending projections in line with our long-term revenue projections. Putting the budget on a sustainable path requires redefining what state government should support, can support, and what the taxpayers ultimately will support. Those on the left are coming to terms with the reality that programs held dear face cuts. Those on the right are coming to grips with the reality that new revenues will need to be raised. What has become abundantly clear is this: we cannot see this year’s gap in isolation using only one-time, short-term solutions. To do so will only create a bigger gap next year followed by increasing gaps in years to come. All legislative committees, all members in all parties are engaged in finding solutions to close a $112 million gap. Restructuring parts of state government, consolidating programs, insisting on efficiencies, and adding revenues are all under scrutiny as we go through this process. The end product will be a balanced budget.

Economic Development: Building on Our Strengths

Vermont continues to work hard at sustainable economic development doing what it can to make sure the private sector thrives in an increasingly competitive world. We can point to challenges and to successes. We are emerging from the recession steadily while we maintain our position as a low unemployment state. We have created about 11,000 net new jobs since 2011 even as we see significant churn in the economy. Our tourism sector remains strong and the farm and food economy has added about 200 businesses and 2,000 jobs in the last six years, increasing the value of agricultural products by 15 percent.

We cannot compete with some of the rising economic stars such as Raleigh, Boulder, Seattle, or Belgium and Ireland in the traditional way with huge tax incentives, cheap labor, or cheap energy, but we can compete in other ways. Our brand is strong: we have our Yankee work ethic; and our schools, quality of life, and broadband access are all improving. Our financial and insurance sector is a big contributor to our state as is the renewable energy sector. Vermont is home to extraordinary advanced manufacturing and technology businesses. The Legislature intends to build on these strengths through insurance modernization, a telecom initiative, improvements to marketing Vermont as a manufacturing and tech center, workforce education and training, and other economic development initiatives. We also expect to work on consumer protection initiatives for businesses and individuals. While this growth must come from the private sector, the Legislature can help influence it. A bill addressing these initiatives is under development in the House Commerce and Economic Development Committee.

The “Cost Shift”

The Legislature is currently looking at options to address the underpayment to the doctors who receive only 60% reimbursement from patients who are on Medicaid. Raising the reimbursement rate by $1 would generate a federal match of $1.10. To increase this rate and draw in the federal match, the Governor proposed a 0.7% payroll tax. He argues that this would increase the payments to doctors and be recovered by employers through a reduction in employee health insurance rates. Concern has been voiced that it will be difficult to determine the true impact on these rates. This and other options are under review in the Statehouse.

In next week’s Montpelier Report, look for more on education reform, renewable energy standards, and the quality of Lake Champlain’s waters.