My Testimony to the Joint Fiscal Committee

Arriving late due to work, I came into the Rutland Vermont Interactive TV Site hoping to find several fellow patriots concerned about our budget. I was disappointed. The room contained about 10 other people, each from some non-profit or a beneficiary of some non-profit, concerned and saddened that their particular group was facing budget cuts. Universal Healthcare Advocates and Worker’s Center representatives also were in the audience. I signed up to speak and was the last on the list for Rutland.
Over the next half hour, person after person pled for their pet projects and related tales of sorrow over what life would be like without those programs. A few offered a simple solution to the budget crisis, more taxes. Yet, in this chorus calling for legalized theft of your hard earned money, there were voice of sanity and fiscal responsibility. Members from the Vermont Campaign for Liberty from around the state called on our elected representatives to follow the Constitution and obey Chapter 1, Article 18.
When it came to my turn to speak, I presented the following (please note that I don’t write my speeches, but only refer to notes, so this isn’t a exact transcript of my speech.):
“I want to thank the Committee for holding this public hearing and I agree with many who have gone before me that your job is not an enviable one.
Vermont is in trouble. We are facing a problem that we saw coming for years, but did little to prevent. Numerous voice sounded the alarm well before the most recent economic downturn calling to us, “this budget is not sustainable”. Yet those voices went unheard.
In fact, even as the economy started to sour, Montpelier went on a spending spree. Creating programs, agencies, and mandates in such a manner that a drunken sailor would blush at how our tax dollars were thrown around. Even in the last two fiscal years, when the reality of what we faced could no longer be denied, Montpelier continued to created boards, commissions, and programs which further increased the size of government.
The truth is and was well known back before this fiscal house of cards collapsed. We all know that our economy goes through a cyclical process of boom and bust. In the last forty years, our economy has gone through six recessions of a years length or more. This equates to a recession occurring every six years or so. During each recession, we find ourselves in the same place. Falling revenues and increase budgetary demands leads to half measures and wishful thinking. We just squeak by with partial cuts and increase taxes. Yet, when the recession ends, we returned to our spendthrift ways and act as though the last year or so never happened. However, six years later, we are back again, the budget gap has grown larger and the revenue shortfalls greater. Clearly the budget and the size of government as it exists right now is not sustainable.
In preparation for this hearing I went to the Joint Fiscal Office’s website and printed off their five year projection for budgets and revenues. I am sure you already know what I found, but I think it is important to restate the problem we face. According to the Joint Fiscal Office, over the course of the next three years, fiscal year 2011 through 2013, Vermont faces a combined debt of $462,000,000. The equivalent of about a third of our budget. However, these figures are based upon two optimistic projects by the Joint Fiscal Office. The first projection is that the budget will not grow more than the rate of inflation (approximately 3.5% per annum). Of course given the fact that simple inflation alone does not take into consideration mandated programs from Washington (generally un-funded) and the growth of costs associated with Medicare/Medicaid which has traditionally outstripped inflation by a mile. The Second, and the most suspect, projection is that revenues for the next three fiscal years will grow by 2.34% (FY 11), 6.87% (FY12), and 6.34% (FY 13). These incredible leaps in revenue are the only thing keeping our projected budget deficits from growing completely out of control. Without this optimistic projection in revenues, Vermonters would be facing a debt closer to $800,000,000 over three years.
So what traditionally has been the response of Montpelier when the budget goes out of balance? Well, as you know the government attempts to chip away at the problem, cutting a little bit here, trimming a little bit there, raising taxes on some, and fees on others. Yet, this approach rarely solves the problem nor does it provide a long-term strategy to prevent future crisis. A prime example of this tried and not so true method is the most recent Miscellaneous Tax Bill.
Under this bill, the legislature seeks to make up the shortfall in the 2010 budget by increasing fees, taxes, and other revenue generating payments. Yet, this bill is a “death by a thousand cuts” to the average Vermonter. The hard working Vermonter, who already has seen his stagnant wages diminish in value over time, will now face higher fees on his property, his licenses, and his access to governmental services. The people who you rely upon to pay their taxes and make this state work, the ones who have little money to begin with to make ends meet, are now to be milked in a hundred little ways of more of their expendable income. The sad reality of this bill is that it does not solve the problem it seeks to correct nor provides a long term solution to our recurrent fiscal problems. It is only a band-aid provision applied to a gaping chest-wound of a fiscal crisis.
So what is the problem? It is very simple. The problem is the paradigm in which budgets are made in Montpelier. The process is flawed because you approach the issue of budgets by saying “what is it we want?” and then you figure out how to pay for it. I would recommend to you that a sustainable and more fiscally responsible approach would be to ask yourselves, “what do we have for revenues and what does the state need?”
The Vermont Campaign for Liberty believes that the government serves an important, but limited purpose in society. The primary functions of government, that which that government needs to do, are providing for roads and bridges, law enforcement, courts, jails, and infrastructure. These should be of first concern and the first to be provided for. However, today our roads and bridges are in sorry shape, law enforcement is spread thin, our courts are understaffed and becoming harder to access for average citizens, and our jails are overcrowded. Meanwhile, Montpelier continues to create more and more agencies and programs that have little to do with what we need and more to do with what we want. Fiscal responsibility demands that we identify the difference between wants and needs. Then pay for our needs before providing for our wants.
Tonight, you have heard numerous people call for the restoration of cut programs, but you have heard very little about how to balance this bloated budget. Therefore, I will do the unpopular thing and recommend the following to be eliminated, not cut, but permanently eliminated from the budget: Arts Council; Office of Chief Marketing Officer; Office of Economic Opportunity; Department of Education; Elevator Board; Film Commission; Commission on the Future of Economic Development; Department of Information & Innovation; Department of Libraries; Council on Physical Fitness & Sports; Vermont Scenic Preservation Council; Department of Tourism & Marketing; Vermont Life Magazine, Vermont Public Television Grant. Council on the Humanities, Early Education, the numerous (and often ignored) legislative studies, and land use planning grants.
These items are all well meaning and clearly something most Vermonters would like or want to have, but they are not necessary to the core functions of government. By cutting these items, the State Budget would be reduced by at least $60,000,000 and without effecting the traditional core functions of State Government.
As a conclusion to my testimony I want to make the following two observations. First, budget planning to date has always been done with good times in mind, but this ultimately leads us to the inevitable fiscal crisis like we are now experiencing during the bad times. Perhaps, we need to plan our budgets as though every year is a bad year. This method negates the constant recurrence of fiscal problems while ensuring that the budget is sustainable and can weather any changes in the economy. Second, I want to point out that the method of identifying your needs and paying for them first before pursuing your wants has been a method applied in most fiscally responsible households around the state for many decades. It has worked for them over the years and it will work for you.