11-17-14 – Upside Down Humble Cake

Posted by Chris Campion

Putney’s own Peter Shumlin, still not “officially” governor until a legislature likely votes him in, was recently “humbled” by the close election results.  But apparently not so humbled where he’s actually going to change his tune, according to VT Digger:

“We all know that the two biggest obstacles to prosperity are rising property taxes and rising health care costs that rise faster than our incomes,” Shumlin said. “We need to stem the growth of property taxes and continue to push for affordable quality accessible health care for all Vermonters.”

Shumlin seems to still think it’s OK, though, to grow the state budget at rates that rise faster than Vermonters’ incomes.  We don’t “all know” what the two biggest obstacles are, despite what a humbled Shumlin might say.  Health care costs rise because programs like Medicare and Medicaid do not reimburse at cost, so the shortfall is foisted on the private commercial insurers, that have to raise rates higher than the rate of inflation to cover existing federal “single-payer” shortfalls.  Vermont’s aging demographic worsens this trend, as the percentage of total Vermonters on Medicare and Medicaid go up, the cost-shift is put on a smaller and smaller number of people working who are covered under commercial insurers.

The biggest obstacle is not the fact that property taxes rise – they are rising because the budgets go up, local and state, and the money for education has to from somewhere.  Since we’ve hitched our wagon to the property tax star – and eventually had to change that to react to the reality that property values do not correlate positively with income levels – the would-be Governor is arguing to scrap the state’s property tax system that funds education, whether he realizes this or not.

Worse, Shumlin does not seem to think that the near-smackdown he received on election day wasn’t a vote against his own policies.  From the Rutland Herald:

The governor won’t change what he believes in, according to those close to him, but will look to make stylistic changes and do a better job of explaining to the public why he is pursuing certain policies.

He’s been explaining why he’s pursuing these policies for years now.  Making more noise about them is the solution?  Doubling down on a losing hand does not sound like the choices a rational man makes.

What Shumlin seems to be missing is that Vermont’s economy is failing, slowly, and has been for some time.  There are only two reason the doors stay open for the business that is the State of Vermont:

1.  35% of the state’s budget is federally funded – this is the governor’s recommended budget, by the way:

Aren't wish lists for kids?

2.  65% of all personal income taxes collected in Vermont come from households earning $100K+ in income (as of 2012) – a number that goes up every year (tax stats courtesy of the State of Vermont):

Numbers That Only A Bernie Could Love

It’s becoming increasingly clear that from a personal income standpoint, the entire state budget is hugely dependent on a tiny number of Vermonters.  They shoulder the increasing burden of being the biggest tax revenue component of the General Fund, the state’s 2nd-largest fund component of the budget, behind the Federal funds and in front of the Education fund.  In fact, of the 312,505 returns filed in 2012, the 100K+ households constituted 12.5% of that number – that’s 12.5% of households coughing up 65% of all net personal income taxes collected.

If more jobs were available – and not the kinds of jobs that the state is forecasting Vermonters can look forward to, like cashier and retail gigs (the biggest “growth” sectors in the state’s own labor forecast) – then you’d have fewer Vermonters struggling with property taxes and health care costs.  Low unemployment numbers does not equal job growth.  Low unemployment does not mean rising incomes, and it certainly doesn’t mean incomes rising faster than the rate of the state’s budget growth.

The state’s tax revenue structure is built upside down.  Vermont is far too reliant on a very small number of households to fund the state budget, and if incomes drop in this small demographic, the state’s budget goes into the tank – which is what seems to be happening right now.

So:  How are we going to pay for single-payer in Vermont, when we can’t pay for our budget now, without it?

{ 1 comment… read it below or add one }

Jim Bulmer November 22, 2014 at 12:58 am

All the more reason to throw the bum out and elect Scott Milne. After all, the conservative position garnered 54% of the vote.


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