May 13, 2009 By Thomas M. Salmon, CPA
Vermont State Auditor
May 2009
Reform is hard work. It does not occur quickly, or easily. It occurs by identifying and giving sustained attention to the action steps needed to reach a common goal. That goal for Vermont should be "what does success look like for the state in 10 years."
No one is questioning the work ethic of the Legislature and Administration in pursuit of a balanced budget. In fact, some say they are working too hard, trying to come to large decisions, in difficult financial times on a short schedule. Yet, "this is the way it’s always been done".
When I wrote the legislative leadership from Iraq in December 2008 expressing what I saw as our responsibility and that "We need to tell people the truth, in advance, that we are going to be making brave decisions with them", I was looking for a commitment to reality. The promises of Stimulus have arisen since then and with it a blend of both hope and false comfort. Critically, advance planning for crisis has not transpired.
Sin taxes are one example of the flaws in the current process. "The last time Vermont added a tax to beer my sales went down 17 percent, we all know where they went; across the river to New Hampshire," a small business owner conveyed to me this week.
Another example is the viable provision presented to reduce the workforce through a retirement incentive. This program is receiving positive reviews, but taken seriously too late in the process.
Meanwhile, a transparent 10 cent gas tax (without bonding) which would bring in over $10 million from out of state residents each year sits idly in the corner.
Even before the stimulus money became available to help stabilize state budgets, much information was known of the dangerous trends in government spending and the unsustainable path we are on.
It should not be a political debate that we are on a course we can neither grow nor tax our way out of. Our own David Coates, former managing partner of KPMG and respected by all, has described our mandatory expenses in Vermont as "dangerous trends requiring action."
Action requires a process, and that process demands structure.
For example, Washington State, while facing a budget deficit of $1.5 billion, in 2002 decided to foster a process of reform to address the budget crisis they faced, which is similar to what we are facing in Vermont now and will face for the next few years. Over a 10 week period, using a consultants help, the Legislature and Administration agreed to shift the focus from spending cuts and tax increases to finding the best possible result for the citizens of Washington. They: 1.) got a grip on the real problem 2) identified the dollars available for the budget 3) set priorities on what the citizens most wanted from the government and 4) "paid for those Government services" based on the dollars available.
We can do this too.
Vermont is long overdue for a process that starts early, with compassion but without emotion, that can end with a shared success. Please look closely at the current process, how cuts and tax increases arise. Listen to statements like "everything is on the table." Everyone should get a front row seat to this format because it must soon become a "remember when."
Reform is hard. If it were easy, everyone would do it.
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