The Vermont
Senate continues to receive grim news from their fiscal experts about the
state’s unsustainable spending trends. The use of the state’s “rainy
day fund” to fill budget holes in 2010 is being considered. Steve Klein of the
Joint Fiscal Office explained that the fund is used like overdraft protection on
a personal checking account to pay the state’s bills when revenues aren’t
available. The fund currently holds roughly $60 million. Klein explained that
over the next five years, the state is looking at a $1 billion budget deficit
and that it is difficult to know when decreasing revenues will bottom out. If
the Legislature were to use the rainy day funds for fiscal year 2010, it is
possible that the fiscal year 2011 budget could be even worse and there would be
no rainy day funds available. Klein also indicated that the state is expecting
to receive between $175 and $200 million in the Federal stimulus bill for
Vermont’s Medicaid program. He went on to say that those funds will likely help
cover Medicaid budget deficits in FY2009 and 2010, however come FY2011, they
could be faced with a $200 million deficit. He suggested spreading the federal
funding over four years if possible.

Tom Kavet, an
economist for the legislature, described the need for structural changes to the
education system to the Senate Appropriations Committee. He questioned
whether we would design the same system that we have today, knowing that
enrollment levels have declined by ten percent but our spending has doubled over
the same time span. He recommended that all options should be on the table
including looking for efficiencies, spending cuts, tax increases and money from
the Federal government.

Commissioner
of Labor Pat Moulton Powden visited several committees this week to explain the
Administration’s proposal to fix the state’s rapidly decreasing unemployment
insurance trust fund. The proposal contains several changes to employer
unemployment insurance payments, as well as employee benefits such
as:

• Raise the taxable
base wage from $8,000 to $14,000 in 2010
• Raise the taxable base wage from
$14,000 in 2010 to $20,000 in 2011
• Do not relieve employers that do not
respond within 10 days to the Department’s request for information relating to
the employee’s dismissal from experience rating changes
• Institute a 1% fee
on all charges to reimbursable employers (non-profits, local/state governments,
school districts) to cover part of the cost of administering benefits
•
Reduce the maximum weekly benefit for employees from $425 to $409
• Change
how the weekly benefit amount is calculated from 57% of wages paid to an
employee over the last 5 quarters to 50%
• Changes to: the number of weeks
worked in order to gain benefits, annual benefits paid out, and eligibility for
a person fired for misconduct and gross misconduct

The Federal Stimulus
Package is likely to contain some unemployment insurance funding for states,
many of whom are also experiencing dwindling unemployment insurance trust funds.
The Senate Economic Development Committee heard concerns from Vermont retailers
about the projected increase in rates. The retailers described the numerous
increases in costs (energy, fees, insurance, etc.) their businesses are
experiencing at a time when their business volume is declining.

Several
legislative committees dedicated time to learning more about the workforce
development needs of the state to determine if legislative changes could improve
existing programs. John O’Kane, Chair of the State’s Workforce
Development Council, joined Commissioner Moulton Powden to highlight the success
of various programs and to provide recommendations as to how they could be
improved. According to O’Kane, “Vermont cannot compete on the same level with
Iowa or Ohio in attracting new business to our state via incentives, therefore,
we cannot underestimate the importance of workforce skills and development for
our economic future.” Some recommendations discussed by various committees
included the following:

• Hold a forum to
connect laid-off workers with employers and seed/venture capital and technical
assistance providers to encourage new business start-ups and retain people in
Vermont.
• Retool funding allocations prescribed by statute to allow more
flexibility in the disbursement of workforce training funds.
• Eliminate
financial disincentives for high schools to send students to regional technical
centers.
• Create an educational system focused on the success of every
individual and tailored toward their learning style and interests.
• Work to
reduce poverty and mitigate the impacts of poverty.
• Provide funding and
leadership to develop curriculum for green building/energy efficiency and
weatherization techniques that can be used by technical centers or trainers for
people already in the field.

Several
groups representing the tourism and recreation industry appeared before the
Senate Economic Development Committee to describe the importance of this sector
to the State’s economy. Brian Cain, Chair of the Travel and Recreation
Council, described other states’ marketing efforts and investments in promotion
versus the declining amount budgeted for Vermont. He made a case for continuing
to invest in tourism and recreation as visitor spending supports 12% of all jobs
in Vermont and it was one of the few sectors to increase employment and revenues
for the state in 2008. The Committee expressed interest in improving promotional
efforts and asked the Council to come back with additional recommendations as to
how more resources could be dedicated to this sector.

GBIC
President Frank Cioffi presented an outline of ideas to stimulate the economy to
the House Commerce Committee. (See Week 2 at
http://www.vermont.org/chamber/legreports.aspx for more details.) He emphasized
the need for coming together as a state to grow our economy and create an
economic development plan that everyone will buy into and work as partners to
accomplish.

The House
Natural Resources Committee began a review of the Governor’s Permit Reform Task
Force’s recommendations for changes to streamline the State’s permitting
processes. The Land Use Panel of the Natural Resources Board has also
filed its proposed rules package with the Secretary of State. A public hearing
is scheduled for Tuesday, February 24, 2009 at the Natural Resources Board’s
conference room in Montpelier. The deadline for filing public comment is Friday,
March 6, 2009.

To view the package,
please click here:

http://www.nrb.state.vt.us/rulemaking/act250/act2502009.htm

Representative Helen Head (D- So.
Burlington), Co-Chair of the 2008 Basic Needs Budget Technical Advisory Council,
announced the 2008 Livable Wage Rates to the House Democratic Caucus on
Tuesday. The council determined that the average livable wage for a two-person
family with no children is $13.07/hour.

Representative Steve Maier (D-
Middlebury), Chair of the House Health Care Committee, provided the House
Democratic Caucus with an overview of issues they expect to focus on this year,
noting that there is no money to spend. He indicated that the Committee
will look at a Massachusetts-style health insurance mandate, though he does not
expect a vote on that issue this year, as well as the Governor’s proposal to
raise deductibles in the Catamount Health Insurance program in order to reduce
premiums. Representative Maier was also asked about the rumor that Vermont might
be one of five states chosen by the Federal government in the Stimulus Bill to
serve as a single-payer health care reform pilot project. He responded that
there are many people working to get Vermont included in the discussion of a
pilot program on health care reform but that he doesn’t expect anything in the
Federal stimulus bill.