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Political notes from Free Press staff writers Terri Hallenbeck, Sam Hemingway and Nancy Remsen



The choice: Pay and benefit cuts or 320 layoffs

The Douglas administration has put two options on the table for state employees to ponder. The choices are something lawmakers will have to consider as well as they write their versions of the budget.

To fill the big gap in tax revenues that has developed as a result of the slowing economy, Gov. Jim Douglas first suggested he would need to layoff 600 workers. Actually he proposed 660 layoffs of which 60 were spelled out within his budget. The other 600 were to be identified later.

Wednesday, the administration identified 320 jobs that it was prepared to eliminate -- a lot fewer than the previously announced 600 because the administration would be willing to find some of the $17 million in payroll savings by going along with a concession the Vermont State Employees Association put on the table. Namely, a pay freeze -- no cost-of-living increase and no step increases.

Douglas made clear minutes ago that layoffs aren't his preference. He'd rather reduce state payroll expenses by asking state workers making more than $30,000 to take 5 % pay cuts and to pay 30%, rather than 20% of the cost of the health insurance premiums.

Administration officials have stressed they are looking for ongoing payroll savings, so the pay and benefit rollbacks wouldn't be restored when (not if, we hope) good times return.

The layoffs, by contrast, would create lasting changes since many involve discontinuing some service or program. For example, 67 jobs Correction Department jobs would be eliminated by closing the prison in St. Johnsbury.

The list of specific job cuts is 18 pages long and there are lots of impacts that have yet to be discerned. Secretary of Administration Neale Lunderville highlighted several -- no more red-meat inspection, and reduced inspections of milk. Elimination of the Public Oversight Commission that reviews hospital capital budgets and certificates of need. Elimination of the home school program, with responsibilities (and some money) shifted to local school districts. Elimination of a solid waste program that reviewed permit applications and certification requests for transfer stations, again with responsibility and dollars distributed to local entities.

The 320 job cuts would save $11.2 million. The pay and benefit cuts would produce about the same savings. Choose your poison.

Learning that their jobs were on the line was harsh for 320 folks. One person called me, crying and not sure where to turn.

Rep. Michael Fisher, D-Lincoln, complained that telling the workers yesterday was cruel since it's not a done deal. He sees it as a negotiating tactic, a way to put pressure on the union.

On the other hand, how can the union or lawmakers weigh the impact of proposed job cuts without knowing what jobs would be cut?

Another caller said the union and administration shouldn't be limiting themselves to these two options. Why not consider a shortened work week for a few years until the economy rebounds. That would give everyone time to consider and carry out more thoughtful restructuring, the caller said.

No easy answers here.

-- Nancy Remsen

Can you post a copy of the proposed cuts?
Just as more mayors have taken over their schools from their local school boards (http://online.wsj.com/article/SB123682041297603203.html), Vermont's Brigham decision should be followed with a similar takeover of Vermont's schools by the state, overseen by the Governor's office.

For too long, local school boards have protected their interests - such as keeping open unrealistically low enrollment schools - at the expense of broader interests throughout the state of Vermont. Having our schools run by a monopoly coupled with an incestuous political ally in Montpelier has exacerbated the unintended consequences of the Brigham decision. At the time of the Brigham decision, education spending accounted for 23% of Vermont's state budget. Today, it accounts for some 40%, as it continues to consume a greater share of Vermont's precious revenues dollars. With 70% of home owners receiving some form of income sensitivity on their property taxes and 25% of Vermonters on some form of Medicaid, the majority no longer have any 'skin' in the game.

Quite simply, it has become out of control and if drastic measures are not taken soon, this state will face bankruptcy or near-bankruptcy conditions.

What are those drastic measures? School closures are necessary. We can no longer afford our roughly two dozen schools with enrollments in the range of 50 students and our over 100 schools with less than 100 students.

A Blue Ribbon Commission should be appointed to determine statewide school closures and the cost savings associated with these closings. If the local communities object, they should be required to pay the opportunity cost of keeping their school open.

As for our roughly 285 school districts, we should start with moving to having just one; with a conversation of going to as many as 14, or one for each of Vermont's counties.

On a different note, a similar Blue Ribbon Commission should be appointed to determine statewide hospital closures. We have too many small, inefficient and unaffordable hospitals given Vermont's economies-of-scale.

Montpelier and its legislators are either ignorant of or choose not to acknowledge the gravity of our economic crisis (http://www.vermonttiger.com/content/2009/02/reckoning.html?cid=6a00d834519c3c69e2011278e712c928a4).

We've only yet to scratch the surface of its full impact.

The impact of the changes recommended here are more psychological and cultural, than practical; as streamlining education and health services will provide greater efficiency and allow its savings to ameliorate the current and future budget cuts from such areas as human services, transportation, corrections and law enforcement.

Over time, tax revenues are determined by economic and productivity growth. The solutions addressed here speak to some of our productivity issues. Meaningful land use, regulatory and tax reforms are needed if Vermont is to move forward with job creation. Its current path of "central government control" is doomed to fail, as our private sector job growth of 0% this decade coupled with a 70% increase in government payroll and benefits would attest.

As founder of Vermonters of Economic Heath, I launched our Web site (http://www.vteh.org/) in October of 2007 with these words:

"In The Gathering Storm, Winston Churchill’s stated purpose was “to show how easily the tragedy of the Second World War could have been prevented.” In Churchill’s time – as now - a storm was brewing but “people were viewing it and not doing anything.” In Vermont, an economic and demographic storm is brewing and like Churchill’s time, Governor Douglas, Speaker Symington, Senator Shumlin and others in Montpelier are doing little but viewing this coming tsunami."

Montpelier should take note. Our tsunami has only just begun.
Some of these jobs need to be cut anyway. I think this is a good way to dial back the situation and then go from there.
Gov Jim Douglas and Neale Lunderville want a body count - plain and simple!

Savings is not really the issue - dividing the union is!
Yeah, Tom, that must be why you received such a strong vote total in teh last november's elections.
Apparently Tom didn't get the memo about the death of capitalism, I know how much it meant to him. Should I send flowers?

The ultimate irony (look it up Tom) is that we are hanging around on baited breath waiting to see if communist China will loan us money tomorrow so that the US can pay its bills. I understand that as part of their loan requirements they are going to make every American write 100 times. "Communism is not dead regardless of what you were told by Reagan's speechwriters". To bad Ronnie missed all of this.

A friend of mine from N.H. was so upset by what he perceived as coming socialism that he was going to leave America. After doing some research it seems that his only choice was Zimbabwe.
Anonymous,you write "Yeah, Tom, that must be why you received such a strong vote total in teh last november's elections."

Are you implying that one only needs enough votes to be proven correct? If that's your benchmark, then you must be a fan of President Bush, as he received voter approval not once, but twice. I doubt you were a fan of the former President; you might want to adjust your benchmark.

Regarding your comments on "communist China," China maintains political and human collectism while simultaneouly maintaining a free-market economic system; one that rivals that of the United States.

As China's citizens acquire greater economic freedom, the incongruence between this economic freedom and their political and human collectism (communism) will come to a clash; eventually leading to democracy for its people.

Give it a few decades and I'll be proven right - - regardless of whether Vermonters "put moi over the top" at the polls.

Tom Licata
"Savings is not really the issue - dividing the union is!"

This totally begs the question: why do we need a state workers union?
Actually, Tom, Presidnet Bush didn't earn the most votes and that's already been proven!
The union has got to go - it is not helping its members.
That is the truth.
"Douglas made clear minutes ago that layoffs aren't his preference."

Baloney! Layoffs are the ONLY thing he is interested in. And everyone knows it.

The list is available at www.vsea.org
$17 million is less than 3 percent of the State's labor costs. So, THIS begs the question why he's demanding a 5% cut from State workers, plus 50% increase in health insurance premiums, and a pay freeze? When you add it up, he is proposing to cut State workers pay by 10 - 15% across the board. Not hardly "fair" in my mind when he gets $14,000 for meals and he only took a 5% cut on his $150,000 salary!
Get rid of this union and start working efficiently!
I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.


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