Forget a Compromise, One Side Will Cave

by Hamilton E. Davis

   Over the last couple weeks, the administration of Republican Governor Phil Scott and the Democrat-dominated Vermont Legislature have moved even closer to the brink of a catastrophic shut down of state government, a move that would damage Vermont’s credit rating and dig a political and financial hole that could take years to crawl out of.
   The issue that led state government into this mess is the financing of elementary and secondary education. Wading through the morass of legislative and executive back and forth is onerous at best, but broadly speaking there are both substantive and purely political issues in play. I took a crack at them in my post on May 30, and concluded that the real responsibility for the mess belongs to Gov. Phil Scott and his chief of staff, Jason Gibbs.
   On the question of whether the administration position or that of the legislature represents the sounder public policy, I have decided to publish in its entirety a commentary by John McClaughry, a long time public policy and political analyst from Kirby, VT. The piece was originally published by VTDigger and is reprinted with John’s permission.
  Why McClaughry? Well, I am known to my tiny, rigorously selected corps of brilliant readers as being of the Democratic persuasion, and McClaughry is the polar opposite. We disagree all over the place, and I consider his political philosophy to be frozen somewhere in the second Jefferson administration.
   But McClaughry is smarter than any half dozen Republican bigfeet you can think of, he is absolutely lethal when it comes to the intricacies of public policy and he is cussed enough to wield a bipartisan shillelagh. I suspect him of enjoying bashing Democrats more than Republicans, so when he unloads on the Scotties, I take it seriously. Give it a look.  If you’re still unsure about McClaughry, you might consider that President Ronald Reagan considered him valuable enough to bring him into the upper policy realms of the most conservative national administrations in the modern era.
   Enough of the substance. The issue now is a brutal political struggle that Scott has elevated to a possible government shutdown, and an existential struggle with the Legislature about how government will work in Vermont. So far, Scott has been winning pretty easily, but I am beginning to think that the wind is shifting. We’ll know for sure by July 1.
   Here is the way the playing field looks to me now:


   Virtually all the action in the override session has taken place in the House. Part of the reason for that is budget and tax legislation, in Vermont and everywhere else, starts there, by tradition if not by constitutional fiat. The Senate has been quiet, but that can be deceiving. Sen. Tim Ashe, the Chittenden D/P serving as President Pro Tem, has his chamber under firm control; whereas Speaker Mitzi Johnson has struggled to manage the House. Keep in mind the underlying assumption here: that the contest now is mainly political, not substantive.


 The action so far has been a series of strategic retreats before the Scott shutdown threat. The budget/tax bill that passed before the Legislature adjourned essentially left in place the property tax increases driven by the school budgets passed earlier in the year by local communities and school districts. The increases were of two types; one rate covers residences; the second covers second homes (non residential) and businesses.

Scott demanded that the Legislature use windfall, one-time money to eliminate tax increases in both categories, Res, and non-Res in the shorthand. So, herewith the play-by-play, following the veto of the first budget:

1.      The House offers to separate the school financing aspects of the budget from the remaining costs of running state government, so that government would not shut down. Scott says, No Way.

2.      Rep. Janet Ancel, the chair of Ways and Means, recommends a major move toward Scott by proposing to use one-time money to eliminate the residential increase, while leaving the non-residential increase in place. Scott says, No Way.

3.      Cynthia Browning, a Democrat from Arlington in Bennington County, proposes to use the one-time money General Fund money to buy out the entire property tax increase. She would rewire the financing mechanism somewhat, and insist on eliminating state control over such administrative functions as class size. On the money issues, however, the Browning thrust amounts to a total capitulation on the part of the Legislature to Scott. And just to make it a little worse, she supports the Scott contention that it is the Legislature that is responsible if state government shuts down. Browning’s proposal gets some interest from and vetting by Ways and Means, but does not get into a bill, at least not yet.

4.      Throughout this process, Scott has not moved a millimeter, and his apparatus, his staff and particularly his press secretary deliver a steady stream of harsh comments about the way the Legislature is doing its job.

5.      On Friday of last week, the House and Senate sent Scott another budget, one that incorporates the Ancel initiative—residential homes would not see a tax increase, but  the second home and business tax hikes remain in place. That bill has been passed by both chambers. Scott is virtually certain to veto that measure today.

   That’s where we stand now, with the players and particularly the press waiting to see what the ‘”compromise” will be.
   My own view is that there won’t be a compromise at all. Scott has talked himself into a corner by refusing to move at all from his all-or-nothing demands. If he accepts the half-loaf on the table—Just letting the property tax increases go through on non-residential property and businesses—he’ll look silly, particularly to that portion of his base that already dislike his stand on issues like guns and marijuana.
   Scott’s intransigence, meanwhile, has forced the Legislature into a very serious box. Their original budget was a perfectly sound piece of work, whose overall numbers came in below Scott’s targets and had overwhelming bi-partisan support; in the Senate, every Republican voted for it.
   Scott’s magisterial refusal to move at all has put the Legislature in a position where the real issue they face is whether they can escape with their political self-respect in place, given their own belief that the public will blame them for a government shutdown.
   By this reasoning, the only real path forward is for the Governor or the Legislature to hold or cave in to the other. That would not be a compromise—it would be a very serious blow to the side that caves.
   There is no way at this point to guess which way the contest will go. But there are some interesting straws in the wind.
   I’ll look at those in my next post.