Stimulus package needs work
Brattleboro Reformer Editorial, April 22, 2008 (link to editorial).
Even by the normal standards of Gov. James Douglas, we are appalled by the brazen cynicism of the economic stimulus package he unveiled on Saturday. Take a bunch of old ideas that have gone nowhere in the Legislature. Borrow a little money. Offer a couple of token tax breaks and credits. Dress it up with some flowery rhetoric and give it a catchy name - the “Road Map to Prosperity.” Voila! You have another Douglas plan that’s long on politics and short on substance.
Are we exaggerating? Consider that Douglas not only waited until the last weeks of the session to offer this plan, but also released the initial details of the plan in the midst of the Legislature’s final deliberations on the budget.
While lawmakers and key members of the Douglas administration were agonizing over cuts to social service programs, Douglas and his staff were secretly working on a stimulus plan that no one in the House or Senate knew anything about. It’s little wonder that legislators are furious over Douglas’ tactics.
Looking over his stimulus package, there’s not much there. Douglas wants the state to borrow $17.4 million, using state pension money as collateral, to spur affordable housing construction. Except that no one told State Treasurer Jeb Spaulding about it, and he’s the guy in charge of borrowing money. Naturally, Spaulding is skeptical about Douglas’ plan.
The “New Neighborhoods” initiative that Douglas has tried to get through the Legislature for the past two years has been dusted off again. His plan would relax Act 250 regulations to create more housing and offer tax incentives to communities, something that has little support outside of the real estate and construction lobbies.
Providing $18 million in loans through the Vermont Economic Development Authority for business expansions sounds good, but using money from the state’s general fund to subsidize the loans is questionable. The idea of a “sales tax holiday” also sounds good, but the lost revenue under Douglas’ plan amounts to about $2 million.
However, not all of Douglas’ proposals are half-baked. His plan to borrow $80 million over the next five years for bridge and culvert repairs is a sound idea, since the repairs are needed and it’s cheaper to bond for the jobs now than to wait and pay more later. Likewise for creating a Vermont Mortgage Assistance Program to aid people facing foreclosures on their homes.
But taken as a whole, Douglas’ plan has a thrown together feel to it, and doesn’t address the cuts that the Legislature is considering to deal with a potential $50 million revenue shortfall.
We suggest that Douglas start with one of the proposals he made at the beginning of the year - closing the capital gains loophole. That could generate as much as $23 million. And instead of using it for upper-income tax relief as Douglas first planned, it should go toward paying for some of the health care and human services programs slated for the budget ax.
The chances of Douglas getting any of the items in his stimulus plan are directly proportional to the amount of work that he and his administration will have to do to win back the trust of lawmakers. Without some major fence mending by Douglas, there is little hope that there will be agreements on either a fiscally sound budget or action to stimulate the Vermont economy.