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Gov. Douglas' goals draw mixed reviews

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January 14, 2008

By JOHN FLOWERS

MONTPELIER — Addison County lawmakers on Thursday gave mixed reviews to Gov. James Douglas’s priorities for the 2008 legislative session, praising his commitment to “green” energy and new health care reforms but sharply criticizing his proposal to lease the state’s lottery.

Douglas, a Middlebury Republican, outlined his administration’s goals during his annual state-of-the-state address, a 40-minute speech that was interrupted 17 times — 16 times due to applause, and once when Statehouse staff cleared the House chambers of a handful of protesters who had unfurled anti-war banners.

The theme to the governor’s speech was a familiar one: Making the state more affordable to Vermonters who are increasingly feeling the pinch of rising fuel prices and a lack of affordable housing.

“Today, I lay out a series of proposals to achieve prosperity through affordability and to rethink, revitalize and reform the way our state approaches its most pressing challenges,” Douglas said. “By making health care, homeownership and the tax burden more affordable — and by making investments in job creation and our natural environment — our families and our state will prosper.”

Douglas called for:

• Making the state’s health care system more streamlined and inclusive. He suggested, among other things, placing a “prevention specialist” in each region of the state to work with citizens in preventing chronic diseases; and making sure every doctor in Vermont has electronic health information systems by the years 2010.

“I … request that this Legislature make affordable health care the top priority and send me a bill before town meeting,” Douglas said.

• Implementing new programs to boost affordable housing. He said he wants to make it easier for new homes to be permitted, and wants to give tax incentives to first-time homeowners who want to invest in redevelopment of the upper-floor space in commercial/office buildings in urban centers.

• Adjusting the state’s income taxes. He wants to eliminate the 40-percent capital gains tax exemption for unearned income, a benefit currently enjoyed by those primarily living off investment proceeds. His plan would, however, maintain the capital gains exemption for those 65 and older and exempt the first $2,500 in long-term investment income for middle-income investors.

Douglas reiterated his objection to raising “the income tax, payroll tax, property transfer tax, home heating fuel tax, gas tax and other taxes.”

• Leasing the state lottery to a private entity to raise as estimated $50 million in a one-time payoff. Douglas would use half of that windfall to lower property taxes and the other half to modernize Vermont’s deteriorating public schools.

• Boosting college scholarships and workforce training programs by 14 percent ($8 million).

• Creating more tax incentives to encourage environmental service companies to create jobs in Vermont. He also pitched “Go Vermont,” a program to encourage car-pooling, the use of alternative fuels and the passage of stricter auto emissions standards.

Douglas urged the Legislature — dominated by Democrats in both chambers — to work with him in considering innovative solutions to the state’s problems.

“If Vermont is to continue to grow and prosper, we must reexamine the fundamentals of the services we provide and find ways to make improvements,” Douglas said. “We must bring a new energy to this calling and a pledge to protect those who need us most. And we must reach for the change that will bring a better life to those who still struggle.”

Addison County legislators were almost unanimous in endorsing Douglas’s 2008 objectives, but differed on how the state could accomplish the tasks at hand.

“It’s hard to disagree with his goals,” said Rep. Will Stevens, I-Shoreham. “As always, the devil is in the details.”

Like most of his county colleagues, Stevens does not relish the thought of deriving one-time revenues from leasing the state lottery.

“If (the lottery) is actually making the state money … why would he want to give that up?” Stevens said. “It seems like it’s a short-term fix that has long-term implications.”

While Stevens likes Douglas’s plan to boost college scholarships, he hopes that such awards do not worsen another one of the state’s problems: Losing its youth to out-of-state schools and jobs.

“It would be a shame to have increased and untargeted scholarships result in yet another — if unintended — push ‘toward the exit’ for our youth,” Stevens said.

Rep. Steve Maier, D-Middlebury, was pleased to hear Douglas cite new health care reforms as his top priority for 2008. Maier will be at the forefront of those reform efforts, as chairman of the House Health Care Committee.

“I expect there will be a fair number of areas of agreement about the next steps of what we can do in health care reform,” Maier said. “I also expect there will be some disagreements.”

Those disagreements are likely to arise from a difference on how many new health care initiatives the state should take on. The Democratic majority in the House and the Senate has voiced a desire to extend more health insurance opportunities to small businesses and the under-insured. Douglas has advocated less dramatic strides.

While he said he supports Douglas’s desire to generate more revenues for school modernization, Maier does not think leasing the state’s lottery is the right vehicle to accomplish that objective.

“I’m dead-set against the idea of getting more revenue out of increasing gambling; it just doesn’t make any sense to me,” Maier said.

Democrat Willem Jewett, a representative from Ripton, said he shared many of the same goals outlined by Douglas. But he said he hopes the shared purpose of the executive and legislative branches translates into some concrete results this year.

“I’ve been through the cycle a few times now, and what I’m looking for — and what my constituents are looking for — is more action,” Jewett said. “I’d like to be encouraged and hopeful, and I always am, but I want to see the results at the other end of it.”

In suggesting leasing the state lottery, Jewett believes Douglas is acknowledging that state revenues aren’t keeping pace with its needs. He noted the state placed a moratorium on new school construction aid last year due to a shortage of funds.

“To lease the lottery to Wall Street so that they can deluge us with marketing doesn’t seem like the right answer to that,” Jewett said.

Sen. Claire Ayer, D-Weybridge, took issue with Douglas’s contention that businesses were most concerned about the tax burden in Vermont.

“What I’m hearing them talk about is energy and health care costs,” Ayer said, reiterating her belief that comprehensive legislation in those two areas will leave more money in the pockets of businesses and individuals.

That said, Ayer was pleased to hear Douglas cite health care and energy as two top priorities.

“We all agree that we need to do something, so I’m glad to hear that,” Ayer said.

Ayer, Senate majority whip and member of the Senate Finance Committee, pledged to take a close look at Douglas’s proposed change in the capital gains tax. She is opposed to leasing the state lottery.

“Wall Street isn’t going to buy a business unless they make money,” Ayer said. “The way they are going to make money is to have more people buying tickets. We have to think about that.”

She said $25 million is a “drop in the bucket” when it comes to needed upgrades to the state’s schools.

Ayer was pleased to hear Douglas’s emphasis on public transportation and reducing greenhouse gas emissions. To that end, Ayer believes the state could invest in more park-and-ride facilities. She was disappointed to not hear the governor talk about improving the state’s rail system.

Rep. Betty Nuovo said Douglas’s 2008 priorities don’t match his recent actions. For example, the Middlebury Democrat said the governor’s desire to encourage public transportation does not match what she argues has been his lack of support for commuter rail; and his stated desire for green energy does not correspond by what she said was the administration’s failure to purchase dams along the Connecticut River earlier this decade.

“He talks out of one side of his mouth one time and another side of his mouth at other times,” Nuovo said.

Rep. Kitty Oxholm, R-Vergennes, was pleased that Douglas conveyed a message of fiscal restraint during his speech.

“Everybody is a little cautious this year, because of what we see happening in the economy,” Oxholm said.

She said she would maintain “an open mind” about leasing the state lottery, and was pleased to hear the governor encourage public transportation, car-pooling and development of more affordable housing.

Rep. David Sharpe, D-Bristol, said he would’ve liked to have heard more details in Douglas’s speech.

“There wasn’t much in the speech, but there was a positive attitude, which was the first time I’ve heard that from the governor,” said Sharpe, who contends that unlike other governors who extol the virtues of their state to prospective entrepreneurs, Douglas laments how difficult it is to do business because of high tax rates and rigorous permitting requirements.

Sharpe added he believes that Douglas was sending conflicting message with his statements on taxes. He noted that at one point in his speech Douglas was drawing the line on new taxes, yet Sharpe contended that Douglas is in effect raising taxes on a segment of the population by closing the capital gains loophole.

“To stand up there and say ‘no new taxes’ and make these proposals I think is completely disingenuous,” Sharpe said.

Rep. Chris Bray, D-New Haven, liked the conciliatory tone of the governor’s address.

“Overall, I would say that the governor’s message was open-minded and invited a real, working partnership between the Legislature and the administration,” Bray said. “I hope and believe that the Legislature will respond in kind. This is what Vermonters expect of us and this is what our oath of office requires.”

Bray opposes the proposed leasing of the state lottery but favors elimination of the capital gains tax loophole.

“I believe that making taxes fairer is critical, and so I congratulate the governor on his proposal to close the capital gains loophole, which is generally a significant benefit for only the wealthiest Vermonters,” Bray said. “This change is long overdue.”

Rep. Michael Fisher, D-Lincoln, believes Douglas set the right tone for a successful 2008 session. That said, Fisher hopes Douglas is prepared to think big when it comes to endorsing new laws.

“I hope he is willing … to accept some real change to help Vermonters,” Fisher said.

And while he believes the House chambers was the wrong venue for Thursday’s anti-war protest, Fisher said he hopes the governor is thinking increasingly about the war in Iraq and how it is affecting Vermonters and state programs.

“(The protesters) did bring up something a lot of my constituents are concerned about,” Fisher said.

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