The Valley Reporter asked a variety of local community leaders to provide questions for the four candidates running for two state representative seats for the Washington 7 district which includes Warren, Waitsfield, Fayston, Moretown and Duxbury.
The candidates are incumbents Adam Greshin, I-Warren, and Maxine Grad, D-Moretown. Challengers are Ed Read, I-Fayston, and Heidi Spear, I-Fayston. Candidates will be answering questions from community members in the upcoming issues of The Valley Reporter leading up to the newspaper's candidate forum at Big Picture Theater, Waitsfield, on October 27 at 7 p.m.
1. Don Mayer, Small Dog Electronics, Waitsfield:
Health care finance will be the focus of legislation with the governor expected to deliver a plan by January. This is a two-part question:
Part one: With upward of $2 billion needed to replace employer-sponsored insurance premiums to fund the state's universal health care plan, which sources of revenue do you feel should be tapped and in what percentage: income tax, payroll tax (employers), individual premiums or access fees, property tax, carbon tax or other taxes?
Grad: I remain committed to working toward a unified, publicly financed health care system that decouples health care from employment and is based on ability to pay. Before the Legislature puts into place such a system, we need to understand what people and businesses pay now. We are developing these answers through a contract with Rand Corporation. Until we know what the baseline is, we won't know if any funding proposal is better than the current system. I will only support one that is more equitable, simple, sustainable and relieves the current burden health care financing places on our businesses and individuals. A mix of funding is needed to raise the $2 billion. We should look at all current sources of revenue as well as new ones like carbon, gross receipts and energy taxes. I favor using the income tax. I am concerned about the use of the property tax given our education finance situation and tax burdens Vermonters face. Any system must be better than what we have now and looked at in conjunction with Vermont's overall financial demands.
Greshin: If the state moves ahead with universal care, it will have only three choices to raise most of the required money: income tax, payroll tax and property tax. The latter is a nonstarter. The governor and the Legislature have each hired experts to run simulations and data analyses on payroll and income and how they will move under various economic scenarios. I'll wait for these studies to form an educated opinion on how to raise the required sum. Access fees will undoubtedly be a small component of the mix. One certainty, however: If health care spending outpaces economic growth, as it has in the past, we'll be in the uncomfortable but familiar position of boosting tax rates or finding new sources of tax revenue to balance the books. Before we move ahead with a financing plan, we must make sure universal care is well managed and financially sustainable.
Read: Universal health care is an admirable, altruistic goal. The real driver behind health care reform was the spiraling cost of health care and insurance. The societal merits of whether or not everyone should be entitled to health insurance was an ongoing debate until the issue became a financial one that seemingly had teeth.
In 2011, the Legislature hired a Harvard economics professor, Dr. William Hsiao, to produce a cost/benefit analysis of a single-payer system. His analysis predicted an annual savings of $1.1 billion by 2019. Much of this savings was to come from a reduction in administrative costs – an appealing idea that tipped the scales in favor of Act 48. Health care reform, especially the funding aspect of it, is an enormously complicated endeavor. Policymakers and analysts who've spent their careers on this subject haven't been able to fully solve the equation. No single legislator is going to either. The governor is already a year and a half late producing his funding plan. Let's see if it's even worth pursuing before we try to figure out how to shift $2 billion in costs. Let's put the horse back in front of the cart.
Spear: I am for universal access to affordable health care. However, I have written about my serious concerns regarding statewide single payer as the means to achieving it.
For statewide single payer to not have a significant negative economic impact the state must ensure substantive cost reduction. Cost containment in national single-payer systems is principally achieved through power to set reimbursements for providers and big pharma. We lack that power and face much greater risk of provider loss. Our market size is comparable to or less than 25 U.S. cities – not a nation. Without a closed loop health care system, claims processing will not simply disappear. Savings plans remain elusive. A study on the impact of funding scenarios was just contracted this July, over three years after Act 48's passage. My recommendation on financing, should we move forward, will be formed only once this analysis has been thoroughly considered.
Don Mayer, Small Dog, Waitsfield:
Part two: Since publicly funded health care, as envisioned by Act 48, will make fundamental changes to our tax system to raise this money, shall we also address Vermont income tax reform, i.e., flat tax, basing it on AGI, addressing capital gains, etc., during this process?
Greshin: We should address Vermont income tax reform whether or not we address publicly funded health care. In 2009, the Legislature created the Blue Ribbon Tax Structure Commission to study our tax system and recommend reforms. The final report was issued July 2011 with great fanfare and then stuck on the shelf. It's time to dust it off. The most important recommendation was to move to "adjusted gross income," a broader measure of income used by most other states. Using AGI would allow lower income tax rates by taxing a larger pool of income. But AGI also entails reducing or eliminating many popular tax deductions, such as deductions for mortgage interest and charitable donations. This would simplify our tax code and reduce our rates, but it may or may not reduce our tax bills. And it would certainly add to our tax capacity. The conversation is still worth having.
Read: Almost half of Vermont's General Fund is generated through income taxes, and as Vermont slowly grinds its way out of the recession, one revenue area that continues to underperform is income tax revenue. The income tax structure isn't the problem. The shortage of income earners is, as Vermont is the second oldest state in the country. Want real income tax reform? How about we try to make Vermont affordable for businesses to thrive, provide jobs and ultimately keep income-earners in the state. Let's cure the disease instead of picking at the scab. And, yes, this can be done in a responsible manner.
Spear: Tax policy in our country is overly complicated and out of balance. However, tax policy experiments at the state level, which put us at a disadvantage to retain and expand residency and businesses in Vermont, pass along to our citizens the costs and risks of what are truly national fights. Instead, we should look to our U.S. congressmen to be champions for key reforms and limit our state-level responses. While it may be appealing to shift costs to a smaller percentage of our population, that percentage of our population is highly mobile and is a current source of significant revenue. I think we are all aware of our current revenue problems. On a state level, our tax increases should be limited to what we want less of. It is safe to say that we would not benefit from still lower revenues. Down that path our economic problems will only deepen.
Grad: Yes, we should and have started to. The Legislature will continue to consider the recommendations of The Blue Ribbon Tax Committee Report. It proposed to restructure the income tax by broadening the base and lower rates. That includes moving to the AGI and expanding the sales tax to more items. Vermont forgoes a great deal of tax revenue through certain deductions and exemptions. If we reduced or eliminated these we could collect significant tax revenue without changing any structure. I will give serious consideration to these suggestions and look forward to discussing with my constituents the proposal's impacts.
2. Troy Kingsbury, Village Grocery, Waitsfield:
With our present laws, carbonated bottles and not juice or water containers are redeemable. Yet it seems more and more difficult to redeem bottles in Vermont. The Mad River Valley does not have a redemption center. Waterbury's is often closed so the closet place is Montpelier for many. If elected what will you do to try to resolve this growing hardship for folks?
Read: When Vermont's first Bottle Bill was passed in 1953, the primary purpose was to cut down on litter. Mission mostly accomplished. Recycling is now an ingrained part of Vermont's culture and though April's snowmelt uncovers improperly discarded Coors Light cans, it's a far cry from what it used to be. This is a good thing. There's very little money (if any) to be made in the bottle redemption business. Frankly, nobody's going to get rich dealing in pennies, especially when mainstream recycling has become so effortless. It's a lot easier to just throw returnables in with the rest of your commingled recycling. For those who rely on the 5-cent deposits, I say stop wasting your money on Mountain Dew (sorry, Troy) and buy powdered drink mixes instead. It comes in 100 percent recyclable packaging, and a $3 container will make as much beverage as $24 worth of soda. Now that's sound economic sense.
Spear: Bottle bill programs played an important role in the early adoption of recycling, but broader incentives to recycle are much stronger today and stem from environmental values, legal obligation and the relative cost of trash disposal. In the context of parallel curbside and drop-off recycling options, per ton costs of bottle bill programs are many times higher. Bottle bill costs are hard to justify on the basis of recycling. Redemption programs also target littering. Recent analysis of Green Up Day trash collection in Vermont, however, yielded a higher percentage of redeemable beverage containers than any other item. We need to consider relative beverage sales and what is known about littering behavior to evaluate the current impact of redemption programs. Short of proof of their importance, I would consider policy to sunset this program. Ending the program would remove considerable burdens on retailers and a regressive tax on consumers.
Grad: I would determine how to make redemption centers profitable, work with our Waste Alliance to develop a zero sort and redemption facility and look at the bottle bill's effectiveness. Possible solutions to making redemption centers more profitable are raising the deposit amounts, increasing the amount distributors pay grocers for collections and expanding the bottle bill. Data is needed to determine their consequences. A Valley zero sort and redemption facility would save folks time, gas and money spent on multiple trips to transfer stations, hardware stores and grocers.
While repealing the bottle bill and having containers be recycled is controversial, it's worth considering. The state has started to do so. Bottle deposits curb litter and provide a safety net to our local organizations. Proponents say a repeal is more cost effective, supports market growth and is better for the environment. It would also alleviate the storage and handling hardships grocers face.
Greshin: Vermont's Beverage Container Law (bottle bill) was originally conceived as a litter law and it worked as advertised. But the economics of operating a redemption center are not compelling. It's hard and dirty work and requires space for storage and delivery. With no local redemption center, most of our retail establishments accept returns as a service to customers. The Legislature has discussed boosting the return payment from a nickel to a dime and extending it to all containers, but that may still leave the burden on retailers and places our retailers operating near New Hampshire at a greater disadvantage. The best answer may be to work with the Mad River Resource Management Alliance and other solid waste management districts to combine zero sort recycling with redemption, all under one roof. With a better, more cost-effective means to handle redemptions, we could extend the bottle bill to all containers.
3. Win Smith, Sugarbush Resort, Warren:
I think the most importat issue facing our wonderful state is our long-term economic sustaninability. We are spending far more than we can afford and this has been made possible by short-term federal grants. The truth came home this year. We are also facing a crisis in future years due to our large, unfunded state employee and teacher retirement and health care liabilities in addition to significant underfunding by the state's largest cities, Burlington, Rutland, Brattleboro. How do you think Montlpelier should address this issue?
Spear: I agree that the most important issue Vermont faces is our long-term economic sustainability. Even after summer budget cuts, the general budget is up 4.6 percent and AHS is up 6.9 percent over last year, while annual growth is 2 percent since 2012. Consistently increasing spending at a higher rate than underlying economic growth, using one-time monies to cover operational expenses, has negative consequences for citizens, if not for politicians. The amortized burden for the state's unfunded benefit liabilities is a particularly daunting problem. We now face costs many times the original obligation. The current strategy to set up a fund and lend it $28 million from the state's cash reserves for 10 years is no solution. Lending these funds reduces our "Rainy Day Reserves" for weathering economic downturns. We need to identify the most critical and effective programs and invest our resources far more carefully to restore balance. We need to operate within our means.
Grad: I would focus on our spending and making government more efficient. I support the Legislature's continued use of Results Based Accountability. It focuses on what Vermont gets for the money it spends, whether it can be spent more wisely, and if there are ineffective programs and services that shouldn't be funded. Use of this model will help us prioritize spending and be more efficient and sustainable. The Legislature passed a law this year that will save Vermont taxpayers a half billion dollars over the next 25 years in the cost of the teacher retirement system. This legislation will go a long way to making the system more secure. I will work with our state treasurer and others to make sure this progress continues. I will listen to businesses' concerns and ideas on how to make government work for them and engage agency leaders in addressing them.
Greshin: Over the past five years, General Fund spending in Vermont rose over 5 percent annually, well more than double the rate of the underlying economy and far above the growth in tax revenues. As any household knows, you can't keep spending more than you earn. This summer's $31 million budget-cutting exercise was the latest example of this reality. Underfunded liabilities in many of our large cities are another example of the same problem: benefits promised in excess of our ability or willingness to fund them. State government can't create jobs or ensure prosperity; that has to be done by businesses and organizations operating within our borders. The state's role is to maintain a modern infrastructure, a predictable regulatory environment and a fair and balanced tax regime to fund investments in our people and our future. We must do this while living within our means. That's the only way to ensure long-term sustainability.
Read: I'm privileged to own a business where I have dozens of conversations every week with people from all parts of the socio-economic spectrum: service employees, contractors, second-home owners, trust funders and what few of the middle class are left. The common thread in these conversations? Vermont is an expensive place to live. Vermont's government needs to be run as responsibly as the households and businesses it serves. This requires leadership from people who have experience making things happen on time, on budget. However, due to the bloated four-month legislative session, it's populated largely by those who have a lot of free time and/or money. Cutting the legislative session to two months would attract a much more diverse, in-tune and financially responsible government. This is true citizen representation. It may not sound like a sexy idea, but in order to level the playing field, you must first have the right players.
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