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The Trump Effect: Vermont Lawmakers Fear Federal Funding Cuts

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Donald Trump at the Flynn Center for the Performing Arts - JAMES BUCK
  • James Buck
  • Donald Trump at the Flynn Center for the Performing Arts

A cloud hangs over the Statehouse. It's a big, orange, angry-looking thing with some oddly sculpted schmutz on top, and it looms in the background of every discussion about taxes, spending and policy.

It's the Trump Effect: the potential for wide-ranging budgetary mayhem if President Donald Trump takes a meat-ax to federal spending. "We're all suffering from ill-defined anxiety," observes Sen. Jane Kitchel (D-Caledonia), chair of the Senate Appropriations Committee.

"Right now there's so much conversation going on, I don't think that we're thinking about particular areas," says Finance Commissioner Andy Pallito, Gov. Phil Scott's point person on the Trump Effect. "What we're trying to do is guard ourselves against the overall action the feds may take."

There's the potential for an epic shock wave.

"The total budget is $5.7 billion," says Pallito. "The federal funding is $2.2 billion."

That's a whopping 35 percent of Vermont's budget. Pallito surmises that the only state body not receiving any federal support is the Tax Department.

Great. No matter what happens, tax collections will go on.

Vermont's biggest division — the Agency of Human Services — gets a huge chunk of its money from the feds. Roughly half of all the federal funds Vermont receives are directed to its Medicaid program. Those funds have helped Vermont dramatically cut its uninsured rate during the Douglas and Shumlin administrations.

"We need our federal partners in that," says Rep. Sarah Copeland Hanzas (D-Bradford). "And it's unsettling to think that we may have the rug pulled out from under us."

The most likely path for Medicaid is a conversion from entitlement funding to block grants for the states.

"If they gave us a block grant equivalent to what we're getting now, provided the expenditures don't grow, we'd be in OK shape," Pallito says. "But I suspect the reason they want to go to block grants is to cut back."

Copeland Hanzas has taken on the task of monitoring the Trump Effect for House Democrats. She identifies housing as a potential trouble spot — a worrying idea for a state seeking ways to increase its affordable housing stock.

She also points to Vermont's much-discussed waterway cleanup program, which, it should be noted, was mandated by the federal Environmental Protection Agency. The state's ability to improve municipal stormwater and wastewater treatment depends heavily on federal infrastructure grants.

"That would make it much more difficult for our communities to replace aging facilities," she adds.

Vermont may also be hit by cuts in federal taxes. Depending on how they are structured, they could reduce state tax collections as well, putting a further squeeze on state programs.

Gov. Scott's budget provides for reserve funds against the possibility of federal cutbacks, but they don't amount to much.

"If we're successful, we'll have more than $30 million at the end of this session," Pallito says. On top of that, there's $6.9 million in the state's rainy day funds and roughly $80 million available in the global commitment fund, a federal grant program that's given Vermont flexibility in providing health insurance coverage.

Best case? Less than $120 million.

Even if that's enough to get through this fiscal year, the federal cuts would go on and on.

"The reserves are not going to continue to build," notes Pallito. At best, the state would only be postponing the real pain — providing "a little room to smooth it out," in the budget chief's words.

Nothing smooth about this situation.

Wanted: A Good Lawyer

Another source of ill-defined anxiety sprang forth on Friday when U.S. Attorney Eric Miller suddenly announced his resignation, effective February 10. Trump will choose his replacement. And, given official Vermont's attitude toward the president's infamous executive orders, one could see him appointing a hard-liner with a mandate to impose the Trumpian version of law and order.

"I'll be watching who the next appointee will be," Scott says. "It is of concern that we share the same vision of what I feel is protecting Vermonters' rights in this federal overreach in terms of our Constitution."

Even before Miller resigned, Scott had been coordinating with U.S. Sen. Patrick Leahy (D-Vt.) in anticipation of a change. Indeed, on December 13, Scott and Leahy sent a joint letter to Trump urging him to keep Miller on the job until his replacement was confirmed.

As a member of the minority party in the Senate, Leahy has little official influence over the nomination process. But he has unofficial pull, thanks to his long tenure.

"Judiciary Committee Chairman [Chuck] Grassley (R-Iowa) has indicated he would follow Leahy's (and others') tradition of upholding the blue slip process," writes Leahy spokesman David Carle, referring to the tradition of giving deference to a senior senator's views on a nominee for a position in his or her home state.

Still, it's easy to imagine Trump ignoring the perquisites of the Senate and choosing a hard-liner out of pure spite.

A bit of a reality check comes from Tom Anderson, the Scott administration's public safety commissioner. He served as Vermont's U.S. attorney during the latter years of George W. Bush's presidency, from 2006 to 2009.

"When a new administration comes in," he explains, "they shift around the [policy] focus."

But Anderson identifies mitigating factors. Once the broad policy is outlined, he says, U.S. attorneys "work autonomously under the policy determinations being driven out of Washington."

Wiggle room, in other words.

On a purely practical level, Anderson observes that stomping on your local partners is not the way to get things done.

"We had good working relationships with all the state law enforcement," he says. "That's something we worked at, because it's a force multiplier when you've got good working relationships between federal, state and local authorities."

There are two ways to look at the U.S. attorney vacancy: If Trump is in full-on vindictive mode, he might decide to stick it to a state that's resisted his executive orders. On the other hand, Vermont is a very small state in a very large country. If Trump is focused on immigration and security issues, he's more likely to focus his attention in the South and West.

Still, fertile ground for ill-defined anxiety.

No Plan B

It didn't take long for Scott to get the message.

The Republican governor's proposed budget suffered a crushing blow Friday morning when the Vermont House voted down a plan to move local school budget votes from Town Meeting Day to May 23. The tally was 87 against the idea, and only 47 in favor.

The defeat set the dominoes falling. Without delaying local votes, it would be impossible for school boards to meet Scott's proposed mandate for level-funded budgets, because most have already gone to the printer. Without those savings, the rest of Scott's spending plan is unworkable.

Republican denunciations of the House vote were still ringing in the air when Scott began working on plan B.

"Began working" — as in, he didn't have a plan B.

On Friday afternoon, Scott held a pair of meetings with Republican lawmakers to start exploring what comes next.

"I just wanted them to know where I stood," the gov said Monday. "As I've said consistently, I wasn't going to sign a budget that raises taxes and fees. I looked forward to their ideas, as well."

"He encouraged comments from us all," says Rep. Fred Baser (R-Bristol), who attended one of the meetings. "He did say he didn't have a plan B. He doesn't have a fallback position in terms of the budget and the like."

The hunt for plan B commenced with those intraparty meetings.

As to the Democrats, Scott said, "I've offered them an open line of communication."

An active approach for Republicans, a passive one for Dems.

Party building is all well and good, but eventually Scott will need to employ his centrist appeal and build interparty alliances.

"It's really kind of early," notes Baser. "We have new leadership in the Senate and House and a new administration, and I think a little patience is very much warranted."

OK. But remember, this is the governor who wants legislative sessions to last no more than 90 days. That wouldn't leave much time for launching a bold initiative, watching it crash and burn — and only then starting work on plan B.

Fast Track

What a difference a year makes.

In the 2016 session, the Vermont Senate dithered endlessly over ethics reform, ultimately delivering a bill to the House with almost no time left before adjournment.

This year, S.8 had a rocket strapped to its backside. It passed quickly through two committees, and on Tuesday the full Senate gave it the go-ahead with a preliminary, unanimous voice vote. The only note of dissent came from Sen. John Rodgers (D-Essex/Orleans).

"I think [the bill] hardly scratches the surface," he told his colleagues. "I think it's an extremely small slice of what needs to be addressed, and I think there are much more serious issues."

The bill codifies some important ethical standards. It addresses the revolving door between public service and lobbying, limits political donors' ability to receive no-bid state contracts, and tweaks financial disclosure rules for elected officials.

It also creates a low-budget state ethics commission with limited reach, no enforcement powers and a single, part-time staffer.

But wait, there's more!

The funding mechanism is set to expire in two years, which would provide a convenient excuse for killing the whole thing.

Senate leaders defend the bill as a first step, kind of a test run for a new-to-Vermont concept.

"Do we need to have more? Is it adequate?" asks Sen. Jeanette White (D-Windham), chair of the Senate Government Operations Committee.

It was Kitchel's appropriations committee that created the funding mechanism: a small levy on every state agency and department. She rejects the notion that the expiration date offers an easy way out.

"We have a long history of dealing with sunsets," Kitchel asserts. "It really forces us to take a look at the experience. And I think we have a history of reauthorizing based on the circumstances at the time."

After a second Senate vote scheduled for Wednesday, the bill will likely move on to the House, where two tougher ethics bills have been introduced: one by Rep. Heidi Scheuermann (R-Stowe) and one by Rep. Robin Chesnut-Tangerman (P-Middletown Springs). It remains to be seen whether House leaders have any more taste for a strong ethics commission than their counterparts in the Senate.


The original print version of this article was headlined "The Trump Effect"

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