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Vermont Yankee Vote

28 February 2010, 9:37 pm

Wednesday was quite a dramatic day in the Capitol. The (small) Senate chamber was filled to capacity to hear the debate on whether or not to relicense Vermont Yankee. There were many reasons to vote NO on relicensing Yankee: the Enexus spinoff, the Tritium leak into the Connecticut River, the price being offered for future power, the trustworthiness of Entergy Louisiana…

Tim on the Senate Floor

In the end, I am glad that the negative vote cut across party lines.

Here’s a picture of me speaking on the floor in opposition to (I kid you not) building a second nuclear power plant on Vermont soil. I commented that it was strange that those Senators who believed four years of testimony was insufficient to make the decision on the existing plant would propose approving a new nuclear plant with roughly five minutes of debate in front of the TV crews.

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CPAs, Estate Taxes, and the Middle Class

8 February 2010, 11:23 pm

There is an effort underway to repeal the Vermont estate tax changes that were implemented last year. This tax, which affects a tiny fraction of Vermont estates, has its origins in the early part of the 20th century, and was supported by some of the era’s wealthiest Americans because they thought it was unwise to allow tremendous amounts of wealth to remain in the hands of just a small number of American families.

At a Senate Economic Development Committee meeting in Burlington this past Thursday, a representative of the state’s CPAs said the estate tax frequently affects “middle class” people. This sounded a little strange, since at the federal level, only 2% of all estates are subject to any estate tax.

So I dug into the Vermont Department of Taxes data to explore the number of estates actually taxed in VT the last couple years. The number of estates and tax generated is below…

YEAR                  ESTATES                  TAX GENERATED

2007                            114                            17,798,143

2008                            104                            15,696,389

Under the table in the Tax Dept report, it says “Most estates are either not required to file returns or file returns with no payment due.“

Obviously these estates were taxed under the previous tax regime so it’s not a direct comparison. But as I look at these, I draw the conclusion that because only estates valued over $3.5M were taxed at all, the combined value of the estates in VT in 2008 was NO LESS than 3.5M x 104 estates = $364M. To actually reach the tax generated, an additional total estate value of $34.9M would be necessary. So the combined worth of the estates was $400M, with some only being taxed a small amount (those just over $3.5) while some generating much more. Spread over all estates, this represents an effective tax rate of 3.9%. And that’s not including any gifts given to dependents during the estate planning process, when a significant portion of estates are distributed in a manner that avoids any taxation whatsoever.

We all use middle class as a term to reflect a specific group of people we have in mind, but I confess that I have a hard time viewing these estates as those of any “middle class” people I know…

I cannot support repeal of the estate tax for the wealthiest among us precisely because it’s middle class taxpayers who will, as always, have to bear an ever-larger tax burden to make up for the revenue loss.

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The Dramatic Costs of Private Health Insurers

24 January 2010, 9:35 am

This is a variation on an earlier post that appeared as an opinion piece in the Burlington Free Press. The Governor and Legislative leaders are turning their scalpels to services to low and moderate income Vermonters, while ignoring the dramatic bloated costs in the health insurance industry which are by far the greatest threats to Vermont’s financial well-being, not to mention that of individuals and families. If we’re going to cut funds to poor elderly people, let’s be fair and turn our attention to health care board rooms as well…

My Turn: Lax rules drive up health care costs

by Tim Ashe – Wednesday, January 20, 2010

The Free Press may be correct that the Legislature will be hard-pressed to pursue significant health care reform this year (Premature to take up health care in Vermont, Dec. 20) at the same time Congress debates a national plan.

But there is no excuse for the Legislature to stand by in the meantime while Vermont throws away millions each year on existing mismanaged programs.

Take, for example, Catamount Health, which the Free Press editorial declares “has proven to be unsustainable with the economic downturn.” Is the economic downturn really the only issue? Might poor regulation of the private insurers who provide Catamount plans be part of the sustainability problem? Let’s consider Vermont’s experience since Catamount’s adoption.

In 2006 the Legislature’s health care consultant, Dr. Ken Thorpe, projected the unsubsidized premium for Catamount coverage would be $305 per month. Because reimbursements would be tied to Medicare rates, he projected an annual growth rate in premiums in the 3.5% to 4.5% range.

Unfortunately for Vermont taxpayers, since Catamount began in 2007, we’ve had a very different experience. The initial premium awarded to Blue Cross/Blue Shield and MVP in October 2007 was $393/month, a whopping 29% more than worst-case projections at Catamount’s inception. That rate is in place today. And just three months ago, MVP announced it was requesting a shocking 31% increase for 2009-10.

After having the gall to request a 31% increase in our current deflationary economy, MVP lowered their requested increase to 12.4%. Blue Cross/Blue Shield has also asked the State for a – you guessed it – 12.4% rate increase. That’s some coincidence.

Bill Little, president of MVP in Vermont, has said of their rate request: “It’s definitely a sustainable rate, it is an appropriate rate.” I hope the Free Press joins me in affirming that this is not an appropriate rate – not from MVP, and most definitely not from BC/BS in the same year it sent its CEO off with a $6.3 million golden parachute. (It’s worth noting that a year’s worth of proposed premium increases for all 9,300 Catamount enrollees could be more than covered for much less than $6.3 million).

Vermont’s regulatory record with Catamount looks still more troubling when viewed in the context of trends in health care spending:

  • BISHCA’s January 2009 health expenditure survey pegged Vermont’s 2007 growth in health care spending at only 4.5%.
  • A June 2008 article in the New England Journal of Medicine reported the per person cost of Massachusetts’ Commonwealth Care was $352.43 a month, compared to the $393.11 allowed for Catamount, despite the fact Massachusetts’ per capita health costs are above the national average, while Vermont’s are 90% of national.
  • A study of President Obama’s original health care proposal conducted just months ago by the Lewin Group put the 2009 cost of an unsubsidized single premium for a policy comparable to Catamount at $298/month – a level comparable to Dr. Thorpe’s estimate.

At present, there are 1,339 Vermonters who pay full cost for their Catamount enrollment. Taxpayers pay a share of the burden, however, for the remaining 7,988 enrollees. Every inflated dollar of premium for those subsidized Vermonters is another dollar burned by taxpayers. Unfortunately we’re burning millions.

Catamount is not unsustainable, but it will quickly become so if BC/BS and MVP continue to have their way with Vermont regulators.

Rather than merely opine about Catamount’s sustainability, or to blame its challenges solely on the economy, the Free Press would serve its readers well to dedicate investigative staff time to exploring in detail why BC/BS and MVP are being allowed to charge Vermont taxpayers so much more than had been anticipated.

Then the Free Press can move on to challenge the hospitals for their combined requested $112 million budget increase (excepting the frugal folks at Springfield Hospital, who came in with a $1.7 million decrease).

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Ensuring Integrity by Closing the Revolving Door

24 January 2010, 9:24 am

In the next twelve months, dramatic decisions will need to be made in Vermont concerning both Vermont Yankee and the state’s largest telecommunications firm, Fairpoint. In my opinion, the taxpayer needs to be assured that our top regulatory officials are totally free from any appearance of a conflict as these two fundamental Vermont issues are tackled. That’s why I’ve introduced legislation that would prohibit the Commissioner of Public Service from  working for any utility regulated by his department for a period of time after he leaves the position as top regulatory enforcer.

The Senate Government Operations Committee likes the bill, and will consider extending the provisions to other top positions, and also to Legislators. They will also consider the length of time a prohibition should be in place, and what exactly should be prohibited – employment, lobbying, contact with officials in the respective department.

Currently Vermont is one of only 21 states with no revolving door policy in place for top officials, and it’s time we change that. The story below from the Times Argus discusses the bill. The headline and focus on Commissioner David O’Brien are unfortunate, as the bill is not about him but rather the broader need to close the revolving door…

Top utility regulator O’Brien feels some heat

By Louis Porter VERMONT PRESS BUREAU – Published: January 13, 2010

MONTPELIER — A Senate committee will begin today to consider a bill that would prevent the state’s commissioner of public service from working for any state-regulated utilities for five years after he leaves office.

If that seems awfully specific, Public Service Commissioner David O’Brien would agree.

“It’s sad,” O’Brien said. “It is targeting one particular appointee in state government.”

Since the bill, which will begin its journey with a discussion in the Senate Government Operations Committee today, specifies his position alone, “I can only conclude that Sen. Ashe has something against me,” O’Brien said.

Not so, said Tim Ashe, a Democrat from Chittenden County. His bill is designed to make sure that there is no potential conflict of interest for the person — whoever it is — occupying the top utility regulation spot in the executive branch. That is particularly important when two major utility issues — FairPoint Communication’s operation of the state’s telecom infrastructure and a potential continued operating licensee of the Vermont Yankee nuclear plant — are being worked on by regulators, he said.

“Given its extreme importance there can be no question that our lead enforcement agent be unencumbered by any future conflict,” Ashe said. “It is really a non-political proposal that has extra merit given our effort to deliver broadband and cell phone coverage by the end of the year.”

But O’Brien said the bill proposed by Ashe “seems very petty.” He said he has ruffled feathers at nearly every utility in Vermont, and far from trying to prepare a job for himself when he leaves office, has put his regulatory duties first, he said.

“I am not expecting my phone to ring off the hook from the utilities the day I resign,” O’Brien said. Many other former Vermont regulators work in the field now, including some at times employed by the Legislature, he added.

“I will stand on my record,” O’Brien said. “At the end of the day I am very happy with what I have done.”

And if legislators have a problem with the way he has done his job they should bring those issues to him, O’Brien said.

It is not the first time legislators and O’Brien have not seen eye-to-eye. Despite having served in his current role for seven years, O’Brien has not been confirmed to the position by the Senate, although they have not forced him out of the spot, either.

“It is not a comment on the work the commissioner has been doing, it is a question of integrity for the future,” Ashe said of his bill.

Ashe pointed out that the administration of President Barack Obama has instituted more stringent rules placing limits for years on what kind of work former officials can do after they leave government. If his fellow lawmakers believe restricting the issue to the office of commissioner of public service is too narrow he is not against expanding the scope of the bill, Ashe added.

One former top administration official, Mike Smith, recently went to work for FairPoint in a job that will involve interaction with his former colleagues. While he doesn’t see a conflict there, that event may result in more support for the bill, Ashe said.

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Making Sure the Stimulus Bill Reaches Workers

22 December 2009, 9:36 am

The primary premise of the stimulus bill, otherwise known as the American Recovery and Reinvestment Act, was to keep workers working and to put earned income in their pockets.

One of the tools to ensure the lion’s share of Vermont’s stimulus proceeds doesn’t end up in the hands of a few large paving company owners is the federal Davis-Bacon law. In place for 70 years, it creates a special minimum wage for all the trades who work on highway and building projects. It is meant to ensure that federal money is not used to pay less than livable wages to American workers.

Unfortunately, though these rates are supposed to be revised every 3 years in every U.S. county, many Vermont rates haven’t been updates in 19 years. This means workers are not afforded proper wage protections. On the other side, it forces contractors to go through the absurd and abundant paperwork process to confirm, in many cases, they are not paying below Vermont’s minimum wages. A waste of time for them, at no value to the worker.

In the Legislature, I helped pass a bill that creatively modernizes the required wages in Vermont for stimulus-funded work. This needs to be in place until the federal government steps up and revises the Davis-Bacon rates.

The good news is that Bernie has been joined by the rest of Vermont’s Congressional delegation to request just that from the Department of Labor.

Read here for more: http://leahy.senate.gov/press/200912/120409b.html

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Minimum Wage

13 December 2009, 9:12 pm

This past session in the Senate, I introduced a bill that got little attention. Short and to the point, it said that the Vermont minimum wage, which is tied to CPI, would not go down in the event of a decline in the CPI. Some laughed when they saw this bill because it’s been decades since CPI went down in the United States.

It gives me no pleasure that CPI did indeed go down this past year, which means under normal circumstances Vermont’s lowest wage workers would have seen an already too-low minimum wage decline still further at the worst possible economic time.

My bill, which was folded into the Senate Economic Development bill, and which ultimately became law, helped protect Vermont’s low wage workers from suffering a decline in their earnings.

If there’s any doubt about the potential for these workers to slide into still greater inequality, read this from the Denver Post…

Colorado’s minimum wage is set to decline next year due to a decrease in the inflation rate during the first half of the year, according to an order from the Colorado Department of Labor and Employment.


The new order would lower the state’s current hourly minimum of $7.28 to $7.24 on Jan. 1.


Most employers, however, will still have to meet the federal minimum wage, which rose to $7.25 in July.


For a full-time worker, going from $7.28 to the federal hourly minimum will result in a loss of $62.40 in income during the course of a year.


“For the people really working at the minimum wage, even though it is a small amount of money, it means a lot to them,” said Rich Jones, director of policy research at the Bell Policy Center in Denver.


For tipped workers in Colorado, the minimum will go from $4.26 per hour to $4.22 per hour, an amount above the federal minimum for tipped income of $2.13 an hour.


The Colorado Restaurant Association, which lobbied against linking the minimum wage to inflation, isn’t directing members one way or the other on adjusting wages, said Peter Meersman, the group’s chief executive officer and president.


“Each individual employer will decide that,” said Meersman, who called the downward adjustment a surprise.

Jones said he hopes employers will focus more on maintaining goodwill with their workers rather than lowering wages because they can.


The state minimum wage is based on a formula contained in the state constitution after the passage of Amendment 42 in 2006.


The minimum wage rate is recalibrated each year based on the Denver-Boulder-Greeley Consumer Price Index, which fell 0.6 percent between the first half of 2008 and the first half of 2009. Last year, that index rose 3.9 percent, but it is now on track to record its first annual decline since its start in 1965.


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Obama Must Learn from VT’s Mistake and Include the Public Option

3 September 2009, 11:07 pm

Let me first say that I’m extremely disappointed that at this point a universal health insurance plan is not under serious consideration in Congress. This ensures we will continue to have the most bloated administrative costs found anywhere in the industrialized world. I am also disappointed that the Senate Health Committee rejected a proposal to allow up to five states to be granted waivers to use federal dollars to provide universal coverage in whichever way those states’ legislators and Governors see fit. Senator Sanders has fought to keep this idea alive, and I hope he prevails so Vermont can seek to become one of these demonstration states.

I believe a “public option” is absolutely critical if we wish to reform our health care system. Otherwise there will simply be no meaningful check on the costs charged by the private insurance companies. Vermont’s experience with Catamount Health illustrates on a small scale what happens without a public option.

Just three years ago, the Vermont Legislature considered and rejected a public Catamount option to compete against Blue Cross/Blue Shield and MVP. Consider our experience since then.

In 2006 the Legislature’s health care consultant, Dr. Ken Thorpe, projected that the unsubsidized premium for Catamount would be $279 per month. Because reimbursements would be tied to Medicare rates, he projected an annual rate of growth in premiums of 3.5% to 4.5% depending on trends in pharmaceuticals.

However, since CHC began in 2007, we’ve had a very different experience:

  • the premium awarded to BC/BS and MVP for 2008-09 is $393/month – 35% more than Dr. Thorpe’s worst case scenario.

I expect you’ll agree with me that a competing public Catamount option would not have permitted a 35% upcharge over worst-case projections.

The Vermont experience is inconsistent with trends in health care spending specifically and the economy as a whole:

  • BISHCA’s January 2009 health expenditure survey pegged Vermont’s 2007 growth in health care spending at only 4.5%.
  • According to a June 2008 article in the New England Journal of Medicine, the per person cost of Massachusetts’ Commonwealth Care was $352.43 a month, compared to the $393.11 allowed for Catamount, this despite the fact that Massachusetts’ per capital health costs are above the national average, while Vermont’s are 90% of national.
  • Finally, a study of President Obama’s original health care proposal conducted just a few months ago by the Lewin Group put the 2009 cost of an unsubsidized single premium for a policy comparable to Catamount at $298/month – a level comparable to Dr. Thorpe’s estimate adjusted by his worst case rate of growth. Indeed, Vermont’s premium should be 10% lower because its per capita health care expenditure is 90% of the national rate.

I hope that the Congress will learn from Vermont’s experience and include a public option. If they do not, here in Vermont we will need to overcome the timidity of earlier Legislatures and revisit a public Catamount option to bring affordable health insurance to our small businesses, uninsured, and underinsured residents. We literally cannot afford not to.

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