A look back at the 1991 budget deficit

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(Host) The last time Vermont experienced a budget deficit like this year’s was back in 1991.

Then, two major forces in Vermont politics formed an unlikely alliance.

Republican Governor Dick Snelling and Democratic House Speaker Ralph Wright won support for a package of cuts and tax increases to help balance the budget.

Raising more revenue was part of the overall solution 18 years ago. But Governor Jim Douglas says higher taxes are not an option this year.

VPR’s Bob Kinzel reports.

(Kinzel) When Dick Snelling returned to the governor’s office in January of 1991, after serving four terms between 1977 and 1984, he faced a state deficit that amounted to roughly 10 percent of Vermont’s budget.  It’s a number that’s similar to size of the state’s current fiscal situation.

At the beginning of the 1991 session, Snelling did something that’s become one of the most talked about events in modern legislative history.

Unannounced, he walked over to the office of House Speaker Ralph Wright and requested a brief meeting to ask for Wright’s help in drafting a package of budget cuts and tax increases to erase the deficit.

At a press conference after the meeting, Snelling said that adopting this package was more important than his own political future:

(Snelling) "I’m perfectly willing, if I can get this problem solved, to be a one-term governor. That won’t hurt me an awful lot if the price of getting this problem solved is that I’m unpopular. I’ll live with that. But to get the problem solved, people do have to know what the problem is and what the alternatives are. You can’t ask them to be for tax increases if they don’t know that they have to have tax increases or for spending cuts if they don’t know that the state needs spending cuts."

(Kinzel) Wright was astounded at Snelling’s offer to solve the budget crisis without a major partisan fight between the Republicans and Democrats.

(Wright) "We had a problem, very major problem. We all could have headed to the bunkers for political reasons to save our political rear ends down the road. We did the right thing. Admittedly the tough thing, but the right thing."

(Kinzel) And Wright was further amazed when Snelling proposed a three-tiered state income tax increase to raise new revenue.

(Wright) "It was extraordinary to me. This doesn’t happen very often. Quite frankly, I’ve never experienced this, that all the way through this package, in 7 or 8 meetings with the governor, there was no hidden motive."

(Kinzel) Although Snelling had Wright’s support, he faced a major revolt from the House Republican caucus.  Many members of his own party said they would never support the income tax plan and they urged Snelling to drop it from the package.

In late February, Snelling addressed the House caucus and told them it was all or nothing.

(Snelling) "Either I can negotiate for you or I can’t. And if you’re telling me that I can’t, that I’ll stop trying, I will do the best I can. I cannot do any better than that and I think the $80 million package that we have is on balance the best that we can get. Now, if I have a right to say, `OK, I want to buy all of it except this piece, that I don’t like,’ well then they have a right to buy all of it except the piece they don’t like and where are we then? Where are we then ? "

(Kinzel) Snelling then told the caucus that if they didn’t support the $80 million package, he would find it very difficult to work with them in the future:

(Snelling) "I will be clearly unable to lead you if the Democrats bring a majority of their party to support a package that has had all this discussion between the Speaker and myself and Republicans won’t come towards the center to the same degree. I will have failed. I will have failed to represent you, to lead you. I will have failed to bring us together in ways that are required."

(Kinzel) Governor Jim Douglas considers Dick Snelling to be his political mentor.  Douglas was asked last week if the approach that Snelling took in 1991, using both budget cuts and tax increases, was a model for this year.

Douglas says the answer is no because he says the circumstances of the 1991 deficit were different.

The governor notes that there have been four revenue downgrades during 2008 – a situation that he says allows the state time to reduce spending and avoid higher taxes:

(Douglas) "It’s happened over a longer period of time and I think our revenue forecasting has been more accurate. What happened in 1991 was that all of a sudden during the legislative session the bottom fell out and there was no time to adjust. And so the Legislature and administration came in with a package of additional debt, some revenues and some budget reductions."

(Kinzel) Douglas says he also opposes a tax increase at this time because he says overall tax burdens are higher today than in 1991.

(Douglas) "I do know this, that Vermonters are very heavily taxed now. We have to do what we can to moderate that burden, be more competitive, to allow our families to prosper economically. So we don’t have any more capacity for taxation. We have to tighten our belts."

(Kinzel) Legislative leaders seem to agree with Douglas that the 2009 deficit can be erased without raising taxes but there’s less agreement if this policy can be maintained for the 2010 budget.

For VPR News, I’m Bob Kinzel in Montpelier.

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