(Host) State Treasurer Jeb Spaulding has raised concerns about the governor’s proposed $175 million scholarship program.
The treasurer says Vermont needs to pay off existing obligations, before it launches an ambitious new spending plan.
VPR’s John Dillon reports:
(Dillon) Treasurer Spaulding says he applauds Governor Douglas for coming up with the college scholarship idea.
But the problem, as Spaulding sees it, is that the state already has some big bills coming due. He says these include red ink in Medicaid, the need for more money in the Transportation Fund, and a deficit in the teacher’s retirement fund.
Spaulding says that these debts could raise a red flag for the companies that set the state’s credit rating.
(Spaulding) “I do think the major credit rating agencies are likely to question us on this subject. They know we’re facing shortfalls in paying for Medicaid, pensions and roads and bridges. And we’re going to need to a clear and specific answer – which we don’t right now – as to how we will pay for these existing obligations at the same time as we’re starting a major new initiative. You just don’t put an addition on you house until you can pay your existing bills.”
(Dillon) The governor wants to fund some 12,000 scholarships by using money from lawsuits against tobacco companies.
The state is expected to see an additional $12 to $14 million a year for 10 years, beginning in 2008. Douglas says that increase in funds matches perfectly with a projected drop in the number of college-age students. He says his plan will make higher education more affordable and help the state colleges stay in business.
Douglas is a former state treasurer, so he says he’s familiar with the credit agencies’ review of the state’s finances.
(Douglas) “One thing they’re going to be interested in whether there is adequate economic base to meet our obligations going forward. And as we see the demographic shift with 2,000 fewer kids coming out of high schools a decade or so from now, I think they’ll understand from economic forecasts that there won’t be enough taxpayers to pay the obligations of state government. We have to build our economy by building our workforce. And the best way to do that is through the Vermont Promise Scholarship Program.”
(Dillon) But Spaulding says he has more immediate concerns.
(Spaulding) “As the state treasurer I’m the one who has to pay for the bills. I’d kind of like to know that we have a plan to pay for those bills before we start new programs. That seems reasonable.”
(Dillon) The governor’s plan to spend the tobacco money on scholarships also faces competition in the Statehouse.
The House Ways and Means Committee is considering using the money to help fund a comprehensive health care plan.
For Vermont Public Radio, I’m John Dillon in Montpelier.