Vermont State of the State Address 2004

Montpelier, Vt., Jan.6 -Following is the full text of Vermont Gov. James (Jim) Douglas's (R) 2004 state of the state address:

Mr. President, Mr. Speaker, distinguished Members of the General Assembly, my fellow Vermonters: The year 2004 is upon us and it is my honor to report to you on the condition of our state, the progress we have made in the past year and the ambitious agenda that lies ahead.

When I first addressed you from this podium a year ago, Vermont was in the midst of difficult times and a quiet anxiety persisted among the working people of our state. Job losses and plant closings were daily reminders that something was not right, and it was the judgment of the people that it was time for a change a change in approach, a change in focus and a change in tone.

They demanded we take a critical look at the policies of the past and work together to craft new solutions for the future. So I asked you to join me in achieving change in a new spirit of civic virtue that valued cooperation over contention, and it is with great satisfaction that I stand with you today and say that progress has indeed triumphed over partisanship.

As a result of our measured dialogue, professionalism, bipartisanship, and genuine goodwill, the people of Vermont will recall of this past year that this administration and this General Assembly were partners for positive change. It is my expectation that we who join here to answer the call to public service will continue in this spirit.

Today, the change the people called for is underway, and it is helping to lift the cloud of uncertainty that lingered too long on our horizon.

Vermont's economy is strengthening. At only 4 percent, our unemployment rate is the fifth lowest in the nation and nearly 2 points lower than the national average.

While other states experienced severe deficits that caused them to raise taxes and slash vital services, we produced a balanced budget, and Vermont is among only a handful of states to end the most recent fiscal year in surplus. We did it all while protecting the most vulnerable among us and without raising the net tax burden on the people.

We were able to maintain fiscal responsibility by holding the growth in general fund spending to the lowest level in a decade. By resisting the expansion and creation of expensive government programs, we ensured a more stable and sustainable fiscal future for our children. Let us continue to have the courage to stand firm.

In one short year, we helped spur job creation by delivering the largest single economic stimulus bill in Vermont's history, providing over $105 million in new capital and tax incentives for employers, and training programs for workers.

We saved jobs in all four corners of the state and encouraged employers to invest in the creation of over 2000 good paying jobs for the years ahead.

We took steps to improve the arteries of a healthy economy our roads and bridges that over the last decade were allowed to deteriorate; and we stood up to the special interests and kept our promise to kick-start critical infrastructure projects like the Circ Highway that have been delayed by litigation, red tape and lack of will.

I offered an alternative to the often heated contest between those who seek economic growth and those who seek environmental preservation. This third way resists the extreme impulses of ideology and recognizes that in Vermont, our economy and environment are codependent. We must accommodate each for the betterment of both.

I laid out an ambitious plan for the clean up of Lake Champlain and waterways throughout the state. We spoke out strongly against plans to weaken regulations on coal-burning Mid-West power plants that contribute to air pollution in Vermont. We passed a long-awaited renewable energy bill to promote the use of renewable alternatives and offer consumers more renewable options; and we continue the fight to prevent a toxic tire-burn across the lake.

We turned years of rhetoric about combating Vermont's substance abuse problem into reality by passing my D.E.T.E.R. anti-drug program. We put more emphasis on prevention, more support behind community coalitions, more of the addicted in treatment, more counselors in our schools, more police on the streets, and more drug dealers behind bars--and we will not shrink from our responsibility to do more still.

We ended years of gridlock, and took the first steps to address the stifling burden of property taxation on our working families by passing Act 68. This dramatic reform eliminated the divisive sharing pool and will bring property tax relief to the vast majority of property owners.

We renewed our commitment to the family farm, providing farmers with emergency relief and eliminating the property tax on farm buildings in the Current Use program.

We took innovative steps to reduce the cost of prescription drugs by initiating the first-in-the-nation multi-state bargaining pool, and are aggressively pursuing strategies to gain access to less expensive Canadian pharmaceuticals.

We fortified the hospital regulatory process to prevent future abuses, and took aggressive steps to strengthen the credibility and accountability of Vermont's only academic medical center.

My administration has undertaken a massive reorganization of the Agency of Human Services to improve the way it serves Vermonters, and established the Vermont Institute for Government Effectiveness, a top to bottom review of government operations to root out waste and inefficiencies that cost taxpayer dollars.

And we are taking important steps to address the chronic and shameful neglect of important institutions like our State Hospital and our correctional facilities to ensure the safety and proper treatment of those in the care of the state.

This is a record of accomplishment of which we can all be proud.

As 2004 begins we have delivered on the promise of change for the sake of progress, in every agency of government, in every corner of the state, and for the benefit of every Vermonter. I am proud to report that the State of Vermont is strong and growing stronger.

We must pause today and acknowledge those Vermonters who every day risk their lives to protect us.

We live in a time of extraordinary courage and sacrifice. I have had the privilege of thanking and helping to send off nearly every Vermont National Guard member and Reservist who has been deployed to defend us from terrorists and tyrants who seek to deliver their hate to our shores.

Six Vermonters have given their last full measure of devotion in the war to liberate Iraq. We will be eternally grateful for their sacrifice.

Here at home we rely on the women and men of the fire and rescue services and our federal, state and local law enforcement agencies who are committed to protecting us and responding to any crisis in our communities. Sadly, we lost two law enforcement officers, a first responder and a firefighter in the line of duty this past year.

Let us remember those we have lost, and join in honoring and thanking the members of our armed services and public safety community.

Our state is growing stronger and our economy is improving. But for those Vermonters who still struggle to find work the recession continues and to them I pledge my continued resolve. I will not be satisfied until every Vermonter who wants a job has a job.

A good job is more than just a paycheck. A good job fosters independence and discipline, and contributes to the health of the community. A good job is a means to provide for the health and welfare of your family, to own a home, and save for retirement. And a job is a source of dignity, hope and possibility for the future.

As I meet with Vermonters on factory floors throughout the state, I can see the difference that we have already made in people's lives.

Several weeks ago I had the pleasure of visiting Vermont Tubbs in Brandon to meet their dedicated employees and share with them my job creation agenda. The company was one of many that in the recent past was teetering on the brink of closure an event that would cost our state roughly 200 jobs, including that of Serge Cotnoir.

Serge is a dedicated, hardworking Vermonter who cares about his family, his craft, his community and his state. In 2002, Serge lost his job in Island Pond when his plant closed. He was lucky enough to find a new job at Vermont Tubbs. Before long, however, continued economic stagnation put that job in jeopardy as well and it seemed to be a foregone conclusion that Vermont Tubbs would close its doors forever.

But through the determined efforts of the community, assisted by my administration, most of the jobs at Vermont Tubbs were saved and the employees of the company continue to produce some of the highest quality furniture in the world.

Serge, who remains gainfully employed because of our efforts, epitomizes the honest, hard-working Vermonter whom we should keep uppermost in our minds as we conduct our work here during this coming session. Please join me in welcoming Serge, who is with us in the balcony today.

All Vermont workers can gain comfort from knowing that as long as I am governor, not a single job will be forfeited due to a lack of interest from Montpelier. We will fight for each and every one.

We will continue to invest in the skills and entrepreneurial spirit of Vermonters. They are the job creators, the workers, the thinkers, and the risk-takers.

As a next step toward improving our economy, I am proposing a series of initiatives that build on my plan for prosperity. Last year, we took steps to reduce property taxes, and this year my administration is recommending that we lower property tax rates an additional 5 cents.

I asked the Tax Department to undertake a review of our entire tax structure to identify ways to reform the system to make it fairer for the everyday Vermonter.

What we found will come as no surprise to most taxpayers income tax rates in Vermont are simply too high. And it probably also comes as no surprise to find that our system is designed in a way that allows some to avoid paying their fair share.

A system such as the one we have today discourages economic growth, creates cynicism and breeds resentment among our people.

So today, I am proposing reforms to Vermont's tax policy that will make our system of taxation more fair and equitable for all. My plan reduces personal income taxes across the board, while most significantly reducing the tax burden on low and middle income Vermontersthey are the people who need it most.

Vermont's middle income tax rate is currently 8th highest in the nation. Under my proposal, middle income Vermonters would see a 6.9 percent reduction in their income tax rate, dropping it to the more competitive rank of 16th in the nation.

The lower income tax rates I am proposing can be accommodated though common sense changes that will make our tax system fairer.

Two years ago, Vermont adopted a measure exempting 40 percent of capital gains income, giving capital gains preferential treatment, and primarily benefiting the wealthiest taxpayers.

Vermont is one of only five states that offer a broad-based exclusion for capital gains. In order to reduce income tax rates on all taxpayers, especially low and middle-income Vermonters, I am proposing to eliminate the 40% capital gains exemption except when the capital gain is associated with the transfer of farm property that will remain in production.

I also propose reducing the corporate income tax rate on employers to make them more competitive and to help them grow our economy and create good jobs.

Vermont's top corporate income tax bracket is currently 5th highest in the nation. Our high rates handicap the state's ability to recruit employers and represent a significant competitive disadvantage for homegrown Vermont companies.

To make Vermont more competitive, strengthen our recruitment efforts and level the playing field, I am proposing that we reduce our corporate tax rates across the board an average of 14 percent.

This reduction will be phased in starting in 2006. With this change, Vermont's top corporate income tax rate will drop from 5th highest to 16th in the nation.

These lower rates will be accomplished by closing loopholes in our tax code that allow some multi-state corporations to redirect profits to other states to avoid declaring them in Vermont. As a result, these huge companies pay only a minimum $250 tax while our homegrown Vermont businesses particularly our small businesses pick up the rest of the tab.

These few multi-state corporations utilizing income-shifting strategies to avoid paying their fair share will see their taxes rise, while the typical Vermont employer will see its taxes drop significantly.

Taken together with my proposal to reduce the income tax burden on low and middle-income families, this tax reform program makes our system more fair and represents a better deal for all Vermonters.

I am also proposing additional marketing assistance and educational opportunities for small business owners, and we will resume our work to reform the permitting process and workers' compensation system.

In addition, we must cultivate the next generation of manufacturing to help replace the thousands of old-line manufacturing jobs that have disappeared over the past several years.

Therefore, we must support the development of high-tech centers throughout Vermont and the University of Vermont's efforts to develop an incubator facility for emerging technologies.

To help ensure the success of rural and urban employers alike, we must also build a robust technological infrastructure. Working with private sector partners we will create a wireless network that covers all of our major transportation arteries, and extend broadband Internet access to 90 percent of our homes and businesses by 2007.

And of course, we must continue to build on our relationship with our neighbors to the north. I want to thank Lt. Governor Brian Dubie for reopening our door to Quebec and all of Canada. The opportunities for enhanced trade are great, benefiting us all. ****

We cannot discuss Vermont's jobs environment without discussing our natural environment. Vermont's environment is where we work and play; where we hunt, fish, and trap; where we ski and ride; where we raise our children and make our way of life.

It is in this harmony, of the practicable and the pristine, that I have offered a third way - the Vermont Way - to balance the environmental protection we cherish with the needs of working Vermonters.

Over the past year, I have advanced an aggressive environmental agenda that embraces the Vermont Way. In September, I introduced my Clean and Clear Water Action Plan, a 6-year, $150 million commitment to accelerate the clean up of Vermont's waterways.

I have proposed starting the clean up in Lake Champlain, which has been plagued by a dangerous algae bloom that, during the summer months, has turned some areas into a thick, green muck.

My plan takes the first tangible measures in recent memory to mitigate persistent pollution problems in our lakes, rivers, and streams, and I look forward to the Legislature's support in this ambitious effort.

We all share the goal of clean water, and want to achieve this goal as fast as possible.

The debate over stormwater runoff is complicated, but it is one we must resolve, and resolve quickly, with bipartisan support. While we struggle to find a solution, a Vermonter struggles to find a job, a family struggles to buy a home, and stormwater continues to pollute unabated. This General Assembly should not adjourn until the stormwater impasse is broken and we have found a solution.

In Vermont, it is natural that our discussions of development are steeped in the principles of responsible growth. This fall, I announced a collaborative effort to explore ways to formalize smart growth planning and speed the creation of designated opportunity centers. It is my goal that these opportunity centers offer permitting and tax incentives for businesses wishing to grow in Vermont.

The Winooski downtown redevelopment is a good example of the smart growth model, and my administration will continue to support that important project.

The high cost of energy continues to be a critical issue for Vermonters. Last year, at my urging, the Legislature passed the Renewable Energy Bill that establishes "Renewable Energy Goals" and gives direct incentives to Vermonters who install renewable energy systems in their homes or businesses. I remain committed to the ongoing public dialogue and exploring all energy options as we discuss the future of power in Vermont.

One way to reduce electric bills, and contribute to environmental protection, is to conserve energy. State government must be an innovator in conservation and efficiency. We cannot expect families and businesses to conserve power if government fails to lead.

In the coming weeks, I will set forth a far-reaching plan to transform state government into a role model for environmental stewardship. We will reduce the impact of state government's daily activities and, in turn, increase market demand for environmentally sensitive products and services. This plan will include a new management system for the state's fleet of vehicles. With this ambitious strategy, we will aim to reduce government's contribution of greenhouse gasses by 25%, more than 34,000 tons of pollutants, by 2012.

Our deep respect for the land and its harvest is the legacy of generations of farmers who put food on our tables, preserved our landscape, and inspired us with a powerful work ethic.

Farming is a difficult way to make a living. Workdays often extend from darkness to darkness. In recent years, especially for our dairy farmers, even the longest day has not been enough to keep many farms profitable.

Beginning last year on my recommendation, the state took a more active role to help farms withstand hard times. We must remain unyielding in our support for the family farmers who contribute so much to our way of life.

Opportunities abound to encourage the diversification of agriculture in Vermont by supporting organic production, agri-tourism and the burgeoning specialty food industry that add value to farming operations. By helping our farmers pursue these strategies, working to strengthen Vermont's right to farm law, and continuing to offer them the assistance they need to weather difficult times, we can help ensure a bright future for the farm community and our entire state.

To ensure the brightest possible future for every Vermonter, however, we must address the growing problems of our health care system. We are fortunate to have a medical community and hospitals that provide high quality care. But ask any Vermonter and he or she will tell you that our health care system is ailing. Costs are too high, mandates too many and options too few.

Policymakers have struggled with this important issue for decades. In addressing this challenge, there are no easy answers, no silver bullets, no cure-all tonics; only tough choices. True reform must be comprehensive and address the totality of this problem.

Recent attempts by government to make health care more affordable and accessible have had unintended consequences that aggravated many of the ills it sought to cure.

Initial efforts started us down a hopeful path, but the true costs of that course are now becoming evident insurance companies have fled our state leaving our residents with fewer choices, premiums have skyrocketed, doctors and hospitals are not receiving the reimbursements they were promised, patients are losing direct control over their care, and state-run programs are headed for collapse.

As government looks to solve a problem that government itself helped create, we must not allow the remedy to be more harmful than the disease. Any reasonable measure to improve the condition of Vermont's system and make healthcare more affordable must first "do no harm."

It must not raise the cost of care for the vast majority of Vermonters already insured through private insurance, nor should it raise taxes on already over-taxed workers. It must have long-term financial sustainability, improve access and open up competition among insurers to use market forces to drive costs down. And, finally, it should enhance the quality of care and put more power in the hands of doctors and patients, instead of government and health care bureaucrats.

This year, my administration has taken the initial steps toward real reform of Vermont's health care system. Right now, 78 percent of Vermont's health care dollars are going to treat patients with chronic illnesses such as diabetes, high blood pressure and cardiovascular disease. In partnership with Vermont's health care community, my administration launched a sweeping chronic care initiative designed to enhance treatment and lower costs for those with chronic illnesses and put the patient at the center of care.

We also began to look at long-term care for elderly and disabled Vermonters. $125 million of our state's healthcare budget supports these long term needs. By refocusing our delivery to home-based care we give seniors the choice they desire, increase the quality of care and reduce costs.

Just as we look to the oldest Vermonters, we must look to the youngest. The problem of childhood obesity is plaguing our youth. There is a direct relationship between obesity and a host of life-threatening maladies. My Fit and Healthy Kids Initiative is aimed at teaching the value of good nutrition and regular exercise to our youth through state leadership, community grants, and the establishment of the Green Mountain Games for Kids.

For all Vermonters, access to high-quality, low-cost prescription drugs is a priority. As part of my strategy for reducing the cost of pharmaceuticals, Vermont and Michigan formed the nation's first multi-state buying pool for prescription drugs in our Medicaid program, boosting the state's ability to get the best price for needed drugs. Further, we've been a national leader in petitioning the federal government for access to cheaper Canadian prescription drugs.

In a comprehensive approach, these are the first steps toward real reform. But, the most complex issue facing Vermont and the nation is the high cost of health insurance and the vicious cycle that pushes costs still higher as government seizes more control over the system.

In the weeks ahead, I will present a series of carefully crafted proposals that will make improvements to the health care delivery system and make Vermont's health care laws more flexible so that consumers can have more low cost options that address their individual circumstances. These reforms will help increase access to affordable health care for all Vermonters, empower individuals with more direct control over their care, and work to save Medicaid for the most vulnerable.

The health and lives of too many Vermonters, especially our youth, are threatened by drug abuse.

For the first time, we have taken bold action to address Vermont's substance abuse problem. I am pleased to report that we are making extraordinary progress in treating it with a compassionate program that places a premium on prevention and targets our substance abuse resources where they are needed most.

As we gather here today, however, there are still schools that need counselors, communities that need recovery centers, prevention coalitions that need assistance, and addicts who need a treatment facility here in Vermont.

While we work to eliminate the demand for deadly drugs, we must also continue to pursue, arrest, prosecute, and punish those who push them.

For our state to succeed economically and culturally we must rely on the informed wisdom of our people, and we are duty bound to do all we can to help foster that wisdom through our system of public education.

Education is the great equalizer, giving the poor, the disadvantaged, the voiceless and the vulnerable the power to pursue their greatest hopes and aspirations so that no one may deny them their destiny.

Vermonters have demonstrated their devotion to this principle time and time again, seeking to balance funding among school districts, reduce class size and improve teacher pay, hoping to slowly but surely develop a system where all schools are capable of addressing all of our children's individual needs.

Vermont is fortunate to have so many wonderful and dedicated teachers and administrators who share this goal. Because of them our public school system is strong and it is a system of which we should be proud.

Despite all of our efforts, however, true equality of educational opportunity continues to escape too many of our children. It is our responsibility to ensure that these children have options so that not one day of learning is unnecessarily lost because of barriers erected by government.

Today, the children of wealthy Vermonters can escape such barriers by paying tuition to another school of their choice. But for many middle and lower-income residents, tuition payments are not an option. Instead, they are forced to play the hand that is dealt them, and their child's future is on the line.

The time has come to find an alternative that gives every child, regardless of residence or economic background, a truly equal opportunity for a first class public education that meets his or her needs. School choice should not be a privilege reserved only for the wealthy. It should be the right of all Vermonters.

That is why I am proposing a statewide, K-12 public school choice program that affords all Vermont students an opportunity to attend the school of their choice. No longer can we allow the defenders of the status quo to stand in the way of equal access to the best education our public schools have to offer.

As you consider my proposal, you will hear testimony from parents whose children would benefit from choice. Their reasons will be diverse, but each equally important to their child. I urge you to listen to these families and the challenges they confront as they struggle to give their children access to the first-class education they deserve, and then pass a bill to guarantee it.

Over the last year, I've had the privilege of traveling the mountain gaps and green valleys of this great state.

Along the miles, I've met Vermonters on factory floors, in school cafeterias, and at backyard barbeques. I've met them on country roads, at county fairs, and church suppers.

I've met them in joy and in loss, in shining moments and in dark hours. I've met a strong people, full of dignity and resolve, from whom I draw inspiration, promise, and hope. It is for these everyday Vermonters, and for their struggle, that we push and pull to make this state a better place.

In my travels, I am reminded that the wellspring of Vermont liberty flows from Main Street, not State Street; from town meeting democracy, not government bureaucracy; and from the home of every Vermonter into this people's dome.

The agenda I offer is based on my many conversations with the people across this state. From their hopes and aspirations emerge the ideas that transform our society, sometimes brick by brick, and sometimes leap by bound. They are the true architects of my agenda.

We have much to do many more miles to go and I welcome your partnership in this profound endeavor.

Thank you and may God bless you, our great state of Vermont, and the United States of America.
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