The uproar over Governor Shumlin’s land deal with Jeremy Dodge isn’t going away anytime soon, nor should it. A lot of questions* remain to be answered**, but I’m going to focus on a public policy issue that should get fresh consideration: Financial disclosure for candidates and elected officials.  

*Example: if legal ethics mean anything, then there ought to be an inquiry into attorney Gloria Rice’s role in the deal. She represented BOTH sides in a transaction that was obviously weighted in Shumlin’s favor. Dodge was unaware of his rights in a tax-sale situation, and of the potential tax relief available to people like him. If she didn’t know all that, she’s a lousy real estate lawyer. If she did know all that and didn’t say anything, then she’s guilty of an ethical breach.

**Example II: Shumlin and Dodge signed the purchase agreement on September 25, three days before the property was scheduled for tax auction. But the deal wasn’t formally closed until November 7 — the day after Election Day. Hmmmmmmm. Maybe there were good reasons for the six-week delay, but the timing is remarkable. It could be interpreted as an awareness on Shumlin’s part that the sale might cause a stink if the details came out before the election. (And remember, Shumlin reportedly told Dodge not to talk to reporters.)

If this deal shows one thing clearly, it’s that financial transparency is a necessity. We need to know where and how our elected officials (and those who seek to become public officials) make their money, and how much they pay in taxes. Personal finances reflect an individual’s values, character, and priorities, as well as potential conflicts of interest. VTDigger, last October:

The governor said he’d never seen corruption in the Statehouse from either party over the course of his political career. … “The system works in Vermont,” he said. “In gubernatorial races, we voluntarily release them … What problem are we trying to solve?”

I take cold comfort in the nothing-to-see-here assurances of a man who thinks that fleecing an uneducated, mentally troubled individual is fair game. How, exactly, does he define “corruption”?  

Shumlin offered another rationale for shielding state lawmakers from disclosure rules:

Shumlin said requiring legislators to disclose information like personal income and real estate would be asking too much. “These are folks that give up part of their lives five months of year to come to Montpelier,” Shumlin told VTDigger.

He’s got that completely ass-backwards. From the vantage point of a humble voter, these are folks who seek positions of influence, and who wish to serve the public and protect the public trust. If disclosing one’s finances is too much to ask, then perhaps Our Elected Servants should seek another line of work.

The politicians like to get all folksy on this subject — hey, this is little old Vermont, everybody knows everybody, we’re all good people, there aren’t any secrets, and a person’s business is his/her own affair — but they are evading the real issue. Vermont is one of only three states that don’t require statewide candidates to disclose their finances, and one of only TWO  that don’t require legislative candidates to do so. Isn’t that just a little bit disgraceful?

Apparently it stimulates no shame under the Golden Dome, since (as VTDigger reports) it’s been 19 years since a personal finance disclosure bill made it as far as the House or Senate floor. I don’t hold out much hope that the same lawmakers who balked at some simple, reasonable campaign finance rules would voluntarily subject themselves to personal disclosure requirements because, if the campaign finance debate showed anything, it showed that the public interest is the last thing on many lawmakers’ minds when it comes to how they do their business.

But the Jeremy Dodge land deal is an obvious sign that it’s time to try again. Hold their feet to the fire, even if they jump up and run away as soon as they can.  

I just heard from someone in the media that Governor Shumlin made time in his busy schedule today for a series of one-on-one meetings with members of the State House press corps. The subject: the Jeremy Dodge land deal, natch. Nice timing. Friday afternoon, Memorial Day weekend, stories buried in the Saturday paper.

(My invitation must have gotten lost in the mail. Darn.)

I guess individual interviews were preferable to a formal news conference because he wanted to avoid an explosion of the pack mentality, and so he could subject each reporter to the power of his personal charm.

Also, I’m sure he wanted to avoid a repeat of last year’s debacle when reporters questioned the terms of the original East Montpelier land deal:

..Shumlin initially dodged questions from reporters about the land deal, which involved a campaign donor. At a heated press conference, in which reporters peppered him with questions about the deal, he became visibly angry and left abruptly. The reaction afterward was swift. Shumlin’s staff called reporters and chastised them for delving into his personal life.

Yeah, we hope he (and his angry staff) took a lesson from that incident. Walking out of a presser and personally attacking reporters might provide temporary relief of scandal-related symptoms, but it’s likely to make things worse in the long run.  

I’m fully aware that we should take anything reported by WGOP — er, WCAX with a grain of salt. After all, just last week it made a huge and completely unwarranted fuss over Rep. Peter Welch’s alleged involvement in the IRS/Tea Party affair.

But WCAX has produced a follow-up to Peter Hirschfeld’s scoop about Gov. Shumlin’s East Montpelier land deal — you know, the one where he bought a 16-acre property and a dilapidated house for well under appraised value, the seller (Jeremy Dodge) was a troubled individual who wasn’t represented by counsel in the sale, and who now believes he was ripped off by Our Governor.

And if Channel 3 is right, the trouble may just be getting started. Because, according to Dodge’s longtime friend Bernie Corliss…

The land deal attracted the attention of federal authorities. Corliss says an FBI agent came to his door Monday, telling him he was investigating the legality of the deal. The agent even left a card.

“He asked me what I thought Jerry’s mental ability was. He asked me if I thought there was something wrong with the buy,” Corliss said.

WCAX News confirmed the FBI’s involvement. The U.S. Attorney for Vermont said agents followed up on a tip. Authorities would not tell us what they were looking for, but say there is no active investigation.

This may be purely routine, but I don’t think the FBI deploys its agents on a mere lark. And it’s never good news when a politician’s next news conference might well begin with the question, “Governor, have you been questioned by the FBI?”

After the jump: Shumlin jawbones himself a tax break.

One more exclusive tidbit from WCAX: you may recall that the assessed value of the Dodge property was lowered from $233,700 to $144,000 after the sale. Well, according to Channel 3, that’s because Shumlin sought a reduction in his East Montpelier property taxes.

“He did suggest that, you know, this was a worthless property and it isn’t worth what we had it in for,” [town lister Ross] Hazel said.

So he spent $58,000 on a “worthless” property that, even after a generous reappraisal, is still listed at $144,000.

Do I think there’s a scandal here? Not really. But my God, it stinks. At the very least, as Corliss told WCAX…

“A good person with ethics would have definitely done something different,” he said.

Hard to argue.  

Well, well. Just a few days after publishing an anecdote about Peter Shumlin’s money-grubbing youth (paywalled), here comes Peter “Scoop” Hirschfeld with a story of Our Governor’s modern-day devotion to unvarnished capitalism. (Partial version free here; full story paywalled here.)

Latest Shumlin land deal leaves seller feeling jilted

Last year, as you may recall, Shumlin bought a plot of land in East Montpelier on the cheap with a lot of help from his friends. And on that little piece of paradise, he had a new home built.

Then, last fall, Shumlin arranged to buy an adjacent piece of property. The owner, Jeremy Dodge, had inherited the land in 2009, had fallen way behind on his taxes, and was facing foreclosure. The 53-year-old Dodge is a troubled soul who dropped out of school in the ninth grade, has been in and out of trouble with the law, and as a longtime friend put it, “Jeremy’s not all there.”

The sale price: $58,000. At the time of the sale, the appraised value of the property was $233,700. That’s since been reduced to $144,000 because the house is in serious disrepair. But even so, Shumlin got a deal.

Or should I say “steal”?

Because Dodge, a man who obviously lacks the business smarts of a millionaire Governor, didn’t have legal representation.  

“I could not afford a lawyer,” Dodge said. “And (Shumlin) said we’d just use his lawyers.”

Oh dear. Smells like “conflict of interest” to me. And now, looking back on the deal, Dodge’s perspective has changed:

“I don’t have nothing bad to say about him, but yeah, I got ripped off, plain and simple,” Dodge said Tuesday. “I wish it had turned out differently.”

Shumlin insists that “$58,000 was a fair price” because the house “is in terrible shape.” Well, yeah, but even so, the revised appraisal is still nearly three times the purchase price. And although Shumlin claims the deal was a good one for both parties, he seems to realize that there’s a certain… odor… about it.

Dodge said Shumlin came knocking late last week to ask about whether he’d been speaking recently with reporters.

Yeah, I bet.

Now look, the Governor did nothing illegal here. But it sure does appear that he took advantage of someone who wasn’t fully capable of defending his interests or knowing his rights. Sounds a lot like that little kid who was happy (and proud) to price-gouge his brother and sister.  

Readers of the Mitchell Family Organ were greeted on Sunday by a neat little piece of psychodrama : a childhood story told by Governor Shumlin and relayed to us by The Indispensable Peter Hirschfeld. (Paywall warning.)

Shumlin, accompanied by his younger brother and older sister, would “go into the store with our allowance … and of course we’d do what kids do – we’d buy candy.”

Unlike most kids, however, Shumlin’s appetite wasn’t for sugar.

“I’d keep the candy in my drawer,” Shumlin says, a smile spreading. “And at the appropriate time, when I knew that my brother or sister had loot, I would sell it to them when they were really desperate for sugar. That’s my nature.”

The Governor obviously sees this story as an illustration of his entrepreneurial nature and his tight-fisted approach to money. But when I read it, the first thing I thought was, “My God, what a little asshole.”

A smile spreading, indeed. I mean, it’s one thing to stash your allowance in the piggy bank, eschewing the immediate gratification of candy bars and chewing gum. It’s a whole ‘nother thing to price-gouge your own family.

This charming anecdote shines a fresh light on some of Shumlin’s policy positions. His opposition to new taxes on soda, candy, or junk food, for instance: he’s clearly got a soft spot in his heart for those who profit off our weaknesses.

And I suppose we should be grateful that he only wanted to reduce the Earned Income Tax Credit rather than, say, turning it into a payday lending program.  

But the most revealing thing about this slice of pre-gubernatorial life is that Shumlin is actually proud of it. Reminds me of the bird-feeder story, which he STILL brings up from time to time. He thinks it portrays him as a real Vermonter, not some chump who goes out naked to rescue his bird feeders from hungry bears. (Which, when you think about it, is really more like something a flatlander would do.) And, in the process, ignores at least two pieces of expert advice: “Take down your feeders in the spring” and “Don’t provoke the bears!”

This myopia and extreme self-assurance is simultaneously a great strength and a real weakness for Peter Shumlin the politician. He really is very smart, and willing to act on his convictions. And stick to them. Even when he’d be better off changing course.

Unfortunately, when it comes to helping the poor (and taxing the rich), there’s still a part of him that’s the steely capitalist who was willing — nay, happy — nay, proud — to fleece his brother and sister.

And who sees that as the natural way of the world.  

Well, looky here. VTDigger’s Anne Galloway found herself a little somethin’-somethin’ that nobody else noticed in the last-minute machinations of the Legislature:

A little-known, six-paragraph provision that passed in the Senate just five hours before adjournment on Tuesday could lay the groundwork for significant changes in the way business is conducted at the Vermont Statehouse.

The resolution, S.R. 7, allows the Senate to form a special committee to examine the lobbying activities of publicly funded organizations.

This special committee will have subpoena power to compel testimony and gain access to relevant records and accounts, and its members will include many of the Senate’s most powerful figures.

The resolution was the brainchild of Sen. Dick Sears, and his intended targets are public-school organizations such as the School Boards Association, Principals Association, and Superintendents Association. He’s tired of what he calls their “brick wall” of opposition to school reforms.

“It seems as though trying to make changes in ed policy is like pulling teeth,” Sears said.

Sears insists he doesn’t have “any preconceived notions that anybody is doing something wrong,” but the Senate has just given him a big ol’ hammer and the authority to search for nails. And you know what they say about a man with a hammer, right?

After the jump: my biggest objection to S.7, and an interesting potential twist.

Apparently, Sears and other Senators are tired of getting a flurry of constituent contacts whenever school reforms are under consideration. He blames the Associations for orchestrating these inconvenient floods, ignoring the notion that maybe a lot of Vermonters are actually happy with their local public schools and are leery of centrally-imposed “reforms.” (F’rinstance, the overwhelming approval rates for school budgets.)

Be that as it may, my biggest objection isn’t about the content of S.7, it’s the process. We never heard a peep about this during the legislative session. Sears and his cronies snuck it through on Adjournment Day, with no advance notice. Seems a bit… well… undemocratic.

Sears’ primary intent is to examine the lobbying activities of the school associations, but as Galloway notes:

The language in the resolution is broad – any organization that receives state funding could come under scrutiny when the committee begins meeting this summer.

At least one member of the special committee, Democrat Jeannette White, asserts that “state funding” includes tax credits and tax breaks.

And that would be truly fascinating. Because just about every entity of any size in Vermont would qualify under that definition.

The seven-member committee includes Sears, White, John Campbell, Kevin Mullin, Jane Kitchel, Bobby Starr, and Richie Westman. There’s a whole lot of support for the institutional status quo in that group. I’d feel a lot more optimistic if someone like Tim Ashe or David Zuckerman had a seat at the table.  

We’ve had our fun at the expense of gas-station magnate (and failed politico) Rodolphe “Skip” Vallee, for his late-blooming environmentalism when it comes to potential competition at Exit 16, his stout defense of Burlington-area gas retailers against charges of price-fixing, and his laughable attempts to put himself on the same level as Bernie Sanders.

But maybe we’re being unfair. Maybe Skip and his colleagues have gotten a bum rap on the collusion charges. After all, we have no proof beyond circumstantial evidence. It might be different if, say, the gasoline industry had a record of price-fixing. That’d put things in a different light.

Oh, wait.

The London offices of BP and Shell have been raided by European regulators investigating allegations they have “colluded” to rig oil prices for more than a decade.

The European commission said its officers carried out “unannounced inspections” at several oil companies in London, the Netherlands and Norway to investigate claims they may have “colluded in reporting distorted prices to a price reporting agency [PRA] to manipulate the published prices for a number of oil and biofuel products”.

… The commission said the alleged price collusion, which may have been going on since 2002, could have had a “huge impact” on the price of petrol at the pumps “potentially harming final consumers”.

The EC wouldn’t identify which corporations were raided, but several, including BP, Shell, and Norway’s Statoil, as well as the oil price reporting agency Platts, all confirmed they are being investigated. Or, as a Shell statement put it, “currently assisting the European commission in an inquiry.”

Cough.

A top Liberal Democratic politician compared the affair to the Libor scandal, in which many of the world’s biggest banks were found to have manipulated global interest rates for their own profit.

And in case you had any illusions that Libor was a one-shot deal, check out this appalling story by Rolling Stone’s Matt Taibbi, who says the big banks are fixing all sorts of market rates.

You have to think that, if the banks have figured out how to fix pricing mechanisms for their own advantage, that knowledge has probably spread to Big Oil as well.

But hey, I’m sure the only reason Skip’s stations charge higher prices (when they can get away with it) is to pay for those lovely fake flowers in Maplefields restrooms.  

Oh boy, here we go…

Vermont state government is preparing for the possibility of layoffs at IBM’s plant in Essex…

…the employee group Alliance@IBM says workers are girding for a reduction in force at the Essex facility following the technology giant’s unexpectedly low quarterly earnings report – and some cuts reportedly already have been made.

Last November, I brought you the prediction of a respected technology journalist that IBM — which has drastically cut its American workforce over the past several years — was planning a further 78% cut by the year 2015.

Yes, that’s seventy-eight percent. Four out of every five workers, gonzo.

In the wake of this week’s Alliance@IBM statement, Governor Shumlin is trying to stay positive, although he sounds much less sanguine than he did when he responded to my November post by asserting his belief that Essex Junction would survive. Now, he’s channeling Sergeant Schultz:

“If they’re going to do layoffs, as you know, they don’t pre-announce. I don’t know anything that I haven’t read in the paper,” he said. “We haven’t heard anything from IBM. Nothing. Not a word.”

And they won’t, either. Not until the hammer falls and the word begins to leak out, worker by worker. Because that’s how IBM rolls.

It doesn’t pre-announce layoffs; it often keeps each individual layoff below 500 to avoid triggering government reporting requirements; it doesn’t reveal the size of any individual job action. (The only numbers of any sort are Alliance@IBM’s estimates.) It won’t even tell you how many American workers it employs — or the size of its workforce at any individual location. The Burlington Freeploid tried and failed to determine how many people work at Essex Junction:

The Lake Champlain Regional Chamber of Commerce’s description of the local IBM plant says it has 5,400 employees.

[Alliance@IBM’s Lee] Conrad placed the number of employees at the chip design and manufacturing facility closer to 3,600 – down from a record high of 8,500 in 2001.

Yikes. I guess that explains why IBM has stopped revealing its workforce: the numbers are too embarrassing. And they reveal the truth about IBM in Vermont. The question “Will IBM stay or go?” has already been answered; they’re 60% gone already, and that percentage will grow before the end of this month.

The Governor claims to be “ready to rock” with guidance programs for laid-off IBMers. But how prepared are we for the almost certain prospect that IBM may be completely gone in a few years’ time, or will at best be a mere shadow of its former self? How prepared is the state for the economic impact on Chittenden County, which is the driver of Vermont’s economy?  

The biggest single “WTF” of this year’s legislative session — bigger even than putative Democrat Peter Shumlin’s steadfast defense of tax breaks for the wealthy — had to be the bungling of campaign finance reform. It’s not the biggest in terms of impact, but it’s the widest margin between expectation and result.

Because after all, the Gov made it pretty damn clear how he felt about tax increases he didn’t approve of. (The only surprise there, IMO, was how far the Legislature was willing to take the tax fight. Sure, Speaker Smith and Penitent Pro Tem Campbell caved in the end. But at least they held out ’till the end.)

Whereas campaign finance reform should have been a slam dunk. At the beginning of the session, there was broad tripartisan agreement on a package that was about as meaningful as it could be in a post-Citizens United world. The heads of the Democratic, Republican, and Progressive Parties, mirabile dictu, all endorsed the legislation. So did Secretary of State Jim Condos. And Paul Burns of VPIRG.

So what could possibly go wrong?

Heh.  

Lawmakers in both houses batted the thing around like a cat toying with a mouse, until the victim was so dizzy that it probably welcomed its eventual demise. About eighty-bajillion different ideas were floated, effectively burying the bill under a mountain of competing proposals. Much too much of the debate was occupied with self-interest, not the public interest. Some were more to blame than others, but the result was a big fat zero for campaign finance reform.

In a year when “everybody” was on board with a decent bill.

Dennis Moore, Dennis Moore

    Riding through the land

Dennis Moore, Dennis Moore

    Without a merry band

He steals from the poor

    And gives to the rich

Stupid bitch!

Congratulations to Vermont’s own Dennis Moore, Governor Shumlin, for winning what he’d call a battle over principle (I’d call it a dick-swinging contest, but then I’m just a “blogger seeking relevance through savagery and acerbic wit,” as Joe Benning so aptly put it) with the Legislature. In the face of a thinly-veiled veto threat, House and Senate leaders withdrew their proposal to make some rich folks pay more and cut taxes for middle-income Vermonters.

And that’s what it came to in the end: Our Democratic Governor, defending wealthy Vermonters’ right to pay embarrassingly little in state income tax. And he won. Huzzah!

The Governor began this legislative session by loudly opposing “broad-based tax increases” while advocating tax hikes that didn’t fit his customized definition of “broad-based taxes” — the gas tax hike and his late unlamented plan to cut Vermont’s share of the Earned Income Tax Credit, not to mention the increase in state property tax. (Which was out of his control, but he could have proposed some corresponding relief if he cared to.) Indeed, eventually he stopped trying to define “broad-based taxes,” since the State House press corps wasn’t buying that particular bridge to nowhere.

The Legislature, which rejected his kick-the-poor ideas for raising revenue (EITC) and cutting expenses (the five-year lifetime cap on Reach Up benefits), kept coming up with creative ways to raise revenue while evading his hard line on taxes. And as quickly as they set ’em up, he knocked ’em down. As the session drew to a close, it became clear that he’d rather sacrifice his own well-crafted spending proposals than be forced to raise the taxes he didn’t want to raise.

The final Legislative proposal was a revenue-neutral idea to make the income tax a bit more progressive. It would have set limits on tax deductions, imposed a minimum 3% tax on top earners, and begun the process of shifting our state income tax from a “federal taxable income” basis to “adjusted gross income.” (As I wrote on March 22, Vermont is one of a handful of states that levy income tax on FTI rather than AGI. Using FTI means the wealthy pay a much lower effective tax rate. And I’m not an accountant, but it seems to me that they get to double-count some of their tax deductions on their Vermont returns. That’s a big break they don’t get in most other states.)

The overall effect: top earners would pay more. The revenue would go to lowering middle-class taxes, thus offering Shumlin a way around his curiously defined no-tax-hike pledge.

And he turned it down, offering some unconvincing rationales.

He first claimed that the plan violated his closed-door “Three Kings” deal with House Speaker Shap Smith and Senate Penitent Pro Tem John Campbell. He also objected to “changing tax policy on the fly,” which is an interesting way to put it. The AGI shift was proposed by the state’s Blue Ribbon Tax Commission two years ago, and the other two ideas have been kicking around the State House for the past few weeks.

Yeah, they’ve been around a while. The only thing  “on the fly” about the budget and tax bill was the $10 million in budget cuts mandated by the Three Kings. Legislative budget-writers had to figure out those cuts in a few days’ time.

Shumlin’s eminence sel et poivre, Jeb Spaulding, advanced the “unintended consequences” wheeze. He warned that the legislation might hurt people with large medical bills — which could be fixed, if need be, with a small tweak. He said it might hurt the real-estate market — as if a slight raise in taxes would impede anyone with the means to buy a costly home. He said it could hurt charitable giving —

— except that donors already get a much more valuable deduction on their federal taxes. Because Vermont’s taxes are based on FTI, they effectively get a second deduction on state taxes. Are they really going to stop giving to nonprofits because they might lose a portion of a much smaller state tax break?

Legislative leaders hope to build a case for their tax plan and bring it back in 2014. I hope they do. Vermont’s tax system isn’t as fair or progressive as the Governor says it is. We can do better. And we could be doing better right now, except for Governor Shumlin’s opposition.

So congratulations, Governor. You stood your ground. Of course, in the process you stomped all over lawmakers who tried to devise a better tax system and aimed inflammatory and misleading rhetoric against your fellow Democrats. But I’m sure it was all worthwhile, just so wealthy Vermonters can continue to pay scandalously little in state income tax.