The meat of the last recession and prior to it. So this panel is going to be a a bit of a History Lesson. Take this off depressingly wonderfully if we can say that as a phrase. Ive heard him speak a few times ive never had to be so negative so that is something to take into consideration. I cut it its got to be a bit of a History Lesson so i want to set the stage a bit for what was going on in the years in the months leading on so when the financial downturn started and so just a reminder of the Great Recession and thought it at the end of 2007 and i was the largest collapse in state revenue on record by 2010 states were looking at a loss of 191 billion dollars in total in revenue that they had lost between from the start of the downturn and of course when there are times of economic downturn hitters more pressure on social Safety Net Services and things that cost a more money and so you have that inverse effect of more budget pressure at a time where the dollars are disappearing and so id like to set the stage a little bit individually for these two states. For four months heading into 2009 before the federal stimulus began kicking in this day was looking at 80 million deficit heading into 2009 if you think that spot the analysts are projecting a charge of 3 million deficit through 2010 days god so by the at the university of vermont and the chorus are cutting millions of dollars of scratch their varsity baseball and soccer team that seems comment in a recession. Major athletic teams getting a race from the books and i think for vermonts trough who was in 2009 to state revenue trough. And revenues were down 8 from their prerecession peak. And then we have our again which was even worse. The revenues fell 15 from the prerecession pick out there know for again. And heading into 2009 it was looking at a billion dollar deficit to tackle. And at that point governor kulongoski had ordered agencies to cut 5 or whatever was left of the remaining six to seven months of the fiscal year. And again a very common divide lawmakers and governor during the recession and i had a billion dollar deficit to tackle but then the out years the following two year revenue forecasters were predicting that the state was going to be looking at a 752 Million Dollar hole overwhelming numbers and i wanted to start off by asking you on every state is different Different Things different budgets and so i wanted to start off by asking what the economic drivers were figure individual states budget and how those started showing up as red flags perhaps when you first started getting in the in conducting forgot i start going south and we will start left to right sorry my left. Well thank you lace for setting the stage. Reason first of all the budget shortfall was projected to triple between or nine and ten in vermont i believe for us to legislator over both my budget and went and spent what did that they should have but seriously that exacerbated the challenge that we were already confronting we have a well diversified economy manufacturing Higher EducationAgriculture Health care and of course tourism so that it wasnt over reliance on the single sector i remember chatting at the time with ted and some of our colleagues and expressing relative pleasure that i wasnt the governors of state michigan thats overwhelmingly dominated by a particular industry because we have some diversification we acted quickly in vermont beginning in january or are 20 or nine i took a 5 pay cut invited all of the folks of my administration to do the same. That allowed us to go to the bargaining table with the state of Employee Union and extracted 3 cut from them. Which had never happened in our States History it hasnt happened since. We downsized our workforce by 7. 8 mostly through but not entirely we have layoff which will unpleasant but the reality that we were confronting at the time. We took advantage of the extra food stamp opportunities. Which microphone earlier. We face the challenges as you all know of a time of revenue contraction exactly when the burden of Public Service demand is greater. So its a real collision of fiscal measures that made a particularly challenging for all of us at the time but there was an analysis done by one of the major Media Outlets after the recession and waited for him on as the fourth least economically stressed states coming out of the recession so i felt really good about how people in the public and private sectors came together. I went to a church and stack firewood for families who need it and make the stick for slander valuable to a lower and moderate income people to get the fire what they need more cold in vermont in the winter as you know. So i think the combination of our response as well. It was a challenging time and one that will certainly remember but open not to experience again. Well work and has the economic structure that makes it very difficult for us to handle a recession and just to give you about the profile or again is sent largest a land area and so 90 80 with a Natural Resources plus economy to agriculture fishing there was even gold mining you did not have Much Technology in oregon prides was tectonics it was still the scope Building Company that had a couple spinoffs intel did not come to orca which now is the largest employer until 1978 and they had built out to have a bigger and bigger footprints but the important thing to understand is the Manufacturing Technology that they have for us the at the weakness for assist that when an income tax that we do not have a general sales tax i think really wanted to states in a country that did not have a sales tax are free prone taxation systematic and say that because our neighbors just to the north of us who we are always looking at washington its just the opposite ourselves maybe they have no income tax so when a recession comes to us what happens is you have a quarterly forecast and its based upon income tax filing. And we were picking up very quickly and 2007 the people were not filing businesses. We are holding back not fighting on employees. Employees that were going to file a we. Finding the temporary advance payments they werent filing so we had a fairly good idea that something was up. And the other thing i have to tell you is that in the federal state relationship or again is one of those five states out west that are that this ongoing relationship with the governments interception and i sample the federal government owns 52 of oregon. When we reliant upon their footprint here this is just september coreys a large number of National Resource agencies in oregon because of the ocean fish, birds, everything else. So what happens is that in a snapshot of or again in his heyday in the seventies and eighties we were cutting about eight to nine feet of timber both federal and state lands federal force. Lance after dean environmental legislations equality. Everything else has less than a big or feed of the turbulence. The reason why this is so important to us is there another federal programs that off the federal for sense that there are run by agriculture, we got to 25 of the receipts from the sale of the timber awful slant and they were 24 of the 36 counties that were heavily reliance upon that money and the other big agency is a bright adjustment rowlands that are fraught i give the railroads it was a land scam the government said the land back week at 75 of a cut off of those lands for these counties where those trees are located. The dilemma forces with that than 1 million board feet of tampa. These counties who have for a year relied upon their payments from the federal government behind financial strait today still. There are 12 counties are still heavily reliant on that. It was a cultural problem for them because they had gotten so used. The government gave us 5 Million Dollars. And they were using that money to actually from their county governments and now you go and tell them to raise their property taxes everybody in a county says weve never paid property tax at that rate and they wont. So this was putting pressure on the state and the federal response of the forest land. And because of the nature of our tax system and because of our economic ex which is manufacturing predominantly and we have a budgeting process of what we do is to start off with the governor who looks at the last idea budget. Adds a number of inflation factors which we call the continuing Service Level budget. Which means how much money you need for the last time 2. 6 billion dollar down and oregon as an example of international implement rate was about 95 i heard was around ten in oregon it was 12 five it was very difficult and so we would come again and i was getting the Quarterly Financial reports that we were in trouble. You make the budget cut at the and as liz said at the end of the budgetary process until 5 of what they had at that time. Who was probably more like 20 of what they had to cut and how we handle this was actually probably the thing that i thought was what we did best of all. The president and i had known each other for years and i used to go have breakfast with very saturday morning and the sole purpose of our meeting was to keep legislation from coming in the session because well we both concluded and this is truly both concluded was if they came in this was going to be a foot fights because everybody has an Interest Group in our objective was to keep them out and i would handle it through the statutory process called the allotment process which designates where the budget cuts come from and we were able to do that. And so there were the helpless a great deal and ive always thought this and the president hadnt stepped up and said they couldnt come in and he just said he wouldnt do it took a lot of flak because the legislators didnt one of the cadets and we both agreed that it wasnt good to do that. Thats how you look through this time period. Governor thank you. We started talking about what we do in terms of cutting. Cutting is kind of the firstly response and dipping into reserves. Governed i want to hear about your interactions with the legislator and that historic detail. What we did not deep into our reserves which im very proud we are throughout this process as well aaa violated i think we handled it well from that standpoint but in 20 or nine as you suggested legislator over my body feature quantitative would suggest i was right i was right but it exaggerated the challenge of the year ground by including as after the left office. That engineer 2011 so i think couldve been handled a little better. Are cutting of my easy. We have a process in vermont where joined Fiscal Committee a five narrative a chamber hasnt parts or improve budget changes when legislators not in session up to a certain level so utilized that process we reduced our head count but i mentioned i member travel my budget team going over potential cuts in terms of dental health for kids. My thought was that analysts for 29 years. And then they said we gotta go back on this and i said thats my initiative and they said well everything is going to be on the table controversial car was causing some of her highway a push back on that. But i said its going to be Human Services for people of the state. I know the priority is on my number saying to after years go by those red areas are more important i get that does something is gonna have to yield so we went through that process of making choices through the government is all about i quoted president kennedy who wants a set to govern us to choose and that explained that the legislator thought that was our responsibility and we have to Work Together to make some choices and overall we. During this time leading into 2009, in or eight there was talk over federal stimulus now the federal government can play a role so im curious between ten or eight leading up to nine when they figured something out, our states involve the and what were those discussions like governor douglas . What started early on and having life you with a bit after the or election where the president elect invited governors to come to talk about everything or anything for particular the financial practice while we are facing about a week and a half notice 50 governors showed up in philadelphia. I dont want to say there was some governors he likes some tomato a alone we have the whole gang theyre pretty well with and the Vice President i like to talk about this and then fist amber i was vice chair and she had time are pretty with a couple of colleagues before the House Appropriations committees what they began to work on this before the new administration came in and iconic other sound support was coming with the give and take members of the house because every subcommittee chairmen was determined to get something within his nurse jurisdiction of the package so i realized early on that this was going to be more constrained and companies would prefer and i realized that there is a school of thought that the earlier package that and mental in our solar going over three had too much discretion. Some call it governor slush funds although they never told me i had a one. But i think it was an overreaction because i think education for example which is the second biggest piece of the package or informal were facing a demographic crisis. The number of kids of our Public School has declined by 1 prayer figures of the last 20 it is going to continue for 20 more. We dont need more teachers we dont need as many as we have. We need fewer schools and theyre going through a consolidation enclosure process now so my point is rather than a holstered teacher salaries would have been nice to be able to use that money for transition funds to achieve some School Consolidation and not the impact on some of our Committee Just i think there really should have been more flexibility for states because one size doesnt flow what do you think about that . Are states involved was the flexibility better or worse . Well as i said, i think they had a longstanding history relationship with the federal government so its a love hate relationship with, we worry sometimes in sometimes we dont agree of a variety of environmental issues, and i was just remembering something that was said, i remember that right after i got elected i think there were 12 governors that were new at that time and i remember somebody saying to us, you guys are really lucky and we were coming out of this session of the. Com and they said look every governor in an eightyear period will have a recession and you guys are very lucky because you have yours coming in this is a free ride and foolishly i believe that, i kept saying, guys and if you look at it, we were on the ascendancy and i was thinking, boy they were right about this. But you know, and looking at how you handle these things i remember one particular debate i was having with the head of my Human Services department and the social Safety Agency and it was corrections and it was just me and these two doctor goldberg never talked about money he was the head of the Human Services department and he only talked about people and he said this is whats going to happen a few cars that budget here and he would give me this picture of his children and all of this and tears in my eyes and max williams who is now by the way the executive director of the largest and morgan and max looked at me and he ran the Corrections Department at that time and he said governor you and i both know you picked them to run agencies he said you know if government can only do one thing just one a State Government we dont have to have a huge bilbo one thing you have to do is to ensure that the citizens are safe in their homes and in the streets of their communities and that is why you have to prioritize what i mentioned and those are the debates you have with people about what youre going to do and theyre both right and i have served on the Supreme Court so i lean towards maxes argument but i wasnt about to tell people that i cut the Human Services budget to keep people in jail and i was in the right people but should do and it is the difficult, because when i say we cut the budget 5 theyre not people they have different impacts and a lot of them are just the administrative process like the number of people, we did the same thing we didnt hire people we had a reserve fund of about 800 million before the federal government stepped in iowa hes had the experience of the stimulus they came in and they asked us just before we got here do you guys remember ed and i vaguely remembered it because they came into pieces, one piece was direct and who is more on the social side, it was a tax cut and the other side was this, i cant remember, was it ten or 20 billion dollars but we got about 200 million and for the death of me i cant remember what we did with that and the reason was it was unrestricted the government didnt put any restrictions on it and i think i know they did with, it i think i dumped it into the school fund, is what i did and subsidized at that time as it was coming out of the or one or three recession and i put it in that but there is an interesting distinction because i love to getting unrestricted funds it put more hooks and required us to report into a number of things and i call our whole budget guy before i came here and i asked him what he did with that and he couldnt remember and thats why you probably should have some transparency and accountability when you give us money. Its an excellent point and im curious, now that youre both not an office anymore, just this idea of accountability with the federal stimulus and yes its a real pain and to be diligent and have to be constrained with how you spend the money and reported it but from an accountability perspective is that the b