Vermont's Economic Health - A Taxing Problem 
By James Ehlers

Illness can grab hold of us suddenly or subtly. My departed friend Peter who suffered from terminal cancer remarked during his tribulations that while he knew there was no cure and the end would be coming, he appreciated the advance notice, so to speak. He had the opportunity to put his affairs in order. A heart attack, he reasoned, would not afford him the occasion to make things right. The only thing better, he would tell me, would be, if after he had made his amends and indulged in previously delayed delights, there would be some more time. Time. A cure. Resulting in more time. We both laughed that with more time there would only be the need for further requital. There would be no cure.

Illness overcomes entities and organizations, as well. More often than not with an organization, the sickness does not come on suddenly, but rather subtly. And like the subtleness of Peter’s cancer, there often is time to recognize the symptoms and seek treatment. And in the case of an organization, there is almost always a cure—if treatment is sought, of course.

Vermont is ailing. And I am not certain most of us are recognizing the symptoms. A few are, however. The Public Assets Institute (PAI), Ethan Allen Institute (EAI) and Vermonters For Economic Health are among them.

PAI’s Paul Cillo and Doug Hoffer note in their Fall 2007 Briefing, "The State of Working Vermont 2007," there has been virtually no new private sector job growth in Vermont for the last six years. They use the term "anemic." Meanwhile, education and health services jobs— non-profit—grew 20 percent and government jobs expanded eight percent.

EAI warns, after conducting a study with economists Richard W. Heaps and Arthur G. Woolf entitled Demographic Changes and Their Fiscal Consequences in Vermont, "inflation-adjusted K-12 spending has risen by 44 percent and the number of teachers and aides has risen by 21 percent—while the number of pupils has declined by nine percent" since the passage of Act 60. They continue, "At historical average tax rates virtually all state revenues in 2030 will be needed to pay just for education and human services."

And, as we can see from the PAI briefing we are well on our way with continued growth in the education and human services industry, but virtually no growth in the sectors which underwrite those costs through their tax contributions in a state, according to EAI, that is the second oldest by median age in the nation. The maturing citizenry, predicts EAI, and their employers, "will have to shoulder ever-higher burdens of taxation to support Vermont’s generous public service expenditures."

These expenditures have caught the attention of Vermonters For Economic Health (VEH).

VEH, under the leadership of Tom Licata, a MBA with an employment background in finance, says, "Montpelier’s recalcitrant culture continues to ignore Vermont’s approximately $3.5 billion unfunded liabilities … And from the highest taxed state in the nation, what is Montpelier’s response? Montpelier’s response is to ‘shuffle the chairs on the deck of the Titanic’ through talk of increased income and other taxes that would continue its modus operandi of obfuscation and distraction. Folks, look at the numbers and demographics; we’re not going to tax ourselves out of this hole!"

The unfunded liabilities to which VEH refers include $1.3 billion for road and bridge repair, $451 million for water treatment plants, $438 million in bonded debt, $400 million for pensions and Medicaid, $300 million for miscellaneous debts, $200 million for the Chittenden County Landfill, $161 million in new highway construction, $90 million for school construction, $75 million for the mental hospital, $45 million for state park repairs, $43 million for dam repairs and other debts including Catamount Health totaling $3.55 billion. All of this, according to VEH, in a state whose aging citizens are already among the highest taxed in the nation, with next to zero private sector job growth, spending roughly three times the rate of inflation in the areas of education and corrections, and losing its young people at four times the national average.

If these three organizations—PAI, EAI and VEH—are correct, and I believe they are, both from my practical and academic understanding of the issues, our state is ill. I do not believe it is too late, however, to save our state, to make the amends necessary, and to reap the joys living in Vermont can deliver. It will, however, be a test of our will. Do we want to live or are we content to let go? That is a decision each of us must make for ourselves.

James Ehlers is the publisher emeritus of Livin’ Magazine.