This commentary is by Terry Breen of Charlotte, a retired management consultant.
Continuing with large-scale social spending in Vermont without first kick-starting some growth into the Vermont economy will lead to a predictable outcome: We will run out of other people’s money.
Vermont’s population is stagnant, excluding a one-off bump from Covid migrators. The state has the second-oldest average age. Roughly 60% of students graduating from Vermont colleges leave after graduation in search of higher-paying jobs. Workforce supply issues abound. Where are our state-funded programs to attract young, talented people to Vermont?
Vermont’s economic growth is ranked in the bottom 10 states. Too many people are employed in lower-paying hourly wage jobs. Vermont is the fourth-highest-taxed state. Rarely do companies migrate to Vermont and high-paying jobs are hard to find.
Until we increase the percentage of citizens earning higher incomes, we will not have the tax base to continue to fund the social programs.
Yet, despite these facts, Vermont is headstrong set on continuing to increase its spend on social services. Interesting to note that Vermont spends almost twice in social services per capita as New Hampshire ($3,040 vs. $1,670). The current Vermont Legislature social spending foray includes a child care bill, family leave act and Affordable Heat Act, all of which increase tax costs to residents.
No doubt that many Vermonters benefit from these programs. But are these the best use of Vermont’s tax revenue? I think not, or at least not until we get our economy growing.
When something is too “expensive,” the best solution is to look for ways to reduce costs, such as regulatory reduction, increase supply and incent competition. Another effective approach to “expensive” is to increase people’s ability to pay, such as higher-paying jobs and lower taxes. Our Legislature never does this. Instead, it continues to propose programs that increase taxes to subsidize services to those who need assistance. The root problem of “expensive” is never solved, sometimes worsened, and always masked by some taxed revenue subsidy (funded by income tax, property tax and payroll tax).
Continuing to increase taxes to fund ever more social programs is not a path to a sustainable high-quality lifestyle. Vermont needs to adapt its policy and investment focus to strengthen the economy, bring in higher-paying jobs, reduce taxes and enable Vermont citizens to be self-reliant.
Although this is not an easy task, there are 49 other states out there to learn from (both good and bad examples). The list of things to do is hard and takes time, but there is no better time to start than now. Here’s an example of the problems Vermont needs to focus on to spark its economy and incent people to both stay here and move here:
- Is there a high-paying job awaiting me with upward potential? Most of our jobs are paid by the hour.
- Is there a high-paying job for my spouse?
- Is there another high-paying opportunity if the job that brings me to Vermont does not work out?
- Are taxes reasonable? Vermont is the fourth-highest-taxed state. 22 states have recently reduced their tax rates, and all are seeing increasing populations and blossoming economies.
- Is there affordable housing? Vermont has the highest cost of housing as a percentage of median income. Act 250 usefulness is long gone.
- Are the schools good and is there choice? 21 states have recently implemented school choice and Vermont is working hard to restrict choice. Why do we not realize that competition brings higher quality and more efficiency (haven’t we learned the negative of this from our social experiment with health care?).
- Is crime low? Historically strong but the recent crime trend and prosecution leniency is going in the wrong direction.
- Is health care available and good? Historically strong but going in the wrong direction via our social medicine experiment that is proving to be expensive and low on customer service.
- Is the state infrastructure good (roads, airports, ports, cell coverage, high-speed internet coverage)? We have a lot of work to do here.
- Are there enough young people for someone under the age of 40 to socialize? This is always a challenge in a rural state.
Unless we take an approach that incents and enables all Vermonters to be self-reliant, we will continue down the path of out-of-control social spending and we will run out of everyone else’s money.
