veh web pres v9 24 08

www.vteh.orgwww.vteh.org 11

Vermonters for Economic HealthVermonters for Economic HealthPresent

A View ofA View ofVermont’s Economic HealthVermont’s Economic Health

Vermonters for Economic HealthPO Box 153

Essex Jct, VT 05453

www.vteh.org


Who are VermontersWho are Vermontersforfor Economic Health (VEH)? Economic Health (VEH)?

VEH is a grassroots, non-partisan, citizen-led organization

Our Mission –

To Promote Economic Health

and

Fiscal Responsibility

in Vermont’s Government


We’ll Examine . . .We’ll Examine . . .

Vermont’s:Vermont’s:

Tax Burdens and TrendsTax Burdens and Trends

Spending and Expenses Spending and Expenses

Job GrowthJob Growth

DemographicsDemographics

Explore Potential SolutionsExplore Potential Solutions


TAXESTAXESTAXESTAXES


Why Should YOUWhy Should YOUBe Concerned?Be Concerned?

17.3%19.6%

41.1%

53.7%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

5 Yr. Growth Rates 2001-2006

Inflation

VT Per Capita PersonalIncome

VT State Expenditures

VT Taxes

Source: State of Vermont Comprehensive Annual Financial Report FY 2002 – 2007; Consumer Price Index


VT’s Tax Burden RankingVT’s Tax Burden RankingCombined State and Local Tax Burden - 2007Combined State and Local Tax Burden - 2007

StateState and Local

Tax Burden Rank

Total 11.0 %

Vermont 14.1 % 1

Maine 14.0 % 2

New York 13.8 % 3

Rhode Island 12.7 % 4

Ohio 12.4 % 5

Hawaii 12.4 % 6

Wisconsin 12.3 % 7

Connecticut 12.2 % 8

Nebraska 11.9 % 9

New Jersey 11.6 % 10Source: The Tax Foundation; Bureau of Economic Analysis; Commerce Department

StateState and Local

Tax Burden Rank

Montana 9.7 % 41

Wyoming 9.5 % 42

Texas 9.3 % 43

S.Dakota 9.0 % 44

Oklahoma 9.0 % 45

Alabama 8.8 % 46

Delaware 8.8 % 47

Tennessee 8.5 % 48

New Hampshire 8.0 % 49

Alaska 6.6 % 50


VT’s Tax Burden RankingVT’s Tax Burden Ranking10-year history10-year history

State and LocalTax Burden Rank

2007 14.1 % 1

2006 13.9 % 1

2005 13.9 % 2

2004 12.8 % 3

2003 11.4 % 6

2002 11.3 % 7

2001 11.5 % 7

2000 11.6 % 7

1999 11.6 % 7

1998 11.9 % 5Source: The Tax Foundation; Bureau of Economic Analysis; Commerce Department

Fed, State and LocalTax Burden Rank

2007 35.1 % 5

2006 34.8 % 3

2005 33.9 % 3

2004 31.1 % 5

2003 29.8 % 16

2002 30.7 % 14

2001 33.2 % 14

2000 34.4 % 13

1999 34.0 % 12

1998 34.4 % 9


Every Revenue SourceEvery Revenue SourceIs Being SqueezedIs Being Squeezed

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1959 1969 1990 1994

Rooms &Meals Tax

Source: VT Department of Taxes


SPENDINGSPENDINGSPENDINGSPENDING


How Does Vermont SpendHow Does Vermont Spendits Revenues? its Revenues?

Education

Human Services

Transportation

People & Prop Protection

Business Type

General Government

Natural Resources

Commerce & Community

Employ. & Training

Debt Interest

39%

36%

7.5%

6%

5%

Source: Vermont Comprehensive Annual Financial Report. Fiscal year ending 6/30/06.

75% of Revenues Go Towards Education and Human Services


How Has Various VT Government Spending How Has Various VT Government Spending Grown Recently?Grown Recently?

Spending Growth Rates FY 2002 - 2007

56.6%47.6% 45.1%

17.3%

-13.1%-4.7%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

GeneralEducation

People andProperty

Protection

HumanServices

Employment& Training

Commerceand Commun

Develop

Inflation

Source: Vermont Comprehensive Annual Financial Report. Fiscal year ending 6/30/06.

Education, Police & Corrections and Human Services are growing almost 3 times higher than inflation, while Business and Job related

expenditures shrink.


Student Enrollment Down - Student Enrollment Down - Employment and Costs UpEmployment and Costs Up

Source: Summary of the Annual Statistical Report of Schools (SASR) FY 1997 - 2006

Student Growth = -9.1%; Teacher and Staff Growth = +20.8%

106,341

96,63615,783

19,069

94,000

96,000

98,000

100,000

102,000

104,000

106,000

108,000

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

15,000

16,000

17,000

18,000

19,000

20,000

Students

Teachers

And Staff


JOBSJOBSJOBSJOBS


Source: Public Assets Institute

(In thousands)Private Sector Job Growth from

1990 - 2007

Since the 2001 recession there has been Since the 2001 recession there has been no Private Sector job growth in VTno Private Sector job growth in VT

150

170

190

210

230

250

270

1990

1992

1994

1996

1998

2000

2002

2004

2006

2007

Total VTPrivateSector Jobs


What Kinds of Jobs are Being Created?What Kinds of Jobs are Being Created?Government, Education and other Non-profit jobs

do not add to VT’s Tax Base


VT’s Job VT’s Job ProblemsProblems

Real or ImaginedReal or Imagined

No job gains No job gains reported ... reported ...

only “plans” only “plans” for future jobs.for future jobs.

No job gains No job gains reported ... reported ...

only “plans” only “plans” for future jobs.for future jobs.

Source:WCAX / BFP ‘07 Review on

VT Businessand

BFP 7/19/08Vt Jobless Rates Fall Slightly

From 2007 – 2008 … Jobs Lost

Dirigo Mill – Gilman 115

Qimonda – Williston 135

Standard Register – Middlebury 112

Omya Industries - Proctor 60

Vermont Plywood LLC - Hancock 35

Northern Power Sys. - Waitsfield & Barre 60

TD Banknorth Inc. – Various Locations 30

Specialty Filaments – Middlebury 180

Neo EMS – Brandon 20

Wausau Mill - Northumberland 35

IBM – (reduction in force in June 2008) 180

Vermont Tubbs - Brandon 100

KBA Printing - Williston 55

Sirloin Saloon - S.Burlington 35

Neo-EMS (Nexus Customer Electronics) - Brandon 47

Metro Group - Rutland 204

Hillcrest Foods - Fairfax 24

ClearSource Vermont Pure - Randolph 75

Vt Teddy Bear Co. - Shelburne 23

Total Job Losses 1520


What Vermont’sWhat Vermont’sPublic Assets Institute saysPublic Assets Institute says……

““Many of Vermont’s new jobs are low-paying Many of Vermont’s new jobs are low-paying service jobs.” service jobs.”

““What is needed in Vermont are good-paying jobs What is needed in Vermont are good-paying jobs that take full advantage of work force assets.”that take full advantage of work force assets.”

““This requires Government & Community leaders This requires Government & Community leaders working together to develop an economic working together to develop an economic environment that makes the use of these assets a environment that makes the use of these assets a State Priority.”State Priority.”


Vermont Jobs 2001 - 2008Vermont Jobs 2001 - 2008

April-01 April-08 Change

Total jobs 302,300 306,800 4,500Private Sector Jobs * 252,700 252,600 (100)Public Sector Jobs ** 49,600 54,200 4,600 * Includes both for-profit and non-profit employers

** Includes federal, state, and local government employers

Source: Public Access Institute, Montpelier, VT.

The bottom lineAll of the net new jobs during this period were in the public sector. There are fewer private sector jobs now than there were in 2001.


VT Has Many More Part-Time WorkersVT Has Many More Part-Time WorkersThan The U.S. or NE AverageThan The U.S. or NE Average

All Male Female

United States 22.4 16.3 29.6

New Hampshire 24.8 16.6 34.0Connecticut 26.6 19.1 35.0Rhode Island 27.0 19.1 35.4Massachusetts 27.1 18.9 36.1Vermont 28.1 20.5 36.2Maine 28.8 20.1 38.2

Source: Economic Policy Institute analysis of Current Employment Statistics survey data.

Many of these jobs are tourism-related with sub-standard pay and little or no benefits


The Paradox The Paradox of our Self-Fulfilling Prophesyof our Self-Fulfilling Prophesy

An Unsustainable Road – Vermont is replacing An Unsustainable Road – Vermont is replacing Private-Sector (taxpaying) business with Private-Sector (taxpaying) business with Government and Non-profit (non-taxpaying) Government and Non-profit (non-taxpaying) entities …entities …

The Result – greater tax burdens on a shrinking The Result – greater tax burdens on a shrinking private-sectorprivate-sector economy and economy and residential propertyresidential property ownersowners … …

andand – Vermont’s Legislature steps in with social – Vermont’s Legislature steps in with social assistance to fill this void.assistance to fill this void.


DEMOGRAPHICS

DEMOGRAPHICS

DEMOGRAPHICS

DEMOGRAPHICS


VT’s 2007 VT’s 2007 Gross Gross

Domestic Domestic ProductProduct

Source:Vermont Economic Newsletter

July 288, Page 3

Industry Segment %

Government 13.7

Manufacturing 11.5

Health Care 10.0

Retail 8.3

Professional / Technical / Administrative 8.0

Finance 5.9

Wholesale 4.8

Construction 4.5

Hotel / Restaurant 4.4

Information Management 4.1

Utilities 3.0

Transportation 2.1

Private Education 1.7

Agriculture 1.5

Other small sectors, including Real Estate 16.5

How often do How often do we hear that we hear that

Vermont relies Vermont relies heavily on heavily on

Agriculture?Agriculture?

How often do How often do we hear that we hear that

Vermont relies Vermont relies heavily on heavily on

Agriculture?Agriculture?


VT’s Population GrowthVT’s Population GrowthLess Than Half of the National AverageLess Than Half of the National Average

Population Growth 1997 - 2006

4.5%

9.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Vermont U.S.


Who Is Going to Support Who Is Going to Support the Ever Expanding “Safety Net”the Ever Expanding “Safety Net”

When You Are Retired?When You Are Retired?

In Less Than 25 Years VT Retirees Almost Double While The Work Force Shrinks

49.7%42.6%

16.7% 30.2%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

2000 2030

Year

% o

f VT

Pop

ulat

ion

60 & Up

25 - 59

Source: U.S. Census Bureau


Vermont’s Demographic CrisisVermont’s Demographic Crisis

Vermont’s young people Vermont’s young people (age 19 - 29)(age 19 - 29) leave VT at a leave VT at a rate higher than the national average rate higher than the national average (7(7thth in net in net out-migration).out-migration).

Vermont has one of the lowest birthrates in the Vermont has one of the lowest birthrates in the U.S.U.S.

In 2005, Vermont became the 2In 2005, Vermont became the 2ndnd oldest state in oldest state in the nation.the nation.

Vermont’s share of people aged 25-29 was the Vermont’s share of people aged 25-29 was the lowest in the nation, while its share of people lowest in the nation, while its share of people aged 50-54 was the highest.aged 50-54 was the highest.

Sources: U.S. Census Bureau, Vermont Economy Newsletter, New England 2020 Report


The Bottom LineThe Bottom Lineis Simple …is Simple …

We Have Lived BeyondWe Have Lived Beyond

Our MeansOur Means

Far Too LongFar Too Long

We Have Lived BeyondWe Have Lived Beyond

Our MeansOur Means

Far Too LongFar Too Long


SOLUTIONSSOLUTIONSSOLUTIONSSOLUTIONS


Vermont’s Solutions…Vermont’s Solutions…

1.1. Identify the problemsIdentify the problems

2.2. Change the cultureChange the culture

3.3. Grow the “Pie”Grow the “Pie”

4.4. Contain spendingContain spending

5.5. Remove obstacles to private sector job growthRemove obstacles to private sector job growth

6.6. Elect forward-thinking Public Officials who Elect forward-thinking Public Officials who represent your prioritiesrepresent your priorities


Identify the ProblemsIdentify the Problems

As detailed in this presentation and other As detailed in this presentation and other credible studies, the problem facing credible studies, the problem facing Vermonters is a “Perfect Storm” of …Vermonters is a “Perfect Storm” of …

Spending outpacing Revenue

Anemic private sector job growth

Unsustainable rise in Vermonters’ tax burdens


Change the Culture Change the Culture

Tax payers and voters Tax payers and voters become knowledgeable of become knowledgeable of VT’s deteriorating economic healthVT’s deteriorating economic health

‘‘Silent majority’ Silent majority’ get involved ( get involved (Does the Legislature Does the Legislature reflect what most Vermonters think?reflect what most Vermonters think?) )

Montpelier Montpelier refocus on the average, hard-working, refocus on the average, hard-working, middle class Vermonter. middle class Vermonter.

Lawmakers Lawmakers recognize that economic growth = jobs = recognize that economic growth = jobs = increased tax revenues = ability to support non-increased tax revenues = ability to support non-economic objectives (e.g., social safety net, economic objectives (e.g., social safety net, environmental imperatives, etc.)environmental imperatives, etc.)


Grow The “Pie”! Grow The “Pie”!

Being attentive to Vermont’s Economic Health and Growing Private Sector Jobs enables us to:

Support the most vulnerable members of our community

Provide opportunities which keep our children and grandchildren in Vermont

Be good stewards of the environment

Broaden the tax base and ease the burden on low income Vermonters and those living on fixed incomes

Create meaningful opportunities for those who want to work hard to create a better life for themselves and their families


Contain Spending Contain Spending

Persistent spending 2-3 times above the average Persistent spending 2-3 times above the average Vermonter’s income growth is unsustainable and Vermonter’s income growth is unsustainable and irresponsibleirresponsible

You would be jeopardizing your own future if you You would be jeopardizing your own future if you conducted your own affairs this way. Why elect conducted your own affairs this way. Why elect public officials who endorse this behavior?public officials who endorse this behavior?

Encourage a reversal of the decision-making Encourage a reversal of the decision-making process: Instead of deciding what is needed and process: Instead of deciding what is needed and then how we can afford it, let’s decide what we can then how we can afford it, let’s decide what we can afford and then make the difficult decisions required afford and then make the difficult decisions required to allocate the available resources.to allocate the available resources.


Remove Obstacles Remove Obstacles to Private Sector Job Growthto Private Sector Job Growth

Regulation and permitting, when excessive, has negative Regulation and permitting, when excessive, has negative consequences:consequences:

It raises the cost of everything from housing to the It raises the cost of everything from housing to the premiums you pay for health insurancepremiums you pay for health insurance

It makes it difficult for local businesses to compete with It makes it difficult for local businesses to compete with more business-friendly locales which leads to fewer more business-friendly locales which leads to fewer job opportunities and fewer goods purchased locallyjob opportunities and fewer goods purchased locally

It requires greater bureaucracy to maintain, which It requires greater bureaucracy to maintain, which diverts much needed funds away from the most diverts much needed funds away from the most vulnerable members of our communitiesvulnerable members of our communities


Elect Forward-Thinking Elect Forward-Thinking Public Officials Public Officials

Vermonters For Economic Health seeks to:Vermonters For Economic Health seeks to:

Recruit candidatesRecruit candidates of all affiliations for this fall’s of all affiliations for this fall’s Statewide elections who recognize the current crisis Statewide elections who recognize the current crisis and will and will prioritize VT’s Economic Healthprioritize VT’s Economic Health when in when in officeoffice

Offer financial supportOffer financial support to candidates who share to candidates who share these viewsthese views

Create a voting blockCreate a voting block of concerned citizens who of concerned citizens who recognize that only through recognize that only through organization and unityorganization and unity can meaningful change occurcan meaningful change occur


What Can What Can YouYou Do? Do?

Sign the Petition – www.VTEH.org - there is strength in numbers!

Vote – this fall and encourage others to do the same

Contribute to the VEH Political Action Committee (VEH-PAC) – VEH will support legislative candidates who agree with our mission and have signed the VEH Candidate Economic and Fiscal Pledge

Run for Office – We cannot change the current culture in Montpelier without changing the composition of the Statehouse

Write Letters to the Editor – expressing your concern with the direction VT is headed

Write State Legislators – and let them know that their priorities are not YOUR priorities

Refer others – neighbors, co-workers, friends and family to our Web site so they can view this presentation and sign the petition


““I contend that for a nation to try to I contend that for a nation to try to tax itself into prosperity is like a man tax itself into prosperity is like a man standing in a bucket and trying to lift standing in a bucket and trying to lift himself up by the handle”himself up by the handle”

Winston ChurchillWinston Churchill

www.vteh.org

veh web pres v9 24 08

Economy & Finance

vermont jobs

local tax burden state

vermonts new jobs

public sector jobs

nonprofit jobs

service jobs

future jobs

kinds of jobs