After receiving at least $5.4 billion in federal relief over the past year to ease shutdown-induced economic hardships, Vermont is now “digging out and building back” its economy, according to the Public Assets Institute.
“The number of hotel and restaurant jobs increased by 1,800 in April, out of 1,900 total new private-sector jobs last month. As COVID-19 cases declined and business restrictions loosened, jobs in the hospitality sector grew to 24,300. The sector is still down more than 20 percent from pre-pandemic levels,” the think tank said in a news release.
The economy is expected to grow more as the state readies to completely reopen most public sectors by July 4.
It wasn’t always a positive outlook for Vermont’s economy during the lockdowns. Back in June, Vermont’s Joint Fiscal Office estimated that the state would lose over $400 million in revenue through to the end of the 2021 fiscal year. That figure became largely a moot point as more than tenfold that estimate — at least $5.4 billion — came to Vermont via federal CARES Act money in disproportionate amounts per capita when compared to the rest of the nation.
Despite the huge influx of federal money, Vermont’s unemployment funds chest was substantially depleted through the course of the shutdowns.
“Increased demand from jobless workers in 2020 drew down over half of the balance in Vermont’s unemployment trust fund,” the PAI report states. “That left it at $222 million at the start of 2021, just short of the minimum level recommended by the U.S. Department of Labor.”
The group’s report continues that the state’s unemployment fund balance typically far exceeds the federal minimum, and it was among the best-stocked in the nation until the shutdowns began. It states that to replenish these funds for those forced out of work amid the shutdowns, working Vermonters saw “adjustments to employer contributions and employee benefits” via legislative action.
The report also notes that increased tax credits are making a difference in Vermonters’ finances.
“Thanks to increased tax credits, Vermont families will pay less for child care in 2021—over $8,000 less for some families, compared with 2020,” it states. Other details include federal and state child and dependent care tax credits can reimburse taxpayers up to $4,960 per child and $9,920 for two children. Any household making $125,000 or less qualifies for the full amount.
The increase in tax credits for having children was implemented as part of the 2017 Trump tax cuts.
The PAI reports that more federal money is on the way to continue supporting the Vermont economy.
“The American Rescue Plan Act (ARPA), passed in March 2021, earmarked $76.6 million for Vermont’s local governments,” their website states. “Towns can use money through the end of 2024 to help pay for government services; direct assistance to households, small businesses, and non-profits for COVID-related costs; premium pay to essential workers; and infrastructure investments.
It continues that in June, Vermont towns will get federal money based on population, with the exception of the Burlington area which will follow a different formula for metropolitan areas.
Gov. Phil Scott has embraced the federal funds, including using them for other, less-COVID-related projects.
“If we’re cautious, we can solve problems and fund projects that have been stalled for years,” he said in a press conference on Jan. 6. “Improving communities, services, outcomes, the state government itself, and lay the foundation for an economic resurgence around the state without having to ask more from taxpayers to do so.”
Scott warned however that using one-time money for long-term programs would be a poor policy.
“[Then] we’ll be forced to increase the tax burden on working Vermonters,” he said.
On the federal level, the Biden administration is pledging to use this money characterized as COVID-relief funds for a whole range of economic initiatives.
“Building back better means an updated social contract that treats American workers and working families as essential at all times, not just times of crisis –– with higher wages, stronger benefits, and fair and safe workplaces,” states texts at joebiden.com/build-back-better.