By David Flemming
The good news: one of the top major credit agencies applauded Vermont’s legislators for recognizing that Vermont has a population problem.
The bad news: that same credit agency, Fitch Ratings, said that it would still downgrade Vermont’s bond rating from a perfect AAA bond rating to AA+.
Why did Fitch choose to lower Vermont’s rating? Our labor force is “flat to declining” in the past decade. Fitch has a “lowered view of the state’s growth prospects and the state’s ability to raise revenue from its tax base,” according to employee Eric Kim.
Fitch is part of “The Big Three” credit rating agencies. Just 10 months ago, Moody’s also downgraded Vermont from its perfect rating. The other credit agency, Standard & Poor’s, has given Vermont a less than perfect rating for a while now. This means that when Vermont’s government needs to raise money quickly by selling bonds to investors, the investors can demand higher interest rates to offset the slightly higher risk that Vermont will not be able to pay interest on those bonds.
Vermont can no longer blame the 2009 Recession for its problems. Most of the other 50 states has seen at least some population growth in the past decade while Vermont has been stagnant.
That said, Vermont still maintains one of the highest credit rating relative to other states in the region. We can borrow money at the same rate as Massachusetts and New Hampshire, and can borrow money more cheaply than Connecticut, Maine and Rhode Island.
What does all this mean for Vermonters? More taxpayer money will need to go toward paying down pension debt and the like, rather than towards government services. Gov. Phill Scott said on Thursday that it’s uncertain how much taxpayer money will need to be diverted.
In the long run, the only way we can repair our rating is if our workforce can grow substantially with policies that are friendly toward economic growth.
David Flemming is a policy analyst for the Ethan Allen Institute. Reprinted with permission from the Ethan Allen Institute Blog.
There isn’t any fix to this problem other than realizing that it isn’t going away and will only get worse….Employers and employees of any consequence are not going to be coming to Vermont. They have much better and more friendly options else where.In fact we will more than likely lose more of the remaining good jobs over the next few years…Many of the problems Vermont has, such as the aging population and declining work force, are shared by our neighboring states as well…In Vermont we put ourselves at a further disadvantage with our laws and regulatory system that is viewed as hostile to business…The bottom line is that the problems Vermont faces will not be going away and the legislature needs to acknowledge this. Doing things like offering 10,000.00 for individuals to come here and work remotely is just a joke,that insults the people who already struggle to earn a living here. It’s time to manage the money closely. There is going to be less and less moving forward…………
OK, everyone is on the same page, Vermont has a population growth/ unfriendly business problem. When I was younger, I was taught that identifying the problem was half way to finding the solution. Unfortunately, the folks in Montpelier, as is typical, go half way and then scratch their heads and move on to some inane project. Will it ever end????
As Bernie likes to say, AOC and her squad are the future of the democratic party. Socialism is a sickness of denial and the sick will always be in denial of their failures.
Credit agency: Show me the people, Vermont!……
Well, that’s a problem, Retires are leaving in droves to the Southern States where the
tax burden on retirement is nill, property taxes, nill !!
College Grads had fun here while in school, but when reality set in, they understand VT
has no real future and starting a career with the taxes they’ll be paying……Nope !!
The only ones that are staying have the” Socialist Sanders Mindset “, thinking they’ll be getting
things for free, they may have a Degree……but there still idiots !!
Montpelier just doesn’t get it, the state house is full of flatlanders or trust babies, so they know
what’s best for our State, Yeah !! They should back home and help their states !!
Just look at the state that Vermont’s it’s in, and falling deeper in debt every year !!…………..
We’ll be at a C+ real soon, vote them out.