John Klar: A Vermont economic forecast for 2023

Vermont faces very serious economic and budgetary challenges in the years ahead. The fiscal destruction wrought on our state and its economy by progressive experimentation will not be repaired overnight, but the profligate and regressive policies of the past two decades will most assuredly come home to roost in the current national economic decline. To comprehend just how great this challenge is, consider this partial list of problems, and who created them all.

John Klar

The state pensions system. The state pensions have been woefully mismanaged and inexcusably underfunded. The national stock market has declined about 14.5% since a 2022 Final Report dated January 10, 2022 by Vermont’s Pension Benefits, Design, and Funding Task Force reported:

Across all funds, the FY2022 pension [Actuarially Determined Employer Contribution] ADEC expenditure is now larger than total appropriations for entire categories of state government functions. For a sense of scale, the $316.2 million of combined VSERS and VSTRS ADEC is more than state government spends on Labor, Debt Service, Commerce and Community Development, and Higher Education combined. … Employer pension costs, therefore, are expected to grow faster than the State revenues available to pay them when assuming all actuarial assumptions will be consistently met moving forward.

That “employer” is the State of Vermont. The funds raised to pay these massive liabilities must come from Vermont taxpayers, who are already overly burdened.

The net metering program. This scam has thieved tens of millions of dollars each year from low-income Vermonters through electric rates that are nearly 50% above the national average, to fund solar panels and electric cars that most poor Vermonters cannot afford. In 2022, the Legislature failed by a single vote to implement a similar tax on heating oil to fund heat pumps. These burdens damage the economy and take money from ratepayers that would otherwise be spent on Vermont businesses.

The universal school lunches. This program was instituted with federal COVID money, and unfairly allocates benefits to millionaires for free lunches while many working-class Vermonters struggle. It costs an estimated $25 million annually. Progressives are actively pushing to make this program permanent, now using state money.

School spending. Vermont continues to be the second-most expensive school system in the nation, despite plummeting proficiency scores for students. Our state has lost about 30% of its public school students in the last twenty years, but not a single superintendent position. Costs and spending rise, and so-called savings from closing local schools are largely absorbed by the high costs of transportation to get kids to other facilities. This is a failing system, and it must be reformed properly and quickly.

Healthcare and health insurance costs. Healthcare costs and insurance premiums have both increased substantially in Vermont in recent years, aggravated by the failed (and very expensive) OneCare Vermont scheme, which has enriched a handful of overpaid bureaucrats at the expense of patients and healthcare workers. Vermont faces a nursing shortage – OneCare Vermont funds would be better spent to recruit and train more nurses rather than pay much higher rates for out-of-state temporary workers. This is a problem that will get worse quickly if not addressed immediately. OneCare Vermont must be scuttled pronto.

Universal daycare. Vermont cannot afford this immensely expensive progressive initiative, which favors paid childcare at the expense of stay-at-home parents. A better course is to relax overly restrictive state regulations that have caused a daycare shortage, and incentivize start-up daycare providers. This would be much less costly, and reduce rather than increase administrative expenses.

New sales taxes. Vermont’s Legislature commissioned a study to weigh taxing groceries, then skimming 15% of revenues for state administration to redistribute funds to low-income Vermonters. This is an unconscionable as well as an unworkable scam, and must be quelled before it gets out of the bureaucratic gate. It will hurt all Vermonters while helping almost none – except the paid bureaucracy that will grow yet larger!

Vermont’s state bureaucracy has been dramatically expanded under progressive stewardship. Vermont’s economy cannot be based on a massive bureaucratic workforce, yet progressives have created exactly that drag on real earnings and growth. Only a prompt and effective reversal of this government-expanding experiment can rescue Vermonters from the damage to the real economy this has inflicted.

Only fiscally conservative legislators — whether Democrat or Republican — can get it done. Our state’s future economic solvency depends on it.

John Klar is an attorney and farmer residing in Brookfield. © Copyright True North Reports 2022. All rights reserved.

Image courtesy of Public domain

4 thoughts on “John Klar: A Vermont economic forecast for 2023

  1. Mr. Klar knows, as do many of us that this is not news. Klar is restating the perils of continued state government financial mismanagement, now multiple decades in the making. 2008 saw publication of “Off the Rails” by the Ethan Allen Institute, a concise summary of the financial perils Vermont faced 15 years ago. And nothing has changed for the positive.
    Until Vermont’s voters figure out how dire Vermont state finances are and vote for change.
    Until Vermont’s voters figure out the dire condition of Vermont’s society, Vermont will continue to bankruptcy and the continued fall to anarchy brought about my the super-majority legislature. This
    falls on those people- and those that continue to support them.

  2. Mr. Klar,

    Thanks for pointing out the ongoing problems with the pension system.

    Last session, Governor Scott vetoed the so called rescue plan for the pension fund cobbled together by the unions and Democratic/Progressive leadership. Scott wanted to highlight its gross inadequacies and continued reliance on overly optomistic projections. Politically, this was a foolish thing for Scott to do and not one legislator was willing to stick their neck out with him and say the obvious; that this rescue plan, while making some minor improvements, did not solve the problem but once again simply kicked it down the road.

    The downturn in the stock market has proved just how right Scott was.

  3. The crux of these issues is, of course, the disproportionate size of the Vermont workforce employed by healthcare, education, and the government. They and their families are the demographic most advantaged. Nearly forty percent of Vermont’s workforce is in this category, and they are the beneficiaries of Mr. Klar’s listed problematic policies. This is not to mention that Vermont has more non-profit corporations per capita than any other State in the U.S..

    These folks represent an insurmountable voting bloc. Two wolves and a lamb deciding what to have for lunch.

    Bon appetite.

  4. John, whats your take on the so called “housing shortage”, or what some call the homelessness industrial complex?

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