Roper: How will Vermonters afford this agenda?

By Rob Roper

The Vermont Legislature returns in January with a long list of daunting challenges, all with potentially astronomical price tags for Vermonters, who are already some of the most highly taxed people in the United States.

Among this list includes a projected 6% increase in property taxes to fund an education system already topping $2 billion to serve a declining population of less than 80,000 students. The system is so dysfunctional that former House Education Committee Chair Dave Sharpe, D-Bristol, recently claimed legislators were “hoodwinked” by special interests into supporting Act 46, the 2015 school district consolidation law that was supposed to lower costs by increasing efficiency. That has not worked out.

Rob Roper is the president of the Ethan Allen Institute.

The Green Mountain Care Board recently authorized rate hikes of 12.4% (Blue Cross Blue Shield) and 10.1% (MVP) for people with Vermont Health Connect insurance plans, and approved a 59% increase to $1.42 billion for OneCare Vermont, the state’s latest health care cost-containment boondoggle. One suspects considerable hoodwinking here as well.

Also of concern is the state’s $4.5 billion in unfunded pension liabilities for teachers and state workers. To put this cost in some perspective, every Vermonter — man, woman and child — is currently on the hook for over $7,000 (a number that is growing quickly) to pay for these benefits, and feeding this beast will consume 14% of the state’s general fund in 2020. (In 2018 that general fund expenditure was nearly $200 million, and this is an annual obligation over the next 20 years.) If this is not addressed, public employees risk losing some or, in an unlikely but not impossible scenario, all of their benefits.

Act 64, the water quality law passed in 2015, is about to hit businesses, municipalities, public schools and even some individual residences full force with stormwater regulations and fines with associated costs and taxes that will run into the hundreds of millions of dollars over the next few years, and billions over the next decade. This has the very real potential of bankrupting many Vermont businesses.

These are costs already on the books. Here’s what we have to look forward to.

Leaders of the majority party seem poised to pass a minimum wage increase, which by last estimate, on top of the increased costs to employers and consumers, will require an estimated $86 million for Medicaid over five years either in tax increases or program cuts.

And, they seem resolved to pass a mandatory paid family leave program which will come with a new payroll tax taking an estimated $76 million per year out of working Vermonters’ pockets, just to start.

If this weren’t enough, in what one legislator described as what will be “our banner legislation” for 2020, many lawmakers want to entangle Vermonters in the latest carbon tax scheme called the Transportation Climate Initiative, or TCI. This multi-state collaborative would amount to a proposed 5, 9 or 17 cent-per-gallon tax on gasoline and diesel fuel, at a total cost to Vermonters of an estimated $20 million to $90 million, a number that will grow annually ad infinitum.

These are just some of the big ticket items, not mentioning the cost to maintain our neglected roads and bridges. Who knows what nickel-and-dime tax and fee increases they have in store, like plastic bag taxes, new and increased professional licensing fees, etc.

In all seriousness, how do our representatives expect us to pay for all of this? There are only about 320,000 taxpayers in Vermont. This ever-growing burden on so few shoulders is crushing. It has to stop. It would be one thing if we were getting our money’s worth out of all this, but the existing programs outlined above, apart from being wastefully expensive, are all examples of gross mismanagement. Can we realistically expect any better from the proposed programs?

A recent news story out of Rockingham, Vermont, described a community discussion billed as “Attracting and Retaining Young People,” in which one person described as an “older resident in work jeans and boots” summed things up very well. “Our taxes are absolutely nuts,” he said, “[but] there’s so much potential.”

There is so much potential in Vermont. This is a wonderful place. But these taxes and regulations are smothering the people who try to live here. As long as our taxes remain “absolutely nuts,” and the money is poured into programs that do not work as intended or promised, that potential, sadly, cannot and will not be realized.

Rob Roper is president of the Ethan Allen Institute. He lives in Stowe.

Image courtesy of Flickr/401kcalculator.org
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29 thoughts on “Roper: How will Vermonters afford this agenda?

  1. If we have any brains we will vote out these nut-jobs this coming fall, the state is already bankrupt, stop the goofy spending sprees!

  2. Rob, these guys don’t know the answer to your question and what’s scarey is they could care less.

  3. FYI, Rob, when you say this: “If this is not addressed, public employees risk losing some or, in an unlikely but not impossible scenario, all of their benefits.” The union deficit of $4.5 billion is really not a risk to unions. Because court precidents have ruled that the obligation the states have entered into with the Unions is a valid contract, willingly entered into by BOTH parties.. if Unions hold firm, and refuse to take a “haircut”….there is no recourse. It is a STATE obligation – contractually. Federal law has it that “States” cannot declare bankruptcy, but only “Cities” can. we have seen this already in a few states.. If the State of VT cannot afford to pay the Unions (it can’t), there is only one way out…..if Unions do not volunteer to cut (they won’t)…and that is raise taxes massively on upper incomes. That will only force more to leave VT ASAP and the problem magnifies TEN fold. My advice is to get out now. VT will not be a pretty financial picture in 3- 5 years. I did…

    • Your advice is well taken. On the other hand, while a State can’t use the jurisdiction of a federal bankruptcy court – when its citizens and their communities become bankrupt, the State, for all intent and purpose, becomes bankrupt (i.e. insolvent). It’s IOUs and markers will no longer be accepted currency. Its services and support will diminish, then disappear (see the current Brattleboro Retreat cisrcumstance). The semantics of describing the State’s financial insolvency will be irrelevant. It’s how the inevitable tyranny plays out that will tell the tale.

      • Jay….the pension crisis will unfold slowly and gain speed. but long before that happens, the credit rating agencies will have downgraded VT bonds to near junk level. I see conflicting figures of how much actual bond debt VT has….$2 billion, $3 billion, $5 billion. I think the higher figures are wrong & include pension deficits.. States depend on selling bonds to fund & smooth out income vs expenditures. All runs smooth if you maintain good credit rating….you have easy acess to money. VT was just downgraded a notch. if what happens that I see coming down the road, VT bond obligations will be nearly junk level, which means the interest rate costs skyrocket if VT needs access to capital marlets. And VT now spends OVER $6 billion in budget? Big credit downgrades will happen before the unfunded deficts slam you in the face. When it happens (it will), VT will be the first to demand from Federal Gov’t a BAILOUT! But they won’t get it, because while a VT bailout is tiny, relatively….15 other liberal bankrupt states will then demand similar. what to do? there is not enough money to bail out soon bankrupt Liberal states and about $1 TRILLION in union retirement deficts! Best advice? “GET GON”…..Get Out Now….I chose Arizona and loving every second here!

  4. The Bankruptcy Card: While the State raises revenue by taxing cash flows from income and sales activities, State fees are also assigned to bank accounts, car registrations, utility bills and the like. And while we can decrease our tax liability in this regard by limiting our spending and income and limiting investment activities, at least for a period of time sufficient to insulate ourselves from Vermont’s inevitable State bankruptcy, Property Tax remains the gorilla in the room.

    Our local school districts are a perfect example of what we can expect to see. As more and more people, property owners and renters, fall into lower income cohorts, Property Tax Prebates insulate them from ever increasing budgets. But when the only property owners and renters remaining, with incomes sufficient to pay the full amount of Property Tax, are those who work for the very institutions requiring that tax revenue to support them, they will quickly realize their positions are not sustainable.

    Keep in mind that forty percent of Vermont’s workforce is employed by the government, education and healthcare sectors. Along with their family members then, they represent a voting majority. And clearly, the prospect of bankruptcy has not affected their common sense to date.

    Hemmingway said when asked how he went bankrupt: “Gradually. Then suddenly”.

    The question is: how far will this dysfunctional voting majority go to sustain itself? If history tells us anything, it won’t be painless.

  5. Vermont legislators invented a remarkable discovery last week, discovered while doing archeological investigations on their favorite figure head Mussolini. Apparently just before his death a team of crackerjack scientist had discovered hoe to get blood from stones, while not crushing the stone beyond recognition.

    In her press release, Mitzi Johnson stated, ” not only do I have a great wardrobe set up this year in many shades of brown, we’ve also found scientific evidence on how create a more equal taxation implementation from our hero’s in Italy!”

    When asked for more details, she opined” well, it’s something we’re looking forward to introducing this session, believe me we’ll leave no stone unturned.”

    Amercian Red Cross has been building blood supplies in New England since the announcement.

  6. Great article Rob. Vermonters cannot afford this agenda. How about mentioning the unexpected costs of getting our vehicles inspected? Most people cannot afford the mandated requirements that have nothing to do with safety but costs thousands of dollars to repair.

    • I agree. Our truck took several weeks to repair an engine indicator light, taking it out of commission while trying to get kids to school, work, and my wife being a commuting student at UVM. The mechanic was very sympathetic to the interruption and the costs associated with this requirement for inspection even though the truck was running fine. The mechanic was very frustrated with the since this had nothing to do with vehicle and operation safety. Having lived in North Carolina, Virginia, and California I have seen many different requirements, from no inspection in NC or VA, to emissions only in CA, but looks like Vermont likes to double dip on its residents. It is too expensive to keep up here and remain above the requirements, we will be a land of scofflaws.

  7. Socialism at it’s finest. It’s just unbelievable that the lemmings continue to elect these blind liberals. The legislature is so enamored with itself and it’s belief in socialism that they are going to run Vermont into economical ruin while at the same time patting themselves on the back for their higher level of enlightenment. Then when it finally comes crashing down they will blame the Republicans, Conservatives, Capitalists (choose any one of these) for their own stupidity. Liberals have a habit of blaming someone else for their own failings.

  8. I agree with Green Mountain Boy; this state is too far gone to be saved. Let the progressives in Montpelier ruin the state with their insane schemes. Complete bankruptcy is the only way out. Let Vermont die.

  9. You don’t have to worry about climate change or TCI destroying the state. The lawmakers are ahead of both. Talk about special interest groups leading lawmakers by the nose. They’re more like carpetbaggers, historically they would go into economically depressed regions to exploit the populace. The modern definition is “people who move into a new area for purely economic or political reasons, despite not having ties to that place.” ( Quote from Wikipedia) Lobbyists could also fit into this group.
    A commentator recently made reference to some special interest groups as imbedded constituents. So, a politician with imbedded constituents would come with hidden supporters other than the voters who put them in office. In relation to this article, it looks like carpetbaggers are the crux of VT’s issues of over spending and over tax taxing. In the post civil war South, carpetbaggers would be caught, tarred, feathered, and ridden out of town on a rail. Ahhhh, such was the good old days.

  10. Problem with vt they don’t want nothing coming in they could build a casino up at diamond run mall it will solve most of their tax problems and create jobs for people in vermont state

    • gambling Cal? No, what needs to happen is farmers need to begin to pay THEIR SHARE of the municipal tax burden! Cut backs are necessary in all “public funded” sectors as everyone with a brain runs their own budget at home! 10% would be a good way to start. Then encourage NEW BIG business by offering incentives for existing to stay and new ones to come in. Cut business tax and cap residential property tax forcing municipalities to share services would be another area to manage cost. SHARE SERVICES IN SCHOOLS would be another place to cut! Require all districts to cut administrative staff via attrition – NO new hires when someone retires but merge positions instead – saving a bundle of money. Change in pension benefits going forward – let employees INVEST THEIR OWN MONEY instead of a forced STATE SYSTEM phasing the forced system out giving a timeframe. State should be able to fund existing pensioners investing the money wisely.
      Just a few ideas but going down a road continuing unabated tax increases will drive everything out of Vermont and create a “Detroit”!

      • Farmers are in dire straits. I know many. Many have gone belly up/ Cost more to produce a gallon of milk and they have to use other means to survive. Newark (a small Kingdom town) once had 27 dairy farmers, none now. Farming is not a business to be in. Many are now growing hemp in the Kingdom, seen many places.

        If a Gambling joint was established, the tax revenues would not lower taxes for individuals. It’s more “free” money to spend. This has been proven time and time again. Montpelier is never satisfied.

        Wonder that VT is not a San Fran yet.

        By the way, why not let Social Security payments be privatized, and let the persons invest. No free money for the gov. Also if a person dies prior to drawing, it all stays in the Fed general fund, not the family. Have all people handle their money with guidelines, not the gov bureaucrats. The Bern doesn’t like that idea.

  11. Taxation beyond the willing carrying capacity of the tax base discourages enterprise by reducing reward for productivity, pushes a higher percentage of the taxpaying population toward insolvency and reduces confidence in the economic outlook of the state. Those members of the Vermont legislature who are high school graduates learned that in school. Throttling the flow of cash within a society is economic death – on the obverse, look what Trump’s tax reduction accomplished – including record IRS revenues. To be concise, it is folly to assume that the results of legislative action, when it will have known and predictable consequences, are not the intended results. Money is the seed and fertilizer of private sector expansion. Removing it from the private sector will reduce state tax revenue and contract the state economy even as taxes are raised.

  12. Fewer students need MORE money??? Am I missing something??? It’s about time that the folks in Montpelier figure out how to pay for last year’s feel good projects before they start the New Year throwing good tax payers’ dollars after bad feel good projects. How about shelving all the rhetoric about global warming and start addressing solvable problems for changes???

    • Baruth has proposed legislation (2020) for more gun control, talk about costly expenditures, try to enforce. Hope the anti-gun sanctuary counties come to VT as in VA and elsewhere. It’ll stop the likes of Baruth et al and his (their) mentality.

    • When Clinton gutted the military and cut 286k people, six Army divisions, 166 Navy ships and 26 Air Force squadrons, liberals would have been screaming if the cost had actually increased.

      Now we have fewer students, consolidated schools, with the same number of teachers, more administrators and the cost increases substantially every year. We’re supposed to accept this?

      • No, we shouldn’t accept this. Everyone should do as I have and contact their Reps, the Governor and the Secretary of Education because the taxpayers were deceived by our gov’t. We were told that Act 46 was going to relieve the burden of taxes on residents. I am appalled at how high my taxes are going up and what the dysfunctional District I live in is expecting us to pay. I went to a school board meeting last night and an educator stated that she has been brainwashing the students to guilt every adult they know to vote for a $60M bond that will increase our taxes up to $346 annually, not including the yearly raises the teachers get. One of the school board members posted on the Front Post Forum stating she doesn’t feel we pay enough tax. That is the mentality of the liberal education board and they will not be happy until they drain every penny out of our savings. We have to fight back. It doesn’t help that Scott made one of 18 corrupt Republican Governors, begging the Federal Gov’t for refugees, at the taxpayers expense, while he gets a 45% kickback from the religious organizations. We need to elect an honest Republican Governor in Montpelier but we also need to see a majority of Republicans in our Legislature, which is never going to happen.

        I think Jeffrey Green is giving us good advice…. Leave before it is too late. If the legislature realizes the majority of VTers are relocating, they will create a relocating tax of 60% of the equity of our homes. They will figure out a way for our move to benefit them. Greedy, is an understatement.

    • They are solving problems!! On the news last night they said that VT has been working on a Bill to make it illegal for anyone under 21 to have a cellphone. That is a really good way to not only bankrupt our universities but raise taxes even more because God forbid someone under 21 gets kidnapped or stuck with their car in -degree temps and dies, VT will be sued big time! And they deserve it!

  13. Let’s see the population of Vermont is just over 620K and with the majority of the tax burden
    going to around 320K Citizens ” property owners ” so what is the other half doing, oh yeah
    the government TIT !!

    The state is floating a projected 6% increase in property taxes this year to fund our failing
    school system with test scores, in the tank, grade level efficiency down two levels, and it’s
    overpaid, professional work staff, laughing all the way to the bank…….

    The Green Mountain Care Board ” five members ” recently authorized rate hikes of 12.4%
    Blue Cross Blue Shield and 10.1% MVP for people with Vermont Health Connect insurance
    plans, the state who, their staff, are charged with ensuring that changes in the health system improve quality while ” stabilizing costs ” and approved a 59% increase to $1.42 billion for
    OneCare Vermont, the state’s latest health care cost-containment ” boondoggle ” now that’s
    an understatement !!

    Montpelier and it genius mindset and it’s $4.5 Billion, yes with a B, unfunded liabilities that grow
    every year and think they can tax there way out and then add TCI tax, Family paid leave tax, and
    whatever else these inept fools can come up with ……

    Liberals in charge in Montpelier are ruining this state and our Governor cannot figure out why
    people are leaving and you cannot get anyone to more here…………

    MY God, wake up people before it’s too late !!

    • ‘Too late’ passed us by long ago. There’s no hope for recovery until either the state declares bankruptcy or enough people decline to send taxes to Montpelier.

      • Should the state declares bankruptcy, the Federal government will take over. Better hope that the Reps control both houses and the Presidency for a positive outcome. The Feds should and might dissolve the VT Socialist Legislature.

        In CA for instance Bakersfield filed bankruptcy, and perhaps a couple more towns/cities. Don’t know those outcomes.

        The “chain of command” 1) the towns/cities, 2) the state and then Fed takeover. Can’t imagine the UN next.

    • Didn’t you watch Tucker Carlson over the weekend…our Republican Governor made the list of the 1 of the 18 corrupt State Leaders. So even when we vote for our chosen Party, we are voting for a Liberal.

      • I wish I could. Like the guy and feel sorry for what he’s put up with and his family–death threats and all. I don’t get cable and in the sack at 8pm, up at 3am.

        Best time of the day, early morning. Accomplish a lot before 9am.

    • Then I just read on the Lt. Governor’s FB page that they created a position called “Director of Racial Disparity” for God knows what salary. Of course, VT Liberals are posting how necessary this Director is in a State with 7% minorities.

      When I was looking over one of the most expensive resorts in VT, I asked about the group by the beach. It was a convention for one of the Vermont Depts., which I won’t name. Okay, I wonder how much that cost. I guess money does grow on trees.

      I do feel they could cut the education budget in half if the system wasn’t so corrupt, but it is, and they won’t.

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