LaMontagne: Vermont is in trouble

Editor’s note: This commentary is by Eric LaMontagne, executive director of Campaign for Vermont.

Vermont loves to tout its many media accolades, frequently showing up on top 10 lists praising us for our health, happiness and sustainability. Pull aside the curtains, however, and anyone who is honest with themselves can only come to one conclusion: Vermont is in trouble.

Please, bear with me. I realize numbers and statistics about employment, wages, benefits and taxes are not a flashy or exciting subject. This is not a single-issue, single-solution situation. These numbers will, however, illuminate a complex, systemic problem that few openly acknowledge and that will not be easy to address. They must be treated with the same gravity as Vermont’s other hot-topic issues, such as paid family leave, taxation of cannabis, water quality funding, and minimum wage increases.

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Among other problems, Vermont’s workforce has shrunk by 15,000 workers and the state’s unemployment rate is dangerously low. Also, Vermont is ranked 49th for private sector total compensation.

Let’s start with wages. In an April report by the American Enterprise Institute, Vermont ranked 49th for private sector total compensation (wages and benefits) after adjusting for regional price parities. Out of all 50 states, only Montana offers worse average wages and benefits for jobs outside of state and local government positions. Data shows that between 1998 and 2017 total compensation in the private sector DECREASED by $407, while benefits increased by $2,815, for a total compensation increase of $2,408. This about half of the national average. In the same time, public sector wages increased by $14,283, benefits increased by $12,767, for a total compensation increase of $27,051 (more on that in a bit).

Another important data point that came out of this study adds quantitative support for what many Vermonters already know – Vermont is an expensive place to live. Our 49th ranking is where we land after taking into account cost of living. Our rank before this adjustment: 23rd. So while our Legislature mulls a litany of new taxes and fees, Vermonters can expect our dollar to buy less and less relative to the rest of the country.

So what does this mean? Well, ask yourself this – would you seriously consider making a home where you know nearly everyone else in the country can get paid more for the same job? Where your dollar goes further in most any other state? If you’re struggling to make ends meet, to build savings and retirement accounts, to pay for quality housing, does this motivate you to stay here?

According to a recent survey from the Burlington Young Professionals, a group within the Lake Champlain Regional Chamber of Commerce, the answer is a solid “no.” More than 40 percent of responses indicated an intent to leave Vermont. The most common reason cited: low pay and high housing costs. One young professional went as far as stating “I would love to be able to stay here and raise children, but it would be a financial nightmare.” In that same survey, 45% of respondents listed a lack of job opportunity as their number one concern.

This is is a sentiment that is felt statewide and can be seen in our too-low unemployment rate (2.3% at the time of writing). The Federal Reserve cites 4.5% to 5% as a healthy rate range. Every county in the state has seen a drop in workforce participation. In total, Vermont’s workforce has shrunk by 15,000 since 2009.

Let’s go back to the public sector numbers for a moment. According to the data presented in the American Enterprise Institute report, between 1998 and 2017 total compensation for public sector employees (local and state government officials and employees) increased 67.7% (vs 7.34% for the private sector). Benefits alone increased by more than 169% (private sector – 50.78%). Even though it may seem that our public employees are flying high – and compared to private employees they might be – Vermont still only ranks 33rd for public sector total compensation.

All of this is occurring at a time when Vermont, for the first time in our history, is on record as having a negative net worth of $200 million. This is largely due to $2.3 billion liability in retiree health care benefits for teachers and state employees, an increase of $73 million in just one year. Ten years ago this liability was “only” $487 million. In 2020 Vermont will have to make a $205 million minimum payment on these entitlement promises, a number that is increasing every year. Meanwhile, the state is NOT funding the actuarial recommendations for the retiree health care plans, leaving a substantial shortfall every year. In 2020, this will be around $85 million and will continue to grow unless something is done.

Oh, and you can tack on an additional $2 billion owed for state employee pension obligations.

Finally, we need to look at our potential for tax revenue. In addition to the pressures caused by low wages and a dwindling labor pool, according to a 2015 report by the Joint Fiscal Office “the aging of Vermont’s population has the potential to curb or reduce state revenue from taxes on income, consumption, and property. The baby-boom generation … has provided a substantial share of state tax revenue. As these workers move toward retirement over the next 10 to 15 years, they are expected to earn less, spend less on certain goods, and, as a result, pay less in taxes.” Translation: there is little to lead us to believe that our tax revenue situation will improve. And with Vermont recently being named the worst place for retirement in the U.S. due to taxes, one must be concerned that this decline will be even more significant than anticipated.

Let’s review:

• Vermont ranked 49th for private sector total compensation (wages and benefits).
• People do not see Vermont as a place where they can have a stable financial future. 40% of young professionals responding to a survey indicated an intention to leave the state, citing low wages and housing challenges.
• Vermont’s workforce has shrunk by 15,000 workers, and our unemployment rate is dangerously low.
• Vermont ranked 33rd for public sector total compensation, showing a growth of 67.7% (vs 7.34% in the private sector).
• Vermont has a $2.3 billion liability in retiree health care benefits for teachers and employees.
• Our minimum payment on those healthcare liabilities will be $205 million in 2020 – an amount that comes right off the top of our budget and grows every year.
• We are under-funding these health plans. In 2020 there will be an $85 million shortfall, a number which will grow unless we make a change.
• An aging population will deflate tax revenues.
• We are also facing a $2 billion obligation for pension benefits.
• Ranked worst in the U.S. for retirement, potentially pushing out even more taxpayers.

Vermont is in trouble. Prosperity is in jeopardy. If we continue along this path, we are facing a future where fewer workers, earning nearly the lowest relative wages in the country, are saddled with the task of shouldering ever-increasing liabilities. Our shrinking and aging population will only further increase our costs and hinder our ability to dig ourselves out of this financial hole.

Please, call your legislator and tell them that we cannot afford to impose any additional tax, fee, or entitlement program without first looking at how it will impact both those paying for it, and our economy as a whole. Demand candid and transparent analysis, in all agencies and departments, and across all levels of government, that asks “does the data show that this action will help our financial situation as a whole?” If the answer anything other than a solid yes, then that action must not move forward.

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19 thoughts on “LaMontagne: Vermont is in trouble

  1. “……….due to a $2.3 billion liability in retiree health care benefits for teachers and state employees.”
    Nobody ever has figured out how to cover this extraordinary debt. Sure would like the experts explain how this will go away. Yes folks it is BILLIONS !

  2. Demanding candid and transparent analysis is asking too much of our legislators. It’s too deep for them. Any people that makes the proposes that they make are shallow and non thinking and are legislating on emotion, not facts and reality.

  3. We have a wonderful opportunity in this state. We shouldn’t nor needn’t run, though I can’t blame anyone for leaving. The NOW PSSC contaminant is spread throughout the country. There is no better place to hone your case to the American People than our state.

    Of course if we chose the same plan we’ll get the same results. Notice how Scott, by default or design has left the majority in Montpelier confused and in disarray. He’s choosing NOT to fight. He’s letting them trip by their own momentum.

    We can chose to hit back, like the old rockem’ sockem’ robots, until somebodies head comes off. Based upon our particular Vermont terrain, past experience (every year for the last 30 years), media control, education control and really just general subversion, it might be best to just step aside when they throw the big punch. Or pull them in the same direction, getting their balance off and letting them fall by their own efforts.

    If we “trigger” their base, we the Vermont citizen will lose, just as we have for decades, the fight they so desperately want will be on, which means THEY WIN again and our little republic is further injured by the many cuts.

    What do we lead with? How can a minority throw a veto proof majority off their base? How? It is so easy, it would be so much fun!!! It would bring us Love, Joy and Peace through out our state, we wouldn’t be fighting we’d be having fun, those who choose to fight would be fighting with themselves.

    There is an easier way, a much easier way.

    • In our country, we’re split fairly evenly, shown in most every election. In that case with two “equals” it’s ok to jump in the ring full boar, hash it out, there’s a fair chance you’ll do ok, more so if the truth is on your side.

      This, however, is not the Vermont landscape. It’s not even a close representation.

      Sun Tzu….any business person, any general will tell you do not take on your competitor head on. You will be bought out, you’ll be beaten to a pulp, you will lose. No there is a much different strategy for these situations. Truth has to be on your side. Exposing the heart of your competitor by THEIR actions will win over many, they will be falling on themselves.

      This could be the most fun election Vermont has ever, ever experienced in our state. We could bring us all together in harmony, peace and joy. Isn’t it time we tried a different plan?

      The minority could get our super majority so off balance this next legislative session they would literally fall down on their own accord. No fighting on our side, just winning as they say. It would be so much fun. The people would love it, rightfully so.

    • Case in point…..need to look at from others perspectives.

      Is Vermont in Trouble?

      For Business people, Definitely!
      For Independent contractors Definitely!
      Financially, yes of epic proportions, we just keep kicking the can.

      What about the poor? They don’t see it.
      What about state employees? They definitely don’t see it.
      What about teachers? Nope they don’t see it.
      What about medical? Nope, they are just giving themselves a 15% bonus!
      What about monopolies? Nope the crony crew is living fat off the hog.
      What about the indoctrinated? See they don’t understand, they have been lied to.

      This is how, with the truth on their side Republicans lose every election in our state. We use trigger words the assure our loss of epic proportions. We don’t understand our audience. We use the same tactics, it makes me think we want to lose, but then I know the rino’s are ok with all this division, and loss, it gives them power.

      Truth delivered like this message, however correct will assure the Republicans and even bigger loss, the choice is ours to make. Know thy foe, know the terrain you enter before trying to win the hearts of the people. Suffer the consequences if you don’t, I’m tired of suffering, I’m tired of bleeding, I’m tired of the game that’s being played, it’s time to change. It’s time to win the hearts of the people.

  4. Vermont has a bigger problem then this analysis indicates. 80% of Vermont lands and properties are owned by 20% of the population. Over the next 20 years, most of the 20% are going to die off — and there is no one coming to replace them. In short, the state spending is going to destroy the liberal tax and spend government here, and no one in Mount Stupid cares.

  5. Tell it to the Liberal, socialist or what ever name you want to call them, if you think they will listen. They have an agenda and that is all they care about.

  6. Vermont’s outstanding legislators, keep up the great job your doing, I bet you can have
    our state rated ” The Worst State ” fifty out of fifty…….by 2020 if not sooner.

    Now that’s’ saying something when we have California, New York in the mix. God Help Us

    When will Vermonter’s wake up and kick these fools to the curb, just read some of the bills
    proposed thus far this year………shameful, but then again no shame in Montpelier………..

  7. For many years now as I drive around Windsor County, I see the same properties for sale for literally years in too many cases. Vermont has simply deteriorated as a place to live. Nice to visit, but not to live. The single most devastating factor has been our local POL’s. They ALONE bear this albatross.

  8. VT’s leftist government is slowly but surely dragging the state into the sewer of AGENDA over
    citizen need and like all leftist run states/cities that means regulate out business, high personal
    and property tax, government not living in it’s means and ruination of of state coffers. Remember
    we use to have SURPLUSES from revenue now it’s all spent years ahead of collection.

    What the state needs is a influx of Right minded people to vote out the leftarded Fascist idiot
    flatlanders responsible for the ruination. But that’s not likely to happen as all the Right minded here
    are moving out..

  9. As Americans if we choose to be Patriots, if we choose to be Vermonters. We must build a New State and not be tread upon. It’s been too long that we did not vote. It’s time to stand up and vote. We must get together and demand a fair life. Are we capitalist or are we socialists? Don’t we demand a free life of no tyranny? Will we be succumbed by greed? JFK said ” My fellow Americans, ask not what your country can do for you, ask what you can do for your country.” .Applies today. He had the for site to see a Nation in trouble, yet we let get worse today. Be a Vermonter and show America how we will go to the polls and vote. Put your man or woman in office. That’s all you should do. That’s all I can ask. Vermonter Do the right thing

  10. When Vermont has to pay people to move here and work, that should tell you something is inherently wrong our policies which include our spending policies, taxing policies and a host of others..

    For years I have said Vermont has become East California and Burlington has become San Francisco East. Isn’t California in the same shape Vermont is?

  11. Many years ago there was a song that asked where have all the flowers gone. Today in Vermont the lyriic will be where have all the people gone? In the mean time the folks in Montpelier will continue to raise ttaxes and sccratch their collective heads.

  12. This is nothing new, the writing has been on the wall for years. Precisely why I got the heck out of dodge years ago. That’s the beauty of America. You can drop a state like a bad habit when they are being run into the ground much like VT. Looks what’s happening in NY, CT, poorly run and those that can leave aren’t looking in the rear view mirror while they cross the state line for the last time as a resident.

    Once Zuckerman becomes gov the lipstick will have had it’s final application on this pig.

      • I moved to the Carolina’s. I have a nephew in Montana and he really likes it.

        That being said, they’re some odd land rules in the upper midwest in regards to mineral rights and water that can be an issue. A little too arid out there for me. My wife and 3 kids looked at Arizona, Utah, and lots of other states. We settled on the SE. We’re close enough to the ocean to be swimming on the beach (like last week) or up in the mountains to be skiing in the winter, yet I can grow palm trees next to a pool. Our significant cost of living savings is going right into our kids 529 accounts. With no deduction limits like those in VT.

        Alex, the list doesn’t need to get any longer. The housing market is good, if you;re thinking of moving but not quite ready yet I would at the very least sell and rent, that at least keeps you nimble.

      • I did an analysis of my retirement income adjusted for cost of living, taxes and fees in Vermont, Georgia and Tennessee. I get a $1000 a month in my pocket by moving to either GA or TN.

        Worse, if I live as long and the IRS says (according to their required 401K distribution schedules, I will pay this state $300,000 in taxes and fees and get nothing for them.

      • I believe in another TNR article wherein you commented about WY. I know the state well and it’s nice. Get a WY state map. See the history therein noted and places to be. I can mentioned quite a few. I have a brother that lives in Rock Springs. Beautiful area with the Flamming Gorge Reservoir, and is 180 east of SLC. Pinedale, Dubois, Star Valley, Casper, Cody. The state is your oyster, shuck it and gobble i up.

        PS keep liberals away.

  13. Eric,
    No problem.
    Just grow the state budget even more, so Montpelier bureaucrats would spend even more on government program to “solve the problems and grow” the Vermont economy at the same time.

    Just through more money at it and call it innovative.

    That did not work in Cuba, Venezuela, The Soviet Union, Nicaragua, but Bernie and Co will find a way to do better Socialism in Vermont.

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