12/09 1 Vermont’s Reach Exceeds its Grasp Vermonters for Economic Health PO Box 153 Essex Jct, VT 05453 www.vteh.org

12/09 www.vteh.org 2 Who are Vermonters for Economic Health (VEH)? VEH is a grassroots, non-partisan, citizen-led organization Our Mission – To Promote Economic Health and Fiscal Responsibility in Vermont’s Government

12/09 www.vteh.org 3 We’ll Examine . . . Vermont’s: Spending and Expenses Tax Burdens and Trends Job Growth Demographics Explore Potential Solutions

12/09 www.vteh.org 4 SPENDING

www.vteh.org 5 Vermont’s Liabilities - 2009 Data $1.6B (teacher & state employees) $466M $470M $400M $300M $70M ($40M to stimulus) (Net of Stimulus $) (Champlain Bridge & VT State Hosp. costs not included)

12/09 www.vteh.org 6 State Spending by Category 73% of Revenues for Education and Human Services

12/09 www.vteh.org 7 State Spending Growth Education, Police & Corrections and Human Services have grown 2-3 times faster than inflation

12/08 www.vteh.org 8 Student Enrollment Down - Employment and Costs Up Source: Summary of the Annual Statistical Report of Schools (SASR) FY 1997 - 2008 Student s = -9.1%; Teacher and Staff Growth = +20.8% Students Teachers And Staff 2008

12/09 www.vteh.org 9 K-12 Education Employment VT has 43% more school employees per 10,000 population and ranks second highest in the nation: 326 employees compared to 228 nationally. If VT were at the national average, it would employ 6,090 fewer people, saving the state approx $ 372M annually. (6,090 x $61.00) According to the National Center for Education Statistics; VT’s 10.8 student/teacher ratio is the lowest in the nation at 30% below the national average of 15.5. VT’s 15.6 student/Non-teaching-staff ratio is lowest in the nation at 65% below the national average of 44.1. Source: Vt Economy Newsletter: Nov/Dec 2008

12/09 www.vteh.org 10 Change in non-Farm Employment During the Recession Net employment changes in VT during recession (Nov 07 – Mar 09) Source: VT Dept of Labor, Mar 09

12/08 www.vteh.org 11 TAXES

12/08 www.vteh.org 12 VT’s Tax Burden Ranking Combined State and Local Tax Burden – 2007-2008 (Pre-Recession) (excludes state property taxes and state tax rebates that might apply) Source: Tax Foundation calculations using data from multiple sources – primarily Census Bureau; Rockefeller Institute; Bureau of Economic Analysis; Council on State Taxation, and Travel Industry Association

12/08 www.vteh.org 13 5 yr annual average growth (’02-’07) Growth in Spending & Taxes Outpaced Vermonter’s Incomes Source: VT Comprehensive Annual Financial Report %

12/09 www.vteh.org 14 JOBS

12/08 www.vteh.org 15 Source: Vt Dept of Labor (In thousands) No Private Sector Job Growth Since 2000 Private Sector Jobs in VT

12/08 www.vteh.org 16 Vermont Jobs Q1 2000 – Q1 2008 Source: Public Access Institute, Montpelier, VT. State government job growth = 16.7% Local government job growth (including education) = 10% Federal jobs = -1.1%

12/08 www.vteh.org 17 DEMOGRAPHICS

12/08 www.vteh.org 18 VT’s 2007 Gross State Product Source: Vermont Economic Newsletter July 2008 [$24.6 Billion] (Pre-recession)

12/09 www.vteh.org 19 Vermont’s Population Growth Less Than 1/3 the National Average [1997 – 2008]

12/08 www.vteh.org 20 Who Is Going to Support the Ever-Expanding “Safety Net” When You Are Retired? Source: U.S. Census Bureau

12/09 www.vteh.org 21 Vermont’s Demographic Crisis Vermont’s young people (age 19 - 29) leave VT at a rate higher than the national average (7th in net out-migration). Vermont has one of the lowest birthrates in the U.S. In 2005, Vermont became the 2nd oldest state in the nation. Vermont’s share of people aged 25-29 was the lowest in the nation, while its share of people aged 50-54 was the highest. Sources: U.S. Census Bureau, Vermont Economy Newsletter, New England 2020 Report

12/08 www.vteh.org 22 We Cannot Continue this Course Unsustainable Path – Vermont is replacing Private-Sector jobs with government and other tax-supported jobs … Result – growing tax burdens on a shrinking private-sector tax base and on residential property owners … and – Vermont’s Legislature added generous social and economic assistance, with a continually increasing tax burden.

We Have Lived Beyond Our Means Among the highest taxed & regulated in the nation Spending at roughly 3x the rate of inflation ~0% Private-Sector Job growth – 2000-2007 Vermont faces $ Billions in unfunded liabilities Losing our young people at 4x the national average 12/09 www.vteh.org 23

12/08 www.vteh.org 24 SOLUTIONS

12/08 www.vteh.org 25 Vermont’s Solutions… Identify the problems Change the culture Grow the “Pie” Contain spending Remove obstacles to private sector job growth Elect forward-thinking public officials who hold realistic priorities

12/08 www.vteh.org 26 Identify the Problems As detailed in this presentation and other credible studies, the problem facing Vermonters is a “Perfect Storm” of … Spending outpacing Revenue Anemic private sector job growth Unsustainable rise in Vermonters’ tax burdens

12/09 www.vteh.org 27 Change the Culture  Tax payers and voters  become knowledgeable of VT’s deteriorating economic health ‘Silent majority’  get involved (Does the Legislature reflect what most Vermonters believe?) Montpelier  refocus on the average, hard-working, middle class Vermonter. Lawmakers  recognize that economic growth = private sector jobs = increased tax revenues = ability to support non-economic objectives (e.g., social safety net, environmental imperatives, etc.)

12/09 www.vteh.org 28 Grow The “Pie!”  Improving Vermont’s Economic Health by Growing Private Sector Jobs enables us to: Create meaningful opportunities for those willing to work hard to create a better life for themselves and their families Broaden the tax base and ease the burden on low income Vermonters and those living on fixed incomes Support the most vulnerable members of our community Provide opportunities which keep our children and grandchildren in Vermont Be good stewards of the environment

12/08 www.vteh.org 29 Contain Spending  Persistent spending 2-3 times above the average Vermonter’s income growth is unsustainable and irresponsible Why continue electing public officials who endorse this behavior? Reverse the decision-making process: Instead of deciding what is needed and then how we can afford it, let’s decide what we can afford and make the difficult decisions required to allocate the available resources without tax increases.

12/08 www.vteh.org 30 Remove Obstacles  to Private Sector Job Growth Regulation and permitting, when excessive, has negative consequences: It raises the cost of everything from housing to the premiums you pay for health insurance It makes it difficult for local businesses to compete with more business-friendly locales which leads to fewer job opportunities and fewer goods purchased locally It requires greater bureaucracy to maintain, which diverts much needed funds away from the most vulnerable members of our communities

12/09 www.vteh.org 31 Elect Fiscal Realists Vermonters For Economic Health seeks to: Endorse/recruit candidates of all affiliations for future legislative elections who recognize the current crisis and will prioritize VT’s Economic Health when in office Offer financial support to candidates who share these views Create a voting block of concerned citizens who recognize that only through organization and unity can meaningful change occur

12/09 www.vteh.org 32 What Can You Do in 2010?  Sign the online petition – www.VTEH.org - there is strength in numbers! Vote for fiscal realists– encourage others to do the same Contribute to the VEH Political Action Committee (VEH-PAC) – VEH will support candidates who agree with our mission and have signed the VEH Candidate Economic and Fiscal Pledge Run for Office – We cannot change the current culture in Montpelier without changing the composition of the Statehouse Write Letters to the Editor – expressing your concern with the direction VT is headed Contact State Legislators – and let them know if their priorities are not YOUR priorities Refer others – neighbors, co-workers, friends and family to our website so they can view this presentation and sign the petition

12/08 www.vteh.org 33 “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle” Winston Churchill www.vteh.org