12/08 1 A View of Vermont’s Economic Health Vermonters for Economic Health PO Box 153 Essex Jct, VT 05453 www.vteh.org

12/08 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

12/08 www.vteh.org 3 We’ll Examine . . . Vermont’s: Tax Burdens and Trends Spending and Expenses Job Growth Demographics Explore Potential Solutions

12/08 www.vteh.org 4 TAXES

12/08 www.vteh.org 5 VT’s Tax Burden Ranking Combined State and Local Tax Burden – 2007-2008 (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 6 5 yr annual average growth (’02-’07) Growth in Spending & Taxes outpaces Vermonter’s Incomes Source: VT Comprehensive Annual Financial Report

12/08 www.vteh.org 7 Every Revenue Source Is Squeezed Source: VT Department of Taxes Now

12/08 www.vteh.org 8 SPENDING

12/08 www.vteh.org 9 How Does Vermont Spend its Revenues? Source: Vermont Comprehensive Annual Financial Report. Fiscal year 2007. 75% of Revenues Go Towards Education and Human Services

12/08 www.vteh.org 10 How Has VT Government Spending Grown Recently? Source: Vermont Comprehensive Annual Financial Report. Fiscal year ending 6/30/06. Education, Police & Corrections and Human Services are growing almost 3 times higher than inflation, while Business and Job related expenditures shrink.

12/08 www.vteh.org 11 Student Enrollment Down - Employment and Costs Up Source: Summary of the Annual Statistical Report of Schools (SASR) FY 1997 - 2006 Student Growth = -9.1%; Teacher and Staff Growth = +20.8% Students Teachers And Staff

12/08 www.vteh.org 12 K-12 Education Employment VT has 43% more school employees per 10,000 population and ranks second highest in the nation with 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

12/08 www.vteh.org 13 JOBS

12/08 www.vteh.org 14 Source: Vt Dept of Labor (In thousands) Private Sector Job Growth from 1990 – Q1 2008 Since 2000 there has been only 1.3% Private Sector job growth in VT

12/08 www.vteh.org 15 Vermont Jobs Q1 2000 – Q1 2008 Source: Public Access Institute, Montpelier, VT. State government job growth = 16.7% Local government jobs (including education) = 10% Federal jobs = -1.1%

12/08 www.vteh.org 16 What Kinds of Jobs are Being Created? Government, Education and other Non-profit jobs do not add to VT’s Tax Base Source: Public Assets Institute: 2007

12/08 www.vteh.org 17 VT Jobs Lost 2007-2009 Source: WCAX / BFP ‘07 Review on VT Business and BFP 7/19/08 Vt Jobless Rates Fall Slightly

12/08 www.vteh.org 18 What Vermont’s Public Assets Institute says… “Many of Vermont’s new jobs are low-paying service jobs.” “What is needed in Vermont are good-paying jobs that take full advantage of work force assets.” “This requires Government & Community leaders working together to develop an economic environment that makes the use of these assets a State Priority.”

12/08 www.vteh.org 19 The Paradox of our Self-Fulfilling Prophesy An Unsustainable Road – Vermont is replacing Private-Sector jobs with Government and Non-profit jobs … The Result – increasing tax burdens on a shrinking private-sector economy and residential property owners … and – Vermont’s Legislature steps in with generous social and economic assistance, resulting in continually increasing tax burden.

12/08 www.vteh.org 20 DEMOGRAPHICS

12/08 www.vteh.org 21 VT’s 2007 Gross Domestic Product Source: Vermont Economic Newsletter July 288, Page 3

12/08 www.vteh.org 22 VT’s Population Growth Less Than Half of the National Average

12/08 www.vteh.org 23 Who Is Going to Support the Ever Expanding “Safety Net” When You Are Retired? Source: U.S. Census Bureau

12/08 www.vteh.org 24 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 25 We Have Lived Beyond Our Means Far Too Long

12/08 www.vteh.org 26 SOLUTIONS

12/08 www.vteh.org 27 Indicators of Economic Health VEH is crafting a list of measurements that we believe show the health of Vermont's economy. This is a work-in-progress These indicators have three relevant attributes: - Absolute Value - Trend - Comparison w/others Unemployment Rate Gross State Product Size of Government (jobs ratio: private/public sector) Taxes (state & local) as % of Per Capita Income Private sector job growth

12/08 www.vteh.org 28 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 represent your priorities

12/08 www.vteh.org 29 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

12/08 www.vteh.org 30 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 think?) Montpelier  refocus on the average, hard-working, middle class Vermonter. Lawmakers  recognize that economic growth = jobs = increased tax revenues = ability to support non-economic objectives (e.g., social safety net, environmental imperatives, etc.)

12/08 www.vteh.org 31 Grow The “Pie”!  Being attentive to Vermont’s Economic Health and Growing Private Sector Jobs enables us to: Support the most vulnerable members of our community Provide opportunities which keep our children and grandchildren in Vermont Be good stewards of the environment Broaden the tax base and ease the burden on low income Vermonters and those living on fixed incomes Create meaningful opportunities for those who want to work hard to create a better life for themselves and their families

12/08 www.vteh.org 32 Contain Spending  Persistent spending 2-3 times above the average Vermonter’s income growth is unsustainable and irresponsible You would be jeopardizing your own future if you conducted your own affairs this way. Why elect public officials who endorse this behavior? Encourage a reversal of 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 then make the difficult decisions required to allocate the available resources.

12/08 www.vteh.org 33 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

12/08 www.vteh.org 34 Elect Forward-Thinking Public Officials  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

12/08 www.vteh.org 35 What Can You Do?  Sign the Petition – www.VTEH.org - there is strength in numbers! Vote – encourage others to do the same Contribute to the VEH Political Action Committee (VEH-PAC) – VEH will support legislative 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 Write State Legislators – and let them know if their priorities are not YOUR priorities Refer others – neighbors, co-workers, friends and family to our Web site so they can view this presentation and sign the petition

12/08 www.vteh.org 36 “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