Public Assets Institute http://publicassets.org forward thinking for Vermont’s common good Tue, 25 Apr 2017 20:36:18 +0000 en-US hourly 1 Everyone loves the property tax http://publicassets.org/blog/everyone-loves-the-property-tax/ http://publicassets.org/blog/everyone-loves-the-property-tax/#respond Tue, 25 Apr 2017 20:29:28 +0000 http://publicassets.org/?p=11396 For all of their public hand-wringing over property taxes, legislators and even the governor seem almost cavalier in their willingness to ask property owners to pay more.

- The tax incentives proffered by Act 46 to induce school districts to merge are being funded by higher property taxes.

- The Legislature imposed property tax penalties last year in an effort to reduce property taxes.

- In January, the governor declared property taxes “one of the biggest contributors” to what he called Vermont’s “crisis of affordability.” He then made a proposal that would have shifted $50 million in additional costs onto the property tax.

]]>

For all of their public hand-wringing over property taxes, legislators and even the governor seem almost cavalier in their willingness to ask property owners to pay more.

  • The tax incentives proffered by Act 46 to induce school districts to merge are being funded by higher property taxes.
  • The Legislature imposed property tax penalties last year in an effort to reduce property taxes.
  • In January, the governor declared property taxes “one of the biggest contributors” to what he called Vermont’s “crisis of affordability.” He then made a proposal that would have shifted $50 million in additional costs onto the property tax.
  • The House Education Committee introduced a plan earlier this session that would have increased school property taxes on high-tax towns in order to lower taxes on low-tax towns.
  • Now the Senate Appropriations Committee wants to load more costs onto the property tax. In order to balance the state’s General Fund, the committee decided to shift an $8 million appropriation into the Education Fund. So $8 million that would have been covered with income taxes or the sales tax would have to be picked up by property owners.

Given the public rhetoric around property taxes, this proposal ought to provoke a lot of head scratching, if not head banging. But this is another consequence of leaders in Montpelier painting themselves into a corner by pledging a balanced budget with no new taxes before they’ve even had a chance to determine what needs to be done for the people of the state in the coming year.

The governor proposed some worthy initiatives in his budget, like putting more money into providing affordable, high-quality child care. More money for child care was also one the items the Senate Appropriations Committee wants to fund next year.

But while it appears everyone knows the state should be making more investments in people and programs, no one seems to want to have an open discussion about the best way to pay for those investments. Instead, the solution is: move it to the Education Fund. That way, the governor and the Legislature can avoid raising taxes directly. It will be property taxes that go up, but that can be blamed on school spending, teachers, and local school boards.

Despite what we often hear about Vermont’s “skyrocketing” or “out of control” school costs, Vermont school spending has consumed the same share of state and local taxes for at least 20 years. And for the last 15 years or more, the share of General Fund revenue going to support general education has remained pretty constant. It was 33.2 percent in fiscal 2003, and it’s 33.5 percent this year. During that period, it hit a high of 35 percent early in the recession, and thanks to federal stimulus money, it hit a low of 30.2 percent.

There are better ways to generate the money that leaders in Montpelier appear to agree is needed. Instead of increasing property taxes, which fall more heavily on low and moderate income Vermonters, we could close some of the tax loopholes enjoyed by those who aren’t having an affordability crisis. Wouldn’t that at least be a better place to start?

]]>
http://publicassets.org/blog/everyone-loves-the-property-tax/feed/ 0
Finally, a pay raise http://publicassets.org/library/publications/finally-a-pay-raise/ http://publicassets.org/library/publications/finally-a-pay-raise/#respond Fri, 21 Apr 2017 19:40:35 +0000 http://publicassets.org/?p=11372 In 2016, Vermont’s lowest-paid workers saw the biggest wage gains of any group: 4 percent. When unemployment is low, workers are in short supply, so wages should increase. But Vermont’s low jobless rate—5 percent or less since 2012—was having little effect, especially at the low end. For those workers wages increased less than 2 percent a year from 2009 to 2014. Last year’s gains were due in part to Vermont’s minimum wage increase of 45 cents an hour.

]]>

F1-MJB093In 2016, Vermont’s lowest-paid workers saw the biggest wage gains of any group: 4 percent. When unemployment is low, workers are in short supply, so wages should increase. But Vermont’s low jobless rate—5 percent or less since 2012—was having little effect, especially at the low end. For those workers wages increased less than 2 percent a year from 2009 to 2014. Last year’s gains were due in part to Vermont’s minimum wage increase of 45 cents an hour.

 

 

Steady union rolls
F2-MJB093While union membership has fallen in the rest of the country, the share of employed Vermonters who are in unions or are covered by union contracts has remained fairly steady. The percentage of union members in 2016 was up slightly from 2006. And the share of workers covered by union contracts, including non-union workers, was the same in 2016 as it was 10 years earlier. During that period, union membership declined in 38 states.

 

 

Young, male, and jobless
F3-MJB093Vermont’s unemployment rate—the average for the entire working-age population—held steady last month at 3 percent. Meanwhile, newly released data from 2016 reveal variation among different groups of workers. For instance, the unemployment rate was lower among women than among men. And men ages 16 to 24 had the highest T1-MJB093rate last year: over 8 percent.

 

 

pdficonPDF Version

 

 

]]>
http://publicassets.org/library/publications/finally-a-pay-raise/feed/ 0
Letter to Legislative Leaders http://publicassets.org/blog/letter-to-legislative-leaders/ http://publicassets.org/blog/letter-to-legislative-leaders/#respond Fri, 14 Apr 2017 12:48:47 +0000 http://publicassets.org/?p=11351 Dear Speaker Johnson and President Pro Tempore Ashe,

We’re writing with a plea for bold action. Last fall’s election demonstrated one thing loudly and clearly: people want political leaders to act, to address the problems that are all around us. Across the political spectrum, people feel ignored by government and left behind by an economy that rewards those at the top.

Vermonters want a vision for what the state can be in five or 10 or 20 years and a path to a more prosperous future. The state budget should be part of that vision, but for over a decade Montpelier has focused on immediate, yearly budget gaps...

]]>

pdficonPDF Version

April 13, 2017

The Honorable Mitzi Johnson, Speaker of the House
The Honorable Tim Ashe, President Pro Tempore of the Senate
Vermont State House
115 State Street
Montpelier, VT 05633

Dear Speaker Johnson and President Pro Tempore Ashe,coverOVletter2017

We’re writing with a plea for bold action. Last fall’s election demonstrated one thing loudly and clearly: people want political leaders to act, to address the problems that are all around us. Across the political spectrum, people feel ignored by government and left behind by an economy that rewards those at the top.

Vermonters want a vision for what the state can be in five or 10 or 20 years and a path to a more prosperous future. The state budget should be part of that vision, but for over a decade Montpelier has focused on immediate, yearly budget gaps. The Great Recession was clearly a major crisis that required everyone’s full attention. But the recession officially ended almost eight years ago. It’s time for Montpelier to begin to address the state’s chronic problems like poverty, especially among young single mothers; the lack of affordable, high quality child care; the high cost of higher education; the underfunding of the mental health care system; pollution of the state’s waters, and jobs that don’t pay enough to support a family.

Vermont has structural fiscal problems. Health care has been consuming a bigger and bigger share of available revenue, which has squeezed the rest of state government. Meanwhile, revenue growth has not kept pace with economic growth. These structural problems will take time to solve, but the sooner elected leaders begin to address them the sooner they will be solved.

Here is what the Legislature can do now:

1. Begin to make smart investments, starting with the governor’s recommended new funding for early care and learning and higher education. The governor’s vision to expand our idea of public education—from early childhood through college and beyond—is the right one. Quality child care and early education are critical to preparing kids for adulthood, and postsecondary or technical education is a prerequisite for a successful career. Additional funding for the child care financial assistance program and institutions of higher education is a good step toward achieving that vision, but it shouldn’t come at the expense of pre-K to 12 schools. The state also needs to make other strategic investments in affordable housing, the developmental and mental health system, services that provide pathways out of poverty, cleaning up the state’s waters, and other key areas.

2. Fill the budget gap without additional damaging cuts. Cuts over the past decade or more and the growth in health care costs have already undermined the state’s ability to competently deliver the services that Vermonters need and want. Two years ago, for example, Vermont reduced Reach Up grants for families with adults receiving disability benefits, leaving 700 families already facing poverty in worse shape. Diverting funding for housing programs to help balance the General Fund means fewer Vermonters have access to affordable housing.

3. Eliminate income tax loopholes that primarily benefit the wealthy, and lower tax rates for everyone. By reducing all the income tax rates and eliminating the top bracket, most Vermonters will see a tax cut. The top marginal rate will go down, making Vermont more competitive with other states. And Vermont can make the tax system more progressive by eliminating itemized deductions and phasing out the benefits of the lower tax brackets for Vermonters making more than $300,000 annually.

Most states with an income tax use federal adjusted gross income (AGI)—income before deductions and exemptions are applied—as the starting point for calculating their state taxes. Vermont is one of only seven states that start with federal taxable income—the amount left over after deductions and exemptions—which is substantially less than federal adjusted gross income.

Taken together, these changes produce savings to support needed strategic investments and make the tax system more fair.

As the attached Public Assets Institute analysis shows, taking these steps will allow the Legislature to lower income tax rates, balance the budget, and start to make smart investments that will begin to address Vermonters’ needs.

We hope you will consider this approach to the fiscal 2018 budget. We recognize that this is not easy. But it’s the right direction for Vermont and will put us on the path to becoming a state that works for all Vermonters.

For One Vermont,

Dan Barlow, Public Policy Manager, Vermont Businesses for Social Responsibility

Melissa Battah, Community Organizer, Vermont Interfaith Action

Paul Cillo, Executive Director, Public Assets Institute

Jan F. Demers, Executive Director, CVOEO

Carlen Finn, Executive Director, Voices for Vermont’s Children

Dan Hoxworth, Executive Director, Capstone Community Action

Karen Lafayette, Legislative Advocate, Vermont Low Income Advocacy Council (VLIAC)

Ed Paquin, Executive Director, Disability Rights Vermont

Colin Robinson, Political Director, VT NEA

Julie Tessler, Executive Director, Vermont Council of Developmental and Mental Health Services

cc: The Honorable Phil Scott, Governor
The Honorable David Zuckerman, Lt. Governor
Members of the General Assembly

Attachment

]]>
http://publicassets.org/blog/letter-to-legislative-leaders/feed/ 0
Meeting Vermonters’ needs in Fiscal 2018 and beyond http://publicassets.org/library/publications/reports/meeting-vermonters-needs/ http://publicassets.org/library/publications/reports/meeting-vermonters-needs/#respond Fri, 14 Apr 2017 12:32:43 +0000 http://publicassets.org/?p=11338 Vermont’s elected leaders are facing a projected budget gap of about $70 million for fiscal 2018. They have an opportunity to balance the budget, begin to make smart investments that address Vermonters’ needs, and modernize the tax system to better respond to Vermont’s 21st century economy.

The plan described in this report would do three things:

1. Fund the governor’s proposed investments without reducing funding for public education.

2. Solve the budget gap without additional harmful cuts.

3. Eliminate income tax loopholes for upper-income Vermonters while lowering tax rates for everyone.

]]>

pdficonPDF Version

The purpose of the state budget is “to address the needs of the people of Vermont.” Yet each year Montpelier focuses its attention on closing the General Fund budget gap.

Elected leaders acknowledge investments are needed to clean up Lake Champlain, provide families with child care financial assistance, and make higher education more affordable. But progress has been slow in making these investments. And to balance the budget they make cuts—to Reach Up benefits for the poorest families, to affordable housing programs, to key policy staff.

Despite the cuts, however, the budget gap reappears year after year, thanks to persistent structural problems: anemic state revenues even in a growing economy, and rising health care costs that demand an increasing share of state spending.

T1-IB1701Vermont’s elected leaders are facing a projected budget gap of about $70 million for fiscal 2018. They have an opportunity to balance the budget, begin to make smart investments that address Vermonters’ needs, and modernize the tax system to better respond to Vermont’s 21st century economy.

The plan described in this report would do three things:

1. Fund the governor’s proposed investments without reducing funding for public education. Gov. Phil Scott’s budget includes investments in child care and an expanded vision of public education that includes both early education and higher education. That’s a good idea. But Scott would cut pre-K-to-12 public education to fund his plan—not a good idea.

The state can invest in child care and all levels of education—pre-K to 12, and higher ed—without cuts to any. There are numerous other state services that also need funding—Reach Up, mental health care, programs that support homeless Vermonters, initiatives that move Vermont families out of poverty permanently. What’s important is that we start now to invest in Vermont’s future.

2. Solve the budget gap without additional harmful cuts. The budget adopted by the Vermont House correctly rejected the governor’s proposed public education cuts, but it resolved the gap with some savings and transfers, as well as General Fund reductions. This worsens already inadequate state services weakened by previous years’ cuts.

3. Eliminate income tax loopholes for upper-income Vermonters while lowering tax rates for everyone. While elected officials have cut services to vulnerable families, tens of millions of dollars are spent annually on income tax expenditures that primarily benefit upper-income residents. Vermont is one of only seven states that use federal taxable income rather than adjusted gross income (AGI) to calculate state taxes. Shifting to AGI would lower rates for all brackets, ease taxes on a majority of Vermonters, make Vermont more competitive with other states, and create savings that can support smart investments.

With these recommendations, the state budget would take an important step toward achieving its purpose by addressing the needs of Vermonters and allow the state to make smart investments for a thriving future.T2-IB1701T3-IB1701

The Institute on Taxation and Economic Policy (www.itep.org) in Washington, D.C., prepared the analysis and revenue estimate of the tax reform plan for Public Assets Institute. The revenue projection and estimated tax effects for taxpayers in various income brackets are for calendar year 2017. Income tax bracket thresholds are updated each year; this analysis uses 2017 projections.
©2017 by Public Assets Institute   This research was funded in part by the Annie E. Casey Foundation. We thank them for their support but acknowledge that the findings presented in this report are those of the Public Assets Institute and do not necessarily reflect the opinions of the Foundation.
]]>
http://publicassets.org/library/publications/reports/meeting-vermonters-needs/feed/ 0
Budget numbers http://publicassets.org/blog/budget-numbers/ http://publicassets.org/blog/budget-numbers/#comments Fri, 31 Mar 2017 21:32:44 +0000 http://publicassets.org/?p=11282 143 to 1. That was the headline last week. The House budget plan that closed a $70 million gap without raising revenue had near-unanimous support.

The House’s version of the budget cobbled together $48 million in transfers, $17 million in savings and cuts, and $5 million in enhanced tax collections to create a budget that virtually everyone could agree on. While the plan appears to be popular inside the Statehouse, this budget does little to address the real issues Vermonters are facing outside.

Here are some other Vermont numbers worth thinking about:

47%: the share of single mothers with young children living in poverty

12%: the amount the middle class has shrunk since 1980

$304,465: the difference in income between a Vermont family in the bottom 20% and one in the top 5%

]]>

143 to 1. That was the headline last week. The House budget plan that closed a $70 million gap without raising revenue had near-unanimous support.

The House’s version of the budget cobbled together $48 million in transfers, $17 million in savings and cuts, and $5 million in enhanced tax collections to create a budget that virtually everyone could agree on.  While the plan appears to be popular inside the Statehouse, this budget does little to address the real issues Vermonters are facing outside.

Here are some other Vermont numbers worth thinking about:

47%: the share of single mothers with young children living in poverty

12%: the amount the middle class has shrunk since 1980

$304,465: the difference in income between a Vermont family in the bottom 20% and one in the top 5%

15,000: the number of Vermont children living in poverty

$25 million: the annual amount Vermont needs to raise to clean up Lake Champlain

665%: the increase in the cost of attending the University of Vermont since 1980

According to Vermont statute, the purpose of the state budget is “to address the needs of the people of Vermont.”  While arriving at consensus and balancing the budget are important, especially against the national backdrop, neither is the goal of the annual budget exercise.  The goal is to address the needs of the people of Vermont.

As the fiscal 2018 budget process continues, it needs to include more discussion about smart investments that will improve the lives of 625,000 Vermonters. That’s the most important number in this year’s budget debate.

]]>
http://publicassets.org/blog/budget-numbers/feed/ 1
Unemployment nears its lowest in four decades http://publicassets.org/library/publications/unemployment-nears-its-lowest-in-four-decades/ http://publicassets.org/library/publications/unemployment-nears-its-lowest-in-four-decades/#respond Fri, 24 Mar 2017 20:18:05 +0000 http://publicassets.org/?p=11267 On average, 3.3 percent of Vermont’s labor force was officially unemployed in 2016. The average annual rate has dropped below this level only three times in the last 40 years: to 3.0 percent in 1988 and 1999 and 2.8 percent in 2000. Last month Vermont’s jobless rate fell to 3.0 percent.

In Chittenden, more workers

Vermont has struggled to regain employment since the recession. In the last 10 years Chittenden County has added workers—more than 8,000, a rise of nearly 10 percent. But this increase was overwhelmed by losses in the rest of the state as a whole, where the number of people working fell by more than 18,000, or about 7 percent. This includes Franklin County, the only county besides Chittenden that saw growth.

]]>

F1-MJB092On average, 3.3 percent of Vermont’s labor force was officially unemployed in 2016. The average annual rate has dropped below this level only three times in the last 40 years: to 3.0 percent in 1988 and 1999 and 2.8 percent in 2000. Last month Vermont’s jobless rate fell to 3.0 percent.T1-MJB092

 

 

 

 

In Chittenden, more workersF2-MJB092
Vermont has struggled to regain employment since the recession. In the last 10 years Chittenden County has added workers—more than 8,000, a rise of nearly 10 percent. But this increase was overwhelmed by losses in the rest of the state as a whole, where the number of people working fell by more than 18,000, or about 7 percent. This includes Franklin County, the only county besides Chittenden that saw growth.

 

 

 

Faster income growth, tooF3-MJB092
Coming out of the recession, Chittenden County saw somewhat greater income growth than the rest of the state. Adjusted gross income for residents of the county rose 22 percent from 2006 to 2015, the latest year for which the Vermont Tax Department has data. Elsewhere in the state incomes rose just over 19 percent during the same period.

 

pdficonPDF Version

]]>
http://publicassets.org/library/publications/unemployment-nears-its-lowest-in-four-decades/feed/ 0
Another attempt to lower property taxes by raising them http://publicassets.org/blog/another-attempt-to-lower-property-taxes-by-raising-them/ http://publicassets.org/blog/another-attempt-to-lower-property-taxes-by-raising-them/#comments Wed, 22 Mar 2017 15:40:11 +0000 http://publicassets.org/?p=11264 It should be obvious by now: You can’t provide property tax relief by raising property taxes. In fact, it should have been obvious long before now.

Yet that is exactly what the Legislature included in Act 46, the school consolidation bill, in 2015. (It then repealed that provision in 2016.)

And that is exactly what the House Education Committee is proposing again this year. The committee voted on Friday to introduce a committee bill (H.509).

This latest attempt at property tax relief would increase taxes for about half of Vermont towns—the half that has the highest property taxes already—and lower taxes for the towns that have the lowest property taxes.

Seriously. I’m not making this up.

]]>

It should be obvious by now: You can’t provide property tax relief by raising property taxes. In fact, it should have been obvious long before now.

Yet that is exactly what the Legislature included in Act 46, the school consolidation bill, in 2015. (It then repealed that provision in 2016.)

And that is exactly what the House Education Committee is proposing again this year. The committee voted on Friday to introduce a committee bill (H.509).

This latest attempt at property tax relief would increase taxes for about half of Vermont towns—the half that has the highest property taxes already—and lower taxes for the towns that have the lowest property taxes.

Seriously. I’m not making this up.

Twenty years ago Vermont got away from its parochial funding system, where each town was largely responsible for paying to educate its own children. The current system recognizes that we’re all responsible for educating all of the state’s children. So all of our education resources are pooled into the Education Fund, and all communities have equal access to that funding pool based on the same set of rules.

The property taxes that go into the Education Fund come from non-residential property based on a single, uniform rate statewide ($1.535 per $100 of fair market value this year) and from primary residences with tax rates determined by each town’s education spending per pupil. The homestead tax rates are the same in towns with the same per-pupil spending, and the rates are proportional throughout the state—that is, a town that spends 20 percent more per pupil than a neighboring town will have a 20 percent higher homestead tax rate.

The current system provides children with equal access to educational resources, and because tax rates are tied to per-pupil spending, it discourages unnecessary spending. Higher spending per pupil results in proportionally higher tax rates, and lower spending per pupil results in proportionally lower tax rates.

H.509 would do away with this proportional system for homestead taxes. Instead, it would create two groups of towns: one below an arbitrary spending threshold and one above. The group below the threshold would have a single, uniform tax rate and receive a fixed amount per pupil—initially about $12,500.

Towns in the second group—those that spend more than $12,500 per pupil—would receive the $12,500 per pupil at the uniform rate and also be in a separate sharing pool. As with the current system, they could expect their tax rates to go up as they spend more per pupil. The ultimate tax rate calculation, however, would depend on how many towns and which towns were in the separate sharing pool.

Vermont had a system like this in the late 1990s and early 2000s. The separate sharing pool was known as the “shark pool.” It proved unwieldy, unpredictable, and confusing, and the Legislature wisely scrapped it in favor of the simpler, proportional system we have now.

We all have a stake in seeing that all children in the state get a good education. H.509, by pitting one group of towns against another, undermines this fundamental feature of Vermont’s school funding system.

]]>
http://publicassets.org/blog/another-attempt-to-lower-property-taxes-by-raising-them/feed/ 4
State can help Vermonters save for retirement http://publicassets.org/blog/save-for-retirement/ http://publicassets.org/blog/save-for-retirement/#comments Wed, 15 Mar 2017 12:43:52 +0000 http://publicassets.org/?p=11255 Most Vermonters do not have a big enough nest egg for retirement. In fact, for many, the nest has no egg at all. And the problem is worst for women and people of color. These were just some of the findings in a report released earlier this year by the Vermont Public Retirement Study Committee. Read more

]]>

Most Vermonters do not have a big enough nest egg for retirement. In fact, for many, the nest has no egg at all. And the problem is worst for women and people of color. These were just some of the findings in a report released earlier this year by the Vermont Public Retirement Study Committee.

As Public Assets documented in A Framework for Progress: Investing in Vermont’s people, infrastructure and good government, there are many barriers to saving for retirement. Nearly half of working Vermonters do not have access to an employer-based plan, people often do not enroll in plans on their own, and stagnant wages make it a struggle for many employees to save.

To address this challenge, Vermont has been exploring a state-sponsored retirement plan for the past few years. Eight states have already enacted legislation putting plans in place, and 17 others are exploring the possibility. In January the committee, led by Vermont State Treasurer Beth Pearce and including representatives from the business community, endorsed a state-sponsored retirement plan that would be voluntary for employers and employees and would allow employees to save through automatic, non-taxable payroll deductions.

Vermonters could see a real improvement in retirement security if the state adopted this plan. More than 100,000 Vermonters would gain access to a retirement plan. The benefits of large publicly managed retirement systems like those serving state employees or teachers are clear: They typically have lower fees and get better returns on their investments than individually managed accounts.

And increased economic security in retirement for individuals is good for the state. Instead of falling into poverty and needing additional public services as they age, financially secure retirees boost the economy by increasing the tax base and consumer spending.

Vermont and other states are taking steps to address the retirement savings problem despite the U.S. House’s recent action that would undermine these efforts. The state can and should continue to move ahead with this plan to make it easier for Vermonters to save for retirement. This is a classic example of government stepping in to correct a market failure that is hurting Vermonters.

Enacting the recommendations of the Public Retirement Study Committee is a low-cost, high-return way to improve the lives of thousands of Vermonters. The Legislature should act this session to advance the development of Vermont’s state-sponsored retirement plan.

 

]]>
http://publicassets.org/blog/save-for-retirement/feed/ 6
2017 kicks off strong for jobs http://publicassets.org/library/publications/2017-kicks-off-strong-for-jobs/ http://publicassets.org/library/publications/2017-kicks-off-strong-for-jobs/#respond Mon, 13 Mar 2017 20:03:15 +0000 http://publicassets.org/?p=11245 The year is off to a good start: Vermont added 1,300 jobs in January, all in the private sector. Since January 2016 the private sector has netted 2,700 new jobs, many of them in accommodation and food service and health care and social assistance services. Read more

]]>

F!-MJB091The year is off to a good start: Vermont added 1,300 jobs in January, all in the private sector. Since January 2016 the private sector has netted 2,700 new jobs, many of them in accommodation and food service and health care and social assistance services. With nearly 260,000 private sector jobs, Vermont hit an all-time peak in January.

T1-MJB091

 

 

 

 

F2-MJB091Hard-working population
Whether by choice or necessity, a larger-than-average percentage of Vermonters work. In 2016, nearly two in three working-age Vermonters were employed, according to figures recently released. That was the second-highest percentage in New England and 9th among all the states. For 35 of the last 40 years Vermont has ranked 12th or better in the share of residents 16 and older who are working. The employment-to-population ratio peaked in 1999 and dropped after the Great Recession.

 

F3-MJB091Hidden unemployment
Vermont’s annual unemployment rate was the sixth lowest in the U.S. in 2016. An average of 11,252 Vermonters were officially jobless last year—3.3 percent of the labor force. Yet thousands more people were not actively seeking a job, but either wanted to work or would have liked to work more hours; these were not counted as unemployed in the official, U-3, rate. A broader measure, U-6, averaged 7.1 percent in 2016—more than twice the U-3 rate.

 

pdficonPDF Version

]]>
http://publicassets.org/library/publications/2017-kicks-off-strong-for-jobs/feed/ 0
We can’t afford more giveaways to high-income Vermonters http://publicassets.org/blog/giveaways-to-high-income-vermonters/ http://publicassets.org/blog/giveaways-to-high-income-vermonters/#respond Thu, 09 Mar 2017 17:01:30 +0000 http://publicassets.org/?p=11241 Each year the governor and Legislature go through the handwringing exercise of closing a projected state budget gap. The projected General Fund gap for fiscal 2018 is about $70 million.

As usual, much of the conversation has been about reducing spending to get the budget to balance. Read more

]]>

Each year the governor and Legislature go through the handwringing exercise of closing a projected state budget gap. The projected General Fund gap for fiscal 2018 is about $70 million.

As usual, much of the conversation has been about reducing spending to get the budget to balance. This year the governor wanted school districts across the state to cut their budgets; he’d use the savings not to lower property taxes but to help fill the General Fund hole. The House would cut General Fund expenditures rather than put more pressure on school districts and property taxes.

But so far, the budget cutting by both the governor and Legislature has held harmless a whole category of state spending: tax expenditures. While so-called appropriated expenditures—actions by the Legislature to spend money—are subject to annual scrutiny by the House and Senate Appropriations Committees, tax expenditures do not require legislative action each year.

Tax expenditures are “statutory provisions which reduce the amount of revenue that would otherwise be collected in order to encourage a particular activity or to limit the amount of taxes collected from groups of individuals,” according to the Vermont Tax Department and the Legislature’s Joint Fiscal Office, in this year’s issue of their biennial tax expenditure report. “Tax expenditures have essentially the same fiscal effects as direct government appropriations.” That is, both reduce the amount of money in state coffers.

Yet year after year, the governor and Legislature have been choosing to pare back programs and services that benefit all Vermonters. Austerity budgeting has delayed the cleanup of Lake Champlain for decades; it reduces funds to take care of veterans or adequately fund public education. Meanwhile, the state gives away tens of millions of dollars in state income tax expenditures annually to the highest income Vermonters.

Gov. Phil Scott talks about how Vermonters are facing a crisis of affordability. That’s true for many. Most Vermonters’ incomes have been stagnant since 2000 even as the costs of essentials—health care, housing, child care, college—have increased by double digits. Officially, we’ve recovered from the Great Recession, but many Vermonters have not felt it. That’s because more than 40 percent of income gains since the bottom of the recession have gone to the top one percent. The recipients of those gains are doing just fine.

Most states with an income tax use federal adjusted gross income (AGI)—income before deductions and exemptions are applied—as the starting point for calculating their state taxes. Vermont is one of only seven states that start with federal taxable income—the amount left over after deductions and exemptions—which is substantially less than federal adjusted gross income.

Because higher-income people pay higher tax rates, those deductions and exemptions are worth a lot more for them—and cost the state more—than they do for moderate and low-income taxpayers. Furthermore, starting with a smaller tax base, Vermont has to apply a higher tax rate to raise the same revenue. Some argue that this makes the state less attractive to business.

The Blue Ribbon Tax Structure Commission’s 2011 report discussed this problem and recommended shifting to AGI. While the Legislature has slowly moved in this direction over the past several years, it’s time to finish the job. The state can reduce these unnecessary expenditures to help balance the budget and make Vermont’s income tax fairer and the state more competitive.

]]>
http://publicassets.org/blog/giveaways-to-high-income-vermonters/feed/ 0