Update October 2007

In this issue:
-- Choices for Vermont Conference October 23
-- Vermont Taxes Progressively, New Study Finds
-- More CFED Troubles
-- Jack Hoffman: New PAI Hire

Choices for Vermont Conference October 23
Vermont is a great place to live and work, in large part because the state spends over $4 billion each year to create and maintain the state's public structures - things like schools, roads, utilities, hospitals, libraries, and police. But as federal funding becomes increasingly unreliable and Vermont's leaders reluctant to raise the needed revenue to fund these structures, the state's future -- our children's future -- is at risk.

Choices for Vermont: Creating a Better Future for All our Children is the second annual conference co-sponsored by the Public Assets Institute and Voices for Vermont's Children that challenges advocates, legislators, business people, and other citizens to think about the Vermont they want and to move their government to create it. This conference provides the information and tools to take up that challenge.

View conference details
Register online- DEADLINE EXTENDED until 10/17 at 5PM

Vermont Taxes Progressively, New Study Finds
Vermont continues to have a highly progressive tax system that imposes higher taxes on those with a greater ability to pay, according to a new study by the Legislature's Joint Fiscal Office. The study's results show that by and large, Vermonters in low- and middle-income tax brackets, which include about 80 percent of filers, pay less in taxes than people in similar income brackets in the other states in the study. But even for high-income taxpayers, Vermont ranked no higher than sixth among the 12 states included in the study.

Gov. Jim Douglas has been criticizing the JFO study and told the Burlington Free Press that Democrats in the Legislature were using it to "sugarcoat our extraordinary tax burden." Meanwhile, the governor has been touting another recent report, by the conservative Washington-based Tax Foundation, that claims Vermont had one of the worst tax climates for business in the country.

Rather than simply characterizing taxes as good (i.e. low) or bad (i.e. high), as the Tax Foundation routinely does, the Joint Fiscal Office assessed the effect of taxes on individuals in different income brackets. The study compared Vermont to 11 other states - the same group of states used in a similar study a decade ago. The analysts prepared tax returns for 24 hypothetical, but typical, taxpayers in each of the 12 states.

One important tax not included in the JFO case studies is the property tax. The report cited other studies that purported to compare property taxes among the states. But it is next to impossible to calculate separate tax bills for the 24 hypothetical case studies from the other states.

Furthermore, Vermont has stopped collecting some key tax information. Just prior to the passage of Act 60 a decade ago, the Legislature directed the Vermont Tax Department to collect homestead property tax information on state income tax returns. This was the first time policymakers and the public had real numbers on the property taxes paid by Vermonters at various income levels in each town. The Legislature repealed this provision in 1999.

With the Legislature now looking at shifting education funding to a direct income tax, it is critical to collect this information again, particularly on residents in the upper income brackets. The Tax Department has income and property tax data on people who file for income sensitivity, but many in the upper income brackets don't apply to pay their taxes based on income because it wouldn't benefit them to do so.

Vermont Tax Study - Volume II
Tax Foundation Report

More CFED Troubles
Just when you think it can't get worse for the Commission on the Future of Economic Development (CFED), it does. The CFED was created to bring fresh ideas from a broad base of interests to economic development planning in Vermont - a good idea. But, in its first year the CFED has been plagued by a late start, leadership problems, poor staffing, and lack of support from the Commerce Secretary. The latest twist: the chair and the vice-chair resigned last month.

• The CFED was created on July 1, 2006 and held its first meeting on October 24, losing nearly four of the 14 months it was given to produce its report.

• The governor-appointed chair was inexperienced in managing public bodies, had little staff support, and was never able to pull together a coherent agenda. He finally resigned in April 2007. In May, the governor appointed Carl Spangler chair. Spangler was a former CFED member who himself had resigned in April. He resigned again in September, this time with Vice-chair Dawn Terrill.

• While the CFED finally did get staffing in place in the spring of 2007, the staff person hired, David Bradbury, resigned in June. The Snelling Center has now been hired to provide staffing.

• Commerce Secretary Kevin Dorn apparently has no interest in a fresh look at economic development. This makes it difficult for the CFED, without strong leadership of its own, to fulfill its mission. In a November 9, 2006 memo to the CFED after their first meeting, Secretary Dorn called for a limited role for the CFED and defended his agency's current plan, stating that "the governor was re-elected by a wide margin and has a strong mandate from Vermonters to continue his policies and efforts, particularly in the area of economic development and jobs."

Any one of these would have been a major setback for the CFED. All of them together may be fatal. The September 15 delivery date for the CFED report has come and gone, and the headless group is still flailing. It's hard to remain optimistic under these circumstances.

For more information on the CFED

Jack Hoffman: New PAI Hire
Jack Hoffman, former reporter and capital bureau chief for the Rutland Herald and Times Argus, has joined the Public Assets Institute staff as a senior policy analyst. Working with Paul Cillo and Sarah Lyons, he will assume responsibility for some of the research, analysis and reporting at PAI.

Jack served in the Vermont Press Bureau, the capital bureau for the Rutland Herald and Times Argus, for 20 years. There he covered politics and state government, with much of his work focused on budget and fiscal matters, particularly education funding. He also wrote a weekly column, "Vermont Commentary," in the Sunday paper. He left journalism in 2002, and for the last five years he has headed a small non-profit organization, the Vermont Broadband Council, to promote the use and availability of high-speed internet access in the state.

Before he started his reporting career, Jack traveled extensively in Africa. He served as a Peace Corps volunteer in Libya in the late 1960s. He has called Vermont home since 1965, when he first enrolled in Middlebury College. Jack and his wife, Lark Upson, live in Marshfield, where he is a member of the Twinfield Union School Board. Two of his passions are golf and Indian cooking.

You can reach Jack at PAI's Montpelier office -- 802-223-6677 or jack@publicassets.org.

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