by Frank Mazur

There’s an increased focus on providing more affordable housing across our country.  Citizens/churches are seeking ways to address this issue but few are addressing why this housing void has occurred.  Recently, Vanessa Brown Calder from the CATO Institute released a policy paper on how local zoning and land use regulations are making housing unaffordable.

Calder’s research shows that rising land-use and zoning regulations are associated with increased home prices.  States that have increased the amount of rules and restrictions on land use have higher housing prices.  She concludes that if state and local governments overhaul their development rules housing prices would be more affordable.

There’s also a correlation that shows states/municipalities with restricted/overreaching regulations rely on Federal housing aid like Sec. 8, public housing and Low-Income Housing Tax Credits.  Federal subsidies create disincentives to solve the problem at the state and local levels thereby rewarding these counterproductive policies that also create more dependency on government.

The Northeast scores the highest in restrictive land-use regulations and constricting zoning rules.  Vermont is near the top as the “least-free state over all.”  Most southern states like Florida have the least restrictions and more affordable housing.

Calder recommends that rather than think the Federal government will solve housing affordability, state and municipalities need to streamline the approval process, provide incentives to local municipalities to reduce regulations and provide land-owner reimbursement when the highest and best use of their land is restricted.

As Pogo says…”We have met the enemy and he is us”.

- Frank Mazur is a former Representative from South Burlington, he was chairman of the House Transportation Committee, and served a board member for the Ethan Allen Institute.

{ 2 comments }

by John McClaughry

For the past two decades The United Nations Intergovernmental Panel on Climate Change repeatedly warned of catastrophic sea level rise produced by climate change, said to result from carbon dioxide emissions from fossil fuel combustion.

Two Australian oceanographers, Parker and Ollier, just published a scientific paper that undercuts the IPCC claims.

One study, using sea level measurements in three locations around the Indian Ocean dating back to the 1800s, discovered the raw sea level measurements show no rise in sea levels. This contrasts with UN claims that Indian Ocean sea levels have risen dramatically. The UN’s sea level rise estimates rely on data from the UK’s Permanent Service for Mean Sea Level. This agency claimed raw data were insufficient for accurate coverage, and thus it “adjusted” the data. Parker and Ollier show the adjustments were done in “arbitrary” ways, using methods that consistently show higher sea levels than are actually measured.

“The adjustments are always in the direction of increasing the alarm,” said Ollier. “If the raw data show no alarming rise, and you want to create an alarm, you have to alter the raw data.”  Ollier estimates sea levels are rising only half as fast (about half a foot per century) as claimed by the UN. He says much if not all of the sea level rise may be due to entirely natural factors.

Here’s the takeaway: never trust the IPCC’s climate predictions.

- John McClaughry is the vice president of the Ethan Allen Institute

{ 6 comments }

by Rob Roper

Columnist Michael Barone, who created and co-authors the Almanac of American Politics, has a great piece out today on the Census Bureau’s estimates of state populations and immigration patterns. Vermont gets a mention. It’s not encouraging, especially if our leaders are serious in their declarations about wanting to increase Vermont’s population in the near future.

Just three states lost population between 2010 and 2017. West Virginia led the way with a two percent decline, which Barone attributes to Obama’s war on coal, and Vermont is just behind with a one percent decline, which “can be chalked up to Woodstock-era migrants — Bernie Sanders, Howard Dean. They’ve liberalized the state’s culture and politics, so with the state’s high taxes and stringent environmental bans, no one is following.”

It’s an ironic slap, given that the Vermont Left loves to portray themselves and our state as the leaders everyone else will follow down this Progressive path. What we’ve really become is the cautionary tale in a public service announcement about failed state policies. “This is your state…. This is your state on Vermont-style politics…” Eeek!

Just FYI, the third state to lose population was Illinois at minus 0.3 percent due to “High and rising taxes, to pay for hugely underfunded public pensions….” There is a cautionary tale for Vermont here as well, as our unfunded pension liabilities are an underreported ticking time bomb.

So, who did well in attracting new citizens to their states? Or, if we’re serious about bringing in new Vermonters, whom we should be emulating? Texas and Florida led the pack with thirteen and twelve percent population increases respectively, attracting 5.3 million people in total to their states. Why? Says Barone, “No state income taxes, light-touch regulation, and resulting private-sector booms.” It’s certainly not the aesthetic or lifestyle. I’ve been to Texas. It is oppressively hot and not particularly attractive, unless you really like the color brown. Oh, and snakes.

Barone concludes, “The nexus between high taxation and domestic outflow is plain when you look at percentages.” Are our lawmakers paying attention? The governor is on the right track with “no new taxes and no new fees.” That’s still a far cry from no income taxes and regulatory reform, but it’s a step in the right direction in bending the culture curve. House and Senate leaders, however, seem intent on driving over the cliff Thelma and Louise style, prioritizing a $15 minimum wage and a new payroll tax to pay for a government-run, family leave insurance program so attractive on its own merits they have to force people into it.

It time for Montpelier to give up trying to find new things to do to attract new citizens, and start figuring out what it is they are doing that drives people away — and stop.

- Rob Roper is president of the Ethan Allen Institute

{ 8 comments }

Linda Sullivan (D-Bennington/Rutland) has recently written a series of insightful commentaries on VT Digger that discuss why “why we seemingly are doing very little to attract business to Vermont.” It is clear that Sullivan has put a lot of thought into answering this question. And for the most part, she gets it right.

“We’re going to need to figure out how best to attract external investments if we are going to have much chance of increasing economic opportunities for Vermonters, of achieving meaningful and sustainable increases in wages, of expanding revenue and tax bases so as to begin to lessen our reliance on property taxes, and of obtaining sorely needed transportation, housing, health care and communications infrastructure improvements. We are in a competition with other states for those investments — a competition in which we’re not competing in any significant way.”

Bravo. That needed to be said. Still, Sullivan needs to be corrected on one point:

She claims that “developing the right strategy to attract business… will likely also require careful design of specifically tailored economic incentives (yes, even tax incentives).” Attracting new businesses to Vermont is a laudable goal, but tax incentives are not the way to do that.

Granting subsidies on a case-by-case basis is the wrong approach to economic growth for two reasons. First, there is little evidence that subsidies and tax breaks for select companies will help spur economic growth. From 1998 to 2015, Vermont handed out over $235 million of subsidies (taxpayer dollars) to companies in the form of grants, low-interest loans, tax credits and training reimbursements. These subsidies have not made Vermont a business powerhouse.

Second, if Vermont extended its subsidy programs, it would inevitably end up prioritizing established businesses that are on good terms with politicians/regulators, over new businesses and potential start-ups that lack these connections. Subsidies also inevitably prioritize larger businesses. Many government grants have a low probability of going to any one business, so the only businesses that are willing to accept the risk in obtaining these grants are those that have multiple and sizable revenue-generating assets which would preserve their business in the event that the business does not receive the grant. Once several businesses suddenly reapportion their budgets away from satisfying customer demands and toward subsidy-seeking, Vermont consumers will necessarily be worse off. Worse still, tax incentives undermine the notion of our government as a neutral arbiter that protects the right of Vermonters to operate businesses without favoring one business over another.

Nevertheless, many of Sullivan’s proposals are worth considering. Or rather, her willingness to identify all too prevalent “half solutions” that have been proposed by those who refuse to admit that Vermont needs more business investment. Sullivan acknowledges the impossibilities of:

  1. “train(ing) people to hold diverse, higher-paying jobs that either don’t exist or are geographically dispersed”
  2. “creat(ing) more housing for a workforce that is only marginally growing”
  3. “bring(ing) more doctors to service small and sometimes distant patient population”
  4. “forcibly increas(ing)labor costsfor our small-business economy unable readily to raise prices to cover wage increases” (Sullivan’s take on the minimum wage).
  5. “prompt(ing) business investment in communications infrastructure to service a relatively small consumer base.”

Sullivan is astute to note the impossibilities of finding solutions that involve extensive government involvement in the Vermont economy. She should recognize that tax incentives are also incompatible with a vibrant business environment. It is only through creating a business environment with predictable regulation and reasonable taxation that we can truly make Vermont an economy that leads the way in New England.

{ 1 comment }

By John McClaughryJohn 2

The biennial session of the Legislature that convenes this week will face more than its share of hot button issues. Here’s a quick survey of the 2018 agenda.

State finances: The legislature faces a FY2019 General Fund budget deficit projected to surpass $40 million. The bright side of this coin is that covering a deficit puts a strong damper on everpresent demands for new spending that would require tax increases.

Retirement Plans: The two state-managed retirement plans – for state employees and teachers – are now an astounding $3.8 billion out of actuarial balance. Treasurers Spaulding and Pearce have tried to make headway in bringing this number down, without much success. Vermont still has a AAA bond rating, but the rating services have pointedly noted that “pension liabilities are growing and funding is not keeping pace.”

Property Taxes: Last June’s budget agreement made it certain that school property taxes would resume their upward march in 2018-19. In December the administration announced that school property tax rates would increase by 9.4 cents per $100 FMV, or 7 percent.

Last April Gov. Scott proposed a plan whereby he would negotiate health insurance coverage with the Vermont-NEA on behalf of all school districts. The union, and thus its legislative allies, vocally objected.

There is a solution for this. As with teachers’ retirement in 1946, put teacher health benefits into state law, and drop the idea of Governor-union negotiations. The union pushed to get agency fee out of local negotiations and into statute in 2014, and needs to see the wisdom of doing the same thing now for health benefits.

All Payer Health Care: When single payer health care failed in 2014, thanks to its enormous tax costs, All Payer sprang to life. It’s based on creating one big Accountable Care Organization called One Care, essentially a subsidiary of the UVM Medical Center empire. The Green Mountain Care Board will instruct Medicare, Medicaid and commercial insurers how much to pay into One Care on behalf of their respective insured populations. OneCare will then parcel out the funds to favored providers to achieve significant savings. Or so they say.

The Board just approved a $621 million OneCare budget, which has not yet become the complete monopoly its leaders urgently desire. When it does, Vermont will have universal managed care operated by a bonus-motivated rationing organization only feebly accountable to the public.

Health Care Mandate: Last week, after Congress’s repeal of the individual tax mandate to purchase ObamaCare policies, health care officials started musing about getting the legislature to impose a mandate on every Vermonter to buy state-approved health insurance. Or else what? Fines? Wage garnishment? Loss of driver’s and hunting licenses? Incarceration?

Minimum Wage: The state’s progressive element is eager to jack up the state’s minimum wage mandate from $10.50 (in 2018) to $15. (New Hampshire: $7.25).They are in serious denial about what their pet proposal would do to low-skilled workers (disproportionally young and non-white) in this age of automation and robotics, plus the impact on businesses dependent on those workers.

Carbon Tax: The Climate Action Network will press hard for their new version of the carbon tax, The Essex Plan. The previous version would tax gasoline, diesel, heating oil, natural gas and propane to the tune of $500 million a year by 2027. The new carbon tax would “only” tax those fuels $240 million a year by 2025. The proceeds would be used to lower electric rates and compensate lower income families and “rural residents” harmed by the higher costs of heating their homes and getting to work, school, shopping, and church. Gov. Scott is, happily, adamantly opposed to a carbon tax.

Lake Champlain Cleanup: EPA has calculated that cleaning up phosphorus-fed pollution in Lake Champlain will require $2 billion over twenty years. Legislators don’t want to tax the phosphorus users (40% of them farms), and few of them are eager to impose a “per parcel fee” on every landowner in the state.

Opiates: The opiate abuse and trafficking crisis is still waxing strong – a nearly 160% increase in overdose deaths from 2010 to 2016. Modest steps have been taken to cut back on the overprescribing of pain medications, but heroin is cheap, and there is no clear path out of the problem.

These are major challenges for our legislators. Stay tuned for five months of struggle in Montpelier.

John McClaughry is the vice president of the Ethan Allen Institute (www.ethanallen.org).

{ 1 comment }

By John McClaughry

Steve Moore and Jonathan Decker write in Investors Business Daily that the liberal predictions of a year ago about Trump’s likely catastrophic effect on the U.S. economy are looking ridiculous. After quoting half a dozen oh-so-smug-and-certain left-wing observers, the authors offer the most ridiculous of all. It’s from an October 2016 Washington Post editorial: “A President Trump Could Destroy the World Economy”,

“Just for the record,”, the authors say, “ the world economy is as strong today as it has been in at least a decade, as the Wall Street Journal recently reported. Now the Left has to engage in logical contortions to explain how the red hot American economy is really a result of Obama policies — every which one Trump has systematically been at work dismantling.”

“As I’ve acknowledged many times, the roaring stock market and the surging rate of growth of the economy (which is now estimated at 3.5%, up from 1.6% in Obama’s last year in office), could turn against Trump in the months and years to come. It’s quite possible that the market exuberance over Trump’s deregulation and tax cut policies have run too far ahead, though I’m predicting 3% to 4% growth for 2018 with the Trump tax cut kicking in. But what is certain at this point so far in Trump’s presidency is that anyone who sold stock on the basis of predictions by liberal ‘experts’ like Larry Summers or Paul Krugman or Steve Rattner missed out on a 30%-plus surge in their financial wealth.”

If one can overlook Trump’s often stomach-churning narcissism – not easy –  at the moment his Presidency seems to have produced a big adrenaline shot for a relatively stagnant U.S. economy. Let’s hope it continues strong, while Trump and Congress start shrinking government spending to fit within revenues.

{ 2 comments }

By John McClaughry
Here’s an unexpected contribution to the carbon tax debate from the Climate Justice Alliance, which describes itself as ”a collaborative of over 50 community-based and movement support organizations uniting frontline communities to forge a scalable, and socio-economically just transition away from an extractive economy towards local living economies to address the root causes of climate change.” Their 32 page report published online is a well-informed piece of work, although I don’t agree with their final position.
This report, say its authors, “provides in-depth context to why carbon market systems will not mitigate climate change, will not advance adaptation strategies, will not serve the most vulnerable communities facing climate change impacts and only protect the fossil fuel industry and corporations from taking real climate action.”
Further, “Carbon taxes will always be low, be evaded, do not cut pollution to the degree needed, and are greenwash. Under the rubric of carbon pricing, these cap-and-trade, carbon offsets, carbon tax systems are false solutions that do not cut emissions at source, create toxic hot spots, and result in land grabs and violations of human rights and rights of Indigenous peoples in the forest regions of developing countries.”
Their one sentence remedy is: simply keep fossil fuels in the ground. Then we’re supposed to find other ways to heat our homes and businesses and transport ourselves to work and school and church. I have my doubts about that.

{ 2 comments }

By John McClaughry

On Christmas Day the Wall Street Journal published an outstanding editorial entitled “The Great Rules Rollback”. It began “Amid the debate over tweets and tax reform, perhaps the most significant change brought by the first year of the Trump Presidency has been overlooked: reining in and rolling back the regulatory state at a pace faster than even Ronald Reagan. This is a major reason for the acceleration of animal spirits and faster economic growth in the past year.”

Neomi Rao, the Director of the White House Office of Information and Regulatory Affairs , is requiring agencies to submit an annual “regulatory budget.” In fiscal 2018 the budget target is a net reduction in regulatory costs. This, the editors say, “forces agencies to think twice about proposing new rules. And if they do, then they need to eliminate regulatory costs somewhere else. If enforced with rigor, this could be the most important check on the bureaucracy since President Franklin D. Roosevelt invented the modern administrative state.”

The Journal concluded “The far larger impact is lifting the pall of government hassle and arbitrary enforcement from business. In the Obama era, CEOs never knew when or how a federal agency might strike for political reasons, no matter the law. Simply lifting that constant fear has had a liberating effect on risk-taking and investment. The deregulation effort ranks with judicial confirmations and tax reform as the main Trump achievements of the year.”

Not surprisingly, I entirely agree. I only wish we could tackle the same problem here in Vermont – that I have argued for over the past 25 years.

{ 0 comments }

by Rob Roper Rob Roper

Medicaid is a program intended to help the sick, elderly, disabled, and poor, but in Vermont, it is also being used to quietly pad politically friendly unions’ bank accounts.

Here and in just 10 other states, a practice — or scheme, according to the U.S. Supreme Court —known as “dues skimming” is taking place. Dues skimming, in total, costs Medicaid an estimated $200 million each year. In Vermont, there are an estimated 7,500 caregivers, many of whom are unaware that they are paying dues or fees to a union, nor do they see any meaningful benefit.

The way dues skimming works is this…. In 2013 the Vermont legislature passed and Governor Shumlin signed into law Act 48, which allowed home healthcare providers to form a union. The argument used here was a stretch: that since Medicaid is public money, caregivers who receive payment from the program are de facto government employees. The resulting union (Vermont Homecare Providers/AFSCME) got the exclusive right to collectively bargain with the state on behalf of all home healthcare providers, union members or not, over a number of issues, including subsidy rates.

But, in many cases these workers are actually just family members of the people they are caring for. The idea that a mother would be pressured into paying union dues for the privilege of looking after her disabled child, or that a union would be able to improve the working conditions of a mother caring for a child in her own home, would strike most people as absurd, but this is how dues skimming works.

Under this arrangement, union members are charged dues, but before the Supreme Court put a stop to it, non-union members were are also on the hook for “agency fees” of up to 85% of the member dues. And here’s the catch: even after the Supreme Court put and end to the forced dues, the state still collects dues on behalf of the union, paying it directly out of Medicaid funds.

Oftentimes the home-care provider never sees the money, and in many cases is unaware that their wages are being reduced (hence the term “skimming”), or that they even have a relationship with the union to begin with. In this way, the government is siphoning money from Medicaid checks into union accounts before those funds ever reach the patient and caregiver, and often without providing much in return.

In 2014, mom Pamela Harris sued the SEIU for forcing her to pay dues as a condition of caring for her disabled son Josh, and the U.S. Supreme Court ruled in her favor, saying in-home caregivers can no longer be forced to pay union dues. Unfortunately, unions have come up with complicated rules to keep caregivers in the dark about their rights and make it difficult for them to drop membership if they so choose.

In Washington State, for example, union dues are automatically deducted from workers’ Medicaid checks, putting the onus on the individual to first realize this is happening, then pursue the union to stop the withdrawal. Caregivers who belong to SEIU 503 in Oregon may only drop membership during a brief, arbitrary window that’s unique to each member. In California, caregivers are forced to watch a union pitch just to be allowed to look after a loved one who receives Medicaid.

So, in effect, little has changed and in-home caregivers are regularly forced into unions they don’t wish to associate with.

This is a policy clearly designed by politicians to enrich unions, which inevitably return the favor by using some of that money to support those same politicians come election time, at the expense patients, caregivers and taxpayers. It’s time for this to end and for Congress and the U.S. Department of Health and Human Services to stand up for Medicaid, its patients, and caregivers, and get out of the business of collecting dues on behalf of labor unions.

By simply clarifying administrative rules, HHS could ensure Medicaid dollars are spent where they are needed — on caring for those in need. Congress could also prevent Medicaid funds from being wrongfully diverted to unions. Both solutions would free up more money for patients who deserve the best care possible, while allowing caregivers to spend their time where it’s needed — on serving their loved ones, not fighting unions. And, those caregivers who do wish to belong to a union would still be able to do so — they could pay their dues on their own but not be forced to have those fees skimmed from their Medicaid checks.

- Rob Roper is president of the Ethan Allen Institute.

{ 0 comments }

By David Flemminghomer lardofthedance2

The carbon taxers are billing the ESSEX Carbon Tax Plan as “revenue neutral. 100% of the carbon pollution fees will be returned to Vermont electric ratepayers, and the program will be assessed annually by Vermont’s Auditor of Accounts.” This can’t be true because any program carries administrative costs that cannot be returned to the taxpayer. The question here is how much will the bill be?

Rhode Island’s 2015 plan for a carbon tax sounds remarkably similar to Vermont’s, in that it planned to “return 100% of revenue (minus overhead costs) in the form of rebates and programs.” However, rather than the 0% of revenues that ESSEX Carbon Tax insinuates, the R.I. proposal predicted 5% of revenues would go toward “administrative overhead costs” if it had been passed. Connecticut’s 2017 carbon tax proposal called for “not more than five per cent shall be used to pay for administrative costs.” Massachusetts does not give a cost estimate, but at least it admits that carbon tax would have administrative costs, while hoping to keep them “presumably low.” British Columbia’s carbon tax was promised to be revenue neutral before its passage in 2008, but it has become “revenue-negative because of administrative costs.”

The ESSEX plan will supposedly raise $240 million revenue. Assuming the 5% administrative costs’ figure that other states have used, Vermonters could end up paying bureaucrats around $12 million.

Additionally, the required annual audit will cost something too. The proposal’s wording is very precise- Vermont ratepayers won’t have to pay for the audit. But somebody will! On April 15th, if the ratepayers are spared the bill, Vermont taxpayers will have to pick up the tab. And since ratepayers are generally taxpayers, Vermonters in general will be worse off.

The situation recalls a scheme Homer Simpson in the Simpsons episode “Lard of the Dance.” Here Homer learns that people will pay money for grease. So, Homer decides to cook up all of the bacon in his fridge and sells 4 pounds of bacon grease for $0.63 (he feeds all of the bacon to his dog, which gets sick). Then, Homer’s son Bart decides to question Homer’s actions:

Bart: “Dad, all that bacon cost $27.”

Homer: “Yeah, but your mom paid for that.”

Bart: “Doesn’t she get her money from you?”

Homer: “And I get my money from grease, what’s the problem?”

If proponents of the ESSEX plan want to be taken seriously, they should admit that the ESSEX plan will, at best, cost millions in administrative and auditing costs. As such, the plan is not really revenue neutral. Overall, this latest version of the Carbon Tax will require Vermonters to spend more in taxes than will be returned in rebates. As Homer would say, “D’oh!”

{ 0 comments }

About Us

The Ethan Allen Institute is Vermont’s free-market public policy research and education organization. Founded in 1993, we are one of fifty-plus similar but independent state-level, public policy organizations around the country which exchange ideas and information through the State Policy Network.
Read more...

Latest News

Iran’s Smoldering Fuse

By John J. Metzler UNITED NATIONS—Surging crowds thronged the streets of Tehran and cities across Iran screaming Death to the Shah, Death to America.  A revolutionary situation brewing...

Net Metering Program Driving Up Energy Bills

by Rob Roper  Green Mountain Power recently announced the need to raise its rates by 5%. Why? One growing reason is Vermont’s “Net Metering” program. The way Net...

Carbon Tax Rebate? Don’t Count On It.

by David Flemming Last November, environmental activists released the “ESSEX” Carbon Tax plan that called for legislation taxing fossil fuels and giving the money that was not used for...

Vermont’s Sad Education Test Scores

by John McClaughry Vermont Digger has done us another service by publishing a report entitled “Making the Grade?”. It presents the results of the tests used by Vermont...

Report: Vermont Spending Way Too Much On Special Education

by Rob Roper This week at the State House, Tammy Kolbe, an Assistant Professor at the University of Vermont, spoke to a joint meeting of the House and...

Video