Commentary: Scott’s Second Act Will Be Much Harder (May, 2017)

by Rob RoperRob Roper

Governor Phil Scott came into office pledging to put Vermont’s wounded economy back on the right track. After one legislative session he gets high marks for accomplishing an important first step in saving the patient: stopping the bleeding. The new governor drew a line in the sand, threatening to veto any new taxes or fees and succeeded in getting the legislature to go along. But stopping the bleeding alone isn’t a cure.  Now it’s time to start the real surgery to repair the damage.

Moving forward, the legislature is not likely to be as cooperative as they were on taxes, as the standoff over teachers’ healthcare contracts demonstrates. Altering the status quo, particularly where special interest groups come into play, is not something they seem willing to contemplate.

The Governor is laying the groundwork, at least rhetorically, for some positive reform by reminding Vermonters relentlessly that we are losing six people from our workforce every day. Our State Domestic Product is half that of the nation as a whole at an anemic 0.8%.

We’re not alone in this. The Wall Street Journal recently ran an article, Northern New England’s Good Jobless Numbers? They’re Bad, highlighting the region’s worker shortage brought on by a full-blown demographic crisis. Employers can’t find local people to fill jobs, and they can’t convince people to move here either.  Faced with this reality they leave themselves, making the cycle worse. But here’s the part all our state officials need to pay attention to:

To address the issue, the states have taken a number of actions—or are considering them. Maine started a tax-incentive program several years ago to keep newly minted college graduates in the state…. New Hampshire Republican Gov. Chris Sununu has proposed a scholarship program to help students attend college and training programs in the state. He is also pushing for full-day kindergarten to help attract workers with young families.

Sound familiar? Giving bigger subsidies to college kids in hopes that they’ll stay in state? Expanding subsidies for early education in hopes of attracting young parents? Two lessons for our elected officials: Other states are doing these things too, and it’s not working for them either. And, because other states are doing these things too, our doing them creates zero competitive advantage for Vermont. We need to think bigger, and we also need to think outside this box.

During his campaign, Governor Scott laid out an aspirational goal to increase Vermont’s population to 700,000 in the next decade, well over a 10% increase from our current level. That’s a huge undertaking. Achieving even a fraction of this, baring some natural or man-made disaster triggering a mass migration, will require major changes in the way Vermont operates, what we offer, and how we are perceived. Mildly tinkering with the status quo won’t do it.

So, how do we break away from the pack? Where other states are zigging — betting more and bigger government programs are the answer – Vermont should zag – offering lower taxes and less government interference. Become an oasis of unfettered, low cost opportunities in a sea of high taxes and bureaucratic red tape.

The major hurdles employers cite in the hiring process is the lack of affordable housing for employees, lack of job opportunities for “significant others”, and, of course, the high taxes and regulations that contribute to the overall high cost of living.

The answers to these issues are, of course, making it easier and less costly for people to build houses, making it less of a hassle and less costly to hire workers, and finding ways to dramatically lower the tax burden.

And here is where the legislature will be an obstacle to future progress. For some examples, they refused to buck the teachers’ unions to reform the bargaining process for health care benefits and save taxpayers $26 million. It doesn’t get much easier than that! They refuse to buck big labor to pass meaningful independent contractor reform. They’ll wave the Act 250 process for politically connected renewable energy producers, but not for other employers or home builders.

Contrarily, as we look ahead to the 2018 legislative session, the House and Senate leadership’s priorities are passing a payroll tax to cover a new family leave benefit, and increasing the minimum wage to $15 an hour – two policies that will make it more cumbersome and expensive to hire new workers.

Governor Scott has skillfully applied some clamps and bandages to the ailing patient. He’ll need a lot of political capital and support when he calls for the scalpel. Vermont is still crashing.

- Rob Roper is president of the Ethan Allen Institute. He lives in Stowe. 

{ 2 comments… read them below or add one }

Alyce Stein May 30, 2017 at 9:30 pm

If “the legislature will be an obstacle to future progress,” it is imperative that level headed Vermonters grasp the implications and work to eviscerate the backward thinking public servants, one by one.

This momentum, however, must start at the top of the food chain. Gov. Scott needs to firmly guide and lead by example. He must retire the avuncular persona, shelve his own narrow minded views, embrace the process and ACT. If he can’t operate like a forward thinking progressive leader, Vermont is doomed to crash.

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Jeanne Norris June 4, 2017 at 5:17 pm

I for one think we are doomed!! Since Gov Scott got elected, I have not had much hope that anything will change, taxes are still too high and I see no signs it will get better. I was actually optimistic when Scott got elected, now we will show them! huh! Guess that won’t be happening, first there was the sanctuary cities crap then the climate change scam support, Then the teachers health care tax savings, not happening..
My optimisim is down the tubes, I regret my vote, and I wonder how long it will be before I can convince my Vermonter husband we need to get outta this state the sooner the better!!

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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.
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