Credit Agency: Show Me the People, Vermont!

July 12, 2019

By David Flemming

The good news: one of the top major credit agencies applauded Vermont’s legislators for recognizing that Vermont has a population problem.

The bad news: that same credit agency, Fitch Ratings, said that it would still downgrade Vermont’s bond rating from a perfect AAA bond rating to AA+.

Why did Fitch choose to lower Vermont’s rating? Our labor force is “flat to declining” in the past decade. Fitch has a “lowered view of the state’s growth prospects and the state’s ability to raise revenue from its tax base,” according to employee Eric Kim.

Fitch is part of “The Big Three” credit rating agencies. Just 10 months ago, Moody’s also downgraded Vermont from its perfect rating. The other credit agency, Standard & Poor’s, has given Vermont a less than perfect rating for a while now. This means that when Vermont’s government needs to raise money quickly by selling bonds to investors, the investors can demand higher interest rates to offset the slightly higher risk that Vermont will not be able to pay interest on those bonds.

Vermont can no longer blame the 2009 Recession for its problems. Most of the other 50 states has seen at least some population growth in the past decade while Vermont has been stagnant.

That said, Vermont still maintains one of the highest credit rating relative to other states in the region. We can borrow money at the same rate as Massachusetts and New Hampshire, and can borrow money more cheaply than Connecticut, Maine and Rhode Island.

What does all this mean for Vermonters? More taxpayer money will need to go toward paying down pension debt and the like, rather than towards government services. Governor Scott said on Thursday that it’s uncertain how much taxpayer money will need to be diverted.

In the long run, the only way we can repair our rating is if our workforce can grow substantially with policies that are friendly toward economic growth.

David Flemming is a policy analyst at the Ethan Allen Institute

{ 4 comments… read them below or add one }

Meg Hansen July 12, 2019 at 8:42 pm

We cannot tax our way out of this mess; we need to grow our way out of it. Vermont needs to become a pro-growth state and for that it needs to be a freedom state.

Reply

Ted Robinson July 12, 2019 at 11:24 pm

Be fruitful and multiply.

Reply

angie d July 13, 2019 at 11:38 am

I know I am out of here. The most beautiful state. The most stupid people. I cannot live in a Communist state and see all I worked for my entire life be given to low life bottom feeders, legal or illegal, who will simply not work. Not going to ‘redistribute’ MY wealth (which is no wealth at all.) I can’t afford to take care of my family and all the indigents, too.

Reply

Jim July 13, 2019 at 2:33 pm

This credit down grade is an unintended consequence of the lib/Dem/Progs stewardship of the unfriendly business environment in the state. They created this business climate, businesses stay away, our youngest and brightest can’t find meaningful employment and relocate, young marrieds have the same problem and live elsewhere resulting no children causing an aging population. The folks in Montpelier realize there’s a problem so stop contemplating your collective navels and solve the problem!!!

Reply

Leave a Comment

Previous post:

Next post:

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

VT Democrats Are Conspiring with VPIRG to pull off a massive “Ballot Harvesting” operation

May 28, 2020 by Rob Roper The three biggest advocates of an all-mail-in ballot election are Democrat Secretary of State Jim Condos, Democratic legislators, and Vermont Public Interest...

GWSA Enforcement

May 26, 2020 by John McClaughry Over the past year I’ve spent a lot of time denouncing what I call the worst democracy-shredding bill in Vermont history. It’s...

Get Ready for the “Global Warming Shut-Down Act”

May 22, 2020 by Rob Roper As Vermonters struggle to figure out how to re-open our economy in the wake of the COVID-19 shutdown, the Senate Committee on...

Roll Call! Senate Votes to Expand Scope of Energy Tax and Subsidize Program (28-2), 2020

S.337- AN ACT RELATING TO ENERGY EFFICIENCY ENTITIES AND PROGRAMS TO REDUCE GREENHOUSE GAS EMISSIONS IN THE THERMAL ENERGY AND TRANSPORTATION SECTORS PASSED in the State Senateon May...

The Endless Tax on your Power Bill

May 21, 2020 By John McClaughry Last week Senate President Tim Ashe ominously “turned open the spigot” to move legislation not related to the coronavirus pandemic. The lead...

Video