The chief executives of Vermont’s leading businesses seem cautious over sales prospects and employment levels for the spring and summer when compared to their fourth quarter 2008 forecasts, and they are unlikely to make broad capital investments. But the attitude of the business community appears to have stabilized. The mood was assessed at the end of the first quarter and released today by Vermont Business Roundtable Chair Bill Stritzler and President Lisa Ventriss. (more…)
Archive for April, 2009
Op – Ed by David Coates, KPMG (Retired Managing Partner) and Member, Vermont Business Roundtable
Paul Cillo may be correct in his recent article (School Funding Far from “Broken”) whenhe describes the Education Fund as “it ain’t broke.” But, I would suggest that the General andTransportation Funds are just about on life support due in large part to our high level ofmandatory educational-related expenditures. (more…)
In three months the state will begin FY 2010 with a budget deficit of $200m+ and the administration and legislature are counting on Vermont’s share of the stimulus package to bridge any major gaps, along with budget cuts and layoffs. To strategically address the immediate deficit issue and position ourselves for future sustainability, a reduction in the size of state government is necessary. How it happens is a function of thoughtful stewardship and innovative thinking on the part of agency heads.
In one case, the Agency of Human Services, which employs 3,500 people, was told to cut $6.8m (or roughly 285 positions.) Secretary Hoffman and his team are working hard to hit that budget amount with as minimal impact on workforce or service delivery as possible. So far, he’s identified 5% of his staff positions for elimination, or 195 people. For a front-line agency that sees the clash between economic crisis and human suffering, and where caseloads are skyrocketing, that’s a tough assignment. Nonetheless, Hoffman, whose experience in the financial sector and tenure in corrections, is an experienced and capable leader; one who understands the risks from both sides of the challenge.
To date, proposals from the state employees’ union have not yielded the kind of savings necessary to avoid further workforce layoffs within the state workforce of 8,400+. But cut we must, otherwise the four constituents of state government ~ citizens, businesses, employees, and other levels of government ~ will suffer death by a thousand paper cuts. It is in everyone’s best interests that the union negotiators and administration find creative ways in which to achieve cost savings and avoid layoffs. Keep talking and sharpen those pencils.
According to one source, the American Legislative Exchange Council (ALEC), Vermont ranks 16th in terms of economic performance (measured by personal income growth per capita; absolute domestic migration; and, non-farm payroll employment) and 49th in terms of economic outlook (up from 50th in 2008). There are fifteen variables that comprise the outlook ranking, which focus largely on tax and fiscal policy. By contrast, Utah, Colorado and Arizona rank 1, 2, 3, respectively; Massachusetts was the highest ranking New England state at 26th.
ALEC is comprised of conservative legislators who share common beliefs in free market, limited government, federalism and individual liberty. So the more liberal among us may disagree with the assumptions behind these results. However, in the current economic crisis where strong debates are emerging around spending cuts, new tax revenue, and threats of gubernatorial veto, or where people still have their heads in the sand around all of the above, Laffer and his co-authors of this “Rich States, Poor States” economic competitiveness index provide a necessary perspective for policymakers, beginning with its Ten Principles of Effective Taxation. Bottom line: when one compares the top ten economic performing states against the bottom ten, those states that spend less and tax less enjoy a higher rate of in-migration and economic growth.
The full report, executive summary and individual state highlights can be found at www.alec.org.