Feelin’ the Golden Dome Squeeze???

Tensions over state spending are fundamental and longstanding.  The duality embedded in Vermont’s state motto of “Freedom and Unity”, established in 1788, speaks succinctly to this tension as does this 1953 passage by noted Vermont author Dorothy Canfield Fisher:

“The Vermont tradition grapples energetically with the basic problem – how to reconcile the needs of the group, of which every man or woman is a member, with the craving for individual freedom to be what he really is.” 

Over the past six years, the “needs of the group” have won substantial favor at the state house over the “craving for individual freedom”. Some may applaud this trend, others certainly want to accelerate it and still others may find it of concern; but it’s important to understand the path we are on relative to this duality.

A measure of the state’s economy published annually by the federal Bureau of Economic Analysis is the Gross State Product (GSP). GSP is the state counterpart to the nation's gross domestic product (GDP), where GDP is the market value of goods and services produced.  In 2010 Vermont’s GSP was measured at $25.9 billion and in 2015 at $29.75 billion for an annual growth rate of 2.81 per cent. Keep in mind that 2010 to 2015 was a recovery period from the last recession during which accelerated economic expansion is expected.

Contrast GSP growth with state spending growth (state dollars only) of 5.22 percent from $1.760 billion in fiscal 2010 to $2.387 billion in fiscal 2016 which ends this June 30th.  Add to the 2016 state spending another $1.99 billion in federal funds, $1.25 billion in net education funds and the $1.1 billion in municipal budgets and state and local government spending equates to a sizable amount relative to Vermont’s GSP.  The sum of the above is $6.73 billion.

Further, with Vermont’s healthcare reform law, Act 48, state government is on the march to take over direct control of another large chunk of the economy via the Green Mountain Care Board, “all payer” funding and one, maybe two, monopolistic ACO’s. Healthcare spending amounts to about $5.6 billion inclusive of state government healthcare spending. Under Act 48, Blue Cross Blue Shield and MVP rate increases have ranged from 5.9 to 7.7 percent and 2.4 percent to 10.9 percent respectively. Current requests for rate increases are 8.2 and 8.8 percent respectively.

Further, indirect spending by state government through rate increases for Efficiency Vermont (the most recent being 7.5 percent), regulated subsidies for certain energy produces, or the expansion of property tax subsidies to $137,500, for example, along with requirements such as Act 46, paid leave, unionized day care providers, minimum wage, and pre-k expansion empower 180 legislators and the Governor with increased management and oversight over Vermont’s economy.

As state government expands its control over Vermont’s economy, less control remains in private hands and the market place. As taxes, fees and regulated rates rise faster than economic growth, household budgets are squeezed from private needs such as savings for a child’s college education, retirement, a vacation, charitable donations, home renovations, or the simple enjoyment of personal interests. The options of commercial interests are also diminished. Starting, growing and reinvesting in businesses that provide Vermonters jobs become more difficult or rely on government subsidies.

Given state government’s expanding control and influence in the Vermont economy, Vermonters might thoughtfully take stock of where the balance now stands between freedom and unity, between the needs of the group and the craving for individual freedom. If the needs of the group unreasonably suppress the enjoyments of economic freedom, both families and commercial interests retain the option to withdraw or simply get up and leave, and in doing so, undermine the very economic activity necessary to support the needs of the group.

Our Constitution reminds us at Article 18. “That frequent recurrence to fundamental principles, and a firm adherence to justice, moderation, temperance, industry, and frugality, are absolutely necessary to preserve the blessings of liberty, and keep government free; the people ought, therefore to pay particular attention to these points, in the choice of officers and representatives,….”. 

As true today as in 1793.

Be Well
Campaign for Vermont

We believe Campaign for Vermont offers substantive insight, information and advocacy on a non-partisan basis relative to Vermont's affordability crisis. We hope you have found value in the above presentation. A contribution of $50 dollars, $100 dollars or more would be greatly appreciated and well used to keep us working hard for you. We do recognize that not all of our supporters can afford this so a donation in any amount is highly valued. Please support Campaign for Vermont with a donation.

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