Vermont Legislative Update 2023: Week 5

Our economy follows the same rules as a natural ecosystem. If you hope to harvest anything from a natural ecosystem, you must be mindful not to do so at a rate greater than it can be regenerated. Hunt too many deer in a herd, and the herd reaches an inflection point where it can not recover. Those who manage trusts  or endowments experience this as well; they extract the interest from the fund, leave some to account for inflation, and never dip into the principal. Such focus on sustainability is commonplace in many conversations around Montpelier, however, let’s take a step back and look at the ecosystem we all work in; the Vermont economy. Our government needs to extract resources from this ecosystem in the form of taxes, however, just as with a natural ecosystem or a trust fund, it must be mindful of long-term sustainability. 

We covered in a previous update a report by the Joint Fiscal Office recently released on the state’s demographics which hints that we are not thinking sustainably. We are looking at a more expensive future, and we’re going to have fewer and fewer Vermonters of working age to fund it. Currently, one in five Vermonters is over 65, and the trend is  moving toward one in four. At the same time, we’re looking at massive spending proposals that will need to be funded with taxes on that ever-shrinking population of wage earners. In this update alone, we’ll discuss proposals that look at levying a 1% payroll tax (~$120 million), a 0.58% payroll tax (~$85 million), a 70 cent tax on heating fuels (about $1.2 billion), and numerous other taxes such as that on internet services ($18.4 million). 

We understand that taxes must be raised for the essential function of government and, thereby, our economy, however, any steward of our economy with an eye toward sustainability has a reason for concern. 

In this week’s update; 

• Budget Adjustment Act passes house
• Senate childcare spending bill released; no revenue source identified
• Paid family and medical leave proposal reviewed in the House
• Cost of Clean Heat Standard estimated at 70 cents per gallon, $1.2 billion to economy 
• Report on Universal School Meals funding suggests taxing the internet, sugar, or sales tax increase 
• House Commerce hears proposed costly changes to the unemployment insurance system 
• The Laundry List​