As I travel around the state visiting with Vermonters, I am grateful for how well we are doing. Our unemployment rate is consistently among the lowest in the nation. We are coming out of the Great Recession in better condition than our neighbors. Our revenues have rebounded by 27 percent since its depths. And we are fighting back from Tropical Storm Irene stronger than ever.
But the people of our state are not satisfied with just doing well, and neither am I. There are still Vermonters who are working hard, but struggling to get by. Others would like to return to work but are trapped in a system that stifles the desire to get ahead. And there are still Vermont kids who are not getting what they need to be ready for school, work and life.
To fix these long-simmering problems, we must make sure we are spending our resources to help our fellow Vermonters get back on their feet and back to work in the smartest way we can. Right now we are not doing so.
So my budget focuses on ways we can ensure a better future for our children, because that is the best way to combat poverty and strengthen Vermont. I have presented three related proposals to advance this goal.
First, I have called for rethinking the way we educate our kids. More well-paying jobs filled by well-prepared Vermonters is the key to our state’s future, and we will get there by recognizing that education means much more than what happens within the traditional four walls of a classroom. Education must be nimble, individualized, and technology-driven to prepare children starting in their earliest years for success in their careers, particularly in fields like science, technology, engineering, and math. Vermont employers are already clamoring for workers ready to fill these skilled jobs, and we expect an even greater need as our economy continues to grow.
Second, we must support both education and our economy by ensuring that quality childcare is available for parents who need that help to stay or advance in their jobs. For many Vermonters, the biggest barrier to work and prosperity is the inability to afford quality childcare. This prevents parents from taking jobs that would lift their families out of poverty, and it limits the choices they can make to give their children a strong start. That is why I propose investing $16.7 million of the state’s allocation for the Earned Income Tax Credit directly for the benefit of lower-income Vermonters who need quality childcare.
Some have criticized this proposal, instead calling for funding childcare subsidies through higher taxes. But Vermont already enjoys one of the most progressive tax systems in the country. Our current EITC allocation is among the highest in the nation, and has risen 49 percent in the past eight years because it is federally indexed. We can invest a portion of the combined state and federal EITC, roughly 15 percent, in a more targeted way that will directly help children who live in poverty without imposing an additional tax burden on hardworking Vermonters while our state struggles out of the worst recession any of us have seen.
Finally, I believe that we can strengthen our state and offer better opportunities for lower-income families by addressing the so-called “benefits cliff” in our current welfare system. Our system now penalizes Vermonters who want to work, because as they begin to earn money, we reduce their childcare and other benefits by even more, causing many to stay out of the workforce or quit their new jobs.
Right now, Vermont is the only state in the country that extends welfare Reach Up benefits indefinitely, without interruption, to the entire eligible household. Doing so does nothing to encourage people to get a job. That is why my proposal to dramatically increase our childcare subsidy is coupled with a fair, five-year limit on our welfare-to-work benefits. Together, these proposals help fix the benefits cliff, stabilize our welfare-to-work program, and promote opportunity for welfare recipients.
At the same time, we will provide protections and programs for those who are unable to be in the workforce, to fight poverty and support those in need. Indeed, even with the changes I have proposed, our budget for next year’s human services programs has increased. There are other investments in my budget to support our children, improve our education system, and strengthen Vermont as well, such as free school meals for all low-income students, and funding to lower the cost of higher education for Vermont students. I also proposed greater investments in workforce development, and scholarships for Vermonters who train in a science, technology or math field and commit to working in our state.
We have an opportunity to rethink, revise and improve how we invest in helping to lift Vermonters out of poverty and into the workforce. It will take hard work and a willingness to reconsider beliefs and assumptions that many of us have held for a long time, me included. I am ready for the challenge, and I ask you to join me.