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Eric L. Davis: Gov. Scott’s vision must become a budget

Gov. Phil Scott used his inaugural address last Thursday to sketch out broad themes on which he hopes to concentrate over the next two years. Detailed policy proposals to flesh out these ideas will come later, particularly in the governor’s budget address.
Scott sees the economic challenges facing Vermont as closely linked to the state’s demographic challenges. Vermont is one of the oldest states in the nation. Since 2000, the number of 25- to 45-year-olds in Vermont — the prime working-age generation — has declined by 2,000 to 3,000 people annually. Even though Vermont’s unemployment rate is one of the lowest in the nation, the aging of the state’s population means that there are 16,000 fewer Vermonters working today than in 2010.
According to Scott, in order for the Vermont economy to grow faster, and thus to generate the resources needed to support expanding demands for state services, the state’s working-age population must increase. During the campaign, Scott said that Vermont’s population should grow from the current level of about 625,000 to 700,000 over the next decade. This amount sounds large but, over a 10-year period, would amount to an annual population increase of less than 2 percent — lower than in other New England states such as Massachusetts.
Scott said that population growth will require not just economic development initiatives to attract new private-sector jobs to Vermont, but also housing initiatives. He wants to increase the supply of available and affordable housing, both for new workers and for young people seeking to remain in Vermont after graduating from college.
Education was another of the governor’s major themes. He sees education as an integrated set of programs focused not just on 5- to 18-year-olds, but as a continuum starting with early childhood education, running through K-12 education, and ending with both formal post-secondary education and job training and workforce development programs.
In his inaugural, Scott argued that Vermont spends too much on K-12 education. Picus and Associates, consultants engaged by the Legislature in 2014 to look at education spending, reported that Vermont could probably reduce K-12 spending by 10 percent without affecting the quality of instruction. Per-pupil costs are currently running close to $19,000 annually, a consequence of the small size of many Vermont schools.
Scott also said that Vermont spends too little on early childhood education and on post-secondary education. Programs for 2- to 5-year-olds can make a huge difference in terms of a child’s readiness to learn. Additional resources would enable UVM, the state colleges, and Community College of Vermont to reduce tuition and fees for Vermont students, and to strengthen programs that would encourage more high school graduates to remain in the state. The governor’s detailed proposals on education will be forthcoming.
Scott recognized that initiatives such as expanded workforce and economic development programs, housing incentives, and education restructuring will require a larger financial contribution from the state. So too will continuing to clean up Lake Champlain. At the same time, the governor firmly believes that Vermont’s tax capacity is “tapped out.” There is no room to increase taxes or fees, either on individuals or on the business community.
A further complication Scott faces is the uncertainty associated with the economic and budget policies of the Trump Administration and the Republican Congress. How much federal funding will come to Vermont, especially for health care and infrastructure? What will be the rates of economic growth, inflation and interest rates during the next two years?
One of Gov. Scott’s biggest challenges over the next few months will be to develop a detailed budget that responds to both the governor’s priorities and the uncertainty in Washington, and that can be approved by both houses of a heavily-Democratic legislature — perhaps after a gubernatorial veto is sustained in the House.
Eric L. Davis is professor emeritus of political science at Middlebury College.

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