Vermonters are understandably proud of their scenic, mostly rural and unspoiled state, so it may have been a little jarring to hear Gov. Peter Shumlin talk about a “full-blown heroin crisis” and a mounting “hopelessness that can help drive drug habits.”
Jarring, but not exactly surprising. Even as just an occasional vacationer, for years I have heard about a swelling problem with heroin in the small city of Rutland, at the western foot of the Green Mountains. Overall, Shumlin said in his state of the state address, treatment for opiate use has increased nearly eightfold since 2000.
Which brings us directly to the question: What ails Vermont?
If we can tear our gaze away from those green hills, red barns, snowy ski slopes and brilliant fall colors, we might see a statistical picture of a state that is stagnating, like a retiree with too little to do. Bodies decay under such conditions, and spirits do too.
With an enviable unemployment rate of 4.4 percent for November, compared to the national 7 percent at that time, you might think Vermont’s economy is booming, much like that of equally rural, oil-fed North Dakota. But it isn’t. There were about 335,000 Vermonters (from a total statewide population of about 626,000) working that month, including the self-employed. In November 1999, the state counted 328,200 workers. That’s a pitiful net growth of fewer than 7,000 jobs in 14 years. By the way, North Dakota - with a population only slightly larger than that of Vermont - gained around 50,000 jobs in the same 14-year period.
The recession of 2008-2009 is not a big factor. After recovering many of the jobs lost in the downturn, Vermont actually lost some jobs during the past year. Unemployment fell during the same time, however, from 5 percent to 4.4 percent, as more people left the labor force than entered it.
Overall, Vermont lost a handful of residents last year - the first population downturn in three-quarters of a century, according to the Census Bureau. From the 1960s through the 1980s, Vermont gained residents at double-digit percentages. The state responded with numerous measures to curb development, including a land-gains tax of up to 80 percent on property that is acquired and quickly subdivided, usually for new housing developments. From 1990 to 2000, the population increased only 8.2 percent. From 2000 to 2010, the net gain was a scant 2.8 percent. These are not annual percentages; these are percentages for the entire decade. From 2010 to now, the growth is barely above zero.
Similar trends are playing out nationally, but they are exaggerated in Vermont. The state is older and much whiter than average. The state’s percentage of Hispanics (1.5 percent) is the second-lowest in the country; the percentage of African-Americans (1 percent) is third-lowest. These demographic groups tend to have higher birth rates than non-Hispanic whites.
It is no surprise that Vermont’s population of school-age students is shrinking at an alarming rate. There were fewer than 90,000 school-age Vermonters in 2011-12, according to the state, compared to more than 106,000 in 1996-97. The school population fell in all 15 of those years.
As school enrollments fall, costs per student are rising. The state spent about $13,500 per elementary and secondary student this year, up about 30 percent from a decade earlier.
Vermonters seem to think their state is a great place to live, but it seems not too many folks from other places agree.
Vermont’s notably chilly weather must play a role, as does its remoteness. But New Hampshire is not tropical either, and it has attracted considerable growth and a thriving technology industry, especially the southern region close to Boston. The state’s population is more than double Vermont’s, and it grew by more than 6 percent between 2000 and 2010.
I think Vermont’s tax structure has a lot to do with the difference between its performance and its neighbor’s. Besides the aforementioned tax on relatively short-term gains from the sale of land, the state has a steep income tax, is among the minority that imposes an estate tax, has a significant sales tax, and also provides a property tax break to households with less than $90,000 of annual income, which shifts more of the burden to upper-income residents. New Hampshire has no land gains tax, no tax on wages, no estate tax and no sales tax.
Taxes are not the only factor, however. Egalitarian Vermont, which sent self-described socialist Sen. Bernie Sanders to Washington, has a complex and cumbersome property tax system in which wealthy communities directly subsidize schools for poorer locales. The system makes it complicated and expensive for such communities to raise money to spend locally on programs such as enriched extracurricular activities and advanced placement classes. Though Vermont’s schools are widely considered to be pretty good, they do not rank highly in the percentage of graduates who go on to four-year college degrees.
Likewise, the state’s varied restrictions on development discourage the creation of new industries and the jobs they might bring. There is a historical basis for Vermont’s anti-development bias. In the years before the Civil War, the state was nearly denuded of trees because of a boom in farming and raising livestock, especially sheep. The barren hillsides poured choking silt into the streams below. By the start of the 20th century, Vermont had to go so far as importing white-tailed deer from New York to restock its population.
Many of the state’s residents today prize the small-town culture. They treasure handmade crafts and artisanal, organic, locally grown foods. I have nothing against these things; I like many of Vermont’s products, including chocolate, wooden crafts and maple syrup. But you don’t attract many new jobs with these industries, and without jobs, you don’t attract many young workers and their children. You don’t create many opportunities for the young people who are already present, either.
The only reasons for Vermont to have an epidemic of drugs and hopelessness are man-made. When heroin is sold just around the corner from the farmer’s market, something must be wrong. I think I understand why Vermonters have adopted the policies that govern their state today. I do wonder, though, whether they are willing to change their policies if they don’t like the results.
Posted by Larry M. Elkin, CPA, CFP®
photo by Heather Katsoulis
Vermonters are understandably proud of their scenic, mostly rural and unspoiled state, so it may have been a little jarring to hear Gov. Peter Shumlin talk about a “full-blown heroin crisis” and a mounting “hopelessness that can help drive drug habits.”
Jarring, but not exactly surprising. Even as just an occasional vacationer, for years I have heard about a swelling problem with heroin in the small city of Rutland, at the western foot of the Green Mountains. Overall, Shumlin said in his state of the state address, treatment for opiate use has increased nearly eightfold since 2000.
Which brings us directly to the question: What ails Vermont?
If we can tear our gaze away from those green hills, red barns, snowy ski slopes and brilliant fall colors, we might see a statistical picture of a state that is stagnating, like a retiree with too little to do. Bodies decay under such conditions, and spirits do too.
With an enviable unemployment rate of 4.4 percent for November, compared to the national 7 percent at that time, you might think Vermont’s economy is booming, much like that of equally rural, oil-fed North Dakota. But it isn’t. There were about 335,000 Vermonters (from a total statewide population of about 626,000) working that month, including the self-employed. In November 1999, the state counted 328,200 workers. That’s a pitiful net growth of fewer than 7,000 jobs in 14 years. By the way, North Dakota - with a population only slightly larger than that of Vermont - gained around 50,000 jobs in the same 14-year period.
The recession of 2008-2009 is not a big factor. After recovering many of the jobs lost in the downturn, Vermont actually lost some jobs during the past year. Unemployment fell during the same time, however, from 5 percent to 4.4 percent, as more people left the labor force than entered it.
Overall, Vermont lost a handful of residents last year - the first population downturn in three-quarters of a century, according to the Census Bureau. From the 1960s through the 1980s, Vermont gained residents at double-digit percentages. The state responded with numerous measures to curb development, including a land-gains tax of up to 80 percent on property that is acquired and quickly subdivided, usually for new housing developments. From 1990 to 2000, the population increased only 8.2 percent. From 2000 to 2010, the net gain was a scant 2.8 percent. These are not annual percentages; these are percentages for the entire decade. From 2010 to now, the growth is barely above zero.
Similar trends are playing out nationally, but they are exaggerated in Vermont. The state is older and much whiter than average. The state’s percentage of Hispanics (1.5 percent) is the second-lowest in the country; the percentage of African-Americans (1 percent) is third-lowest. These demographic groups tend to have higher birth rates than non-Hispanic whites.
It is no surprise that Vermont’s population of school-age students is shrinking at an alarming rate. There were fewer than 90,000 school-age Vermonters in 2011-12, according to the state, compared to more than 106,000 in 1996-97. The school population fell in all 15 of those years.
As school enrollments fall, costs per student are rising. The state spent about $13,500 per elementary and secondary student this year, up about 30 percent from a decade earlier.
Vermonters seem to think their state is a great place to live, but it seems not too many folks from other places agree.
Vermont’s notably chilly weather must play a role, as does its remoteness. But New Hampshire is not tropical either, and it has attracted considerable growth and a thriving technology industry, especially the southern region close to Boston. The state’s population is more than double Vermont’s, and it grew by more than 6 percent between 2000 and 2010.
I think Vermont’s tax structure has a lot to do with the difference between its performance and its neighbor’s. Besides the aforementioned tax on relatively short-term gains from the sale of land, the state has a steep income tax, is among the minority that imposes an estate tax, has a significant sales tax, and also provides a property tax break to households with less than $90,000 of annual income, which shifts more of the burden to upper-income residents. New Hampshire has no land gains tax, no tax on wages, no estate tax and no sales tax.
Taxes are not the only factor, however. Egalitarian Vermont, which sent self-described socialist Sen. Bernie Sanders to Washington, has a complex and cumbersome property tax system in which wealthy communities directly subsidize schools for poorer locales. The system makes it complicated and expensive for such communities to raise money to spend locally on programs such as enriched extracurricular activities and advanced placement classes. Though Vermont’s schools are widely considered to be pretty good, they do not rank highly in the percentage of graduates who go on to four-year college degrees.
Likewise, the state’s varied restrictions on development discourage the creation of new industries and the jobs they might bring. There is a historical basis for Vermont’s anti-development bias. In the years before the Civil War, the state was nearly denuded of trees because of a boom in farming and raising livestock, especially sheep. The barren hillsides poured choking silt into the streams below. By the start of the 20th century, Vermont had to go so far as importing white-tailed deer from New York to restock its population.
Many of the state’s residents today prize the small-town culture. They treasure handmade crafts and artisanal, organic, locally grown foods. I have nothing against these things; I like many of Vermont’s products, including chocolate, wooden crafts and maple syrup. But you don’t attract many new jobs with these industries, and without jobs, you don’t attract many young workers and their children. You don’t create many opportunities for the young people who are already present, either.
The only reasons for Vermont to have an epidemic of drugs and hopelessness are man-made. When heroin is sold just around the corner from the farmer’s market, something must be wrong. I think I understand why Vermonters have adopted the policies that govern their state today. I do wonder, though, whether they are willing to change their policies if they don’t like the results.
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