By Glenn Russell/VTDigger
Gov. Phil Scott arrives in the House chamber to deliver his State of the State Address before a joint session of the Legislature at the Statehouse in Montpelier on Thursday, Jan. 4.
The governor outlined challenges and opportunities for the state in the coming year. And having already started working with legislators on key initiatives, he dedicated his address to highlighting why it is so critical for them to prioritize three key issues: public safety, affordability, and housing.
“Public safety, affordability, and housing are the issues that demand our immediate attention because Vermonters are seeing, feeling, and living them every single day. And because these issues are critical to reversing our demographic trends,” Gov. Scott said.
The governor also highlighted the progress that has been made over the past several years on key priorities and the need to build on that work.
“We’ve already laid the foundation, literally in many cases, to help revitalize communities across the state. With $1 billion from ARPA, we’re investing in over 500 initiatives, in 160 cities and towns in all 14 counties. From big capital projects to small renovations, what they all have in common is an investment in the basic tools a community needs, to keep from falling behind and spark momentum for more good work.”
“So following through on each of our federally funded investments, including what we’ve allocated for state match, is one of the most important actions we can take this session. We’re also aligning this work with flood recovery, and the new federal dollars that come with it, to help more cities and towns restore their vitality and expand economic security. Catastrophe into opportunity.”
The Governor concluded by celebrating the example many Vermonters have set to support and revitalize their communities, calling on everyone to think about how they can contribute.
“Across the state — from Alburgh to Vernon, Island Pond to Bennington, and everywhere in-between — there are things, large and small, that build community and give these places character and identity,” he said. “What is it for you? Whatever it is, if it matters to you, it’s time to step up, get involved, and make sure it remains for years to come.”
“Strengthening our communities, connecting with our neighbors, doing our part, however big or small, is how we prove there is a better way,” the Governor added.
Excerpts from Governor Scott’s address follow:
In his second Inaugural Address, Governor Weeks talked about recovering from the Flood of 1927. He said, “The common watchwords” were “progress and rehabilitation,” noting the true spirit of Vermont is its “indomitable courage in a time of adversity.” And that “the faith and valor of Vermonters has turned catastrophe into opportunity.”
Progress and rehabilitation. Catastrophe into opportunity.
From the first struggles of the pandemic to the rising waters of July and December, and a once in a century opportunity to revitalize our communities — the indomitable courage of Vermonters is as strong as ever.
This session, let’s honor their resilience and strength, kindness and generosity — not only in flood recovery, but by working together to address persistent problems, like demographics, housing, affordability, and recent increases in violence and crime.
To meet this moment, we are going to have to prioritize, set aside good things that are less urgent, and rise above the toxic polarization of America’s political parties to focus our work directly on these fundamental issues.
If we do, we’ll turn catastrophe into opportunity once more.
***
President Clinton’s advisor James Carville famously said, “It’s the economy, stupid.”
Now, I’m not calling anyone stupid, but I think you’ll get my point that in Vermont, we could insert “demographics” in place of “economy.”
I get asked all the time, even by some of you, “where did all the workers go?”
So let me share three numbers from your Joint Fiscal Office that tell you everything you need to know: 14,000, 28,000 and 48,000. As of 2022, we have 14,000 fewer kids under the age of 18 than we did in 2010. During that same period, we have 28,000 fewer adults ages 40 to 54, which is the core of our workforce. And we have 48,000 more over the age of 65. This is all within just 12 years, but this is nothing new. It’s been happening for decades.
Let that sink in for a moment.
As the JFO points out, this can mean higher per pupil costs, declines in income and sales tax revenue, and increased demand for services like healthcare.
They conclude, if nothing changes, and I quote, “Vermont’s ratio of older residents to working-aged people will continue to rise, placing a greater burden on workers to support both young and old.”
If this sounds familiar, it’s because you heard it from me in 2017, when I said, “The biggest obstacle we face to economic sustainability, is a shrinking workforce.” In 2018, I said demographic trends are, “shifting the tax burden onto fewer and fewer people.” Again in 2020, I said, “Our demographic crisis is, without question, the greatest challenge we face as a state.”
Unfortunately, it hasn’t gotten any better. It continues to be an issue we must solve to meet today’s obligations, and make every investment needed for the future.
And to have any chance of reversing our demographic trends, there are three issues we can’t ignore: public safety, affordability, and housing.
These challenges are urgent, immediate, and we must address them this session.
***
For as long as I can remember, our safe, close-knit communities, and the peace of mind healthy cities and towns provide, have been integral to keeping and attracting families to our state.
But with crime rising in too many places, I fear many see the Vermont they know, slipping away.
A growing number of headlines share news of the latest murder, drug-related shooting, and small businesses struggling with increasing vandalism and theft.
Here’s the thing, it’s not just the headlines. According to reports from the Council of State Governments, in 2017 Vermont had the second lowest property crime and second lowest violent crime rates in the nation. By 2022, we had dropped to 18th and eighth.
And in the last 10 years, violent crime reported to police increased 56%, aggravated assault by 65%, sexual assault by 76%, and homicide by 166%. We cannot deny these trends.
When those who victimize others are put back on the streets, hours after being apprehended only to reoffend again and again, Vermonters question law enforcement, prosecutors, our courts, and they question the wisdom of the work done here in this building.
Now, I want to give credit where credit is due: We’ve made progress on justice reform and treating addiction as the public health crisis it is.
But when spiking crime rates make it clear that not all the changes have been effective, we have a responsibility to take a step back and consider other strategies.
We must make a real effort this session to solidify our place as the safest state in the country and reverse the increases we’re seeing — both for the people we serve and the victims of these crimes.
***
We must also acknowledge our crisis of affordability is making it difficult to address public safety, as well as other areas like education and healthcare. And the high cost of everyday life in Vermont is dulling the tools we’ve put in place to keep and attract working families.
In three weeks, I’ll present my budget for Fiscal Year 2025, and it will be a much different picture than previous years. “Sobering” comes to mind.
With historic one-time federal aid ending, another large increase in our pension obligation, and last year’s spending decisions catching up to us, we are back to where we were several years ago with difficult decisions to be made.
For many of you, this will be the first time you’ll work on a budget without hundreds of millions of dollars in surplus. For others, it’s déjà vu.
Once again, we’ll face the discomfort of saying “no,” choosing between many good things, and maintaining the discipline to focus on what Vermonters need most.
I continue to believe we need to keep our spending within existing revenue. So in full transparency, you can expect my budget will increase by about 3%.
I know from experience, many of you view 3% growth as an “austerity” approach.
So it’s important to know that with this increase, and after meeting our obligations, we have very little money left. So, if you go higher, we will be spending more than we’re taking in, leading to higher taxes and fees, adding to the burden Vermonters are already feeling.
I’m sure you’re aware the federal government just announced its increase for those on social security, which was 3.2%. So if our seniors are expected to manage to that, it seems as though we should do the same.
Now, I’m a realist, and I know you have a super majority. You’ve proven the final budget, and the growing burden of taxes, fees and other policy-driven costs, is in your hands.
So all I can do is make my case, which is the same case I’ve made to Vermonters since I first ran for governor. What I hear from people every day is they can’t afford to pay more, or even what they are paying now.
***
Unfortunately, the cost of our Pre-K through 12 education system has already grown beyond the means of many.
As you know, it’s about to grow even more. Because if nothing changes, we’ll see an estimated 18.5% increase in statewide property tax bills. And that’s after we use a $37 million Education Fund surplus to buy rates down.
In total, this would be a quarter billion-dollar tax increase on Vermonters. For a family with a $250,000 home, their bill could go up by $650 a year. And with a $400,000 home, you could pay an additional $1,000.
Before you brush this off because of income sensitivity, remember the vast majority will still see an increase. And renters don’t typically pay property taxes directly, but if a landlord receives a $1,000 increase on their four-unit building, I’m pretty sure it’ll be passed on to those who live there.
So think about those folks who are just barely getting by — living paycheck to paycheck, already deciding what bills to pay and what to do without. Or the working parents, who need every extra penny so their kids can go to summer camp.
I appreciate the optimism I’ve heard from some of you, who think we can just buy it down. Some even committed to getting it down to 2%, or lower. So to be clear, that would cost $225 million.
Keep in mind, the Education Fund is now more than $2.1 billion dollars. With fewer than 83,000 Pre-K through 12 students, we’re spending about $25,000 a year per student, among the very highest in the country. And that might be okay with me if we were leading in student performance.
***
We need to jumpstart housing in the areas that need it most.
Because this crisis is not only holding us back when it comes to filling jobs and refilling our schools — it’s hurting Vermonters here right now. Due to a lack of housing, and our tax and regulatory policies, rents and purchase prices are far too high, and rising.
Decades of studies and data show it’s too expensive, too complicated and too slow to buy, rehab and build in Vermont.
Since March of 2020, we’ve invested over $500 million to fix vacant units, construct new homes and expand shelter capacity. This is unprecedented. And it’s on top of the $37 million dollar housing bond we passed in 2017, which at the time was the biggest investment we’d ever made.
We have made progress, and it far exceeds what we were doing 10 years ago. But $500 million is a lot of money, so we need to be honest about what we’re getting, why it costs so much, and how to lower it.
Overall, we’re seeing about 2,200 residential units permitted each year. About one-third of these, around 700, are state funded. Census data and vacancy rates show that to meet current demand and create a healthy market that puts downward pressure on prices, we need 6,800 units right now. Most of our funding goes to homes that cost, on average, $450,000 per unit to develop. $450,000! So that’s $3 billion in public and private funding, just to fill the gap we have today.
***
Last year I said, “we won’t be able to make the most of this opportunity if we don’t address the decades-old regulations holding us back.” While we took some steps, I know many of you would agree, we need to do a lot more.
The fact is, Act 250 did exactly what it was intended to do. It slowed down growth, and in some cases, stopped it altogether. But it was enacted at a time when we were growing way too fast.
We’ve committed the funds, and laid the groundwork, but if we don’t truly address Act 250, we won’t solve our housing crisis.
Every single one of you, and the people you represent, need a voice in this debate. This issue is too important and too consequential for two committees, and a couple of special interest groups, to control the outcome.
If we make commonsense improvements, we can give young families the decent, affordable homes they need. We can offer seniors a chance to enjoy retirement, without the burden of a large home they can’t afford. And we can put homeless Vermonters in real homes, not over-priced hotel rooms we can’t afford.
By jumpstarting housing for working families, we can revitalize communities, refill our schools, and make our neighborhoods more inviting in all 14 counties.
***
I’m optimistic about our future because of the people of Vermont.
On the morning of July 11, a flood-damaged grocery store in Windsor County was filled with neighbors mucking out. And they didn’t stop there. With rows of undamaged produce and perishables, locals acted quickly to distribute it to those in need. Donating coolers and time, they helped hundreds of their neighbors by delivering food to a senior center, mobile home park, the local food shelf, and more. Even when they had to jump on an ATV to get over downed trees and washed-out roads.
This is “Vermont Strong.”
