Will Vermont continue to be a going concern?


Dear Editor,

In the field of auditing companies, nonprofits and government entities, auditors determine whether an entity can continue to operate. Auditor concerns are if an entity has lost a significant customer, cannot secure financing, or lost a major supplier or key personnel. Vermont state government has gotten itself to a place where, due to open-ended financial commitments, one wonders if the state can continue to function as it has in the past.

Presently, significant matters must be dealt with within the state government simultaneously. Each carries financial implications.  

One often-stated issue is that the state and local government entities have no more pandemic funding from Washington. It is no secret that these bodies received billions of dollars between 2021 and 2023. To the surprise of some, this financial windfall has ceased, but not the programs it underwrote.

We turn to school construction funding. The rest of the state should be deeply interested in what occurred at Burlington High School. The school was required to replace its buildings due to the discovery of PCBs — or polychlorinated biphenyls. The contaminated buildings were abandoned, and the replacement cost has exceeded $200 million. 

The State Education Construction Task Force created by the Legislature in 2023 estimated Vermont’s schools will need more than $6.3 billion just to fund in-kind replacement in the next 21 years, a number widely considered a significant underestimate. While Vermont ended its school construction aid program in 2007, it may be resurrected soon.

In addition, Gov. Phil Scott recently announced that there could be an 18% increase in property taxes this year to close the existing State Education Fund funding gap. Of course, this will be on top of what local towns and cities need to carry on their operations. 

Then, there is the crisis between those who provide health care and the state. With so much of Vermont’s health care costs going to fund Medicaid, there continues to be a perpetual war between the providers and the state. The former’s ability to survive has become dire for some. 

The drug issue is another health care problem that is drawing on 10s of millions of state dollars. Setting aside enforcement for the moment, the cost of overdosing and resulting hospitalization is staggering. Added to this, the state is the principal funder when it comes to recovery treatment, and it has thousands of residents in such programs with more waiting.

State leaders must not ignore the fact that, several years ago, it made commitments to have the state carbon neutral, starting in 2025, more by 2030, and fully accomplished by 2050. This commitment comes with a substantial unknown financial obligation for the state government and all who do business and reside in Vermont.

One can sense the desperation of some in the Legislature to fund the above by considering bringing a class action lawsuit against the oil companies for providing us with a product the oil companies knew could cause pollution and health issues. How deep into denial are we that we must resort to funding from litigation, which is decades away?

With the recent flooding disasters in central Vermont and the statewide destruction in 2011 from Tropical Storm Irene, one would think that the state would be all-out in replacing its antiquated infrastructure. But the state can only allocate so many dollars to the issue.

It now has a homelessness issue to contend with, and in the past fiscal year, more than $160 million was allocated for shelters. Not for roads, bridges and culverts.

Of course, we must not forget the elephant in the closet: the state’s multibillion dollars in unfunded pension obligations. Partially addressed several years ago, this liability just grows exponentially each year.  

The auditing principle of a “going concern” may not directly apply to Vermont. Indeed, the state will be functioning a year from now, which is the time period the “going concern” principle covers. What does the future hold as the state continues to take on huge financial projects with no funding source? The proposed unrealized wealth and surcharge income tax can only do so much.

Don Keelan, Arlington, a retired certified public accountant

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