Archive for the 'Opinion' Category

As an organization chiefly concerned with aiding in economic development for Chittenden Country, GBIC often speaks with Vermont employers to figure out what helped encourage them to set up their business in our state. Our goal is that if we can find a common denominator to support, it will encourage other potential employers and entrepreneurs to choose to do the same. Yet after hearing of the many positives that make Vermont a great choice, what often comes out is that choosing to do business in Vermont sometimes is in part a decision made with the heart and not with the head (or at least not without rationalizing with your accountant). Every employer understands the cost environment in which they are establishing their business when the decision is made to take the risk of opening their doors. However, as Vermont continues to increase both real taxation rates and new areas of taxation, there is growing concern that little seems to be done to encourage the expansion of Vermont’s tax base, rather than simply drawing more from the same wells.

What is abundantly clear is many Vermont entrepreneurs and employers have such a genuine love for Vermont that initially deters them from seeking locations outside of our borders. The problem, as has been seen with some of the most successful Vermont companies, is that with success comes the pressure for further growth; boards, shareholders and continued competitive strains (that may or may not have ties to our state) force some traditionally Vermont based employers to move aspects of their operations to states or countries with more advantageous tax policies and structures. Competitiveness out-places love of place.

Vermont’s answer has tended to focus on asking more from the same pools of employers. The situation is analogous to sugaring: either extract more from the same trees, or establish an environment in which more saplings can thrive, be tapped and foster the growth of future forests. If you unsustainably overtap the productive trees, eventually they will die; in the case of our successful entrepreneurs, they just pick up their roots and move to Florida and/or other places that aggressively seek investment and job growth.

With the challenge of the aging demographics that our state faces, it would seem to be a prudent moment in time to examine how we can encourage entrepreneurial Vermonters (both native and who come to our expansive college and university system) to stay in the state and generate employment. If we are unable to accomplish this goal, a shrinking tax base will be forced to shoulder the weight of increased state expenditure. No one wants to see a decrease in meaningful and supportive public expenditure, but relying on the same sources for revenue will only lead to a more dramatic budget challenge in the long run. This unsustainable approach to income generation for the state, coupled with other increased cost burdens shouldered by our employers (health care, unemployment insurance etc), will surely force the hands of some Vermonters to move their businesses, and the people they employ, out of Vermont.

The Blue Ribbon Tax Commission has begun its work to look at Vermont’s tax structure and our overall competitiveness. GBIC and LCRCC have organized business people and Vermont entrepreneurs to meet with the Commission and share some concerns and ideas about how to retain our quality of place while we seek to be a place where entrepreneurs can be globally competitive.

Bill Schubart recently presented to the Champlain Forum on the topic of how Vermont needs to be move forward and, unsurprisingly, Mr. Schubart took the time to underscore the fact that we don’t know where we’re heading.  “Vermont reveres its past,” he began, “but has not been great at learning from it. Like many people and institutions it seems to need to relearn lessons repeatedly.”  However, the real point Mr. Schubart brought to the table is that we have no shortage of these lessons from which to develop an economic plan that will drive progress in our state.

“If the way forward in business is anything like government, the progression is study, plan, execute, measure and correct. Vermont rarely gets out of the study mode, perhaps because of the inherent tension between political durability and the pain and risk associated with actually leading an enterprise [...]The cycle of study, plan, execute, measure and correct in Vermont usually ends with “study” and usually in the summer. The sheer number of printed but unexecuted “summer studies” could probably provide fuel for Vermonters’ woodstoves for next year.”

This year our state (and the rest of the country) faced considerable pressures and constraint on budget income and expenditures.  This led to the Legislature deciding to convene a committee to take a top-down examination of revenue-side budget sources (essentially a review of taxes and fees) within the next two years.  While this appears to be promising, for it to show real value it must do what so many other studies cannot: follow through on the recommendations from the committee.  And while it’s easy to place blame if we’re not satisfied with the results, Mr. Schubart points out that “We’ve become adept at blaming leaders, anyone other than ourselves, but the reality in a democracy is we are led, or not, by the leaders we ourselves choose.  In the end, we are responsible.”

But this is just the beginning of where we need to find opportunity in challenge.  It is not just enough to examine traditional sources of state income, but to generate new ways of broadening our employment/employer base by actively encouraging and supporting those who are driving our economy.  This shouldn’t mean simply throwing money at the problem as states such as South Carolina have done, but it does mean implementing and fully supporting programs designed to be meaningful for employers to grow, stay and possibly relocate to within our borders.  It’s not about picking winners when you make a focused economic plan, it’s about consolidating resources and delivering them through clear, responsible channels that have direct interaction with employers.

In an effort to clearly identify where Vermonters agree our state should develop, GBIC is examining two of the most complete, community driven economic reports our state has seen in recent memory published by the Commission on the Future of Economic Development and the Vermont Council on Rural development, respectively.  By examining where these reports overlap and agree, GBIC hopes to identify immediately actionable recommendations for the short term while laying groundwork to aid in a long term comprehensive economic plan for Vermont.