by Angela Chagnon
Montpelier – During Tuesday’s Democratic Caucus meeting, Rep. George Till (D-Jericho) announced his plans to introduce a bill to raise taxes on cigarettes and add a new tax on candy. At the Joint Fiscal Office presentation on revenue, another legislator asked if it was time to raise taxes on food and clothing.
That won’t even come close to covering Vermont’s $150 million to $180 million budget gap for the year 2012 according to Tom Kravet of the Joint Fiscal Office.
Tuesday afternoon, Kravet gave legislators a presentation of the state’s projected revenues. “This recession has been as severe in many respects as the Great Depression,” Kravet said. “[But] there are hopeful signs now.”
According to Kravet, consumer sentiment is low, and that is affecting consumer spending which makes up about 70% of our economy. However, the stock market is improving and exports are doing well. Canada receives about 45% to 50% of Vermont exports, and the rising worth of the Canadian dollar is bringing more business to the state.
Temporary employment has risen 30%, which Kravet said typically leads to better employment numbers overall. Vermont’s manufacturing section is doing well, producing about $2 billion more a year even though the manufacturing workforce is down by 14,500 workers. “There is a tremendous growth in productivity,” remarked Kravet.
Although Kravet showed that Vermont’s unemployment rate is one of the lowest in the country, the percentage of discouraged workers, those who have given up on finding a job, is 13%. The national number is 16.8% for discouraged workers. Kravet concluded, “Despite years of economic policies to tilt prosperity, it hasn’t done anything.” He did point out although employment is down in most sectors, the only area of growth has been in healthcare and government.
Kravet said that the real estate market will not fully recover for several years. “The situation is improving even though we’re still at a low rate,” he said. “Housing is not leading the economy out of the recession.”
After the presentation, Kravet was asked what his recommendations were for taxing and spending. “Revenue is this far short, you either have to cut spending or raise taxes or some combination of both,” he replied, noting that Vermont couldn’t count on more revenue.
Incoming Governor Peter Shumlin has promised not to raise any new broad based taxes. Vermont taxpayers, he notes, are “tapped out.” His Democratic colleagues in the legislature, however, may not see it that way.