Leadership and the Governor’s “Affordability Crisis”
For over 70 years, I’ve confronted each New Year reviewing what got better, what got worse, and what I hope for in the ensuing year. At 78, I’m grateful that I have what I need for a peaceful retirement but I want more for my fellow Vermonters.
In 2017, Governor Scott took the reins of government and has done a good job as a crisis manager (Covid and flooding) and as a navigator, steering clear of the reefs. But the waters are falling and the reefs are rising. It’s time for the kind of courageous leadership that tackles the complex challenges that make life harder and harder for many Vermonters.
I and others have written extensively about them: cost of and access to healthcare, financing public and higher ed, affordable housing, hunger, nutrition and food systems, taxation and regulatory systems, criminal justice, and the existential threat of environmental degradation. These seven issues deeply affect the lives of Vermonters, and the difficulty of solving them can no longer serve as a duck blind for executive, legislative, and judicial evasion.
Governor Scott has long taken shelter by using the term “Vermont’s affordability crisis,” citing housing, education, regulation, and taxes. But “affordability” is a function of both costs and the revenues available to pay for them. It is also a self-defeating argument, as pushing these complex challenges down the road only increases their expense and adds to the “affordability crisis.”
Vermont’s 230-year-old-motto “Freedom and Unity” urges an equilibrium between what we do for ourselves and our families and what we do for our communities. We pay a lot of attention to the “every man for himself” idea of freedom, but could do better on the “unity” part. There is no true freedom without unity.
Thirteen years ago, Bill Sayre, Kathy Hoyt, Mike Costa, and I served on a Blue Ribbon Tax Structure Commission (BRTSC) to examine and, if necessary, redesign Vermont’s tax code. We took our duties seriously and tried to do a comprehensive job over two years, but little or no action was taken on our recommendations. One of the facts we learned in our work was that Vermont had a “Gini index.” Gini is the measure of statistical dispersion intended to represent the income inequality, the wealth inequality, or the consumption inequality within a nation or a social group.
According to the Economic Policy Institute’s analysis of U.S. Census Bureau data, income inequality has grown substantially in Vermont. After decades of widening inequality, the richest 20% of Vermont households have dramatically bigger incomes ($243,900) than the poorest 20% ($25,500). The wealthiest five percent of households have incomes 9.6 times as large as the bottom twenty percent of households and 3.7 times as large as the middle ($65,700) twenty percent of households. Income is post-federal tax and includes the value of the earned income tax credit (EITC), and the value of food stamps and housing subsidies. Income is also adjusted for inflation (to 2009 dollars) and for household size. Those of us who have done fundraising in Vermont know there is significant, if discreet, wealth here.
What if Vermont were to introduce a “community-benefit investment assessment (CBIA)” under which Vermonters who earned incomes exceeding $1M a year invested 3%, those with $500,000 a year invested 2%, and those with over $200,000 a year invested 1% to raise revenue to invest in community services that educate, prevent, diagnose, and address problems before they become much less affordable to fix?
According to Vermont Tax Department 2021 data, such a community benefit assessment could produce about $184M that could be used for this upstream investment to reduce the impact of complex systems challenges before they become too expensive to fix. Founding father Ben Franklin famously stated in 1736, “an ounce of prevention is worth a pound of cure.” Have we learned nothing in the ensuing 288 years?
During our tax system redesign work, we heard from several rich Vermonters who encouraged us to tax them more. So might it make also sense for leadership to innovate by trying out a voluntary tax focused on alleviating one of the challenges mentioned above. A Vermonter could commit a special tax contribution to solving the complex challenge of their choice: affordable housing, addiction treatment, local primary care, access to higher education, or, let’s say, prison education.
Vt State Treasurer Mike Pieciak has proposed an innovative and affordable investment in the future of young Vermonters, the goal of which is reducing intergenerational poverty by creating a financial “head start” for young Vermonters. The VT Baby Bonds program would provide a $3200 bond for each child born in Vermont whose family is on Medicaid. The bond would reach an 18-year maturity at $11,000 helping to pay college tuition, or at its 30-year maturity, a value of about $25,000 providing a leg up for a young person seeking a down payment on a home or for starting a business. The $6.4M annual investment would be funded from the unclaimed property general fund not from new taxes.
In either case, the Baby Bonds program is a unique and innovative way to help young Vermonters address the “affordability” crisis without creating a new one.
Examples of the cost-efficiency of prevention, education and early intervention:
It’s cheaper to screen young people with trained school nurses who detect and address adverse childhood experiences (ACES) and then support their families with local community resources in dealing with the issue. This early intervention reduces more costly downstream responses like incarceration at more than $57,000 a year. The total cost impact to Vermont in 2018 for untreated adverse childhood experiences (ACEs), extrapolated from detailed special education, opioid addiction, mental-health direct treatment and child-welfare family services is calculated to be $411,238,605.
It’s also more cost-efficient to have primary-care screening immediately accessible and affordable in our local communities to deal with emerging health issues and chronic disease management than to wait until patients are truly in a medical emergency and must be dealt with in a more expensive emergency room hospital setting.
In 2023, Vermonters spent $6.5B on healthcare, an amount not far below the entire $8B budget for the whole State of Vermont ̶ or $10,442 per person. With an average annual income of $41,680, this means Vermonters are spending roughly a quarter of their gross income on healthcare. And according to the Joint Fiscal Office, the livable per hour wage for a working couple with two children is about $25/hour, whereas the legal minimum wage is $13.67/hour ̶ a steep shortfall for most Vermonters. For a Vermonter making the legal minimum wage of $28,434/year. healthcare cost is almost a third of their annual income. According to the State Auditor’s office, healthcare costs have more than doubled since 2000, adding that if healthcare spending in Vermont had increased at the same rate as the U.S. average, Vermonters would have saved roughly $1 billion. Healthcare is the true “affordability crisis.”
Likewise, it’s more cost-efficient to assist new families trying to finance affordable housing than it is to address downstream homelessness. According to VTDigger, for the second year running, Vermont has the second-highest per capita rate of homelessness of any state in the country at 51 out of every 10,000 Vermonters. It has managed to shelter 96% of unhoused individuals in emergency shelters or some form of temporary housing. Are 3000 seasonal hotel vouchers truly cheaper than investing in more mixed-income housing, especially considering the health consequences of “living rough”? From 2022 to 2023, the number of households with children becoming unhoused jumped 36%, and a disproportionate number of Black Vermonters were also homeless. Is it not time for a community benefit investment discussion?
There are lots of opinion pieces and letters-to-the-editor about Vermont’s progressive leaders allowing our cities to degenerate, with homeless people living on the streets, addicts surrounded by needles shooting up on sidewalks, unsavory panhandlers importuning locals, and shoplifters helping themselves in downtown stores. Sadly, we like to forget that our current systems have failed us precisely because we’ve ignored the need to expand them. The above are all symptoms of a society that has failed to invest in the wellbeing of all its citizens. Homeless people need housing, addicts need treatment, panhandlers and shoplifters need job training and opportunities for economic self-sufficiency.
Our current criminal justice system may temporarily remove these unsavory reminders of our socio-economic failings from view, but they do not solve our long-range problems.
In my short time working in New York City when I was first exposed to street people, I took the time, when I could, to sit down on the pavement next to a sidewalk denizen and talk with them. I was always surprised. These were not bad people ̶ though, like most of us, some had made bad choices ̶ but they had no one to help them back into society and had lost any hope other than turning in vain to those who tried to ignore them. Talk to someone in need; you may be surprised.
I’m not saying that there are not among us those from whom we need protection, but they are the exception. Most people simply need our help and direction and a sense of security in their daily lives. All the evidence shows that to provide that is cheaper than jailing them.
While housing, education, the environment, and food systems definitely need legislative and executive attention, it’s clear that physical and mental healthcare and addiction treatment resources are the main drivers of the Governor’s “affordability crisis.” So let’s start by moving our socio-economic investments upstream where they’re more cost- efficient.
And let’s explore new revenue resources that will ultimately save us money and lead to a healthier, more abundant society. We can’t afford to fix downstream what we ignore at its source.
My hope for the New Year is that leadership will lead.