The Vermont Bond?

Vermont state and municipal bonds are vetted and offered through the Vermont Municipal Bond Bank to larger markets where, typically, high-net-worth individuals and institutional investors then acquire them as a relatively secure investment option.

Robert Giroux, the E.D. of the Vermont Bond Bank, was quoted in a Dec. 1 Times Argus article saying, “The municipal tax exempt market that we issue bonds in has improved dramatically.” He goes on to suggest that, “Individual investors are looking for safe places to put money,” Might he also have included average Vermonters?

The average Vermonter is hard pressed typically to get 1% on savings, 2% on money markets and 3% on CD’s. Towns can currently get rates of 5% on their borrowing.

The State could both serve and engage its citizens with a cost-efficient way to allow Vermonters to invest in their own future by some means other than just taxation, which we often forget is, in fact, also an investment.

Creating an “Invest in Vermont” bond for the average Vermonter that could be marketed and bought online to minimize costs would accomplish several objectives. It would allow Vermonters to invest with a monetary return as opposed to just the socio-economic return that taxes are supposed to provide. It would eliminate some middleman costs charged by the larger firms for marketing the bonds. It would engage them in the future of their state and communities. It would provide a safe haven for the low and middle income saver, many of whose savings have been decimated by an anarchic financial system that focused on accelerating the creation of wealth for the already wealthy rather than on preservation of wealth for the average saver.

This is in great part how Americans were mobilized in the last World War effort. Even the poor could acquire War Bonds and did so. It was a safe investment with a reasonable yield and allowed everyone to participate in the national effort.

This year Vermont may issue up to $75M in new infrastructure bonds and municipalities will issue another $30 to $40M according to Giroux who also reminds us that “Tax free municipal general obligation bonds are quite safe because they are backed by the full faith and credit or highest obligation of cities and towns.”

Some Vermonter’s may no longer have the financial resiliency to participate after what has happened in financial markets, but many others would be pleased to find an alternative to current low-yield consumer savings instruments and the opportunity to invest in their own communities.

Much has been written about the Obama administration’s need to re-engage the governed in solving the problems of government. Here is a way Vermont could again innovate and lead, albeit on a smaller scale.

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