Vermont Buzz

Energy bill threatens jobs and economy

I, too, stand with the numerous businesses in support of the governor’s veto on H.520, not because I am in any way opposed to efficiency programs or the many positive elements of this bill that would help Vermont to address global climate change. My opposition stems from a concern for the adverse effect this proposal may have on Vermont’s business reputation and the fact that our legislators are reneging on a prior promise to Entergy/Vermont Yankee. If the bill were allowed to become law, it would only add substance to the contention that our business climate is unpredictable and hostile. The hastily crafted funding scheme sets a poor precedent.

Legislators have cited the profitability of Yankee’s parent company, Entergy, as another excuse to levy this tax. They have decried the amount of property taxes that Entergy pays, yet this is an agreement that was negotiated by this very body in a previous legislative session. Singling out Entergy to foot the bill sends out a negative signal to the many other profitable national firms here in Vermont. Is this a proper encouragement for employers while we are trying to attract good jobs to our state and losing our young people to states with more opportunities and lower costs of living? An unpredictable business climate coupled with higher electricity costs could significantly affect any company’s decisions to expand or relocate and invest in Vermont.

This legislative action may also have a negative impact on the state’s ability to negotiate future contracts with Hydro-Québec as well, or any other potential power generator that might consider Vermont as a place to do business.

I fully support efforts to increase efficiency measures, but there are better ways to go about achieving such goals. Vermont’s economy should not be undermined with such legislative action, nor should the integrity of this great state be devalued. Vermonters expect it and should not accept anything less.
The Legislature’s attack, on nuclear power seems antithetical to their concern with global climate change. If the goal is to truly address global warming, why then would they support a legislative initiative to target and penalize a large-scale, clean and affordable source of power within Vermont that can provide reliable electricity without significant fossil emissions; one that provides more than 600 highly technical jobs and currently contributes more than $200 million a year in economic benefit to Vermont? The connection between funding this initiative and having Entergy foot the bill is truly only a political convenience. It’s not fair, it’s not smart, and it’s not right.

I support the governor’s use of his veto pen.

Staige Davis
CEO of Lang McLaughry Spera
Former chairman, Vermont Business Roundtable

Business Climate Needs Overhaul

Recently, the announcement of Vermont’s reputation as “a [tax] punisher” has gone national. The U.S. Census Report ranked Vermont as the nation’s leading state in terms of state taxes per capita. In a subsequent Forbes Magazine editorial (April 10, 2006), the author argued that these high costs and hostile attitude toward business are reasons why Vermont’s young people are leaving the state for better job opportunities elsewhere.

Unfortunately, as we have seen in recent years, Vermont’s high costs of living and doing business have had a number of adverse consequences. For example, increasing numbers of high net-worth individuals no longer claim Vermont as their primary residence and have moved their considerable discretionary spending and income tax revenue to other states. Vermont’s multi-national companies, faced with decisions to locate or create new jobs, find the economic incentives and tax structures more favorable elsewhere. Tax-exempt, major employers such as hospitals and higher education institutions cannot relocate, and are forced to pass along their increasing costs of living/business (e.g., energy, health care) to their customers. In a Rutland Herald article on April 11th, Vermont Tax Commissioner Tom Pelham acknowledged that, “Vermonters do pay a high share of taxes, given the economy.”

Steve Forbes in his editorial, “Taxaholics, Take Note” stated that, “If Vermont were to take on the tax structure of neighboring New Hampshire (e.g., no income tax or sales tax), the state would have no shortage of people moving in to pursue jobs and set up businesses.” Forbes believes that, “New Hampshire and Vermont are laboratory cases of how state tax structures affect local economies.”

Certain qualitative measures also demonstrate that Vermont’s business climate is in need of medical attention.  According to the Roundtable’s Pulse of Vermont Quality of Life Study 2005, an increasing number of Vermonters responded that jobs and job security are their number one concern, yet at the same time, they are concerned that economic growth will harm their quality of life. Clearly, the employer community has its work cut out for it, to help Vermonters understand the “Circle of Prosperity;” the connectedness between their own job security or quality of life and a supportive business climate.

Investments in the economy that are based on leading-edge economic development strategies generate greater public revenue that can be invested in improvements in social services, educational opportunities, and greater environmental security. In turn, these societal improvements engender a greater quality of life, which tends to attract a larger and more diverse industrial base, as well as an increased and more varied workforce. More businesses employing more people then complete the circle.

Unless the public’s support for reasonable economic growth improves, the ever increasing costs of state government will be shouldered by a decreasing economic base.  As we see today, health care and education costs are rising at 15 and 11 percent a year, respectively; several times higher than the growth in average incomes (3.7% per year). Without adequate revenues from a growing economic sector, government must necessarily reduce its appetite for road and bridge repairs, education funding, health care reform, aid to children and families, drug and alcohol addicted individuals, corrections, etc.

Given our economy of scale, perhaps we are spending and taxing beyond our means. There are difficult choices ahead that no one wishes to make, but which must be made if funding levels are unsustainable. Let us remember that fostering economic growth also fosters individual improvement and enhances one’s standard of living. But, we cannot achieve the latter without support from the former. 

Staige Davis is the President of Lang Associates and Chairman of the Vermont Business Roundtable.

Wind Power, The Quintessential Vermont Debate

Sheffield voters will soon vote on whether to support a local commercial wind power development.
The Burlington Free Press has an OP Ed that raises good questions. Free Press Article
Though the debate is local, it could have implications for other communities and our state.
I love this debate!
It pits the environmentally conscious Vermonter against the aesthetically conscious Vermonter. It is a local control issue and a NIMBY cause, but is it better for all of us in the state and our energy future?
Who would complain about a clean sustainable power source in Vermont?  We don't like nuclear, the acid rain that falls on us from power generation plants in the Midwest, the wood chip Moran plant whose emissions took paint off cars in Burlington or Hydro Quebec's power development when it displaces native peoples.
Our power costs are some of the highest in the region. This is one of the challenges manufacturers face when analyzing the costs of doing business in Vermont.  Fossil fuels are increasingly expensive.   Even our state government seems to be sending mixed messages on this issue. 
We ARE for sustainable energy resources, but we can't bring ourselves to look at wind turbines.

In Costa Rica, there are vast wind farms on some ridge lines and no sign of development on others.  Their power costs are reasonable and sustainable.  This is an important debate and the voters in Sheffield will have the first say.