Photo: Governor Phil Scott during his interview for this article. VBM photo.
In August, reporter James Dwinell and editor Timothy McQuiston sat down with Governor Phil Scott to get a mid-term update on the Vermont economy, politics and life in Vermont.
VBM: Is there a cultural crisis here in Vermont? What I mean by that is with the current vicious opioid crisis whereby Vermont, despite being the Vermont we all know and love, full of good schools, good communities, and historical values of note, it is ten times greater in having babies born with opiates in their bodies than the national average. Couple that with a high suicide rate, have we lost our way? Do you have an understanding about this from all your travels and efforts around the state?
SCOTT: No, I wish that I did. It is very concerning. The high suicide rate when you look at the data, it is not conclusive: older, male, increasingly more Vets than others. We need to take all this seriously. We have a responsibility.
VBM: The crisis seems to need leadership, better management of programs, and legislative action. How do you lead?
SCOTT: Leadership means that you anticipate problems, when you see problems you try to rectify them, and you do everything you can with the tools that you have. I have focused on the economic issues that challenge us to bring us more opportunity and hope. These issues have been with us for quite some time. We need to change our story by being more welcoming, more affordable, and doing all we can to be more attractive to people who live here as well as attracting folks as we really need more people.
You with Vermont Business Magazine know as well as anybody else that businesses are crying for relief. We need more workers, more families.
VBM: Vermont’s working population is rising statistically. Is this from more Vermonters going back into the workforce or from people moving here?
SCOTT: It is growing in Chittenden County but not all over the state. The rest of the state, be it the Northeast Kingdom, or south in Brattleboro, Bennington, and Rutland, need some help. There are all kinds of opportunities for us. We are doing what we can with tax incentives, Act 250 reform, and otherwise.
We have “capital for a day” visits around the state. The whole cabinet goes along. We split up and visit top to bottom. We listen to get a sense, an understanding of what they feel, experience and know. We talk of challenges and opportunities and learn where we can help.
But what I tell folks is that there has to be some kind of grassroots support. It cannot be driven from the top down. There are good things happening all over Vermont.
Take Randolph for example. There is a group of people who want to address this. There is enthusiasm, pride, and a willingness to work to improve. It cannot be top down. We cannot be their future; they must create their future.
VBM: You were recently in Grand Isle. What did they tell you, what did you see?
SCOTT: All kinds of things. There is work with specialists at UVM on hemp and milkweed. I learned about both. Milkweed is a product of value developed during World War II. They are developing other types of growing operations as well as new agricultural products. They focus on tourism as well with our beautiful lake. But the winter is a challenge.
The Alburgh school district is going against the grain of Vermont’s schools by increasing its student population. To help manage the increase, they have raised money locally, and with state and federal grants, to build a new childcare facility next to their school, creating a wonderful benefit for their working population and creating twelve new jobs at the same time.
VBM: You said at a press conference that you reduced your focus on education funding as you could not find a partner. Understanding that you found no “partners” in the legislature, can citizens become you partners?
SCOTT: Sure, but they have to become active. There are many people that think that the education fund is a self-leveling fund. It is what it is and you cannot control it. It continues to grow. The problem is shrinking student population. Low birth rates, fewer families, and not enough immigration.
The bond rating went down, it remains good but not as good as it was. We have an aging population, underfunded pensions, and other liabilities. The bond rating agencies see more risk, but Vermont bonds are still safe.
VBM: What is the cost to the state of a lower bond rating?
SCOTT: I don’t know yet as we have not sold any bonds since the rate was reduced.
VBM: Do you support VSAC (the Vermont Student Assistant Corp) allowing our money to follow the student out of state? The percentage of graduates who remain in the general area of where they went to school is about 65%. Vermont is one of the few states where the state sends money out of state in support of students.
SCOTT: We need to take care of our Vermont kids. If they choose to go out of state, I think that we are obligated to do so. I know the problem as my daughter is now in Rhode Island. They sometimes come back, and if we can provide more opportunity for them, they will return in greater numbers. My daughter would like to come back as well. This relates to improving our story. There is still a sense out there that there are no jobs here for them, but that has changed. We have more jobs than workers.
VBM: The state economist at the recent Emergency Board meeting said that we would have a surplus in revenue. Is that right?
SCOTT: A surplus is good news and that’s indicative of what we are focusing on. We focus on getting more from our existing programs rather than creating a new program which we would have to manage and “feed” with more taxes. We have paid down some debt, and we made some investments. The economy is doing well. The pending recession remains at bay. We need to continue to provide tax relief. We are recruiting companies as we can, we have had some success with Canadian companies, six so far.
VBM: Why do you think that the personal income tax is growing?
SCOTT: You have to look at multiple years but the national and local economies are both strong. We still are not sure what the effect of the federal tax changes are. So I don’t think we can say that we have a trend in personal income tax growth.
VBM: Room and meals taxes have been strong suggesting strength in our tourism sector. The gasoline tax and sales tax are not doing so well.
SCOTT: We have a four-season tourist trade. That’s good news. The gasoline tax is problematic across the country with more efficient cars and more electric cars on the road today. As the tax is on each gallon of gas sold, we have fewer dollars to maintain the same infrastructure. There is a study group at the National Governor’s Association about what should we do. There may be new and longer lasting road surfaces that the federal government keeps working on.
VBM: Some states are considering reinstitution of tolls on highways.
Photo: Governor Phil Scott during his interview for this article. VBM photo.
SCOTT: I think that this needs to be handled at the federal level. Especially with electric cars becoming more popular and that excites me. We are taking control of our energy future. A new tax structure will appear.
VBM: The sales tax impacts the education fund and it has not been keeping up. Even though the economists lower their expectations, it does not even meet their expectations. Will online sales tax help fill the hole?
SCOTT: Our ability to collect sales tax on online sales improves and helps. We don’t want to raise the sales tax and make us more uncompetitive. I was a senator when Governor Douglas raised the sales tax from 5 to 6% to stop the growth in the property tax but we only got a higher sales tax and continuing growth in the property tax. It didn’t work at all.
VBM: It is amazing that with all the tax collection Vermont has without an increase government cost, such as second home property taxes, some of the gas tax, certainly most of the room and meals tax, and a boost in the sales tax from Quebec shoppers coming over the border to shop at the Walmarts in St Albans and Derby, and with the senior old guys representing us in Washington sending Vermont more than our share of federal funds, the citizens remain stressed by “over taxation?”
SCOTT: We have enough, but we need to learn to live within our means. We don’t need to cut, nor do we need to spend more. What we need in Vermont is not more taxes but more taxpayers to share the load. Our population has been stagnant, we are getting older, we need more people and more workforce development. The ripple effect of more people will lift all revenues, all businesses.
VBM: Has your housing bond helped?
SCOTT: I think it is doing well. High cost of housing is a concern. The $37,000,000 housing bond leveraged another $65,000,000 of private assets and is the single largest investment in housing that Vermont has ever seen. The buildings are not all up yet as it takes time to design, get your permits, and build.
VBM: To follow up on the population question, legislative economist Tom Kavet said that Vermont has a slow increase in population reversing our recent population loses.
SCOTT: This is more good news; we are moving in the right direction. I want to mention the Kavet report about a wealth gap in Vermont that some in the legislature latched onto. I think that his data looked at large groups and that analyzing it closer, the gap is not so great. In some cases people have a big income year from an extraordinary event such as selling an asset, a stock market surge, or selling a business. It is important to keep our eyes on a potential disparity but to make sure that the numbers reflect the real picture and what is really happening. We sure are happy to have those wealthy folks here.
VBM: What have you discovered to be much harder than you anticipated being governor, and what is easier?
SCOTT: I don’t know if anything has been easy, but I think that while I have been working with the legislature, that they have become more aware of the workforce challenges which we face. They are hearing from their constituents who see the needs, and beginning to understand that thirteen rural counties need our help and assistance so that they are not left behind.
We are leveraging our assets, we are one of the safest states with a great quality of life, we have outdoor recreation assets.
Vermont is becoming known as the mountain biking state, the trail networks that we have are becoming known and better connected trails are being developed. And there is a craft brewery seemingly close to every trail!
Here is a story for you. We were in Vergennes during Addison County “capital for a day” at UTC, now Collins Aerospace. They told me that after their merger that they would need a hundred new employees, half of them engineers, electrical and mechanical engineers. They were offering $100,000 plus benefits. We worked with them to contact Norwich University, UVM, and the state college network to see how we could help fill the gap.
The next week we were in Caledonia County “capital for a day” gathered with a business group to listen to their challenges and opportunities. I mentioned the UTC challenge and their lack of engineers. A Lyndonville company person spoke up and said, “We don’t have any trouble hiring engineers here. Every time we need an engineer, we put an ad in a mountain biking magazine, and we get an instant hit!” Our outdoor recreational opportunities attract people to our state.
We were at Suicide Six in South Pomfret where they have a downhill mountain biking opportunity; ride the lift up and down you go on your bike. I like to mountain bike and I went up and down a couple of times. I put about 2,000 miles every summer on my bike. It’s lots of fun. My point is that even the traditional resorts are finding that they are four season resorts and have learned to use their assets and infrastructure which is in place in all seasons. Killington has a great mountain bike downhill as well.
There is a group working on putting all these mountain bike trails and connecting them together and building even more which is very exciting.
VBM: You have a new public service commissioner, Mike Schirling. In his introductory remarks, he said that he saw his job as staying the course. There appears to be an impatience within Vermont’s police forces when confronted which has led to one unfortunate killing after another. It would seem that Vermont should not just “stay the course.”
SCOTT: We will continue to look at those events, and learn. At the same time we need to support our law enforcement.
VBM: Is the $10,000 bonus to move and work in Vermont working?
SCOTT: It was good publicity. We received over 1,000,000 hits on social media when it was announced, and we had over 3,000 direct inquiries about the program. Unfortunately, we only had enough money for fewer than fifty people. What it did do is show that it worked. We have changed the program a bit with the legislature to encourage more people to come.
We also had criticism from Vermonters saying how about sending me a check for $10,000 to stay here? I get it. But the reaction out there was incredibly fast. And we need more workers, more families, more kids to fill our schools; this is what we need. It is not the complete answer, but it’s one area of doing something, moving forward. And it shows that the legislature and the administration are on the same page, and that helps.
VBM: You suggest that the legislature has listened and learned. Have you listened and learned as well?
SCOTT: I think so. Not to rehash the past, but it was difficult for them. In my first term, I said no new taxes or fees, that I believe that we can live within our means. And I meant that. It took fourteen vetoes in total, including three budget vetoes, but we didn’t raise taxes or fees. As a result, we had a surplus for the first time in over a decade. We moved in the right direction.
VBM: Did the legislature learn something?
SCOTT: Maybe. But I don’t want that type of relationship with the legislature. I want us to work together, I want us to not waste our time with political rhetoric, the back and forth. I think that Vermonters are tired of that, here and nationally. We proved that we did not need to raise taxes or fees to satisfy our needs.
I did not want that, so we took a different approach this year, and we had a great third year. If you look at what we accomplished in the last year, including more early care money, more for the state colleges, and removal of some of the taxes. We worked well together; it was good. I did not get everything I wanted; they didn’t get everything they wanted. In the end we came to an agreement which we could all live with.
VBM: You said that you wish to reduce the prison population, that you will review sentencing, drug sentencing in particular. You said that we need to differentiate between those in custody whom we are mad at for their behavior and those whom we are afraid of because of their behavior. But I haven’t noticed a lot of action in this regard.
VBM: GOP Chairwoman Deb Billado raised some ire recently with an article she wrote. Do you have an opinion about that?
SCOTT: This is not the first time, with either party trying to energize the base, trying to activate people, with strong language. I think that there are other ways to activate Republicans. There are plenty of opportunities with touting the things like the economy, permit reform, and all kinds of other things that we have done and that we need to work on. We can activate people in this way. Trying to further the political divide and the polarization that we suffer from in the country with that kind of negative form of rhetoric, does not help. I would take a different approach if it were me to get the party going again.
We still have an affordability crisis on our hands, let’s focus on that.
VBM: The stock market is more nervous about the national economy. Are you?
SCOTT: One never knows when a recession might occur. One never knows what international crisis might trigger that. We have a solid national economy; I think that we have some good things happening here. The 2020 election coming up doesn’t help.
The new NAFTA agreement is a good example. We needed to update NAFTA. I was critical of some of President Trump’s tactics. Yet Mexico and Canada have agreed, but our Congress is dragging its feet. This is a good agreement, good for Vermont, good for the northern tier states, good for Canada, good for the southern tier states, and good for Mexico. It is unfortunate that Congress will not ratify it. Can’t we move beyond politics and accomplish something, something that is good for us, the citizens?
It is the same with immigration. There are penalties for all just now, Congress needs to do something about it. Don’t just talk about it. Don’t just try to use it as a wedge. Fix it.
VBM: Are there any questions which we did not ask that you would like to answer?
SCOTT: Clean water funding comes up so often as we travel. What are we going to do? Why haven’t we done more with the cleanup of Lake Champlain?
This is an area which we have worked well with the legislature. We put the last pieces of the financial puzzle together so that now we have a package of ongoing funding up to $50,000,000 a year for the next twenty years to clean up our lakes and streams. This is good news. I give Treasurer Beth Pearce a lot of credit for coming up with a proposal with the numbers that we can see. Now we better understand the problems, we can better work towards solutions.
Bio-digesters have broken ground and will be coming online. Our creative phosphorus challenge that we put out there to fund ideas from anywhere to address this issue with new methods and technologies has had a great response to reverse the challenges of phosphorus. Maybe we can even make money with the phosphorus that we have, the nutrients. Everybody has stepped up to do their part. We do have some good stories to tell from the efforts we made.
I grew up in Barre and I am pretty sure that the water in the Stevens Branch is cleaner than it ever was. We have made incremental improvements each year, though we have a long way to go. Take Lake Carmi. We put a project, an aeration system that is pretty incredible with what has been done. Friends of mine at Thunder Road told me that so far so good. The system has taken care of the problem in part, they are happy that we could do something that is successful. It made a very ugly situation better. The parties came together, state, local, and federal governments, and pretty much solved this.