Category Archives: Economy

Housing the Homeless as Economic Development Strategy

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We could view homelessness as a moral failure… or a failure of capitalism… or a failure of individuals to live productive lives… or a problem in need of resources we can’t afford to commit…

Or… just spitballin’ here… a waste of potential and precious human capital.

For this discussion, we’re leaving out the moral and ethical dimensions of the issue. We’re not declaring an obligation to protect our most vulnerable. We’re putting on our green eyeshades and considering homelessness from a purely bottom-line point of view.

To hear the Scott administration tell it, extending the emergency motel voucher program is kind of like taking a pile of money and setting it on fire. It produces a bit of transient warmth, but it’s otherwise a waste of resources. Legislative Democrats and even some housing advocates often fall for this: They tacitly accept the premise instead of making the economic case for (a) giving everyone a roof to sleep under in the short term and (b) ending homelessness in the longer term.

When you look at it that way, you find that we can’t afford not to end homelessness. There is abundant evidence that addressing homelessness is an economic winner — not just in the long term, but almost immediately. So let’s stop talking about whether we can afford $72 million for another year of motel vouchers or $31 million for a stripped-down version of the program or a few hundred million to provide enough housing for all. Instead, let’s talk about the economic positives of a humane policy choice.

(I don’t pretend that any of this is my idea, but it ought to be more of a factor in our policy debates.)

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Fox Offers Rewrite of Henhouse Bill

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There seems to be substantial momentum toward reform of the Vermont Economic Growth Incentive (VEGI) program. Two committee chairs, Democrat Emilie Kornheiser and Republican Michael Marcotte, worked together to craft H.10, which would require much greater transparency in the program among many other things.

That in itself is pretty unusual — leaders of the two major parties cooperating on a big piece of legislation. But what clinches the deal for me is that the Scott administration actually wrote its own version of H.10. It doesn’t usually bother to do that. I take it as a sign that Team Scott thinks some type of reform is inevitable, and they want to influence the process as much as they can. (Both versions of the bill can be accessed via the House Commerce and Economic Development Committee webpage. Archived hearings are on the committee’s YouTube channel.

VEGI is administered by the Vermont Economic Progress Council, a nine-member body including seven gubernatorial appointees. The administration’s version of H.10 was presented by VEPC Executive Director Abbie Sherman, whose interest was clearly in maintaining the current process as much as possible while making pleasant noises about reform. .

Let’s start with the fact that the administration bill would drop the VEGI name and replace it with the decidedly uncatchy Think Vermont Investment Program, or TVIP for short. (Tee-vip? Tuh-vip? Tveep?) When you propose changing the name of an established program, you’re acknowledging that the current name has a bit of stink about it.

Auditor Doug Hoffer, who’s a consistent critic of VEGI because of its lack of transparency and the lack of evidence that it works, is scheduled to testify before House Commerce at 1:00 Wednesday. I’m sure his view will be more comprehensive than mine, but let’s go ahead and take a closer look at VEPC’s version of H.10.

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Hoffer Debunks Another Bag of Magic Beans

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The city of Burlington is in a spot of bother over “numerous errors’ in its Waterfront Tax Increment Financing (TIF) district. According to Auditor Doug Hoffer, the city owes the TIF district $1.2 million and owes the state Education Fund nearly $200,000, because it couldn’t keep proper accounts for its Waterfront TIF. He also found that the city spent $173,000 on bike path improvements that were, uhh, outside the TIF district. Since the total scope of waterfront improvements was $16 million, those mistakes add up to almost 10% of the whole ball of wax. Not inspiring, that.

But Hoffer doesn’t blame Burlington so much as the complex structure of the program itself. In a way, this shouldn’t be surprising; after all, it’s comically difficult to even explain the TIF concept in lay terms, let alone successfully manage one of the damn things.

But heck, let’s give it a shot. A tax increment financing district allows a municipality to incur debt for infrastructure improvements needed for development in the district and pay the debt out of future higher tax revenue. If it works, everybody wins. But the devil’s in the details, and there are hordes of pesky details in Vermont’s TIF program.

Whew. I think that’s in the ballpark at least, but don’t cite me as gospel. The point is, TIFs are complicated as all getout, and Hoffer’s audit indicates that it’s too much for our cities and towns to handle. In his words, ““Managing the complexities of this TIF district proved challenging for even the largest municipality in Vermont.” Says here if we can’t build a program amenable to proper management, maybe we should ashcan the whole thing.

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Here’s One VEGI That’s Bad For You

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State Auditor Doug Hoffer has issued a damning indictment of the Vermont Employment Growth Incentive, or VEGI for short. He has, in the past, pointed out the fundamental flaws in the program: the “but for” test at its foundation is impossible to prove and routinely ignored, employers who get these “job creation” grants often fail to actually create jobs, grantees sometimes cut operations or even leave the area despite getting the grants. And while the incentives are big money for the state, they’re peanuts for big employers and they really don’t incentivize anything.

We know that. What we didn’t know — or shall I say, I didn’t know — is that the program is run completely independently by an appointed board. There is no provision in state law for any oversight or review of granting decisions. You can’t take it to court, either. And that board often flouts its own standards. It’s the Wild West.

Funny, this is exactly why Gov. Phil Scott vetoes bill after bill — he decries decision-making by state entities without any legislative or executive review. One would think he’d be leading the charge for VEGI reform. But he’s not, because he’s just fine with giving bags of money to businesses with no strings attached.

Just imagine if a welfare program worked that way: a recipient claims a need but doesn’t have to provide evidence or seek employment. They just get the money.

That wouldn’t fly, would it now?

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Nolan Bravely Confronts Mayonnaise Crisis

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See? There’s slightly less mayonnaise than there could be!

The Christina Nolan campaign is treading dangerously close to self-parody.

Last Wednesday, Team Nolan posted a brief video on social media showing the candidate in front of literally hundreds of mayonnaise jars talking about a mayo shortage.

It was probably her most viral campaign vid to date, but the attention was all negative. Condiment jokes flew around Twitter. The scorn was well-earned; this was bad, really bad. Downright embarrassing, in fact, for a major-party campaign for a seat in the U.S. Senate. Setting, lighting, text, delivery, sound, were all barely acceptable by community access TV standards. It’s something you might have expected from Nolan’s low-wattage Republican opponents.

This video was only 27 seconds long; to enumerate its offenses against politics will take far longer.

Let’s start at the top. Nolan, dressed to make her seem human and relatable. But they went a little too far with it. Lumpy sweatshirt, oddly bulgy tan shorts and flip flops? It’s possible to dress casually without looking like, well, a slob. Also, the colors make her fade into the background.

She stands, rather awkwardly, in front of a nearly-packed supermarket display to talk about supply chain issues. Whose idea was that? Couldn’t they find a display that was actually empty?

And why mayonnaise? (Team Nolan later posted a much better video of her in front of a nearly-empty display of baby formula, which is the supply chain issue of the day. Not mayo.)

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When “Opportunistic Investors” Grab a Chunk of Your Town

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Is it just me, or is something slightly… off… about the sale of South Burlington’s University Mall to a global investment firm?

On the surface it seems like good news. Taconic Capital Advisors and Eastern Real Estate will buy the Mall for a tidy $60 million, which happens to be $26.2 million north of its assessed value.

Let’s stop there. A big investment fund buying a declining property in a dying industry for nearly double its assessed value?

Things that make you go hmmmm…

Taconic describes its traders as “opportunistic investors” looking for market inefficiencies. That’s usually Wall Street-speak for “we buy low on assets and squeeze every last dollar out of them.” See: Every time an investment firm buys newspapers.

The above chart, courtesy of the investor-information website “WhaleWisdom,” shows a damn high churn rate for Taconic. The different colors represent different market sectors. As you can see, Taconic specializes on diving into market sectors where they see potential profit and getting out just as quickly.

Given that history, it’s a little hard to credit Taconic’s stated intention to “reenergize” the mall and “build on its success.” First of all, long-term stewardship of an asset doesn’t seem to be Taconic’s game. And second, success?

“That does not compute,” said Mr. Spock when asked for comment.

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Tired Republican Talking Point is News, According to VPR

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This week, Vermont’s Public Broadcasting ConglomerateTM has been releasing Part 2 of its (obligatory full name here) VPR – Vermont PBS 2022 Poll. And today’s story about one result is a study in journalistic imbalance.

The article is about the above question: Would you recommend that a young person stay in Vermont or leave?

The total result goes right down the middle: A bit more “leave” than “stay” with a sizable tranche “not sure.” Within that, however, Republicans were far less sanguine on Vermont as land of opportunity. A full 63% of Republicans said “leave.” Among independents, that number was 32%, and for Democrats it was 43%.

That’s perfectly fine fodder for a think piece. But the story that came out of the VPBCTM sausage factory was basically PR for a tired Republican talking point. A talking point that’s been repeated so often, for so long, that it’s become a self-fulfilling prophecy.

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Phil Scott Enjoys a Swim in the Covid Cashpile

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As expected, Gov. Phil Scott’s budget address (video/text) was a rollicking affair full of new and expanded programs and tax relief that he touts as providing “transformational” change for Vermont. Yep, these budgets are a lot easier when they’re floating on a sea of federal Covid funds, plus vastly inflated state tax revenues thanks to the purchasing power injected by the feds into Vermont.

To his credit, Scott cautioned that we can’t spend willy-nilly. He said this is a once-in-a-lifetime windfall, and thus a once-in-a-lifetime chance to reset and strengthen Vermont’s economy. “The economic future of our state will be defined by what we do today,” he said at the end of his address. And he warned against spending one-time money for ongoing expenses. “These are one-time funds for one-time challenges.”

Do his proposals match his sweeping rhetoric? In part, but not in full.

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State Economists: Smooth Sailing for Now, Storm Clouds on the Distant Horizon

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All smiles for another 12-18 months

Thursday marked the semiannual Festival of Numbers that is the consensus economic forecast, prepared as always by Vermont state economists Tom Kavet and Jeffrey Carr. The topline: Happy times will continue for another year and a half or so, but after that there’s tremendous uncertainty and huge downside risk.

Or, to put it in purely political terms, Phil Scott will enjoy smooth financial sailing through fiscal year 2024 (assuming he wins another term, and there’s no reason to think he won’t), but whoever is governor in 2025-26 may have a real mess on their hands.

The very short-term forecast is for even more money to flow into Vermont’s coffers. Carr and Kavet upgraded their revenue forecast for the rest of FY2022 (ends June 30) by $44 million.

The reason: Vermont’s economy and state revenues continue to be buoyed by the flood of federal Covid relief dollars — more than $10 billion in all. “We had a [fiscal] hole and we’re filling it five times over with federal stimulus,” said Kavet. Those dollars will continue to flow for 12-18 more months. Then comes a return to Earth, and a landing that might be soft, or… a splat on the landscape.

“There is no playbook from the last time the feds dropped $10 billion on our economy,” said Carr, meaning that it’s never happened before. When the money dries up, Carr said, “the amount of risk, especially on the downside, escalates… The economy will transition into something new and different.”

And while the short-term outlook is rosy in the aggregate, that doesn’t mean everyone is doing well. “One hand’s in boiling water, one’s in ice water,” said Carr. “On average, you’re okay.”

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Welfare for the Well-Off

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Say, have I told you about my can’t-miss economic development plan for Vermont?

It’s called “The Vermont Open Redistribution of Resources Program (VORRP),” a.k.a. throwing money around. All you do is send state vehicles around Vermont, tossing handfuls of cash out the windows.

Just think. It cuts out all the bureaucracy and red tape that bedevil most government programs. It gets money into the hands of Vermonters as quickly as possible. And unlike many such programs, this one is tried and tested. The multiplier effect, a well-established idea in the world of economics, shows that when the government increases spending, it generates far more economic activity than the original investment.

Trust me. It works.

Well, it probably works at least as well as Vermont’s renowned worker grant programs. They reimburse relocation expenses to people who move to Vermont or move to economically distressed areas in Vermont. Their actual effect is completely unproven, as State Auditor Doug Hoffer has repeatedly shown.

And it remains unproven in spite of a relentlessly sunny study of the programs ordered by the Legislature and released on December 15 by the Department of Financial Regulation. VTDigger posted a story yesterday that reports the study’s findings and Hoffer’s criticism of them. (Which is remarkable in itself. Digger has a habit of ignoring Hoffer’s work.) From my point of view, not only is Hoffer right, but I thought he was a little too easy on the report.

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