Perhaps the most important challenge facing Vermonters is economic security and the damaging impact of poverty. More and more Vermonters are struggling to get by in our economy. Since 2000, Bennington County has seen a 50% increase in the number of people in poverty. Ten percent of children in North Hero schools are homeless. Even the Manchester school district has seen the number of children eligible for free and reduced lunch rise from 22% to 53% in only 9 years. And in Washington County, 35.8% of residents face food insecurity in any given year. If Vermont continues down this path, it will take many generations to recover.
These trends are an indication that our economy is not working for all Vermonters or all of Vermont. Building an economy that works for everyone should be our first priority in the fight to build a good life for all Vermonters.
I believe we must act immediately to implement policies that will assist the very poor and working poor, starting with five key areas:
1. End homelessness and greatly increase the availability of affordable housing;
2. Make Vermont’s earned income tax credit (EITC) the best in the nation;
3. Eliminate “poor taxes” on Vermonters least able to afford them;
4. Raise the minimum wage to $15 an hour; and
5. Deploy a statewide microenterprise program and invest in financial asset development.
1. Make an historic investment in affordable housing.
I believe we need to make an historic investment in affordable housing by granting a newly-created public authority, working under the Vermont Housing and Conservation Board (VHCB), the ability to issue a $200 million bond. The proceeds of the bond issue would be used for affordable housing programs across the state in line with VHCB’s current strategy. A backlog of affordable housing projects exists due to a lack of funding. A substantial up-front investment in affordable housing will begin working right away, helping to fill a housing gap that limits workers and the state’s diverse industries that struggle to fill positions because of a lack of affordable workforce housing. This bond action would be the first of its kind in Vermont, but is a mechanism that is routinely and successfully used in other states.
The bond issue would be funded with a common-sense plan to establish a $2 per night Occupancy Fee on hotel and motel stays, which would raise $12 million per year in new revenue, 90% of which would come from out-of-state tourists who can afford it.
2. Make Vermont’s earned income tax credit (EITC) the best in the nation.
I will put the state on a path to expand the EITC from 32% of the federal credit to 40%, which would match Washington, D.C. as the best in the nation and provide immediate tax relief for the 40% of working Vermonters who need it most. Think tanks on both ends of the ideological spectrum have cited the EITC as one of the most effective anti-poverty programs used today, and studies have shown that when low-income households have additional available resources, they tend to spend it on goods and services their families need, putting these dollars back into our economy.
3. Eliminate “poor taxes” on Vermonters least able to afford them.
We should immediately repeal the Reach Up “tax” imposed on the poorest disabled parents with children. No family can afford to pay rent and put food on the table with just $640 a month, which is the current benefit level for a family of three on Reach Up. We should help poor families move to self-sufficiency by reforming the “benefit cliffs” to a graduated scale so that families who earn a dollar don’t lose their benefits, and adjust grants to help families meet their housing needs. This would cost approximately $1 million and would be paid for by eliminating the sales tax exemption on airplane parts.
4. Raise the minimum wage to $15 an hour.
No one should work 40 hours a week and live in poverty. We need to get to a $15 dollar minimum wage. My administration would move quickly to raise the minimum wage to $12.50 an hour, and then increase to $15 an hour in line with recent legislation in New York and California.
5. Deploy a statewide microenterprise program and invest in financial asset development.
A statewide microfinance program would make it possible for Vermonters to create new opportunities with small amounts of up-front funding. Microloans, if administered well, have default rates much lower than for regular commercial loans. The fund would be capitalized with one-time money, and successful microenterprise funds become self-sustaining, providing an ongoing source of capital to help displaced workers and low-income people start successful small businesses. Capacity building efforts will build on existing financial institutions - credit unions, small business administration offices using AmeriCorps*VISTA members, as well as others, and will leverage federal funds that are available but not currently coming to Vermont. CapStone Community Action has demonstrated the powerful impact of this work in Washington County.
Financial asset development programs work with low-income Vermonters to build their assets. Individual development accounts, earned-savings programs, and financial literacy training will be incorporated into programs throughout the state.
In my career, I have come face to face with the pain and struggles caused by poverty. As director of AmeriCorps*VISTA I had the privilege of identifying and deploying the most effective poverty-fighting strategies across the country.
We found the most successful approach is comprehensive and learned that the most effective strategies break down into four areas:
• Security: In order to emerge from poverty, a person needs the basics of food, shelter, transportation, and healthcare (both mental and physical care, as well as addiction treatment.)
• Children: To break the cycle of poverty, children need a caring adult, an effective education with an emphasis on pre-K and literacy, a safe place to live, and nutritious food.
• Financial asset development: Building the assets of both individuals and communities provides the resiliency that creates opportunities and prevents one setback from pushing people back into poverty.
• Individuals with disabilities and the elderly: These are our most vulnerable Vermonters. While investment in occupational therapies can lead to some self-sufficiency, those who are physically limited in their ability to work and/or support themselves require the basics and the opportunity to live in a supportive and inclusive home environment. This includes access to transportation, housing, supplementary income, and support services.
Addressing poverty in each of these categories with limited resources will take a comprehensive approach with clear goals, investment strategies and sound management across departments and agencies. While nowhere near an exhaustive list, the following are initiatives that can make a difference.
Undertake a state needs assessment at the beginning of each budget process.
A state budget is both a strategic and moral document. We must start the budget process each year with a needs assessment for the state that identifies positive and negative trends affecting all Vermonters. Such an assessment, combined with a larger strategic approach, will help put budget proposals in context and clearly identify the tradeoffs that policymakers face every budget cycle.
End homelessness and increasing affordable housing.
In addition to the $200 million investment in affordable housing, we should:
• Fully fund the property transfer tax allocation to the Vermont Housing and Conservation trust fund. In FY17 the tax is projected to yield $38 million. The state should follow the statute and direct 50%, or $19 million, to the VHCB to leverage toward building affordable homes.
• Deploy a $100M Energy Savings Company (ESCO) bond that will provide capital for efficiency improvements in multi-unit buildings across the state. This will encourage additional capital investment that puts Vermonters to work, reduces utility costs for low-income Vermonters, and greatly improves our housing stock.
• Aggregate projects for pursuing private investment that utilizes Low-Income Housing Tax Credits. While at Google, the small team that I led persuaded leadership to invest well over $100 million in low-income housing development. To date, these investments have resulted in the construction of over 8,000 units, often using state-issued bonds. Vermont can pursue this model public-private partnership to bring in critical investment in affordable housing.
• Working within Act 250, accelerate dispute resolution for affordable housing development projects. Bringing in outside investment will not lead to more development if projects are delayed and encumbered by lengthy legal battles. The Safford Commons project in Woodstock took nine years to be approved and was far more costly than it needed to be—and the finished units were filled within days of becoming available (report).
• Pursue creative solutions, like facilitating financing of Vermods. Modular homes are an important option for low-income housing, but they traditionally use a great deal of energy, especially in the winter. Transitioning our mobile home stock toward more energy efficient models will save money for low-income owners.
Ensure food security.
One in five Vermont children lives in a household that is food insecure, and our food pantries are stretched to capacity. Hunger is a large impediment to success at all age levels and is especially harmful to a child’s physical and mental development. Programs like subsidized or free school meals, 3SquaresVT, and the Child and Adult Care Food Program all provide crucial help. We can expand initiatives that safely bring food that would otherwise be wasted to organizations that help feed the hungry. And we should invest in new programs like Veggie Van Go that bring food to people when people lack the transportation to reach food.
Harvest the power of microenterprise.
One of the most effective ways to empower people towards economic security and out of poverty is to help them start small businesses. Combining microlending with support programs at a local level works; I saw it at AmeriCorps*VISTA and our state has seen it with organizations like Capstone Community Action. Vermont has a spirit of independence and entrepreneurship that we ought to encourage.
• Deploy a statewide microenterprise program. Microloans, if administered well, have default rates much lower than for regular commercial loans. If successful, microenterprise funds become self-sustaining, providing an ongoing source of capital to help displaced workers and low-income people start successful small businesses. Capacity building efforts will build on existing financial institutions - credit unions, small business administration offices using AmeriCorps*VISTA members, as well as others.
• Develop a Kiva-like mechanism for Vermonters to fund other Vermonters. Kiva brings together small lenders and small borrowers across the world, encouraging prosperity and attaining a repayment rate of approximately 98%. Milk Money is one Vermont organization striving to facilitate similar lending opportunities within our state.
• Invest in financial asset development. A successful economic development program invests in ways for low-income Vermonters to build their assets. Individual development accounts, earned-savings programs, and financial literacy training will be incorporated into programs throughout the state.
• Scale the driver’s license restoration program to the whole state. In December 2015, hundreds of Vermonters waited in line, sometimes for hours, to take advantage of License Restoration Day. People with outstanding tickets or other fines who had had their licenses taken away were able to earn them back by paying a fraction of their fine and agreeing to a repayment plan. For Vermonters struggling to find or keep a job—or increasingly, jobs – having a valid driver’s license is crucial.
• Explore further innovative ways of making transportation accessible. Programs like Go Vermont, a web-based platform for ridesharing, and Good News Garage, a nonprofit that pairs donated cars with families in need, are just two great examples of the sort of creative approaches our state government needs to prioritize and support.
Prioritize early education and building on the rollout of universal pre-K.
The more Vermont invests in our kids early in life, the greater the payoff in reducing special and remedial education costs and increasing educational achievement. Painfully, there is currently an inverse relationship between the amount the state invests in education and when it does the most good. We need to continue to build this capacity, ensure Vermont will attract qualified teachers, and provide every child a great start.
Ease the transition from correctional facilities to a productive, fulfilling life. Approximately 200 prisoners who are eligible for release remain in Vermont prisons because they have no place to go. It should be no surprise that many end up in environments that land them back in prison. Vermont needs greater investment in transitional housing, job training, and supportive services to ensure that people who have repaid their debt to society are as able as possible to begin again. We should also change the corrections healthcare contract to reward providers for ensuring inmates are healthier when they are released from prison than when they entered, since most will transition directly to Medicaid for at least some period of time. With proven strategies in both of these areas, we can front load the investment and predictably lower spending on corrections and Medicaid.