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Unfunded public pensions killing Vermont, much as Gov. Scott predicted.
By Ted Cohen
A new state-by-state debt survey shows Vermont has a critical debt problem, which is exactly what the Republican governor has been trying to tell Democrat legislators for years.
The state’s per-person debt level is $10,930 – the thirteenth-worst in the country.
Only a dozen of 50 states have worse debt burdens than Vermont. Thirty-six states are doing better than Vermont managing their finances.
The national debt survey, released Sunday by VisualCapitalist.com, blames overspending by state government on unfunded pension and healthcare mandates.
The figures support Gov. Phil Scott, who has been telling lawmakers they need to get serious about a long-term fix.
Scott four years ago vetoed a pension-reform bill, arguing that it didn’t include enough structural changes to fix underlying problems and that the cash injection would only “kick the can down the road.”
He said the bill lacked an option for new public-employee hires to choose a “defined contribution” retirement plan, instead of just the existing, traditional plan
Lawmakers laughed off the logic, approving the bill despite what now turn out to be Scott’s prescient warnings about unfunded liabilities.
Democrats at the time righteously told Scott they were sticking with the unions, the long-term financial danger to the state’s taxpayers be damned.
The legislation as adopted was designed to reduce Vermont’s long-term unfunded retirement liabilities for state employees and teachers by approximately $2 billion by prefunding other post-employment benefits, modifying the pension benefit structure, and making additional State and employee contributions into the retirement systems.
Though in principle Scott said it was a good start, he warned it didn’t go far enough to begin solving Vermont’s unfunded liabilities.
“I’m concerned that we’re putting a more than $200 million Band-Aid on this without fixing the underlying problems,” the governor said at the time.
Vermont for decades has been among the worst offenders failing to put aside enough assets to pay for the public-pension systems.
“When these obligations compound over time, they can become some of the largest liabilities on state balance sheets, particularly as the population ages,” says editor Dorothy Neufeld of Visual Capitalist.
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Categories: News Analysis, Taxes
Vermont’s public employees need to go on a defined contribution retirement system, like most private employers. The unions (VTNEA and VSEA) have gone way over the top gouging taxpayers for that system for over 50 years now…that and the fact that there are WAY TOO MANY public employees in Vermont per capita. Just what are we Vermont taxpayers getting that is so much better than those in New Hampshire?…crappy roads with worn striping and too many ancillary “teachers”? As long as a majority keep voting for democrats and progressives, this rip off will continue.
Just wait until Prop 3 Right to Collective Bargaining proposed constitutional amendment is passed by voters in November. With nearly 50% of the Vermont workforce working for the state government and another 20% working for NGOs, many of which receive taxpayer funds, Prop 3 is sure to pass. The VTNEA and VSEA will go hog wild, no legislative restrictions on union negotiations. You ain’t seen NOTHING yet!
So, we are the best (no.1) of the worst (debt). BTOW!
“Vermont taxpayer debt among worst in nation.” Majin that, whoda thunk it !” One of the most heavily taxed states is amongst the worst in tax debt !!! 2+2 does equal 4 ??? Like I said, whoda thunk it ??
When you feed lawmakers a lot of plums you are going to have a bunch of crap come out the other end.
It’s that simple.
Why did we elect illiterate, but big mouthed, fools that were so stupid they could not understand what was bound to happen. It was negligence to the nth degree and so wrong to take such an important job and not be able to add, And criminal too.
Don’t forget on the local town’s tax collecting machine. There’s many employees in that dept. When elected the VT Tax Dept schools them in the tax collection methods and the tax payer is really crapped on. Your “Tax Collector and Delinquent Tax Collector” suppose to be your friendly neighbor. I know a person that was being “schooled” by the Tax Dept. They got mad and resigned being that it wasn’t fair to the taxpayer. And these people (including Listers) get their diploma for attending the brainwashing sessions. It’s a government well oiled machine. I’ve noticed on the taxes I paid, now being taxed again for the increases that were paid the previous year. Been 3 increases now in 2 years via the nice friendly caring legislators.
Ted, thank you for writing this important article.
I ran for state Treasurer in 2012 on a platform of pension reform, after my experience as Treasurer for the City of Rutland. Rutland City solved its pension problem two ways. The mayor negotiated contract by contract converting new employees to the state municipal pension plan which is better funded and managed than the state employees or state teachers plans. I chaired the pension commission which recommended increasing the funding from the city and employees to fund the plan to its terminus when the last participant expires. The City is one of the few instances I am aware of where a government actually solved the problem instead of deferring the damage.
In that 2012 treasurer’s race I received over 40% of the vote, because independents and some democrats joined republican voters recognizing the risks. However, the teachers union and the state employees union are so powerful they were able to bring Beth Pearce over the finish line with 50%+ to keep their benefits intact and leaving the ultimate bill for the taxpayers. That is where we still are today because of Pearce and now Pieciak as state treasurers.