Vermont taxpayer debt among worst in nation

By Ted Cohen VDC

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.