New Year’s Resolution

It’s the start of the New Year, and for most people struggling to wake up from their food induced holiday coma that means one thing: New Year’s Resolutions.  NYRs can be rather tricky; emboldened by everyone else jumping into the same boat we often tend to set the bar a little high for ourselves; am I really going to go to the gym every morning before work and cut out carbs after eight?  An insatiable love of pasta and a number of late-starting football games have pretty much ruined those already, but there’s one resolution we truly hope for: that the new Administration and Legislature will work to solve our state’s challenges with focused and meaningful governance from the statehouse.

You might say that it’s an odd resolution given that as outsiders we have limited control over what is and is not discussed in the chambers and on the floor under the dome.  And yet, it means far more to me than cardio at 6am.  The reason is this: the solutions required to cut my own bloat are multitudinous and of my own design, while those required to handle what has swelled to a $150 million shortfall are complicated by history, connections, interests, economic and social wellbeing, and (of course) cost.

Therein lies the problem: without a strong plan and steadfast leadership, decisions are delayed and agendas become labyrinthine.  The challenge is that we don’t get a chance to set our own goals: either we close the deficit or we accept an unbalanced budget creating further instability next year.  With a new Governor coming into office, there are high hopes that bold steps will be the name of the game; however, as a state we need to realize that solving the $150M nut is not just a matter of cutting large swathes of budget.  There is a significant amount of value for our future in understanding that we must also focus on growing out of our deficit.  Strategically placed reductions will make government leaner, but if we don’t also fuel our economic engine and put it on a focused path, we will find ourselves stagnating.

GBIC is working with a consortium of partners on a HUD Sustainable Communities grant that will include an outreach process and document development for a strategic industry sector analysis and economic plan for Chittenden County.  These reports will have the capacity to drive not just discussions about how and where our economy can and should go, but to encourage and embolden action.  These results will not be immediate, and the development of the projects will likely take some time, however, as these processes and projects develop let me humbly recommend a resolution to employers of all sizes in the greater Burlington area: stay in contact with your legislators.  Let them know to call you if they have a question on a bill that may impact your business, and be sure to pick up the phone when they do.  Be proactive in ensuring that the on-the-ground effects of legislation are understood in the appropriate committees; GBIC and the LCRCC are continually working to message legislators with your voices, but nothing speaks more clearly than hearing it directly from the people who create jobs.

If you have questions regarding contacting your legislators, or would like help in finding the appropriate channels through which to voice your opinion, please don’t hesitate to contact our legislative team of Dawn Francis ([email protected]) and Cathy Davis ([email protected]).

Vermont’s Tipping Point?

Malcolm Gladwell took the concept of “The Tipping Point” out of the realm of epidemiologists and made it a must know phrase with his book by the same title.  Mr. Gladwell sought to describe the underlying factors that can make large impacts on social phenomenon; comparing fashion trends to disease epidemics in their often sudden rate of impact and ubiquitous presence.  The tipping point that Mr. Gladwell is fascinated by is not a new concept, but the depth of analysis presented in back-of-the-napkin format made his bestseller its own cultural epidemic.

In Vermont, employers have been trying to describe our current challenges as their own kind of tipping point.  The challenge is that you’re never quite sure where or when the tipping point will come into play.  For the state, we can see challenges looming: the bankrupting of our unemployment fund clearly shows a broken link in our social support system and our state deficit is currently on the frontlines as a target of concern, but whether or not (or when) one of these or the other will actually lead to a rapid decline in our socioeconomic sustainability is not known.  Within the business community, this discussion can be heard through the quiet comment of “death by a thousand cuts.”  It’s often a challenge to pinpoint that single thing that could cause a company to close its doors, either permanently or to complete a move to another state with perceived higher return on investment, however, we know that for every individual employer that limit exists.

It is often argued that small changes and tweaks to our tax rates, regulatory system, and other associated business costs have not made a dramatic impact on the number of high-wealth individuals in the state or on the overall composition of our economy.  And while this might have some historical validity, it fails to consider any sort of limit on when a slow trickle turns into a broken dam.  Yet these are things that are repeated as challenges on par with healthcare reform, economic competitiveness and power supply quality and rates.  The important thing to remember is that for each of these factors, there is an equal opportunity to effect positive change.  The movement towards a cultural epidemic should ignite a sense of opportunity as much as one of concern.

Part of the challenge is finding those factors, the “agents of change,” that can catalyze rapid restructuring.  The goal is to find and support those factors that can rapidly add value to a system that is otherwise in equilibrium.  We often think of these actions as revitalization of existing resources or in the creation of new assets with broad value.  An example might be the factors behind the expansion and renovation of the technology campus on Pine St.  The 300 person expansion is being heralded as a focal point of a growing technology community in the South End of Burlington that includes other Vermont employers such as Google analytics experts EpikOne.

Critical in the decision making process for that single employer was the value, both real and perceived, of the state’s three premier economic programs: the Vermont Employer Growth Incentive, low finance rate money from the Vermont Economic Development Authority, and the Vermont Training Program. met their positive tipping point and decided to grow employment in our state 100%.  What we need is to promote a cultural shift that sees strength in retention of employers and increased growth in the addition of new companies, both from Vermont entrepreneurs and from out of state employers looking to be a part of our economy.  Governor-Elect Shumlin has been open about the fact that he has asked every one of his appointees what they will do to create jobs under their purview.  The question is the right one to ask; what we need is the support, vision and strength of implementation to ensure that we tip the scales towards growth of our value-adding employers – without strong action, we stand to tip in the other direction.

Vermont’s Economic Challenge: Finding a recipe for Competitiveness while Maintaining our Quality of Place

As an organization chiefly concerned with aiding in economic development for Chittenden Country, GBIC often speaks with Vermont employers to figure out what helped encourage them to set up their business in our state. Our goal is that if we can find a common denominator to support, it will encourage other potential employers and entrepreneurs to choose to do the same. Yet after hearing of the many positives that make Vermont a great choice, what often comes out is that choosing to do business in Vermont sometimes is in part a decision made with the heart and not with the head (or at least not without rationalizing with your accountant). Every employer understands the cost environment in which they are establishing their business when the decision is made to take the risk of opening their doors. However, as Vermont continues to increase both real taxation rates and new areas of taxation, there is growing concern that little seems to be done to encourage the expansion of Vermont’s tax base, rather than simply drawing more from the same wells.

What is abundantly clear is many Vermont entrepreneurs and employers have such a genuine love for Vermont that initially deters them from seeking locations outside of our borders. The problem, as has been seen with some of the most successful Vermont companies, is that with success comes the pressure for further growth; boards, shareholders and continued competitive strains (that may or may not have ties to our state) force some traditionally Vermont based employers to move aspects of their operations to states or countries with more advantageous tax policies and structures. Competitiveness out-places love of place.

Vermont’s answer has tended to focus on asking more from the same pools of employers. The situation is analogous to sugaring: either extract more from the same trees, or establish an environment in which more saplings can thrive, be tapped and foster the growth of future forests. If you unsustainably overtap the productive trees, eventually they will die; in the case of our successful entrepreneurs, they just pick up their roots and move to Florida and/or other places that aggressively seek investment and job growth.

With the challenge of the aging demographics that our state faces, it would seem to be a prudent moment in time to examine how we can encourage entrepreneurial Vermonters (both native and who come to our expansive college and university system) to stay in the state and generate employment. If we are unable to accomplish this goal, a shrinking tax base will be forced to shoulder the weight of increased state expenditure. No one wants to see a decrease in meaningful and supportive public expenditure, but relying on the same sources for revenue will only lead to a more dramatic budget challenge in the long run. This unsustainable approach to income generation for the state, coupled with other increased cost burdens shouldered by our employers (health care, unemployment insurance etc), will surely force the hands of some Vermonters to move their businesses, and the people they employ, out of Vermont.

The Blue Ribbon Tax Commission has begun its work to look at Vermont’s tax structure and our overall competitiveness. GBIC and LCRCC have organized business people and Vermont entrepreneurs to meet with the Commission and share some concerns and ideas about how to retain our quality of place while we seek to be a place where entrepreneurs can be globally competitive.

Bill Schubart on Planning in Vermont

Bill Schubart recently presented to the Champlain Forum on the topic of how Vermont needs to be move forward and, unsurprisingly, Mr. Schubart took the time to underscore the fact that we don’t know where we’re heading.  “Vermont reveres its past,” he began, “but has not been great at learning from it. Like many people and institutions it seems to need to relearn lessons repeatedly.”  However, the real point Mr. Schubart brought to the table is that we have no shortage of these lessons from which to develop an economic plan that will drive progress in our state.

“If the way forward in business is anything like government, the progression is study, plan, execute, measure and correct. Vermont rarely gets out of the study mode, perhaps because of the inherent tension between political durability and the pain and risk associated with actually leading an enterprise […]The cycle of study, plan, execute, measure and correct in Vermont usually ends with “study” and usually in the summer. The sheer number of printed but unexecuted “summer studies” could probably provide fuel for Vermonters’ woodstoves for next year.”

This year our state (and the rest of the country) faced considerable pressures and constraint on budget income and expenditures.  This led to the Legislature deciding to convene a committee to take a top-down examination of revenue-side budget sources (essentially a review of taxes and fees) within the next two years.  While this appears to be promising, for it to show real value it must do what so many other studies cannot: follow through on the recommendations from the committee.  And while it’s easy to place blame if we’re not satisfied with the results, Mr. Schubart points out that “We’ve become adept at blaming leaders, anyone other than ourselves, but the reality in a democracy is we are led, or not, by the leaders we ourselves choose.  In the end, we are responsible.”

But this is just the beginning of where we need to find opportunity in challenge.  It is not just enough to examine traditional sources of state income, but to generate new ways of broadening our employment/employer base by actively encouraging and supporting those who are driving our economy.  This shouldn’t mean simply throwing money at the problem as states such as South Carolina have done, but it does mean implementing and fully supporting programs designed to be meaningful for employers to grow, stay and possibly relocate to within our borders.  It’s not about picking winners when you make a focused economic plan, it’s about consolidating resources and delivering them through clear, responsible channels that have direct interaction with employers.

In an effort to clearly identify where Vermonters agree our state should develop, GBIC is examining two of the most complete, community driven economic reports our state has seen in recent memory published by the Commission on the Future of Economic Development and the Vermont Council on Rural development, respectively.  By examining where these reports overlap and agree, GBIC hopes to identify immediately actionable recommendations for the short term while laying groundwork to aid in a long term comprehensive economic plan for Vermont.