TimesArgus.com - We Are Vermont

The race for governor: Hopefuls chart own paths to better times

MONTPELIER – A tentative and uncertain economic recovery, an unemployment rate back down to 6 percent and state revenues that are meeting projections are welcome news. But none of that has erased the pain of recent – and continuing – economic troubles facing employers who have laid off workers as business has declined, or workers who have lost their jobs and their borrowing power to afford a home.

So it is not surprising that economic development and job creation are the most common topic in this year’s heated race for governor among the five Democratic primary candidates and the likely opponent of one of them, the Republican lieutenant governor.

But how much can any governor do to tame a national and global economic collapse?

Jeff Carr, an economist who works for the administration, and Tom Kavet, who does a similar job for the Legislature, are both careful not to critique the specific proposals of candidates. After all, they have worked with some and may work with others. But, while state government is limited in how much it can do, there are steps to take, they said.

“There just needs to be a good dose of humility about what can be done at the state level,” Kavet said. “We don’t print our own money. We don’t have the borrowing capacity of the federal government.”

But “that doesn’t stop voters from blaming state government officials if it is bad, and it does not stop them from taking credit if it is good,” he said.

First of all, the state needs an economic development strategy, he said. “The second thing is to play to the strengths of the state and not copy what everyone else does.”

Finally, as voters evaluate candidates’ economic development plans, they should consider character as much as the specific steps the politicians say they would take, Kavet said. That’s because when unexpected events inevitably arise, those management styles likely will matter more than any particular ideas.

Carr agreed that there are limits on what any state government can do.

“It is difficult for the state to overwhelm a lot of the other factors that are pushing on economic development and job creation,” he said. But the most significant thing is to make sure the state’s infrastructure, including job training and education, is adequate to pave the way for the kind of jobs the state wants to encourage, he said.

Renewable energy, agriculture, and telecommunications and broadband Internet infrastructure are common themes for many candidates. Still, significant differences are emerging in the approach and emphasis of each candidate’s plan for economic development.



Susan Bartlett

State Sen. Susan Bartlett said recently she has a hard time understanding why the state has not done more to help inventors become business people by patenting their designs and finding financing.

“We have never gone that step of helping folks get their patents. It isn’t such a hard process as it is a long process,” she said. Those ideas and inventions cut across all industries and products and have the advantage of coming from people naturally connected to – and interested in staying in – Vermont, she said.

Everybody has been looking for the next big economic driver, Bartlett said, and “this is it.” Getting patents “makes it real. It can also give you protection from somebody big who wants to gobble it up.”

Bartlett also would take economic development money from the state agencies that receive some of it now and put more – or all – of it into local regional economic development offices.

“We need to appropriately fund regional economic development,” she said. “You fund those folks so their time is spent helping businesses, not raising money to keep their doors open.”

The state’s diversified agriculture, from artisan cheese-making to seed companies, also has the potential to aid the state’s economic growth without being dependent on changes in the federal milk pricing system, as important as they are, Bartlett said.

“It puts a lot more of the control in the hands of Vermotners and Vermont business people,” she said.

It also has a fringe benefit. Good but less-than-beautiful food left over from such operations can go to food banks and public institutions.

“One of the issues around locally raised food is that it is so expensive most people can’t afford it,” she said. “You can work with schools and institutions to get them really affordable, high-quality, Vermont-raised stuff.”



Matt Dunne

Former state senator and now Google executive Matt Dunne agrees with some other candidates that infrastructure, particularly telecommunications infrastructure, is vitally important to economic development in Vermont.

But he would also include less tangible infrastructure like higher education funding, the ability to raise capital, and other needs in that equation.

“The good news with each of those is that it does not take General Fund dollars to solve those particular problems,” he said.

But he would use another kind of government money to get those needs filled.

“We use revenue bonds and other financial instruments less than other states,” Dunne said. Revenue bonds will work to expand broadband Internet and cell phone coverage because such borrowing can be supported with less return on investment than private business would demand, he said.

Dunne also said Vermonters should not be afraid when companies that were started in the state are sold or move. Some of them could be and should be kept, but for many it is a natural progression, he said.

“For the most part we should embrace the churn economy,” he said.

“Vermont is not going to be a state where commodity manufacturing is going to succeed particularly well,” Dunne said. “We are also not a state that I feel is going to be particularly successful in landing lots of big corporate campuses throughout the state.”

But with one of his proposals – a capital gains tax break if the money is reinvested in a Vermont company – the state could enjoy a succession of new companies being started.

“That is a way of keeping those resources in the state,” he said. “We can once again be a center of innovation.”

What does worry him is the decline in the number of startup businesses in the state. “That kind of decline spells huge trouble for us,” he said.

And the state must remain the kind of place where creative people want to live, he added. “Businesses go to where those people are, rather than the other way around.”

“Vermont has been very good in its past in telling people what they can’t do. My administration will be equally effective in telling people what they can do,” he said.



Deb Markowitz

Deb Markowitz, the current secretary of state, has issued a detailed plan in which she emphasizes protecting businesses and jobs already in the state and pushing banks to lend to Vermont companies if they want to do business with state government.

“Rather than focusing on poaching the next IBM or Husky from another state, we focus on the jobs and businesses we have,” she said.

Markowitz also would concentrate on marketing Vermont as a place that manufacturers products like software and renewable energy components and would offer a tax incentive to businesses that hire unemployed Vermonters. In the long run that would be cheaper than keeping them on state unemployment benefits, she said.

As for the banks, particularly large out-of-state banks, Markowitz argues that companies expect that when they do business with lending institutions, that relationship will be repaid, and there is no reason the state of Vermont should expect less for the business its $4 billion annual budget represents.

“We bailed out Wall Street and it has not trickled down to Main Street,” she said.

Markowitz added that she would bring greater transparency and accountability to the state’s business tax credit program, which gives breaks to some companies that are expanding or relocating here.

She said she would make those changes without spending more state money. “It’s a plan designed to use existing resources in strategic ways,” she said. Tax credits she would put in place for new small businesses would not reduce already-scant state revenue because as startups those businesses are not being counted on for tax money now, she said.

One more change Markowitz said she plans: She would endeavor to change the law so students can’t leave school until they turn 18 or graduate. The ability to drop out at 16 “comes from a time when we were an agrarian society,” Markowitz said, and the longer students stay in school, the better prepared they are for employment.



Peter Shumlin

The thing that distinguishes him from the other candidates is his history of starting and running successful businesses, said Peter Shumlin, the state Senate president pro tem, who runs Putney Student Travel with his brother.

“Vermont has not had a governor who has run and built a successful business since Dick Snelling,” said Shumlin. “I have been building businesses, meeting payroll and having a lot of good luck since I was 23 years old in Vermont.”

His “Vision for Vermont” plan is based on several infrastructure changes, including statewide broadband Internet and cell phone coverage by 2013, expanded early childhood education, more job training programs and a single-payer system that will mean Vermonters’ health insurance is not tied to their employment, Shumlin said.

“I would not propose any of these ideas if there was not a way to restructure our current dollars to make them work,” he said. That way is by reducing the money it costs to keep nonviolent offenders in prison — $40 million a year by his count – by lowering crime and recidivism rates through education and drug and alcohol treatment.

The other key to his idea is to expand design and manufacturing of renewable energy and efficiency technology in the state. That doesn’t just mean building windmills and solar panels, he said; it means more companies like the one in southern Vermont he visited recently that makes lightweight car components that take less fuel to move.

“There is going to be a huge economic boom as we get off of oil and move onto other technologies. Vermont is ideally positioned to get a piece of that economic growth,” he said. “Vermont pretty much missed the tech boom. We can get a piece of this one.”



Doug Racine

“The first thing we have to do is get back to basics,” according to state Sen. Doug Racine. Ensuring the quality of life in Vermont, the quality of the workforce and the quality of the infrastructure are the components of that, he said.

“Those are the things that you have to do and that every family and every business is depending on.”

But just as important – and something his rivals are not all doing – is being honest about what is possible given the state’s fiscal and other constraints, Racine said.

“That is why I am not making a lot of big promises,” he said. “Let’s be realistic and let’s be honest with Vermonters about what we can do.”

And some of that is going to cost money, so priorities must be established, Racine said. Several of the candidates have talked about paying for expanded broadband Internet service, for example, by using revenue bonds – that is, borrowing paid back by subscribers. But that has been tried, and in rural communities if there were enough revenue to support providing the service through bonds, it would already be happening.

“You can’t charge enough to pay the bonds, that is the problem,” he said.

That means that such needed expansion will take some amount of subsidy and that although high-speed Internet can be expanded, fiber optic lines may not be affordable to put in every spot in the state, Racine said.

Other things can be done with relatively little cost – for instance, enforcing environmental laws to make sure Vermont’s landscape remains appealing to companies and helping small businesses comply with those laws, Racine added. Those businesses, like the family car dealership he co-owns and runs, would get the same amount of help under his administration as larger companies have, Racine said.

“The state has not been there to help them in the same way,” he said. “Yet small businesses carry the balance of this economy, and small businesses are where we are seeing job growth.”



Brian Dubie

The lone Republican seeking to follow Gov. James Douglas into office, Dubie has faced criticism from the Democrats for pointing out that Forbes Magazine has deemed the state a bad place to do business.

“I have been a champion for Vermont all over the world,” Dubie said. But at the same time “a leader needs to identify opportunities for improvement.”

And the biggest area for improvement is tax policy, where the state should collect less money in order to compete for jobs with other places, Dubie said.

“To compete, taxes matter,” he said. “We are not going to be able to sustain the level of (government) expenditures we have enjoyed.”

The state also needs more certainty in its regulatory process, Dubie said.

“We have to adopt a pro-growth agenda,” he said. “We can make Vermont a stronger, more competitive state.”

His goal, Dubie said, is “a reasonable level of taxation” and “a reasonable level of expectation in the regulatory environment.”

Otherwise Vermont will not be able to attract new companies and keep the ones it has, he said.

“We are going to have to have private-sector businesses that allow us to generate the revenue that allows us to do all of those things,” Dubie said. “Vermonters have a generous heart, but there are limits to the size of our pocketbook.”

But those issues are similar to the ones Douglas, someone Dubie considers a political and policy mentor, has worked on for four terms. Why does the current lieutenant governor believe he will have more success?

For one thing, times are tougher and the need for change more urgent, Dubie said. “The challenges we face are greater.”

For another, he has a history of having “collaborative conversations about the need for reform,” Dubie said.

Finally, as the person who presides over the state Senate, he already knows the players in the Democrat-controlled Legislature.

“The governor came from outside. I am coming from the inside. I hope to leverage my relationships with relevant committee chairs” and others, Dubie said.

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