 Hi, I'm Gene Bergman and City Councilor from War Two in Burlington and welcome to the Burlington Progressive TV show here on CCTV. We're going to try over the many months that we'll be doing this run to engage with community players and really talk about issues that are important to Vermonters, to Burlingtonians, to people in this country. And tonight I have got the pleasure of speaking with Stephanie Yu, who is the new Executive Director of the Public Assets Institute. Rather than me explain what the public assets is, Stephanie, talk to us. Great. So Public Assets Institute is a non-partisan, non-profit fiscal policy think tank is how we sort of describe ourselves, but we work really with state-level fiscal policy in Montpelier. And the goal is always a Vermont that works for everyone, a Vermont that advances racial and social and economic justice. And so we do that through state budget policy, state tax policy, state revenue policy. Great. You talk about your connection with, at the state. You work with other groups at the state level? We do. A lot of our work is done in coalition. We spend a fair amount of time in the state house, but also the goal is always to connect with different communities across the state. So depending on the topic, depending on who the affected communities are, we're always traveling around and trying to talk to people and sort of bring that perspective also into the state house because I think sometimes that gets missed. There is this disconnect sometimes between what happens at the state and what happens with municipalities. It can definitely feel that way. And what about national connections? Are there groups that you're associated with? So we do have a national partner and then we're actually, we do have counterparts in most states. And so that's great in the sense that there are some state policy issues that cross across states and that people are looking at in different states. So we're part of a group called the State Priorities Partnership, which is a national network. We have counterparts in 44 states, which is just great. Again, some issues come to other states first or we're doing something that other states want to hear about, a great connection. And then the center on budget and policy priorities is our national partner who does similar work, but really working at the federal policy level. I've read about them. I don't have off the tip of my tongue their work, but I know that they do a lot of work and actually spend a lot of time working with Bernie, Senator Sanders. So that's a general understanding of public assets. I just saw that you have, you issued a new report and this is something that you do every year. It's the State of Working Vermont or Vermonters and this is State of Working Vermonters 2022. Yes. It's State of Working Vermont and although actually I like your title better, State of Working Vermonters is probably more accurate description of what it is, but this is really our sort of annual State of the State report and we put it out at the end of each year really thinking about it and I'll say that I think like everything else over the last couple of years, the process of this report has really gotten disrupted by the pandemic. So normally it's a look back. So when we put out a report at the end of 2022, we're looking back on all the data that we've collected over 2021 and trying to think about, you know, we get the census data, we get tax data, we get all kinds of stuff and we're sort of looking at what can we say about trends, what's changed, what's new, but during the pandemic, it felt like especially when we were at the end of 2020, what had happened in 2019 felt so irrelevant to what people were experiencing, you know, nine months into the pandemic. And similarly, the 2021 report, you know, it really felt like a lot had happened since the end of 2020. So we really have, so we've sort of been in this place of thinking about how to do this report, sort of more up to the minute reflections on however monitors you're doing and what they were experiencing during the pandemic. So last year's report was really sort of looking at, you know, those first, so what was that that would have been the first about year and nine months of the pandemic and we kind of had been on this roller coaster of all these labor force adjustments, the lockdown, then sort of jobs coming back, the vaccines, you know, then sort of the Delta and Omicron whiplash and sort of following that trajectory. And so this year is the 2022 report was the first one where we feel like there's a little bit of perspective, a little bit, the pandemic is sort of starting to be, you know, the big effects of the pandemic are starting to be in the rearview mirror. So that's sort of a long, long run up to what the report is now. And the 2022 report really sort of looking at, OK, so what's happened, recognizing that there was a whole lot of federal aid as we all know poured into Vermont, Vermonters, and we really looked at, in last year's report, we really were kind of looking at how much that aid went to individuals, how many went to, how much went to businesses and then how much sort of went to public services, local and state government and that kind of thing as, you know, whether it was public health supports or other sort of shoring up of what public services were needed. So, but in 2022, a lot of that aid had kind of wrapped up. So then it was sort of, OK, what's the post federal aid picture look like? There were still a lot of infrastructure projects, some of the ARPA funds still being spent, some of the school funds still being spent. But we really wanted to get a sense of what 2022 looked like. So I see a computer and you probably have slides that can sort of let us get into some of those details because this is an opportunity to share with everybody that is going to watch this show some of the details. Yeah, so I appreciate that. So, I mean, we always sort of take charts wherever we go. Charts are good. So the first one I'll look at is this personal income chart. And we tried to kind of splice off what that COVID relief chunk was. And we wanted to go back over sort of a longer period because I think the thing to take away from this, this is total personal income. So this is one of sort of the major economic indicators that people often rely on, although sort of the classic ways that we talk about the economy come with challenges of their own or holes or blind spots, right? But personal income is sort of a classic way that we look at it. Personal income and growth state product tends to be the sort of biggest economic indicators. And so you see, you sort of see this growth over a decade. And then you see this sort of big significant in 2020 and 2021 that there were big chunks. So that would include the stimulus payments, the expanded child tax credit, the expanded unemployment benefits. So you can really see that that's where yellow slip. So if we look at the chart, we've got net earnings. That would be salaries and wages. And then, and that shows, what's your conclusion? I mean, it shows an increase. And this isn't billions of dollars. So we're talking real money now. So is everybody in Vermont put together? Yep. So this shows a steady, if we just look at the net earnings, what kind of conclusions are you drawing from just the growth of wages and salaries? Right. So I think there's a couple of pieces that I would take from this. The sort of long-term take is that personal income tends to grow. And that includes somewhat steady growth in net earnings, but a lot of that. And just to be clear, personal income doesn't include every last bit of people's income. So it doesn't include things like capital gains. But these are sort of the most common types of income that people have. Earnings, dividends, interest in rents, and then government transfers, which includes things like social security and sort of those big, some of those big government programs, as well as some Medicaid dollars in there. So over time, that grows pretty steadily. The problem with that is that the growth is not necessarily evenly distributed, right? So maybe we can get that back up. There we go. So we know that we could go to an, I'm not sure I brought the unemployment chart, but we all remember sort of those initial weeks after the lockdown when unemployment claims exploded, when we'd never seen those kind of numbers in unemployment because all these jobs were shut down. We knew it was temporary. We hoped it was temporary, but it was this huge influx that numbers that we had never seen, right? Ten times the amount we'd ever seen compared to the Great Recession. So, you know, weekly claims just sort of off the charts. And yet, the total net earnings for 2020, pretty comparable, right? Not, you know, if you look at that blue slice, it's pretty comparable. So not evenly distributed in terms of, yes, many people were out of work for periods of time, the Paycheck Protection Program, which was that big government loan program to businesses, forgivable loan program to businesses that really kept a lot of jobs in place, even if people weren't actively working. So, it's interesting, right, to say that you still see this net earnings pretty stable, even with all that unemployment. Do you have a chart with the distribution to be able to see, you know, who got what and the percentages? We don't have that particular chart, but I can jump around a little bit here to a wage chart, which I think is helpful, which gives you a sense of the wage changes between 2019 and 2021, because I think what also has happened, so I think, you know, the sort of waves of the pandemic, we saw this big spike in unemployment, all these jobs shut down, we weren't sure what was going to come back, what wasn't going to come back, you know, particular, you know, areas, restaurant, hospitality really hit really hard. And so, in the initial stages, we weren't sure if the wage growth that we were seeing was real wage growth, it was just the fact that a whole bunch of low wage jobs had sort of fallen out of the market, fallen out of the equation. But what we looked at in this year's report is we really saw there is some real wage growth, particularly at the low end, there's some real wage growth happening. And I think, you know, you've sort of heard that great resignation sort of narrative of people really being able to trade up in terms of jobs and there being a lot more demand for workers than there are, you know, more workers needed than there are available. So employers really having to fight for them. And to improve the conditions, because people were really hesitant to come back to some of these jobs between the public health and concerns and all these things. So what we're seeing is we're seeing some real wage growth now, particularly at the low end, but we also like to point out that, you know, even with that wage growth, wages in Vermont are pretty low, they still tend not to, you know, up until the sort of 70th percentile of wages in Vermont, you're not meeting that basic needs budget. And the Vermont livable wage really comes in there. I've heard you, I've heard public assets say that the Vermont's affordability crisis is a crisis of wages and incomes for people, not the other cost. We have a chart for that. So I'll go back a little bit here. I didn't go in any particular order, but we do look at wages and prices compared over time, because I think we hear a lot about this narrative of affordability in Vermont. And part of the question is, well, is it a price problem or is it a wage problem? And consistently over decades, and certainly as long as we've been tracking it, what we see is that Vermont wages tend to be low. Our prices tend to be pretty average, but our wages are pretty low. You know, at tracks with an experience I had when I was working at the Burlington Free Press, and I was working in the production department, we had unionized and we were negotiating a, trying to negotiate a contract, which we did not get. And we had done a study of the wages that we were getting versus what the industry and including Vermont firms were paying, these were like union jobs. And we also, there was a study that came out in terms of what they were making for profits. It was right around the time that USA Today was starting. And so, you know, the theory was that there was a giant sucking sound as Ross Perot would say to USA Today. And we're in this negotiation and we give them this information and they said right there in the table, they go, what does what we make have to do with what we pay you? We pay you what we have to pay you. And so you look at that, you know, the Vermont wages and the low wages and part of this is just the expectation that Vermonters are gonna work for cheap. We're hardworking, you know, we care about the work and we're not real greedy. Yeah, I mean, there's definitely a lot of narratives sort of driving that I think, but you know, it's all relative, right? Like, so for people coming from Massachusetts or New York, it feels like Vermont has a lower cost of living. And yet, the reality is that, you know, when you look at the US averages, there really is this striking difference. But I think you're right. I think they're sort of, it's over a long term. I think people in not just the journalism industry but in every industry would say when we compare what our salaries to those of our counterparts around the country, it doesn't line up very well. So that is a big challenge and part of that is, like you say, it's wage policy and it's other, you know, there's other pieces too. I don't know, do you have anything related to the unionization that we've had in upsurge, I think in Vermont, particularly here in the Burlington area with the university, with the medical center? So I don't think we did it in this year's report but we often do it in our, we also have a monthly jobs report that we put out where we're looking at trends in the labor market or that kind of thing. And Vermont is one of the few states where union membership has sort of ticked up and hasn't just sort of been on the decline for a long time. I can't tell you off the top of my head the sort of over the pandemic effects but I definitely think there's more interest in organizing and I think that's a good thing and there definitely is a more welcoming environment in Vermont to some degree than a lot of other states. Right. What other takeaways can, you know, again, like stepping back now the state of working Vermont. Yeah. What are the big takeaways? So I think there are the big takeaways for us. There's a couple of things, which is one, we're not done with the pandemic sort of the effects have not all shaken out and we don't quite know, we're not back to where we were, certainly on a number of Vermonters employed and number of jobs, we're not back. And I think part of what we've been trying to understand is sort of what is happening there with the labor force. So people aren't coming back even though there's demand even though there's jobs, are those public health choices? Are those, you know, are those concerns about other things? Are those conditions? Have people been able to trade up? How much is this happening? Have people been able to trade up enough to not have a second job? You know, how does it all sort of splice out? And I can't say we can answer all those questions yet but those are the questions that we're asking. So we're not through it all. What we can say is that with the federal aid ending, the federal COVID aid ending, particularly some of the individual payments, right? So the stimulus payments, the child tax credit which was expanded in 2021 for a whole lot of people. You know, what we're seeing is there was a big drop in poverty in 2021, families, child poverty, big drops and we're starting to see that tick back up, right? That after that aid expires, sort of people were struggling before the pandemic. There was a temporary fix, you know, in response to some of the financial hardship but take that away and people are left still struggling. So... So that leads into one of the projects which I know you're working on which is the child tax credit. So talk to us a little bit about that because that's current now. That's right. So that's a great thing to talk about because it's very, you know, tax days coming up and I want to make sure as many people as possible know about this because I think it kind of happened under the radar a little bit. So Vermont was one of a handful of states that in response to that expanded federal child tax credit ending, it was just one year only 2021, that we put in place, the legislature last year put in place a state level tax credit of $1,000 per kid under six for families up to a household income of 125,000. So covering most Vermont kids under six to really help out and sort of fill some of that gap that was left behind when the federal... And there is still a federal child tax credit but there was an expanded version that was more robust, included more people and was fully refundable, meaning that you could get it whether or not you had any tax liability. So the Vermont version is pretty robust. It's also fully refundable but the key is that families have to file taxes even if they aren't otherwise required to to get the tax credit, they have to file their taxes. On the state level, is the governor and his administration like telling people about this? Do you know, I mean, like how's the word getting out? It's a good question. I mean, I think there's been a little bit of coverage. So Vermont also has like other states, we have some tax assistance programs to help low income taxpayers. So through the community action agencies. And on our website, there's a bunch of resources to tell you county by county where you go if you need help with that. And the Department of Taxes website also has sort of the free filing options available to you. So I think there is some word out about it but I do think it did kind of fly under the radar a little bit, so we're trying to bring more attention to it. That's great. And I know this leads, this whole question of income leads to the work that you're doing around state education funding, right? What are you doing there? So good question. So there's, we do a lot of work with education funding and there's been a lot of changes over the last few years some of which are not fully implemented yet. So sort of a long process. But part of what we've been working on with a number of partners for a while now is moving school taxes to an entirely income-based system. Most people pay their school taxes in Vermont now based on income, but there still is this property element to it. And so what we've been looking at is but property taxes tend to be regressive and income taxes, we can make income taxes progressive or at least flat. And so we've been working on moving education taxes to a fully income-based system. It would also just really simplify the system. It's very complicated because we have this hybrid system now. So you really have to sort of do all this, these calculations to figure out where you're better off. And it's just, it's a pretty complicated system but so moving to an income-based system would be simpler and fairer in the sense that right now it does get very regressive at the high-income end. So people at the high-income end are paying smaller. We've got income sensitivity for our state education funding, but it's sort of capped. And then, and you actually have a cap on the house price as well, the house valuation. And in Burlington now where we got hit with this huge reappraisal, many people either bumped over that regardless. And then at the upper end, you're saying, this is the upper end of income, people are paying less. A smaller share of their income in school taxes, exactly. So once you hit about 136, 140,000 in household income, you're usually better off paying, you're gonna be better off paying based on your property value and it'll be lower. So once you sort of get pretty far out, people are paying a much smaller share of their income. That income sensitivity, when we talk about income sensitivity, that is really people paying their school taxes based on their income, which is a more progressive system and a fairer system. I mean, I do think that that's the reason that Burlington school budgets, even the new high school, got a much more favorable look by voters because they know that they're going to be these credits, but it is complicated and it changes and it doesn't seem as related to the income because of the link with your house value. And then, so you're looking to simplify, keeping the same principle that taxes to build the commonwealth in this case, the public education, the foundation is John, I think it was John Dewey, said the foundation of democracy to be based on a person's income and the ability to pay. And how is that going in terms of the sledding? So I think there's been a lot of interest. I think there's been a lot of really good work done in the last couple of years about why this makes sense. The tax structure commission of a couple of years ago, whose final report came out. The year is blur with the pandemic, but I think it came out in 2021, really looking at why income made more sense than property value as the best measure of people's ability to pay. And then there was also a legislative study committee during the fall that was looking at not necessarily whether to do it, but how you would go about shifting to an income system. So I think there's been a lot of really good analysis sort of making sense of this. Why does it make sense to move to an income system? And also thinking about the ways in which it's simpler and fair for people to understand. I will say, Vermont has one of the most equitable education funding systems in the country, but there are ways to improve it, right? We do have a really good system. And part of that is because we have our school taxes, our statewide taxes, which isn't true in most states. Most states, it's a local tax. So whatever you can raise locally, great, go nuts. So you can have high, expensive, wealthy towns, having lots to spend, and poorer towns have less. The pre-Brigam situation. So Vermont sort of passed that in the sense that we pool all our resources. But we also maintain, one of the principles that we take seriously is this idea of local control, that people in the community should be able to decide. And so the rates do vary by community, but they're all going into one big pot. And we're all sort of, and we share all the non-residential revenue. So there's a lot of ways in which we have a really equitable system, but moving to a totally income-based system I think would be even better. And really, so it's not just about sort of what's fair across towns, but what's fair within the town. So that sort of is a great move to the municipal side. Now I know that you guys have been focused for your history on the state policy, but is there any thought to the fact that we have, the municipal system is not income sensitized at all and you've got a host of splinter taxes, there's one way to describe them. You don't have state authority to do much in the way of local options. There are some that are there. So in terms of making the Vermont tax system fair, what do you think? I think it's a good question. And I think I sort of come back to what I said earlier, which is that property taxes tend to be regressive. Municipal taxes are property taxes, so those tend to be regressive. There is one piece where the state kind of gets involved in the municipal property tax side, which is the state does cap for low income people, the state does cap how much you can pay in municipal property taxes as a percentage of your income. So there is a cap, one of the pieces that both the tax structure commission and the study committee just looked at recently, so that's what we call the circuit breaker. At 47,000, you're capped both on the education side and on the... So if you make 47,000 household income, then that's... Then there's a cap. There's a cap. Right, so you only pay, and I always forget which percentage is which, but I think it's 2% on the school side and 3% on the municipal side, or vice versa. But so a total cap of 5%, but it's split. And then, so above that, you don't pay. And it's actually sort of a step scale, so the lower your income is, it might be 1% or 1.5% or 2% there are steps. What that will do is if you have a town that has lots of poor folks, then we don't have the other side of the equation, which is okay if we're not gonna make poor folks have to do an unfair burden. How do we get the money to pave the streets, to fix those potholes, to put the bike lanes and so that you're not killing your bike or driving your car into that, et cetera? Yeah, I mean, I think it's all about ability to pay and how we can best measure ability to pay. One thing about that 47,000, I think the major flaw that both the Tax Director Commission identified and the study committee talked about is that that $47,000 threshold hasn't changed in anyone's memory in 25, 30 years. So that's not capturing the same number of people that it captured when it was introduced 25, however many years ago it was. The poverty rate. It looks like the poverty rate has changed. And the household income is also sort of a little bit of a weird definition in the sense that if you're a household of one, it's a very different number than if you're a household of four. So it doesn't really necessarily account for those pieces. So I think there's lots of ways to reform that, but I also think the municipal property tax question of how you make those more fair or more progressive is a really important question. Well, I hope that we'll be able to chat with you about it more because I'd love to hear some of the conversation, some of the ideas, some of the analysis that could go to making that. We've done some things in Burlington, the gross receipts tax, the payments in lieu of taxes, all of those, the impact fees, some of which, well, all of which your state allowed, but is a hodgepodge. So looking at it at a different level. I wanted to end, because we're close to the time. With, you know, there's this bigger question. It is about like what we should be spending to build our commonwealth, what we should be bringing in and how that should, you know, how the revenue should be raised, what the budget should be. We have tended to have, we sort of, it's a deusterity budget. I mean, ultimately is we have had austerity budgets and I know that public assets has challenged that narrative and I want to hear that because I think that more people need to hear the challenge to austerity. So I have a chart for that. So if we go back to, this is a chart that we think about a lot. So again, this is that total personal income number. This is 2020 numbers, but looking about what slice our state taxes and local taxes and so it adds up to about between 11 and 12% of total income that we're putting into state and local taxes. And I think the question is, right, that number has been relatively steady, although it's, you know, it's kind of range from about 11 to 15% in any given year. But one thing that, but what we do know about the personal income, so we showed that number where it grows pretty steadily, but it doesn't grow evenly across people. We know this, right? We have increasing income inequality. So more and more of that is going to the wealthy. So it does our tax system go where the money is. And I think that's the big question. So that's one piece, which is there's a lot of talk about state wealth taxes. I think there's a lot of interest, both in Montpelier and across the country, about how to think about that. I think that's a really positive thing. We know there's a lot of money in capital gains, but the other piece is, I think you're talking about sort of a cultural challenge, which is the way we approach the state budget now is that we start with the amount of revenue we're getting, and then we make the budget fit under that, which is sort of the opposite of how we do school budgets. How we do school budgets is they tell us how much they need, and then we vote to approve that taxing ourselves enough to cover that budget, which is sort of the opposite with the state budget. We start with the amount we have, and then we force all our services to fit under that. And I think when we look at the personal income numbers, the problem is not that there's not available income. So the problem is sort of this cultural question and yeah, what does it take to have the state that we want? Well, this is a big conversation that we should get into in the future. We only have like a couple of minutes left, so we won't get into the details of that, but this is like a little teaser. Maybe we'll just do a show on that, and a show on the municipal side or if there's a proposal on changing the state tax and the education system on that. Stephanie, thank you. How do people get a hold of public assets if they want to? Absolutely, publicassets.org. We're on Twitter, we're on Facebook, all of the above. Happy to answer questions. Always happy to hear from people. Great, and I know that you send out like blogs and releases, I get emails. I happen to be a supporter. Join our list, yeah, absolutely. And so that's really helpful to do that. Wow, the time has flown. We barely touched the surface. I hope that this has been helpful to folks, at least to give an intro to the issues related to the state of working Vermont, to the state of taxes, to budgets, and how we build a society that is gonna be healthy and will continue to move forward. I wanna thank you all for joining us on Burlington Progressives and look forward to talking to you next month. Thanks, goodnight.