Legislature Must Balance Economic Conditions with Priorities

The Vermont economy is showing signs of distress, and as the legislature convenes, they need to carefully balance current conditions with the weight of the work ahead. Consumers’ disposable personal income has been hurt by:   

  • 7% inflation   
  • 20% increase in the cost of groceries  
  • 10% increase in the cost of gasoline  
  • 7% increase in the cost of housing  

This has put further pressure on businesses. American businesses, nonprofit organizations, and government entities are now contending with:   

  • Supply chain disruptions cost them an average of $228 million per year  
  • A historic workforce shortage, which fueled 21% wage growth over the past two years in Vermont  
  • Falling consumer consumption  
  • The Federal Reserve’s ongoing interest rate hikes  
  • Policy changes passed by the Vermont legislature over the past biennium, including the enhanced Unemployment Insurance benefits 

Business leaders are proceeding with caution because of the increasingly uncertain economic news. This often means taking less risk – the ideas remain, but expansions and increased capital investment are put on hold. Hiring is also slowing, as businesses struggle to shoulder additional costs. While these are financial concerns that they can control, there is so much they can’t. Supply chain disruptions due to global conflicts upset even the smallest Vermont businesses.  

As the 2023 legislative session has barely begun, spending proposals to fund programs are already mounting. While proposals are worthy endeavors, the cumulative impact of these millions of dollars of new taxes and spending could overwhelm the Vermont economy. The Vermont Chamber is tracking these impacts on the business community and its workers. Email us at govaffairs@vtchamber.com if you have one to add to the list.  

Anticipated in 2023: 

  • New investments in the childcare system are projected to cost hundreds of millions more per year 
  • Paid Family and Medical Leave, previously estimated to cost $80 million per year 
  • Universal School Meals, estimated to cost $30 million per year 
  • Education Spending, estimated to cost $1.711 billion per year 
  • Affordable housing proposal for $175 million
  • Clean Heat Standard, vetoed last year, is likely to be revived as the “Affordable Heating Act.”  
  • A tax on sports betting is expected to raise $10 million per year  
  • A doubling of the tipped minimum wage would double the total cost of labor for restaurants to employ front-of-house workers 
  • Amending the Renewable Energy Standards to require 100% renewable or carbon-free electricity