Category: Uncategorized

VBR & EPR Release Qtr 3 2019 Business Conditions Survey [9.9.19]

Posted on September 9, 2019

(South Burlington, Vt.)  Today, Lisa Ventriss, President of Vermont Business Roundtable (VBR) and Jeffrey Carr, President, Economic & Policy Resources (EPR), announced the Q3 of 2019 outlook results of their joint initiative, the VBR/EPR Business Conditions Survey and Index.

Overall Findings

The latest survey, which was conducted during July of 2019, achieved a response rate of 63 percent overall.  Survey results show that: Continue reading “VBR & EPR Release Qtr 3 2019 Business Conditions Survey [9.9.19]” →

Mark Crow Op-Ed – Responsible Solutions to Irresponsible Debt [4.24.18]

Posted on April 26, 2018

by Mark Crow, President, Tenth Crow Creative
and VBR Board Director

Relatively recently, I learned that the state of Vermont (so, we taxpayers) is incurring vast and ever increasing amounts of liability for obligations the state undertook to fund retirement plans for teachers and state workers; plans that include pension and retirement healthcare benefits. As of June 30, 2017, the state owes approximately $4.5 billion to these plans, which is an increase of $900 million from just the previous fiscal year. That’s approximately $18,750 per Vermont household (based on 240,000 households). And, for a variety of complicated reasons, based on the structure of the plans, this amount will only continue to increase. Continue reading “Mark Crow Op-Ed – Responsible Solutions to Irresponsible Debt [4.24.18]” →

David Coates – More Bad Pension News for Vermonters [2.8.18]

Posted on February 8, 2018

by David Coates, Managing Partner, KPMG (Retired) and member, Vermont Business Roundtable

More bad news has arrived for Vermonters, and especially Vermont taxpayers, with the release of the State Actuary’s 6/20/2017 Reports. The reports cover Pension and Retiree Health Care Benefits (OPEB) for State Workers and Teachers, and results are, frankly, quite startling.

The 2017 reports show that Vermont’s combined unfunded liability has increased by over $900 million (over 25%) in just one year. So as of June 30, 2017 our unfunded liabilities stand at $4.5 billion, an amount that is now three (3) times our General Fund revenues and seven (7) times our bonded indebtedness.

In other words, this is the biggest liability the state owes, is more than all of our other liabilities combined, and overwhelms the state’s balance sheet.

This large increase only compounds the problem we already had in paying for these generous benefit programs. Keep in mind that the state is not making any of the annual required payments on the OPEB.  For 2017, the unpaid amount for OPEB was $85 million…yes, $85 million…a 57 percent increase over 2016. These payments do swing from year to year by several million dollars due to a combination of factors; for example, the unpaid amount in 2016 was $54 million. It is also important to note that these liabilities would have been over a billion dollars more were it not for changes already made by the Treasurer.

The state has made the annual required pension payments for several years how and, in 2017, that payment was $137 million. The annual required payment for 2019 is $177 million, an increase of $40 million or 29 percent in just two years. (These amounts are taken from the Actuary’s Report.)

We must ask the hard question: What programs will be cut or taxes raised, to cover this gigantic increase given that revenues are projected to only increase around 3.5%?  Put another way, in 2008 the pension payment was 2.25% of revenues, in 2012 6.4%, in 2017 9.4% and in 2019 it will increase to 11.5%. And keep in mind, as mentioned earlier, the state is not paying anything against the 2017 OPEB obligation of $85 million.

To compound matters, another problem is likely to occur soon, which relates to the assumption used by the state for the return on the pension investments. In 2016, the assumption was 7.95% and in 2017 it was lowered to 7.50%. This assumption is still high compared to other states who are moving their rates to 7% and lower. For example, if our rate were lowered to 6.5%, a more reasonable assumption, it would have the effect of increasing our unfunded liability by $600 million. This would result in increased annual required pension payments in the millions of dollars … putting additional pressure on our revenues.

Failure by the state to make these pension payments would likely result in Vermont losing its coveted Triple A rating. That result would increase the state’s borrowing costs and those of other state-related agencies such as VHFA, VSAC, VMBB and VEDA who rely on the state’s rating when issuing their bonds…costing taxpayers additional millions of dollars.

Having said all this, there is some more promising news to report. The Administration and the Treasurer have reached an agreement to have a “stress test” performed on the pension and OPEB systems.  My understanding is this will include testing how the systems will perform under different market and volatility conditions. Importantly, it will also address affordability, which is critical as to whether or not the systems are sustainable.

At the end of the day, does anyone think our state can possibly meet these obligations?  I doubt even those legislators supported by the labor unions can believe this, given the preponderance and magnitude of this factual information.  Without strong leadership to change our structural problems inherent in these pension and OPEB programs, our state is headed for a financial tsunami!

#  #  #

Roundtable Elects New Leadership for 2017

Posted on January 13, 2017

At its 30th Annual Membership Meeting held at The Capitol Plaza, the Vermont Business Roundtable elected one new director to his first three-year term: Tom Dunn, Vermont Electric Power Company. Elected to their second three-year term were the following directors: Jill Berry Bowen, Northwestern Medical Center, Geoff Glaspie, Husky Injection Molding, Bill Shouldice IV, Vermont Teddy Bear, and John Wilking, Neville Company. Continue reading “Roundtable Elects New Leadership for 2017” →

VBR-EPR 2Qtr2016 Business Conditions Survey Results

Posted on April 26, 2016

2nd Quarter 2016 Business Conditions Survey Results Show Neutral Outlook

(South Burlington, Vt.)  Today, Lisa Ventriss, President of Vermont Business Roundtable (VBR) and Jeffrey Carr, President, Economic & Policy Resources (EPR), announced the Q2 2016 results of their joint initiative, the VBR-EPR Business Conditions Survey.

The survey, which is conducted quarterly, provides both a look back at the previous quarter and a predictive index going forward. The data for both the backward and forward-looking questions are weighted to the Vermont economy by sector employment and turned into “diffusion indices”.[1] These diffusion indices provide a tool for analyzing and presenting insight into the Vermont economy over time through the sentiments of the Roundtable members.

The raw survey data can be easily compared to the national Business Roundtable CEO Survey, a quarterly survey of national and multi-national companies, which contains similar questions to the VBR/EPR Survey in terms of employment and capital spending.  Comparing these two surveys revealed that Vermont companies are more positive-to-neutral about employment stability than national companies, while capital spending outlooks were slightly less optimistic than in the past for VBR respondents and more closely align with BRT results.

1 Each question on the survey is weighted by sector employment and the diffusion number is formulated by giving each “strong positive” answer a numerical value of 1.0, “mild positive” answers a numerical value of 0.5, neutral answers a value of 0, “mild negative” answers a value of -0.5, and strong negative values of -1.0.  The diffusion index numbers are then formulated based on these numerical values.  A value of 100 would mean that every respondent answered “strong positive”, a value of 0 would mean that every respondent answered neutrally, and a value of -100 would mean that every respondent answered “strong negatively.”

2Qtr2016_Table1_Web

Overall Findings

The latest survey, which was conducted during the first two weeks of April 2016, achieved a response rate of 74 percent overall and included a 50 percent or greater response rate from all but three sectors within the membership.  The survey asked eight retrospective and prospective questions about the CEOs’ economic outlook, demand, capital spending, and employment. Survey results show that:

  • Most responses to the question about the state’s overall business climate outlook were neutral (51%). The remaining responses were split between optimistic (28%) and pessimistic (20%). 
  • More than 60 percent of respondents (62%) shared negative outlooks specifically with ease of hiring for available positions; and,
  • The education sector had the most optimistic outlook on the general business climate, while the health care sector had the least optimistic outlook.

Graph #1 below shows the diffusion index of overall economic outlook, which measures the level of confidence (optimism or pessimism) respondents have about different aspects of the economy based on the first question on the survey, and can range from 100 (where 100% of respondents answered “strong positive”) to -100 (where 100% of respondents answered “strong negative”).

For this reporting period, the diffusion index shows a decline in optimism from Q1 2016 to Q2 2016, indicating that Vermont CEOs continue to feel neutral to mildly pessimistic about the business climate for the coming three months.

BCS-2Qtr2016_Graph1_Web

 

BCS-2Qtr2016_Graph2_Web

Graph #2 above shows the composite index of the diffusion index points for the questions relating to demand, capital spending, and employment in the next three months. The majority of responses were neutral and the index point slid from a mildly optimistic index point of 19 last survey to an index point of 9 this survey, indicating a shift toward true neutral.   The outlook remains in the neutral range.

Also included in the survey was the opportunity for Roundtable members to express their opinions on other topics adversely affecting their businesses. The greatest frequency of responses from members concerned high taxes and tax policies, health care costs, economic growth/development in Vermont, and the difficulty of finding workers.

The next survey will be conducted in early July 2016.

 

The Vermont Business Roundtable (VBR) is a nonprofit, nonpartisan organization of chief executive officers of Vermont’s leading private and nonprofit employers, representing geographic diversity and all major sectors of the Vermont economy. The Roundtable is committed to sustaining a sound economy and preserving Vermont’s unique quality of life by studying and making recommendations on statewide public policy issues.  www.vtroundtable.org.

Economic & Policy Resources, Inc. (EPR) has been providing private and public sector clients throughout the U.S. and Canada with problem-solving economic research and analysis services for more than 25 years. Our professionals bring a broad spectrum and a deep reservoir of problem-solving knowledge and experience in applied economics to each assignment. We put our capabilities and experience to work for our clients so that they have the insight and understanding necessary to move forward with confidence. EPR has successfully completed assignments throughout the United States and in eastern Canada. www.epreconomics.com.

It’s Time for the 4-Year Term

Posted on January 25, 2016

by Lisa Ventriss, President

 

In 1992 the Roundtable issued its policy statement on the merits of a 4-year term for governor as a means of managing our fiscal house. At that time, there were three states with 2-year terms (Vermont, New Hampshire and Rhode Island), but in the intervening years Rhode Island has seen the light. The last time Vermont amended its Constitution regarding election cycles was 1870, when we decided to increase terms from one year to two. It’s time that Vermont joins the other 48 states.

We all know about the non-stop campaigning, which creates voter apathy; the inability to sync with actual economic cycles; and the difficulty in finding executive talent willing to accept government appointments. A four-year term would address these challenges and move Vermont toward a modernized and more efficient government.

In this legislative session, the Roundtable is working to build collaborations with other large business and industry groups to champion legislative proposals for a four-year term. When you have the opportunity to talk with your legislator, please be sure to ask for their support.

Click Here to View the 1992 Policy Statement

Missed the 2nd Qtr Roundtable Today! Segment?

Posted on February 1, 2015

RoundtableToday DanielsIn addition to discussing the second quarter Business Conditions Survey findings, the August edition of Roundtable Today! also featured Phil Daniels, Market President of Vermont and Northern NY, TD Bank talking about business conditions for the New England banking industry.

Click Here to watch this episode

VBR & EPR Release 3rd Qtr Business Conditions Survey Results [12.10.14]

Posted on December 11, 2014

12.10.14 – (South Burlington, Vt.) Today Lisa Ventriss, President of Vermont Business Roundtable (VBR) and Jeffrey Carr, President, Economic & Policy Resources (EPR), announced the 3rd Quarter results of their joint initiative, the VBR-EPR Business Conditions Survey. The survey, which is conducted quarterly, takes a look back at the economic conditions of the previous quarter and provides a predictive index going forward.

The economic indicator, constructed as a Diffusion Index, is designed to follow economic sentiments of Roundtable members over time, and serve as a tool for analyzing and presenting insight into the Vermont economic outlook as a leading economic indicator.

The 3rd Quarter survey achieved a response rate of 68 percent overall and included a 50 percent or greater response rate from all but one sector within the membership. The survey asked eight questions about the economic outlook, demand, capital spending, and employment. Survey results show that…

  • For the third quarter in a row, most responses to the overall question about the state’s business climate outlook were neutral to mildly optimistic.
  • More than half of respondents (56 percent) shared negative outlooks specifically with ease of hiring for available positions; and,
  • For the third quarter in a row, the manufacturing sector had the most optimistic outlook (67 percent) on expected demand and employment.

The first graph below shows the Diffusion Index of overall economic outlook, which measures the level of confidence (optimism or pessimism) respondents have about different aspects of the economy, and can range from 100 (where 100% of respondents answered “strong positive”) to -100 (where 100% of respondents answered “strong negative”). The historical survey data extends back to 2004; the new Diffusion Index methodology began in Q3 2013. The neutral, or “zero” line, is highlighted in red.

For this reporting period, the Diffusion Index of overall economic outlook, shows a declining level of optimism from Q2 2014 to Q3 2014, indicating that Vermont CEOs continue to feel mildly optimistic to neutral about the business climate in the coming three months.

3QtrSurveyDiffusionIndex

The next graph below shows the composite index of the Diffusion Index points for the questions relating to demand, capital spending, and employment in the last three months. The majority of responses were neutral or mildly positive, keeping the line steady between 20 and 30 index points.

3QtrSurveyCompositeIndex

When given the chance to express their opinions on other topics, members of the Roundtable gave voice to concerns and uncertainty regarding the state’s efforts around health care reforms, including health care financing. According to members, such uncertainty has resulted in many businesses being unable to make investments in their growth strategies.
The next survey will be conducted in late January of 2015.

#  #  #

The Vermont Business Roundtable (VBR) is a nonprofit, nonpartisan organization of chief executive officers of Vermont’s leading private and nonprofit employers, representing geographic diversity and all major sectors of the Vermont economy. The Roundtable is committed to sustaining a sound economy and preserving Vermont’s unique quality of life by studying and making recommendations on statewide public policy issues. www.vtroundtable.org.

Economic & Policy Resources, Inc. (EPR) has been providing private and public sector clients throughout the U.S. and Canada with problem-solving economic research and analysis services for more than 25 years. Our professionals bring a broad spectrum and a deep reservoir of problem-solving knowledge and experience in applied economics to each assignment. We put our capabilities and experience to work for our clients so that they have the insight and understanding necessary to move forward with confidence. EPR has successfully completed assignments throughout the United States and in eastern Canada. www.epreconomics.com