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Dire News from Vermont Economists

Montpelier, Vermont - April 24, 2009

"What I'm calling this now is the great recession," Vt. Economist Jeff Carr said.

The state's economists came to the Statehouse armed with nothing but bad news.

"We expected things would deteriorate in the first quarter of 2009 but what's happened is that it's on an order of magnitude that's way beyond what had been expected," Vt. Economist Tom Kavet said.

As people spend less, less tax money is coming into the state. For this budget year, tax collections are off $14 million. And for the next budget year that starts in July, there is a projected additional $43 million hole. And both those predictions had already been revised downward.

"There is going to be a lot of pain before there is a turnaround and we've really gone down another step," Kavet warned.

The economists say housing construction has stalled in the state and they are not predicting a rebound any time soon-- saying this is the longest recession since the Great Depression.

Kavet said, "We see declines in retail sales that are unprecedented that we haven't seen since the Great Depression."

"Breathtaking," Carr added.

"They really are," Kavet agreed.

Unemployment is expected to continue to rise from 7.2 percent to up to 9 percent in Vermont.

Sobering financial news-- hitting just two weeks before the end of the legislative session. The governor called for more cuts and no taxes to make up the gap.

"I hope legislators will understand how important it is to make tough decisions, so far there haven't been many made," said Gov. Jim Douglas, R-Vermont.

"I think we have to take a look; essentially scrub the entire budget," said Rep. Shap Smith, D-Vt. House Speaker.

There already was a projected $200 million shortfall for next year. Lawmakers relied on federal stimulus money and increasing taxes to make up the difference. There were no specifics Friday about how to make up this new shortfall.

"We all have various scenarios in our head to deal with this problem-- we will and we will move on. It's bad news but we are prepared to deal with it and still meet our adjournment deadline," said Sen. Peter Shumlin, D-Vt. President Pro Tem.

Democratic leaders and the governor are far apart on how to solve the budget crisis. But both sides have agreed to meet on Tuesday to try to find some common ground quickly.

Kristin Carlson - WCAX News