New report outlines Vermont's demographic tax challenges
It's no secret Vermont's demographics are changing. Older Vermonters are retiring and leaving the workforce, while others are making the move to Vermont's cities, leaving smaller towns in the dust. A new report released Friday outlines how costly these demographic changes are to the state.
As our Calvin Cutler reports, we're talking about a big drop in state tax revenue. The income tax brings in a lot of cash to the state's roughly $1.3 billion general fund. It makes up about half-- over $600 million.
Friday's report warns that if the current demographic trends continue, the state is going to have to make changes in its tax structure or expect to make cuts in spending.
The study highlights three key demographic changes that will affect Vermont's tax revenue in the coming years.
"We need to know who's going to be paying the taxes, to know how can we make it fair, how can we make it appropriate and how can we make it sustainable," said Stephen Trenholm, the vice chair of the Vermont Tax Structure Commission.
Vermont's population is aging, leading to fewer working-age adults. In a decade when the last baby boomers turn 65, seniors will make up a full quarter of Vermont's population.
The study also shows that three counties around Burlington continue to grow but the state's other 11 counties are shrinking or staying the same.
"If you look at the population growth in Chittenden County, Lamoille County, the more metropolitan counties, that's evident that those counties have grown and the other counties have pretty much leveled off," Trenholm said.
Additionally, Vermont households are also getting smaller, shrinking 5 percent on average in the last two decades.
Experts say in the coming years, we may need to reformat our tax structure to accommodate a changing demographic. If we don't, Trenholm says our financial future may not be sustainable.
"As the population shifts, things will have to change because the revenue streams will be different. It doesn't mean there will be a demand for more revenue, but it'll have to come from different places," he said.
The tax structure commission put together this report at the request of the Vermont Legislature. This information will be used as a framework for lawmakers to redo the state's tax structure if necessary.