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Barre Montpelier Times Argus - Candidates Agree Economy Needs TLC

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Location: Montpelier, VT

Barre Montpelier Times Argus - Candidates Agree Economy Needs TLC

Daniel Barlow

Vermont's job layoffs in recent months run together after awhile: 200 at Lydall Inc. in St. Johnsbury; 180 at IBM in Essex Junction, 90 at Brandon's Vermont Tubbs, 44 at Resolution Inc. in Williston; 35 at KBA North American in Williston and 20 at Brattleboro's C&S Wholesale Grocers.

Even the Vermont Teddy Bear Co. got into the act: It cut 15 positions at the Shelburne office in February.

Throughout 2008, Vermonters saw the bad news roll in. Private sector job growth in the state lags the rest of the nation, and last year Vermont was the only New England state to see a drop in exports. Meanwhile, the state's unemployment rate hit 4.9 percent for the second time this year, its highest level since 1994 (the national unemployment average is 6.1 percent). And then the economic crisis on Wall Street.

"Vermont's economy continued to cool for the third straight year," according to a recent report from the Federal Reserve Bank of Boston. "With only slight employment growth and declining exports, and the subprime mortgage crisis softening the real estate market in 2007, Vermont lagged its New England brethren."

The economic crisis comes in the middle of an election year that has proved to be contentious in Vermont.

The blows have come from all sides: Democrat Gaye Symington, the retiring Speaker of the Vermont House, proclaims in a television advertisement that "We have the highest jobless rate in 14 years, and a governor who thinks getting by is good enough."

Douglas hits back in his own ad, accusing her of supporting dangerous tax increases, saying, "It's clear: Vermonters can't afford Gaye Symington."

Independent candidate Anthony Pollina, in a low-key video message to supporters, asks, "Are you making more money than you did four years ago? I don't think so."

National polls have shown that the economic collapses of the last several weeks will hurt incumbent politicians and help Democrats in races from U.S. Congress to U.S. president. But does that translate in Vermont's race for governor as a popular red governor in a blue state asks for a fourth term?

"Vermonters know that our economy is affected heavily by national and international factors," said Eric Davis, a retired Middlebury College political science professor. "The question is, to what extent will Jim Douglas be held responsible for that growing sense of discontent and disgust with the state of the economy?"

The traditional political answers to a slumping economy - less regulation and lower taxes - are no longer popular as the collapse of major financial institutions point to a future where more oversight may be implemented, Davis added.

Douglas, considered by many to be a moderate Republican, has added new ideas to his economic wish list such as supporting "green growth zones right alongside an innovation competition that promises years of tax free status.

But will it work?

"If we see Douglas get less than 50 percent of the votes this year, it will be because of the economy," Davis said. "This is the issue that is hurting Republicans everywhere because of the sense that eight years of Bush and GOP policies lead to where we are now."

The economy under Douglas

When Douglas took office in January 2003 following Howard Dean's 12-year governorship, Vermont's economy was still in a slump after the Sept. 11 terrorist attacks.

Douglas, following up on one of his campaign promises from the 2002 gubernatorial campaign, pushed a $105 million job development package through the Legislature and what he called "meaningful permit reform," aimed at cutting red tape for businesses.

"We were facing a slowing of the economy, a rise in unemployment and a softening of state revenues," Douglas recalled.

Earlier this year, just weeks before the end of the Legislature's session, Douglas unveiled an economic stimulus package that included a sales tax holiday, tax credit and homeownership assistance - all aimed at generating about $214 million in economic activity. Lawmakers and the administration compromised and passed some of his proposals, coupled with a few others from the House and Senate.

Art Woolf, an associate professor of economics at the University of Vermont, joked that if Douglas was a dictator and implemented all of his economic proposals and today's economy was the result, he would give him a failing grade. But, he says, the governor has had to work with Democratic majorities in the House and Senate, who often don't look kindly on his proposals.

"Douglas has done a pretty good job considering his constraints," Woolf said. "He hasn't been able to pass everything he wanted."

Douglas Hoffer, an independent economic policy analyst from Burlington, has a different perspective on Douglas' performance. He said the state's economy bottomed out in April 2003 and then, like the national economy, began rebounding over the next several years.

But, Hoffer said, Vermont's economy did not grow as strongly as the national average and the upward trend peaked in November 2006, the same month Douglas was elected to a third term. In fiscal year 2005, Vermont spent more than $20 million to stimulate the economy - tax incentives, workforce training and tourism marketing - and, Hoffer said, the taxpayers are not getting the bang for their buck.

"It's clear that we've spent money developing jobs in fields that were going to develop those jobs anyway," Hoffer said. "That just doesn't make sense. What we've been doing hasn't worked."

Jim=Jobs 2008

Late last month, Douglas unveiled a multi-faceted economic plan as part of his bid for a fourth term, including more tax credits for research-and-development ventures, a "smart grid" energy network and the development of green growth zones, where he envisions businesses setting up around a renewable form of energy.

Douglas also proposes to create "opportunity zones" by eliminating the income tax on rent revenues for the upper floors of under-utilized buildings in downtown areas. He has also touted his Vermont Innovation Challenge, which would reward an innovative company that brings jobs into the state with tax-exempt status.

"People respond to these calls for innovation," Douglas said. "This can help position Vermont as we move out of this downturn and provide excellent jobs in the future."

Douglas said he is not worried that the national downturn in the economy will result in his defeat on Election Day.

"Vermonters are smart enough to know that we have no control over the corporate greed of Wall Street or the crumbling of the credit market," he said. "I hear that criticism from my opponents, but I don't think that it is credible."

The opponents

Symington served as Speaker of the House for the last four years of the Douglas administration and she and the governor clashed on a range of issues. But she thinks Douglas missed a big opportunity when he opposed - and ultimately vetoed - a proposal from Democrats in 2007 to create an new all-fuels efficiency program.

That proposal, which Douglas opposed because it levied a new tax on nuclear power, would have saved Vermonters money on their energy bills and generated high-paying new jobs in the state, Symington said.

"The Legislature was leading on the energy issue with this bill, and he refused to sign it," she said.

As a gubernatorial candidate, Symington focuses her economic plan on three main fronts: creating construction jobs by repairing Vermont's roads and bridges, creating new jobs through renewable energy development, and investing in higher education.

Symington's Bridge to Opportunity program would help students for whom college is out of reach and give them additional credits for taking new classes that focus on technology, science and art. The pilot program would launch in five schools starting in 2010 before expanding the following year.

"For some young Vermonters, this would be a path to higher education and to good employment," she said.

She also proposes a strict energy goal for Vermont: The generation of 20 percent of the state's electricity needs from in-state wind power in 10 years. Coupled with a strong program to increase the energy efficiency of homes and businesses, this move would generate potentially hundreds of new jobs, Symington said, and vault the state directly into the center of the emerging green economy.

"These would be good jobs that can't be exported to China or out-of-state," she said.

Pollina is more of a political outsider than Symington - he has never faced down Douglas in the who-blinks-first legislative arena. But he's had his share of political scraps with this administration.

"We've lost a lot of good jobs, probably close to 2,000 in the last 18 months," Pollina said. "That is the reason that Jim hasn't equaled jobs."

Pollina proposes closing the capital gains tax exemption to generate $20 million in new state revenue - and that money would be used to begin fixing Vermont's roads and bridges, a mission that would generate new construction jobs across the state.

Also part of his economic proposal is the Vermont Credit Card, which would invest a portion of every purchase toward agriculture or renewable energy projects in the state.

Pollina wants to invest in renewable energy and broadband infrastructure by seeding 2 percent of the endowments of public institutions such as colleges and hospitals.

Pollina believes Vermont needs to better utilize the talents of its own workers. He proposes a state government policy to weight job bids toward firms that use in-state talent.

"We have a great labor force in Vermont that wants to work," he said. "But right now they are driving to jobs in New Hampshire and elsewhere to work, and as they leave they're driving over these crumbling bridges that we could put them to work fixing."

Compared with Douglas' economic policies, Symington and Pollina "are pages close to each other in the same book," Hoffer said.

The approach over the last two-and-a-half decades have shown something isn't working, he said.

"We have 25 years of evidence," Hoffer said. "How long are we going to continue dribbling at the margins of these economic problems?"

Douglas rarely mentions Pollina on the campaign trail. But he does have strong thoughts about a Symington administration.

"She has taken steps to make it more difficult to develop and create new jobs and opportunities for Vermonters," Douglas said. "We can argue over whether we are the highest taxed state in the country of the fourth, but it is clear that she has called for new taxes, which would hinder new job growth."

The economic theory divide

Even in Vermont's business community, there is little agreement these days on what might stimulate job growth.

The Vermont Chamber of Commerce represents 1,600 large and small businesses across the state. Historically, it hasn't endorsed gubernatorial candidates, but it does make recommendations for local House and Senate races.

Chamber President Duane Marsh says what he wants to see in an economic package for the next Vermont governor is less government spending, lower taxes and a reduction in regulation in his field.

"Once government starts to regulate businesses, it usually leads to more regulation," Marsh said. "As a member of the Chamber, I strongly believe in free market thinking."

Forty miles north of the Chamber's central office in Montpelier, is another business group that has a different take on the best direction of Vermont's economy: the Burlington-based Vermont Businesses for Social Responsibility, which represents 600 businesses across the state that are dedicated to the idea that the "need to make a profit and the need to make a difference are not in conflict," according to its Web site.

Executive Director Will Patten said Vermont needs a massive investment in roads, bridges and high-speed Internet, a secure energy future and a solution to increasing health care costs.

"The state really needs to make long-range planning a priority and we just haven't seen that so far," he said. "We should be looking at what well be doing 40, 50, 60 years from now, instead of just looking at the next election."

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