Article published Apr 7, 2009

By Peter Hirschfeld Vermont Press Bureau
MONTPELIER – Public investments in private-sector economic development offer the surest long-term path to prosperity for the approximately 60,000 Vermonters living in poverty, Gov. James Douglas said during a Statehouse summit Monday morning.

More than 100 people representing businesses, nonprofits and state government convened in the House chamber for the “Vermont Governor’s Summit: Pathways to Economic Stability.” In a half-hour introductory address, Douglas said state government ought to fund programs ensuring food, clothing and housing for the state’s most vulnerable residents. However those efforts will ultimately be in vain, according to Douglas, if Vermonters working to escape poverty are unable to find good jobs.

“We need to ensure that our safety net includes economic development,” Douglas said.

He said a recent proposal to use federal stimulus money for targeted economic-development initiatives is a good step.

“We need to be sure we do all we can to create new employment opportunities,” Douglas said. “That’s the surest path to economic stability.”

But Rep. Anne Pugh, chairwoman of the House Committee on Human Services, said that Douglas’ focus on “upper-middle class” business ventures consumes resources that would otherwise fund vital services for low-income Vermonters.

“I heard the governor talk today about the importance of continuing economic supports,” said Pugh, who co-chairs the Vermont Child Poverty Council. “I think we differ on the means.”

She said differences between Douglas’ budget proposal and the version approved last week by the Vermont House spotlight the competing ideologies. Douglas’ budget, according to Pugh, eliminated some earned income tax credits and cut funding for “micro-business” ventures intended to help struggling Vermonters launch small-scale entrepreneurial ventures.

“I think when the governor speaks about economic development, he’s talking about business incentives for upper-middle class Vermonters, and for traditional business enterprises,” Pugh said. said.

Pugh argued those priorities are misguided. “He balanced the budget on the backs of the poor,” she said.

Vermont Secretary of Human Services Rob Hofmann said both sides have valid arguments, and that differing schools of thought can work together to achieve the same desired end.

“People of good will are going to have very different ways of how they approach this,” Hofmann said. “Some people think benefits are not generous enough to blunt the conditions they’re in, and therefore we need to do more direct assistance. Other people will think … that the main way Americans over the years have gotten out of poverty is through employment, and we need to make the state more affordable and more hospitable to employers. I think both camps have a valid point.”

The summit, one of 12 nationwide funded by the National Governors Association, asked a spectrum of Vermont leaders to craft new solutions to the economic problems facing poor Vermonters.

So-called “benefit cliffs,” many experts said, comprise the single-largest impediment for low-income residents. As impoverished Vermonters find jobs and climb pay scales, they no longer qualify for the government resources propping up their household finances.

“We’ve come to find out that one step forward is two steps back, because of lost benefits,” said Sen. Doug Racine, a Chittenden County Democrat and co-chairman of the Child Poverty Council. “That’s a perverse disincentive to work, a perverse disincentive to folks getting ahead.”

The Douglas Administration, according to Hofmann, has worked to alleviate some of those cliffs. He pointed to eligibility expansion in areas such as fuel assistance, food stamps and childcare. But Hofmann said significant challenges remain.

“There are people right now who actually may be worse off financially if they accept a promotion or get a raise,” Hofmann said.

Finding the revenue necessary to eliminate those barriers, Hofmann said, is a difficult balancing act.

“We want to make sure that in finding a remedy we don’t take steps that make this state less hospitable to the employers who can give people the best chance of emerging from poverty,” Hofmann said.