Vermont’s Economic Climate

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6-3-1

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Key IndicatorsHow the Scott Administration will Measure Progress

• Growing the Economy• Size of the workforce--as a percent of the population (statewide and by county)• Employer growth rate--total size and by employee count• Wage growth--by region

• Making Vermont More Affordable• Average percent of household income spent on healthcare, housing (includes utility and

heating costs, etc.), and taxes & fees

• Protecting the Vulnerable• Percent of the population living below 200% of the Federal Poverty Level (FPL)• Rate of homelessness/housing stability• Kindergarten readiness• Percent of the population with access to comprehensive healthcare

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4 Key Factors in Vermont’s Job Market• The State’s economy appears to be entering a more sluggish period: The May

2017 job statistics show that the Vermont nonfarm payroll job count declined by 2,200 jobs over the four month period since the last month where the number of jobs increased in January 2017.

• Labor market conditions are expected to tighten marginally with Statewide employment growth following a more restrained trajectory than anticipated in the January update.

• According to the household survey of employed and unemployed Vermonters, the unemployment rate in Vermont has hovered around 3.0%, resulting from recent employment trends but also a decline in the civilian labor force.

• The updated consensus economic forecast for Vermont also includes a slightly slower pace of output growth and a somewhat slower pace to personal income growth over the near term forecast horizon.

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Credit Ratings Considerations for Vermont

Positives

• Strong financials (i.e. sufficient reserves, liquidity, unrestricted cash flows)

• Positive government framework (i.e. use of fiscal best practices, budget management structure, consensus economic forecasts)

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Making Progress

• This year, we’ve taken steps to get our fiscal house in order and provide relief for Vermonters

• $35 million towards affordable housing• 6 new Tax Increment Financing (TIF) districts• $150,000 to Small Business Development Centers• $100,000 to support regional microbusinesses• $250,000 for economic development marketing• $200,000 in new downtown tax credits to support economic growth• $2.5 million towards the Child Care Financial Assistance Program• $3 million to the Vermont State College System to stabilize tuition• A budget with no new taxes or fees for the first time in memory

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Rating Agencies

• Standard & Poor’s (S&P): AA+• Moody’s: Aaa• Fitch: AAA

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Negatives

• Slower than average economic growth• Shrinking workforce• Population and demographic considerations

• Debt profile (i.e. debt ratios relative to peers)• Pension liabilities

Credit Ratings Considerations for Vermont

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-0.20% -0.03%

0.22%

1.91%2.20%

2.55%

4.08% 4.13%4.40%

5.25%

6.13% 6.30%

7.65%8.15%

11.25%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Delaware Virginia SouthDakota

Vermont Maryland NorthCarolina

SouthCarolina

Missouri Florida Indiana Georgia Utah Tennessee Iowa Texas

Percent Change in Real Per Capita GDP (2011-2016)(Source: Bureau of Economic Analysis)

Real GDP Growth Compared to Other Triple-A States

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-2.5%

1.8%

2.7% 2.9%

4.4%4.9%

7.1%7.5%

8.3%8.7% 8.9%

9.1%

9.7% 9.9%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Virginia Florida Delaware Maryland Vermont Georgia Texas Indiana Tennessee SouthCarolina

Utah NorthCarolina

Iowa South Dakota

Percent Change in Median Household Income, 2011-2016(Source: Census/CPS, three-year rolling average)

Median Household Income Growth Compared to Other Triple-A States

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-4.4%

-0.3% 0.2%

2.0%2.3%

2.8%3.1%

4.1%4.6%

5.0% 5.2%

6.5%6.9%

7.2%

12.9%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

Vermont Virginia Tennessee SouthDakota

Missouri Iowa Maryland Georgia Indiana Florida NorthCarolina

Delaware SouthCarolina

Texas Utah

Percent Change in Civilian Labor Force (2011-2016)(Source: Bureau of Labor Statistics)

Workforce Growth Compared to Other Triple-A States

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Our Demographic Trends Must Reverse

• Vermont has 25,000 fewer Vermonters aged 20 and under than we did in the year 2000.

• Vermont has 60,000 more Vermonters over the age of 65 than we did in that same year.

• Vermont has one of the oldest populations—in fact the second oldest population in the country behind only Maine.

• This “higher than average percentage of older residents” or “older than average” population status is forecasted to continue through calendar year 2025 as Vermont’s population share over 65 is expected to grow at a significantly faster rate than is the case for the U.S. as a whole.

• We must grow our working-age population to grow our workforce and our tax base.

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Vermont General Obligation Debt OutstandingFY 96-17 (Inflation-Adjusted)

(Source: Capital Debt Affordability Advisory Committee)

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Historic and Projected Debt Per Capita RatioVermont vs. Triple-A Average

(Source: Capital Debt Affordability Advisory Committee)

$700

$750

$800

$850

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

2013 2014 2015 2016 2017 2018 2019 2020 2021

Debt

Per

Cap

ita (i

n $)

Triple-A Vermont Projected Vermont

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Debt Per Capita 2013 2014 2015 2016 2017 Net ChangeTriple-A Average $1,021 $1,027 $980 $904 $901 -$120Vermont $811 $878 $954 $1,002 $1,068 $257Debt as a % of Personal Income 2013 2014 2015 2016 2017 Net ChangeTriple-A Average 2.6% 2.4% 2.3% 2.1% 2.0% -0.6%Vermont 1.9% 2.0% 2.1% 2.1% 2.2% 0.3%Debt as a % of GSP 2013 2014 2015 2016 2017 Net ChangeTriple-A Average 2.1% 2.0% 1.8% 1.8% 1.7% -0.4%Vermont 2.0% 2.0% 2.0% 2.1% 2.2% 2.2%

Mean Debt Ratios:Vermont vs. Triple-A Average

(Source: Capital Debt Affordability Advisory Committee)

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Sheet1

Debt Per Capita20132014201520162017Net ChangeVermontTriple-A Average

Triple-A Average$1,021$1,027$980$904$901-$120Per Capita$5,873$2,546

Vermont$811$878$954$1,002$1,068$257% of Personal Income12.3%5.6%

Debt as a % of Personal Income20132014201520162017Net Change% of GSP12.1%4.8%

Triple-A Average2.6%2.4%2.3%2.1%2.0%-0.6%

Vermont1.9%2.0%2.1%2.1%2.2%0.3%

Debt as a % of GSP20132014201520162017Net Change

Triple-A Average2.1%2.0%1.8%1.8%1.7%-0.4%

Vermont2.0%2.0%2.0%2.1%2.2%2.2%

Per Capita2017

Triple-A Average$2,546

Vermont$5,873

% of Personal Income2017

Triple-A Average5.6%

Vermont12.3%

% of GSP2017

Triple-A Average4.8%

Vermont12.1%

Per Capita201320142015201620172018201920202021

Triple-A$1,021$1,027$980$904$901

Vermont$811$878$954$1,002$1,068

Projected Vermont$1,068$1,031$1,120$1,134$1,144

HISTORIC AND PROJECTED DEBT PER CAPITA RATIO

Triple-A20132014201520162017201820192020202110211027980904901Vermont20132014201520162017201820192020202181187895410021068Projected Vermont20132014201520162017201820192020202110681031112011341144Per Capita201320142015201620172018201920202021201320142015201620172018201920202021

Per Capita (in $)

Moody's Adjusted Net Pension Liabilty Metrics

Vermont% of Personal Income% of GSP0.1230.121Triple-A Average% of Personal Income% of GSP5.6000000000000001E-24.8000000000000001E-2

$589 $751

$1,016 $1,197

$1,439 $1,706 $1,842

$1,859 $1,879

$2,543

$4,078

$4,509 $4,615

$5,873

$7,624

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

NorthCarolina

Florida Tennessee Iowa Utah Missouri SouthDakota

Virginia Georgia Indiana Delaware Texas SouthCarolina

Vermont Maryland

Adjusted Net Pension Liability Per Capita(Source: Moody's)

Pension Liabilities Compared to Other Triple-A States

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Moody’s Adjusted Net Pension Liability Metrics, 2017Vermont vs. Triple-A Average

(Source: Capital Debt Affordability Advisory Committee)

12.3% 12.1%

5.6%

4.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

% of Personal Income % of GSP

Vermont Triple-A Average

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Moving Forward

• By growing the economy, making Vermont more affordable, and protecting the most vulnerable, we CAN reverse these trends

• We need pull together and focus on the fiscal fundamentals• Together, we can put Vermont back on the right track

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Vermont’s Economic Climate6-3-1Key Indicators�How the Scott Administration will Measure Progress4 Key Factors in Vermont’s Job MarketCredit Ratings Considerations for VermontMaking ProgressRating AgenciesCredit Ratings Considerations for VermontSlide Number 9Slide Number 10Slide Number 11Our Demographic Trends Must ReverseVermont General Obligation Debt Outstanding�FY 96-17 (Inflation-Adjusted)�(Source: Capital Debt Affordability Advisory Committee)Historic and Projected Debt Per Capita Ratio�Vermont vs. Triple-A Average�(Source: Capital Debt Affordability Advisory Committee)Mean Debt Ratios:�Vermont vs. Triple-A Average�(Source: Capital Debt Affordability Advisory Committee)Slide Number 16Moody’s Adjusted Net Pension Liability Metrics, 2017�Vermont vs. Triple-A Average�(Source: Capital Debt Affordability Advisory Committee)Moving Forward