Dean’s budget-balancing act left taxpayers in red

Vermont had one of the highest per capita tax burdens in the country when Howard Dean left the governorship in January to run for president.

Mr. Dean, a Democrat who calls himself a “fiscal conservative,” says he balanced all his state budgets by cutting spending. And allies and critics alike praise his budget-balancing record.

Vermont enjoyed a budget surplus this year while most states were in the red because of the recession that began three years ago.

What the former governor doesn’t say is that he raised hundreds of millions of dollars in higher taxes, including sales taxes, cigarette taxes, property taxes and corporate taxes, to balance the books while paying for his social welfare proposals.

After 11 years under Mr. Dean’s governorship, Vermont now ranks in the top tier of high-tax states, a fiscal legacy that President Bush’s campaign strategists say they intend to highlight should Mr. Dean become the Democratic presidential nominee next year.

Congressional Quarterly’s Governing magazine, based on data from the U.S. Census Bureau, ranks Vermont second highest among the 50 states in the amount of tax revenue collected as a percentage of personal income in 2001 — about 9 percent to 10 percent.

In a separate ranking that measured state tax revenue per capita in 2001, Vermont was in second place with six other high-tax states, including Massachusetts and California.

Another ranking in June by the Government Finance Officers Association put Vermont in 12th place when state and local tax burdens are combined, well ahead of more populous industrial states such as New Jersey, Michigan and Illinois.

Vermont’s budget has climbed sharply, too, from $662 million in 1991 to $1.8 billion last year. Between 1997 and last year, inflation and population growth combined totaled 18.1 percent, but spending rose 51.7 percent.

Once known for its Yankee thrift, the state has become a mecca for affluent liberals from neighboring New York. Vermont’s sole congressman, independent Rep. Bernard Sanders, is an avowed socialist.

“Roughly 20 percent of the population does not depend upon jobs for income, people who are trust funders or independently wealthy,” says Michael Quaid, executive director of Vermonters For Tax Reform.

Tiny, bucolic Vermont, with a population of 610,000 — about the size of Austin, Texas — does not have many of the problems of other states.

More than 96 percent of Vermont residents are white; only 3.8 percent are immigrants. The unemployment rate is barely 4 percent.

The birth rate is the lowest in the nation, which means Vermont requires less spending on education and welfare than other states. With a median age of 37.7, the population is the third oldest among the states, and its under-18 population (24.2 percent) ranks as the eighth smallest.

Story Continues →