Vermont business climate survey results

Vermont business climate survey results

Shirland, Larry

The purpose of this statewide survey conducted by Dr Larry Shirland of the UVM School of Business Administration and State Representative Frank Mazur (R-South Burlington) was to assess the State of Vermont’s business climate. Questionnaires were sent to approximately 3,500 individuals engaged in business in Vermont asking for their perception of the general business climate, barriers to conducting business in Vermont and the ease or difficulty of conducting similar businesses outside the State. Four hundred and thirty-five usable questionnaires were received and included in the results.

In general, the results show that respondents believe that a commitment to lowering taxes and limiting government spending and a commitment to reduce government regulatory interference in the marketplace would greatly improve the business climate in the State. Many think the economy in the next six months will worsen but that their own sales and employment will remain the same.

Fifty-four percent of the respondents believe that the state Legislature is very ineffective in representing Vermont’s business interests, while only 5 percent believe the Legislature is very effective. Written comments suggest, however, that the House and Senate should have been evaluated separately since perceptions on effectiveness may vary.

Respondents have strong feelings about Vermont’s quality of life and workforce as being major attributes favorable to doing business in the State. However, Vermont’s competitiveness is very negatively impacted by the high cost of health insurance, high income tax burden, high workers’ compensation rates and uncompetitive utility rates. Transportation costs and sales tax burden are viewed as negatives in affecting business competitiveness in the State, but access to markets receives a neutral rating.

Act 250 and Vermont’s regulatory climate are considered detriments to economic growth in Vermont. About 70 percent of the respondents rate these questions very negatively. Strong negative feelings are also expressed about the Agency of Natural Resources and the financing/transportation infrastructure’s impact on economic growth. However, the Department of Employment and Training, Agency of Community and Development Affairs and technology infrastructure are viewed neutral, whereas VEDA is considered somewhat important. Knowledge of VEDA may not be as widespread, since over 35 percent of the respondents did not answer this question.

The business community does not see any strong business advocacy from the Executive office. Only 10 percent of the respondents think this area strongly encourages economic growth in Vermont. This may further explain why business. climate is rated poorly.

It is strongly felt by 65 percent of the respondents that it is very important for state spending to be controlled in order to create a stable business climate. Data also indicate that improving communications between players/networks, building more training programs and reducing regulations are also factors in building a competitive environment.

The survey data show that the business community has strong feelings about education and property tax reform. Status quo Ss not supported and neither is increasing the sales tax or income tax. There is also no support for freezing all aid to schools, local option tax or a statewide teachers contract. It was strongly expressed by 87 percent of respondents that restructuring can provide much needed relief to the Vermont property taxpayer. In addition, 61 percent feel that further reduction of costs with spending caps can provide relief. The question of keeping the property tax funding approach intact receives a neutral response with almost as many strongly disagreeing as agreeing.

There is a strong feeling that the local and state regulations process is inadequate, inconsistent, not helpful, expensive, complex, too bureaucratic, and stringent. The data support respondents’ beliefs that simplified and reduced regulatory interference would greatly improve the business climate in the State.

Over 50 percent of respondents strongly agree that social responsibility is best reflected by re-investing a portion of their profits in the community. Seventy-two percent of respondents feel that providing sustainable jobs with competitive wages is important. There is little support for limiting profits to reasonable returns or supporting politically correct causes as a way of being socially responsible. Respondents feel that developing environmentally oriented products and expanding in Vermont are important socially responsible initiatives. Although there are mixed opinions about involvement with affordable housing initiatives, there is good support for community outreach efforts.

The Department of Education is considered to be very ineffective. The high school system and Human Resource Council are also considered ineffective in meeting education and training objectives. There is not strong support for the technology transfer effort in helping Vermont’s work force but the University of Vermont and the Vermont College System are viewed positively by nearly 50 percent of respondents. The results of the Department of Employment and Training efforts are considered neutral.

A key to improving economic development is an adequate and competitively efficient transportation infrastructure. However, support for more roads is viewed negatively by respondents. There is stronger support for tourist train routes but commuter and freight trains draw a neutral reaction. There appears to be good support for public transit, transportation management system control of traffic and improving airports. Eighty-five percent of respondents view maintaining current roads and bridges as very important.

Fifty percent of respondents believe that to achieve financial sustainability in the State, more privatization efforts and a rainy day fund are needed. Meeting state social needs is viewed very negatively. Results further support the generally perceived low confidence in Vermont’s fiscal policy, which severely hampers Vermont’s competitive environment. Sixty-two percent of respondents also have strong feelings that Vermont is uncompetitive in comparison to other states.

It is obvious from the survey results that respondents feel that Vermont is living beyond its means and that taxes have been stretched to the limit. Over 70 percent of respondents support that assertion.

Although there is heavy reliance by the Administration and Legislature on the Economic Progress Council’s plan to improve Vermont’s economy, 58 percent have heard about the Council but only 20 percent are knowledgeable about its function. When asked if respondents would expand in Vermont, the rating is neutral. However, there is strong support they would not recommend that other businesses locate in Vermont. Written comments by those who would recommend that businesses locate in Vermont overwhelmingly mentioned “quality of life” and “the workforce” as factors for their recommendations. A large majority of those who would not recommend that businesses locate in Vermont mentioned the regulatory process as the primary concern.

The survey results show that the business community predicts that there will be some stability in their sales but no change in employment over the next six months. However, a strong case can be made that if the State of Vermont hopes to create a more positive business climate, lower taxes, sound fiscal policies, less government spending and fewer regulations are required.

Although the sizes of companies represented in the survey varied, nearly 50 percent employ 5 or fewer while only 15 percent employ 100 or more, The average number of full-time employees in the response group is about 60. Thirty-eight percent of respondents are employed in tourist related businesses and 26 percent are in service/financial businesses.

The graph summarizes the results of the survey.(Graph omitted) When interpreting the graphs, an average response of 4.0 indicates that he opinions of respondents are neutral. In other words, there are no strong feelings either positive or negative. In general, average responses of 3.5 or below indicate significant negative feelings and average responses of 4.5 or greater indicate significant positive feelings.

Copyright Lake Iroquois Publishing, Inc. d/b/a Vermont Business Magazine Jan 01, 1996

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