Democratic candidate for governor Sue Minter is calling for a major public investment in higher education. But the tax increases needed to pay for her proposal would land squarely on Vermont’s banks, and banking officials says the plan would harm their industry.
On June 7, Sue Minter held a press conference in Winooski to announce her plan for tuition-free community or technical college for every student in Vermont.
The next day, Chris D’Elia got a call from someone in Minter’s campaign.
“And the call was pitched as I just want to give you a heads up,” D’Elia says. “In my mind I’m thinking the heads up usually comes before the announcement is made, but that’s fine.”
D’Elia is president of the Vermont Bankers Association, and there’s a reason he might have appreciated some advance notice.
Minter’s plan for higher education – she calls it “Vermont Promise” – relies on $12 million in new revenue. All of it would come from new taxes on some of the state’s larger banking institutions.
D’Elia still hasn’t spoken with Minter about her plan. When he does, he says he’ll have a fairly direct message.
“It’s going to be a job destruction policy, because my banks will cut positions,” D’Elia says.
Minter’s plan would increase the bank franchise tax, and make some banks in Vermont subject to the corporate income tax, something they’re exempt from now. D’Elia says the move would likely result in branch closures across the state. And he says it would compel bigger banks to cease investing in Vermont, and seek friendlier pastures elsewhere.
"It's going to be a job destruction policy, because my banks will cut positions ... There's also the basic of taking $12 million out of the Vermont economy." - Chris D’Elia, Vermont Bankers Association president
“There’s also the basic of taking $12 million out of the Vermont economy, which is used to support housing, support small business development, and other initiatives throughout the state,” D’Elia says.
Minter says that $12 million is, in fact, a wise investment in the Vermont economy.
“Four out of 10 students graduating from high school do not go on beyond high school, and meanwhile two-thirds of the jobs require some kind of training and education beyond high school,” Minter says.
Minter says public investments in financial aid for high school graduates will prepare students for the jobs of the future, and ensure a ready workforce for an employer base struggling to find qualified workers.
“This is a mission that the banks should be a part of,” Minter says. “It’s in their interest to make sure that we do more to get young Vermonters beyond high school.”
"It's in [banks'] interest to make sure that we do more to get young Vermonters beyond high school." - Sue Minter
Jeb Spaulding is chancellor of Vermont State Colleges, a network of institutions that includes Vermont Technical College and Community College of Vermont, the schools covered by Minter’s plan. Spaulding says Vermont has the second-highest in-state tuition rates in the country for public colleges and universities.
“And that’s depressing the number of people who are going on to post-secondary education,” Spaulding says.
Spaulding says he’s not advocating for or against the particular funding mechanism Minter has offered up. But he says solving the funding challenge for would-be college students could deliver the skilled homegrown workforce the state so desperately needs.
He says hundreds or even thousands more Vermont students would go onto get a post-secondary degree as a result of Minter’s proposal.
“I think it could be a real game-changer for economic prospects of Vermonters and for economic prospects for the state as a whole,” Spaulding says.
"I think it could be a real game-changer for economic prospects of Vermonters and for ... the state as a whole." - Jeb Spaulding, Vermont State Colleges chancellor
Tom Leavitt, president of Northfield Savings Bank, says he doesn’t discount the merits of a more robust financial aid program for high school graduates. But Leavitt says he doesn’t understand why banks should be on the hook for financing the package.
“It’s great if we’re going to go forward with that, but everyone should participate, and it certainly should not be falling on the backs of the banking community alone,” Leavitt says.
Minter says revenues from the bank franchise tax have been flat over the past decade. Numbers from the Legislature’s Joint Fiscal Office indicate the state took in about $10.1 million from the bank franchise tax in fiscal year 2006, and $10.8 million in fiscal year 2017.
“I believe that the banks should be paying their fair share,” Minter says.
D’Elia says the statistic is misleading. He says lawmakers have opted to redirect portions of that franchise tax revenue into affordable housing and downtown tax credits, creating the illusion that the franchise tax isn’t keeping pace.
Gross bank franchise tax revenues, according to Joint Fiscal Office, have gone up more than 25 percent over the past 12 years, from $11.2 million in fiscal year 2005 to $14.4 million last year.
Though Minter’s plan would hit only the five largest banks doing business in Vermont, D’Elia says all 20 banks in his association are opposed to the plan.
“And it is going to have a very, very detrimental impact on Vermonters, if this was to go through,” D’Elia says.
Minter says the real detriment comes if Vermont doesn’t do something substantive to build its workforce.
“And I’m focused on investing in ways to create economic opportunity,” Minter says.
Minter and D’Elia both say they plan to meet soon to discuss her proposal.
