Stalling economy becomes issue in gubernatorial race

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(Host) Vermont’s unemployment rate is at its highest level in 15 years. The country is sliding into recession and the economic slowdown threatens the state budget.

The financial headlines are big news in the gubernatorial race as the challengers try to blame incumbent Governor Jim Douglas for the state’s hard times. But Douglas says he has the experience and the fiscal discipline to guide the state through the economic downturn.

VPR’s John Dillon reports:

(Dillon) Months before the economy was part of every politician’s stump speech, independent gubernatorial candidate Anthony Pollina was warning about job losses and the economic slowdown in Vermont.

Early this summer, Pollina talked to reporters in front of empty store fronts on Montpelier’s State Street. He cited an analysis by the Federal Reserve Bank of Boston that said the Vermont economy was worse than others in New England.

(Pollina) “2007, when it comes to jobs and the economy, was the worst year Vermont has had since 2002, which was the year Jim Douglas took office. And clearly we always blame a lot on the Bush administration and we can blame a lot on the Bush administration, but we cannot blame Bush for the do-nothing attitude of the Douglas administration. We cannot blame Bush for the failure of the Douglas administration to adjust to a changing economy.”

(Dillon) Since Pollina spoke in June, the economic situation has gotten worse. More Vermonters are unemployed. State revenues are slumping because of the recession. This week, there was more bad news as the Saputo cheese plant in Hinesburg announced that it was shutting down, leaving 80 people out of work.

The bad financial news will hurt the incumbent in this year’s gubernatorial race, says Garrison Nelson, political science professor at the University of Vermont.

(Nelson) “It’s going to affect it very adversely for Governor Douglas because Governor Douglas has positioned himself as a fiscally responsive, pro-business Republican and this is a brand that has lost its cache.”

(Dillon) Douglas disagrees. He says when voters make their choice they’ll support him because of his experience in managing state government.

(Douglas) “It’s having a positive effect because Vermonters understand which candidate is best prepared to lead us in these challenging times. Other candidates try to blame me for the worldwide credit crunch and the price of oil. But Vermonters are much smarter than that. They understand that I’m doing everything I can to try to position Vermont for economic success. Just this week I met with a group of software developers to encourage them to grow and expand in our state.”

(Dillon) But the rise in unemployment does leave Douglas open to the charge that his administration has not developed an effective job-creation strategy.

House Speaker Gaye Symington hammers on this theme. She says in the past few years, most of the new jobs that were created in Vermont pay low wages. But she says even those jobs are scarce.

(Symington) “Despite spending $110 million on economic development over the last three years, we had zero job growth in 2007 and we actually lost private sector jobs, and we seem to be on that track again. The gap between high and low income Vermonters is growing faster in Vermont than in any other state in the country. At some point the governor of the state needs to step up and take some responsibility and put some substantive ideas on the table and Jim Douglas is not doing that.”

(Dillon) Douglas has put out a plan that offers tax breaks to companies for new innovations. He also wants to change state environmental regulations that he says stifle business growth.

Symington and Pollina have criticized the governor’s proposal. Symington says Douglas has mostly offered a re-hash of earlier ideas.

Pollina says he’s laid out a plan to use revenues from the capital gains tax to pay for road and bridge repair.

(Pollina) “The economy and jobs has been the issue for me right from the start and it will continue to be because I think it’s really important. In hard times what you’re supposed to do is invest in people and put them to work.”

(Dillon) But Douglas says that the crash on Wall Street will mean the state has much less capital gains revenue to invest.

For VPR News, I’m John Dillon in Montpelier.

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