Inaugural address of  Deane C. Davis  As it appears in the  Journal  of the  JOINT ASSEMBLY  BIENNIAL SESSION  1969      Thursday, January 9, 1969 Inaugural Address Tom, I thank you for those extremely generous words. Governor Hoff and Mrs. Hoff, I would like at this time on behalf of the people of the State of Vermont to thank you first, Governor Hoff, for six years of dedicated, exciting service and to thank you also for the help which  you  have  given  to  me  and  to  my  associates  during  this  transition  period.  It  really  isn’t  a  transition from  one  government  to  another.  It’s merely  the  shifting of  responsibilities because you,  I  am positive, will continue to have a great interest in the affairs of this state and will contribute wherever and whenever there is opportunity so to do. I am sure  the people of  the State of Vermont wish for you happiness, comfort and satisfaction for many, many years in exciting service in many fields. And, Mrs. Hoff, on behalf of the people of the State of Vermont, I would very much like to thank you for occupying so graciously an equally important office, that of First Lady of the State of Vermont. Mr.  Speaker,  Mr.  President  Pro  Tem,  Mr.  Chief  Justice  Holden,  and  the  Associate  Justices  of  the Supreme  Court,  Governors  Emerson,  Arthur,  Keyser  and  Johnson  and  their  ladies,  and  members  of  this distinguished  body,  the  House  of  Representatives  and  the  Senate  of  the  State  of  Vermont,  one  of  the  great deliberative bodies in the United States, one with a long and rich tradition: The “swearing  in” process  is deeply embedded  in  the history and  traditions of our democratic society.  It does emphasize the degree of fidelity and performance which the people expect of their elected officers. It  is  a  great  privilege  to  serve  one’s  state  in  this  capacity,  and  I would  be  insensitive  indeed  if  I  did  not express  my  own  deep  sense  of  pride  and  appreciation  for  the  opportunity  which  has  been  given  to  me  to work during the next two years with this Legislature and the many other officers of state government. State government does not operate in a vacuum. We are much affected by what goes on in the nation and in  the world  around  us,  perhaps more  today  than  ever  before,  and  as we  look  around, we  see much  that we do not like. We  see  ourselves  involved  in  a  war  in  Southeast  Asia  of  which  our  people  have  grown  weary;  a  war which we have neither been able to win by military force nor by negotiated peace. Crime  is  on  the  increase. Racial  and  class  tensions  divide  us. Organized  protest  has  become  for many  a way of life. The world monetary  system  is  in  precarious  balance  and  the  trend  of  both  our  balance  of  payments  and balance of trade continues to move against us. Inflation increases at a rapid rate and continues to deal cruelly with the elderly and others on fixed incomes. Interest rates are the highest in a hundred years. Here  in  Vermont,  as  elsewhere,  we  enjoy  increasing  affluence  amid  increasing  poverty.  We  have  the highest  level of employment  in our history and simultaneously  the highest  level of people on welfare. Large numbers  of  our  people  are  unable  to  secure  adequate  housing.  We  have  lost  thousands  of  farms  from production and the annual loss continues at a rapid rate with no solution in sight. Real estate taxes are climbing rapidly. Yet the towns are not able to keep up with the demands for better schools  and  other  town  services.  At  the  state  level  even  though  we  are  participating  in  more  than  82 programs in which the Federal Government pays all or part of the cost, we are unable to support the level of service our people want. At the moment, we have a financial problem of substantial proportions. All of these things are disturbing. And yet, we have some blessings to count, too. An abundant, vigorous economy;  education,  public  health  and  medical  science  showing  rapid  improvement.  A  new  thrust  toward equality of opportunity gives promise of progress in eliminating discrimination among our people. And here in Vermont, we have a natural environment which is the envy of millions. It is unique in a way, perhaps  difficult  to  describe,  but  the  beauty  and  simplicity  of  our  physical  environment,  the  sharpness  of four  distinct  seasons,  the  green,  vigorous  quality  of  its  vegetation,  the  open  lands  and  forest  cover  and  the   sparkling clarity of our  lakes and streams with  the abundance of fish and game all help make Vermont what it  is  today.  But  we  see  increasing  evidence  that much  of  this  is  destined  to  gradually  diminish  in  the  years ahead and these things will become even more precious when there is less to enjoy. This  trend may be  inevitable but  if we care enough we can  slow  it down,  introduce a  sense of order and prevent  the  waste  and  spoliation.  We  can  still  have  economic  growth  without  destroying  the  Vermont  we love. It  is  helpful,  I  think,  at  a  time  like  this  to  restate  our  goals.  Let’s  see  if  you  agree  with  me  as  to  what Vermonters want most of all. They want, I believe, their state government to provide for the public safety, to maintain order and a fair and  efficient  system  of  justice  under  law.  They  want  their  children  to  have  the  opportunity  for  a  good education  at  the  elementary  and  secondary  levels. They want  every  child  in  the  state  to  enjoy  this  privilege regardless  of  whether  he  lives  in  a  rich  or  poor  family  and  regardless  of  whether  he  lives  in  a  rich  or  poor town. They  want  no  qualified  young  Vermonter  to  be  denied  the  opportunity  for  a  college  education  for financial reasons alone. They  want  the  State  to  provide  for  the  care  and  comfort  of  all  citizens  who  are  unable  to  provide  for themselves  because  of  age,  immaturity,  or  physical  or  mental  disability.  They  want  our  system,  imperfect though it may be, to separate those who can work and won’t, from those who would work but cannot. They  want  to  preserve  and  protect  the  natural  environment  in  which  we  live.  They  want  clean  water, clean air, and a reasonable number of natural areas which provide a chance for nature to perform its miracles of life and growth. They  want  to  see  a  continuing  increase  in  job  opportunities  through  industrial  development,  and  they want the cost of government distributed as fairly as may be. To  accomplish  these  objectives,  there  is much  that  needs  to  be  done. A  few  of  the  specific  programs  to which we must turn our attention are the following: 1.   Increase state aid to education to 40% of the cost. 2.  Improve the formula for distribution of state aid to make it more equitable for all communities. 3.  Improve  and  amend  the Vermont Student Loan Act  to  provide  for  all  qualified  students  and  comply with recent changes in the federal law. 4.  Improve and modernize our teachers retirement system. 5.  Provision of facilities and a better program for vocational education and technical  training for all qualified young Vermont people. This responds to human needs as  well  as  supporting  more  rapid economic development. 6.  Coordination  of  effort  and  increased  activity  in  the  field  of  vocational  rehabilitation,  alcoholic rehabilitation and rehabilitation of criminal offenders. 7.  Completion of the program for elimination of stream pollution. 8.  Some  tax  assistance  to  farmers  by  a  more  realistic  plan  for  valuation  of  farm  lands  in  order  to preserve open lands for the benefit of the state. 9.  Relief for the elderly from the excessive burden of real estate taxation on their homes. 10. Repeal  of  the  personal  property  and  business  inventory  taxes  and  the  adoption  of  a  new method  for valuation of machinery and equipment. 11. We  need  action  now  to  find  a  solution  to  providing  low  cost  housing.  A  satisfactory  answer  to  this problem would also help towards more industrial growth. 12. Enact legislation to authorize a system of full-time district attorneys. 13. Better  coordination  of  our  various  law  enforcement  activities  to  increase  efficiency  and  provide  a   better answer to rural police protection. 14. Improved coordination of efforts in the field of natural resources. 15. Step  up  our  efforts  to  attract  diversified  light  industry  into  areas  of  the  state  not  now  enjoying economic growth. 16. Provide adequate care and  facilities  for our elderly people by making plans now  to provide adequate housing, nursing home and hospital facilities. These  are  only  a  few  of  the  matters  that  press  for  attention.  But  as  we  analyze  the  state’s  financial situation, we clearly  recognize  that we can’t hope  to accomplish all of  these programs at once. Our first and overriding necessity  is  to put our  financial house  in order. Our commitments  in state government have been growing faster than the pace of our economic growth and we have committed ourselves to programs the cost of which are skyrocketing beyond the most optimistic revenue projections. The  dimension  of  our  present  problems  today  may  be  seen  at  a  glance.  In  our  present  biennium,  state appropriations for  the general fund were 141.6 million and this compares with departmental budget requests for the next biennium of 243.2 million—an increase, from one biennium to the next, of 72 per cent. In the recent six weeks of budget hearings, we have cut more than 50 million dollars from these requests. We have eliminated every nonessential  item we could find. We have drawn  the  line on  further expansion of our  employee  work  force  and  we  have  not  included  a  single  one  of  the  877  new  positions  that  were requested by department heads. But despite all of this analysis and scrutiny, these basic facts present themselves: 1.  If  we  want  to  relieve  our  towns  and  cities  of  some  of  the  pressures  on  their  local  property  taxes  by raising state aid  to  the  local school districts  to 40 per cent of  the actual costs,  it will cost  the state an additional 17.4 million dollars, for the biennium. 2.  If we want to keep our commitment to care for those less fortunate than ourselves  through  our  state welfare program, it will cost us 14.6 million more than the last biennium. 3.  If we are going  to keep our present commitments  to  the University of Vermont and state colleges,  to our  regional  correction  system,  to  our mental  health  program,  to  our  vocational  education  program, and to our state employees, the need for increased spending is startling. We  added  these  costs  for  the  next  biennium  and  took  into  consideration  that  on  the  very  day  this Administration  takes  office,  we  are  told  we  can  expect  a  five  to  six  million  dollar  deficit  in  this  current biennium  over which we  have  no  control. We  felt  this  situation was  too  complex,  and  too  important  to  the future of the state to be treated in the usual routine fashion. It needs more than that. The choices open are not pleasant. We could drastically cut education or welfare,  the  two major areas of spending,  or  we  could  impose  an  arbitrary  percentage  cut  across  the  board.  But  these  would  not  be  valid alternatives and programs vital to our people would suffer. Last  summer,  I  thought  we  had  a  choice  open  to  us.  We  could  either  have  an  austerity  program  or increased  taxes.  It  is  crystal  clear  now  that  no  such  choice  is  available. We  need  both  an  austerity  program and new taxes. With all  these  facts  in mind,  this Administration will break with  tradition and present a program  that we hope will solve our problem. 1.  First  of  all,  we  will  present  a  one-year,  hold-the-line  budget  to  cover  the  operations  of  state government for the next fiscal year. 2.  During  this  first  year,  this  Administration  will  undertake  a  thorough  and  painstaking  review  of  our state government  to  see  if we can  improve administrative efficiency. Although we worked night and day  during  the  budget  hearings  of  the  last  six  weeks,  it  is  impossible  in  such  a  short  time  to  cover every  department  with  a  fine  tooth  comb.  We  need  and  must  take  the  time  to  look  into  every department  to  uncover  overlapping  programs,  inefficient  operations  and  even  eliminating  outdated programs that may no longer be necessary. Let me give you some examples of what I have in mind.   The Commissioner of Social Welfare  and  I have  already worked out  a plan  for  a  top-to-bottom  study of procedures, policies and practices in this ever-growing area of welfare. Many of you know, I think, that from last  year  to  this  year  we  have  an  increase  of  over  one  third  in  the  number  of  applicants  for  welfare  in  that department.  We  both  agree  that  we  must  take  a  hard  look  at  our  welfare  program,  reexamine  our commitments, and be absolutely certain the state is on the right track. The Highway Board and the Highway Commissioner have already started a thorough study of the money we  are  spending  to  administer  the  highway  program  as well  as  planning,  designing  and  building  highways. They  have  already  found  areas  where  money  can  be  saved  and  this  money  is  badly  needed  to  keep  our highway commitments in Southwestern Vermont. With  the  state  proposing  to  spend  almost  67  million  dollars  on  elementary  and  secondary  education, including  teacher  retirement,  during  the  next  two  years—which  is more money  than  the  entire  general  fund biennial  budget  presented  to  this  Legislature  eight  years  ago—I  think  it  is  time  we  found  out  if  we  are getting  our  money’s  worth  for  the  dollars  we  are  spending  on  Education.  The  Commissioner  of  Education fully  agrees  with  this.  Can  we  build  adequate  school  buildings  for  less  money?  Can  neighboring communities  pool  resources  more  effectively  than  they  are  now  doing?  I  know  this  is  a  subject  that  some think  has  been  studied  to  death  in  other  years,  but  I  am  proposing  a  Task  Force  on  the  cost  of  school buildings  to  see  if  there  isn’t  a  better  way  to  get  the  job  done  at  lower  levels  of  cost  than  presently  being experienced. The  projected  increase  in  the money  the  state will  be  spending  on  education  in  future  years  is simply unbelievable. We must find ways to do more with less money. We must  take  a  hard  look  at  the many  programs which  have  been  started with  Federal  funds  but where the  Federal  Government  has  pulled  out  completely  or  partially  and  left  the  state  to  carry  the  load.  Can  we afford to carry on if Uncle Sam admits he doesn’t have the resources to help us any longer? These  are  samples  of  the  things  we  want  to  do  in  this  first  year  of  the  biennium.  We  can  accomplish much of this with our own people. I am not asking for any special appropriation for this self-examination but I will be asking many Vermonters to volunteer their talents in this endeavor. I do hope to utilize the services of the Lieutenant Governor on a full-time basis in this appraisal. After  we  have  had  this  year  of  searching  analysis  and  re-appraisal,  I  will  come  back  before  this Legislature next January with a new budget and a new program for the second year of this biennium. By that time  we  will  know  better  what  our  problems  are,  what  our  priorities  should  be  and  where  we  can  best allocate  our  resources. We  will  know  where  we  are  getting  full  value  for  our  dollar  and  where  we  have  to make  changes.  We  will  have  the  knowledge  we  need  to  move  into  the  decade  of  the  1970’s  with  the confidence  that we have a much more efficient governmental machine and are making  the best possible use of our resources. Despite  the  fact  that  this  year’s  budget  is  a  hold-the-line  budget,  I  regret  to  tell  you  that  we  still  must have  more  revenue  for  the  next  fiscal  year.  The  one-year  budget  I  will  present  calls  for  expenditures  of approximately  17  million  dollars  more  than  projected  revenues.  Reluctant  as  I  have  been  to  come  to  this conclusion,  after  exhausting  all  other  possibilities  and  only  as  a  last  resort,  I must  ask  you  to  face  together with me the prospect of a tax program adequate to meet our needs and also remove some of the inequities in the present system. The  key  elements  for  such  a  program  are  three:  first,  to  provide  adequate  revenues  to  balance  the  state budget; second, to protect those who pay local property taxes from further cruel increases in that burden; and third,  to  remove  inequities  in  the  present  tax  structure  so  as  to  provide  a  solid  and  fair  basis  upon which  to spread the increased cost of state government. To these ends, this is the program: For revenue—  A  general  sales  tax,  with  sales  of  food  for  home  consumption  exempt.    This  is  what  we  have  been calling  a Maine-type  sales  tax.  I would propose  that we  improve upon  the Maine  law by  channeling  the benefits  of  the  food  exemption  more  effectively  to  the  lower  income  families,  so  as  to  remove  the regressive tendency of a sales tax on these families.   This can be achieved by picking up the tax on all retail sales, food included, at the point of sale and then instituting  a  tax  refund  system  ranging  from  $20  per  person  in  the  family  of  each  taxpayer  who  pays  no   Federal  income  tax  to $0  for persons  in  the  family of  taxpayers with Federal  income  tax  liabilities of $1400 or more. This would mean  that  individuals with gross  income of  approximately $11,000 or more would not receive any refund. This refund can be handled as a credit against the state income tax and in the case where the refund is more than the state tax liability, the refunds will be paid in cash. Another  advantage  of  the  refund  system  is  that  the  host  of  nonresident  vacationists who  enjoy Vermont would  receive  no  rebate  on  their  purchases,  since  they  are  not Vermont  income  tax  payers,  and would  thus be paying a fairer share of the tax burden than they are now paying. The  annual  revenue  yield  of  such  a  general  sales  tax,  levied  at  the  rate  of  4  per  cent,  is  estimated  at  25 million  dollars.  After  deducting  the  amounts  to  be  refunded  to  Vermont  residents,  the  amounts  Vermont  is already  receiving  from  existing  sales  taxes  on  rooms  and meals,  the  cost  of  administration  and  tax  relief  to the  elderly,  the  net  receipts  would  be  approximately  17  million  dollars.  A  substantial  part  of  this  revenue would  come  from  two  sources  not  ordinarily  appreciated.  One  of  them  is  the  purchases  by  industry  of products which  are not  for  resale,  and  the  tax on  such purchases would produce an estimated 20 per cent of the  total yield. The other  is  the contribution  to  the revenue which will be made by  tourists and other visitors to the State for recreational purposes, which has been estimated at about 15 per cent of the total new revenue after allowing for the existing contribution from these sources in the form of the meals and rooms tax. All of the  states  around  us  except  one  already  have  sales  taxes,  and  in  order  to  discourage  border-hopping,  Ver-mont  could  also  back  up  the  sales  tax  with  a  use  tax,  which  would  require  any  Vermont  resident  to  report and pay tax on purchases in New Hampshire which were untaxed. While  the  sales  tax  will  provide  the  bulk  of  the  revenue  needed  to  balance  the  state  budget,  a  fair apportionment  of  the  burden  also  requires  increases  in  business  taxes.  I  am  accordingly  proposing  a  20  per cent  increase  in  the corporate  income  tax. This will produce an additional one million dollars annually  from this source at current levels of the economy. As I mentioned a few minutes before,  the current projection of  the amount of  the present deficit by June 30,  1969,  will  be  between  5  and  6 million  dollars,  but  that  will  not  be  known  with  any  degree  of  certainty until April. I recommend that this deficit be funded by imposition of temporary increases in beverage, liquor, cigarettes, and tobacco taxes and that the funds be earmarked exclusively for that purpose. For tax equity—  A  revision of  the  taxation of machinery  and  equipment  and  inventories of business known generally as  the  personal  property  tax  has  been  discussed  over  the  past  two  years,  largely  as  the  result  of  the reports  of  the  Tax  Study  Committee  of  the  Vermont  Legislative  Council.  Those  reports  document beyond  question  that  there  are  glaring  inequities  in  the  application  of  the  personal  property  tax,  both  as among  towns  and  as  among  industries  within  the  same  town.  These  inequities  often  result  in  various manipulations  and  harmful  uncertainty  in  the  determination  of  the  tax  burden  of  individual  taxpayers. The same inequities also result often in business personal property failing to pay its fair share of the local property tax burden, as compared with other property owners. After careful study of the various reports and of the various alternatives, it is my judgment that Vermont can  no  longer  afford  to  put  off  the  solution  of  this  problem.  Delay  will  only  cause  the  problem  to  become worse  as  the  amounts  involved  become  larger,  and  readjustment  thus  becomes  more  difficult.  I,  therefore, recommend  this  comprehensive program,  to place Vermont  among  those  states which have had  the  courage and resourcefulness to deal with similar problems: 1.  Elimination  of  the  fair  market  value  standard  for  evaluation  of  machinery  and  equipment  used  in business,    and    the    substitution  of  50  per  cent  of  original  cost  to  the  taxpayer  as  shown  by  the taxpayer’s books for purposes of local assessment. 2.  Machinery  and  equipment,  so  valued,  would  be  listed  and  taxed  at  the  local  tax  rate  as  all  other property. 3.   Inventories  of  manufacturers,  wholesalers  and  retailers  should  be  completely  exempted  from  the local property tax, and the revenue loss to the towns should be replaced by an activity tax payable by business. 4.  The  inventory  replacement  tax should be  in  the  form of a  levy of  three mills  (three-tenths of one per    cent)  on  the  gross margin  of  all  business which  is  relieved  of  the  property  tax  on  inventories. Gross margin  would  be  defined  as  the  difference  between  the  annual  shipments  (or  sales  in  the  case  of retailers)  and  the  annual  purchases  by  each  business  unit. At  the  rate  of  three mills,  this  inventories replacement  tax  should  produce  somewhat  more  than  all  of  the  towns  together  are  now  realizing from  local  assessment  of  business  inventories.  The  entire  proceeds,  less  costs  of  administration, would be returned by the state to the towns in which the inventories are located. A  second  reform  which  is  long  overdue,  in  the  interest  of  greater  tax  equity,  is  the  revision  of  the  real property tax which has been under consideration by the Legislature for several sessions. For relief of real estate—  I recommend a five-point program including the following: 1.  I suggest that we use part of the proceeds of the sales tax to provide substantial additional state aid to education.  I  recommend  a  sum  sufficient  to  bring  the  aggregate  amount  of  aid  to  education  to  ap-proximately  40  per  cent  of  cost.  We  have  seen  the  local  districts  struggling  to  keep  up  with  the rapidly mounting cost of education. In doing so, many towns have had to increase real estate taxes to unbearable  levels. The  time has  long since passed when property  taxes were an accurate or equitable measure  of  ability  to  pay.  The  inequities  fall  with  the  greatest  severity  upon  those  living  on  fixed incomes. This burden and attendant  inequities will continue  to  increase unless measures are  taken  to alleviate it. Public education  is  the major cause of  accelerating  real  estate  taxes  and  represents 65  to 70 per  cent of  town  expenditures  throughout  the  state.  Hence,  state  aid  to  education  furnishes  an  appropriate vehicle to accomplish the desired result. Substantial  increase  in  state  aid  thus  pursues  the  twin  goals of tax equity and improvement in public education. It will assist the towns in providing a better level of  pay  for  teachers.  It  will  serve  as  one  of  the  best  incentives  toward  regionalization  of  school districts.  It may not  result  in property  taxes being  lowered  in many  towns, but does make  it possible to  prevent  taxes  from  being  raised.  It  is  estimated  that  the  extra  amount  needed  to  reach  this  level will approximate for the biennium 17.4 million of which 6.2 million is for the first year. 2.  To make  it  fully  effective, we must  improve  the  formula  for  distribution  of  state  aid  to  education  to more completely achieve equalization of the burden between school districts. I  recommend  legislation  to  implement  the  cost  sharing  formula  approved by  the Legislative Council Tax  Study  Committee  in  its  report  of  December  1967.  This  formula  provides  greater  equity  for  the less wealthy districts and more closely approximates equalization among all districts. 3.  Require  business  personal  property  to  carry  its  fair  share  of  local  tax  burden  in  towns  where  it  has not done so in the past, through adoption of the replacement program I have already described. 4.  Provide  a  rational  system  of  property  tax  relief  for  our  senior  citizens who  are  attempting  to  live  on fixed incomes which cannot absorb the increased tax bills produced by an expanding economy. 5.  Implementation  of  a  state  policy  to  preserve  open  space  by  providing  a  tax  valuation  provision program for farms, forests and other open lands which would permit such lands to be taxed according to  their value  for open  space uses, with a deferred  tax obligation  for  the difference between  their  tax liability  so  valued  and  the  tax  liability  that  would  have  been  imposed  had  such  lands  been  valued according to their fair market value for other purposes. The  proposal  to  provide  property  tax  relief  for  senior  citizens  requires  some  further  explanation. At  the outset  I  have  rejected  the  idea  of  a  homestead  tax  exemption  which  was  once  popular  among  the  Southern states. Such  an  exemption disperses  tax  relief  to young  and old  alike  and  to  family units which do not need it, and also could cause havoc with many towns’ tax basis. To  serve  its  purpose  satisfactorily,  property  tax  relief  for  senior  citizens  must  be  provided  at  state expense,  and  without  burdening  other  local  property  taxpayers.  It  should  be  directed  so  as  to  benefit  those senior  citizens whose  income  is  insufficient  to  bear  a  reasonable  local  property  tax,  and  it  should  recognize the  difference  in  situation  between  senior  citizens  who  live  in  low  tax  rate  towns  as  compared  with  those who  live  in  high  tax  rate  towns.  Accordingly,  I  will  submit  for  your  consideration  legislation  which  will    provide  an  average  of  $100  per  dwelling  unit  in  tax  relief  for  senior  citizens,  and  will  vary  that  amount depending  upon  the  income  level  of  the  family  unit  and  the  comparative  effective  tax  rate  of  the  town  in which  the  unit  resides.  To  provide  a  reasonable  measure  of  such  tax  relief  the  state  must  be  prepared  to spend  approximately  one million  dollars  annually  from  its  non-property  tax  resources.  This  is  little  enough to discharge our obligation to our senior citizens who are living on fixed incomes and retirement pensions in a time of rapid inflation. This will be a top priority program for this administration. Property  tax  relief  for  farms,  forestry and open  space generally  is  as much or more  a benefit  to  the  state at large as it is a concession to the individual property owners. The Legislature has had under consideration a variety  of  approaches  to  this  problem  in  an  effort  to  preserve  open  space  as  long  as  possible.  I  strongly recommend  that we  try  the deferred  tax system of  the  type similar  to  that used  in  the State of Connecticut. I believe  it  can  be  administered  so  as  to  avoid  the  possibility  of  abuse  by  land  speculators.  For  the  latter purpose,  it will be necessary  to define very carefully  the qualifications of  the open-space  land owner  for  the proposed  system  of  tax  concessions.  I  would  recommend  that  the  following  be  a  minimum  set  of qualifications: 1.  That the land is actively devoted to agricultural uses; 2.  That the land is occupied and operated as a farm by the owner, and is used as his place of residence; 3.  That the land area consist of at least 50 acres and that conditions 1 and 2 above be met; 4.  Whenever  there  is  a  sale  of  land  for  other  than  farm  uses  which  has  voluntarily  been  placed  in  the system,  there  shall  be  paid  to  the  town  the  accumulated  amount  of  tax  which  has  been  deferred  for each of the five tax years next preceding the sale. Forestry  tax  relief  is  becoming  more  important  each  year,  if  we  are  to  reserve  the  forest  economy  as Vermont  has  known  it.  For  the  time  being,  I  would  recommend  that  forestry  be  included  under  the legislation proposed  for  the  relief of  farm  lands. Ultimately, however,  I am  impressed with  the  reasoning of the  Tax  Study  Committee  Report  which  recommended  a  more  fundamental  improvement  in  our  entire system of taxing forestry lands. I commend to the Legislature a further review of the details of this problem, as  recommended  in  the  Study  Committee  report,  so  that  it  will  be  right  for  definitive  action  at  the  1970 Session. This  is  what  might  be  called  "a  tax  package”;  a  program  to  provide  adequate  revenues,  tax  equity  and real  estate  tax  relief.  It  definitely  is  intended  to  shift  a  substantial  part  of  the  tax  burden  from  property  to non-property  taxes.  To  achieve  this  goal  will  admittedly  require  significant  adjustments  in  our  present  tax structure. This will not be easy, nor will it be any easier if we defer these problems longer. I have devoted a large part of this message to the subject of money—why we need it and how we should raise it. But there are other problems that we must not ignore and even in a time of hold-the-line budgets, we can make significant progress in these areas without increased expenditures of funds. I  am  concerned  about  the  areas of  economic development  and housing  and  in many ways  these  subjects go hand in hand. Adequate housing is absolutely vital to the attraction of new industrial firms. I want to single out economic development because it has become crystal clear to me as I sat through the budget  hearings  that  if  this  state  is  to  continue  providing  the  services  people  demand,  we  must  press  on  to expand our  tax base with new  industrial and  recreational development. We must help our Vermonters make the best possible utilization of  their  talents and abilities  in  jobs  that will produce  the best possible economic return. We  do  have  areas  of  the State  that  are  desperate  for new  economic development. There  is no  reason why  the  1970’s  can’t  be  more  productive  to  the  development  of  Vermont  than  the  1960’s  have  been  if  we make  the  necessary  effort.  These  developments must  conform  to  our  overall  planning  for  the  state  because we  must  avoid  the  mistake  made  by  most  of  our  sister  states  who  have  sacrificed  their  natural  beauty  and environment for  industrial  jobs. We can avoid  this by having a close working relationship between planning and development. The  problem  of  housing  for  low  and  middle  income  Vermont  families  becomes  worse  by  the  day.  The problem  is  further  complicated  by  archaic  building  codes,  lagging  technology,  and  local  resistance  to increased  school  costs  which  are  bound  to  accompany  the  influx  of  young  families  into  our  suburban communities where the need for housing is most acute. Our goal is safe, decent and adequate housing for all   Vermonters of low and middle income at a cost they can afford. We  have within our borders  a  strong  and well diversified private  financial  system; we have  the massive commitment  of  federal  resources  in  the  form  of  rent  subsidies,  interest  subsidies,  mortgage  guarantees  and insurance, and powerful support of public housing and urban renewal. We  have  state  commitments  in  the  form  of  the  Vermont  Housing  Authority  to  upgrade  and  increase private  rental  housing  through  federal  rent  subsidies  to  low  income  people  who  otherwise  are  driven  by economic necessity to substandard shelter. We  have  the  Vermont  Home  Mortgage  Credit  Agency  which  can  effectively  supply  credit  for  the purchase  of  homes  by middle  income  people,  by  supplementing  bank  resources  in  times  of  stringency  such as we are experiencing now. This program is ready to go into high gear just as soon as routine constitutional questions are settled. Hopefully this will be soon. Appropriately,  too,  this state agency offers a helping hand  to qualified young  families who momentarily lack the normal down-payment to buy a home. This particular program is now in operation and it already has established  a  successful  record  in  putting  a  respectable  number  of  young  families  into  safe  and  decent conventional homes.   I  intend  to  assign  responsibility  in  my  office  for  the  coordination  of  all  these  federal,  state  and  private resources in order to get the most out of them. If  we  start  with  coordination,  and  then  proceed  with  determination,  I  have  every  reason  to  hope  and expect  that  our  record  of  solid  accomplishment  in  the  solution  of  this  challenging  problem  will  be  a  good one. I  have  an  abiding  faith  in  the  judgment  and  wisdom  of  Vermont’s  people.  It  seems  to  me  that  as  we continue  in  the days ahead  to define  the problems  facing our  state, and  to analyze  the  resources available  to meet  those  problems,  our  citizens  will  largely  support  the  measures  taken  by  this  Session  of  the  General Assembly and by this Administration. I believe the people of Vermont want their house put in order and that they will approve of our actions taken for that purpose. Vermont  is  a  small  state but  a great one.  It has  a bright history  and  the  future can be  even brighter. The challenges  we  must  meet  will  test  us  severely  but  I  have  every  confidence  that  we  can  successfully  meet those challenges. I  cannot  at  this  time  promise  or  prophesy  the  results  but  I  can  promise  you  my  total  commitment  to carrying the work forward. Thank you.