Welfare: 1. Vermont’s Welfare Programs

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The Informed Vermonter reviewed most of Vermont’s welfare programs under Human Services: Welfare and Commerce & Community Development: Vermont’s Housing Programs.

In this section, The Informed Vermonter attempts to estimate the total annual cost of welfare programs and identify the source of funding as between state and federal programs.

This is not an easy task. There doesn’t appear to be a single report prepared by the government that even attempts to do this. There are a multitude of programs running through a wide variety of government departments and autonomous government agencies, many with separate and distinct financial reports.

The information provided here is 100% based on government reports, but the end result is an estimate only. First, it is likely that certain program expenditures have been missed. Second, while most of the information relates to the fiscal year ended June 30, 2016, certain of the data relates to 2015 as 2016 reports are not yet available. On the whole, the problems with the data and methodology tend to understate total welfare spending.

What is Welfare?

For purposes of this exercise, The Informed Vermonter will look only at means-tested benefit programs for poor and low income individuals and families providing cash, food, housing, medical care, services, training and education. Eligibility for benefits is based on income and/or money-in-the-bank thresholds.

Social Security, Social Security Disability and Medicare are all excluded from welfare as the individuals receiving these benefits have all made FICA payroll deductions to these programs over their working careers. These are pre-paid benefits, not welfare.

Vermont’s Education Property Tax rebate is also not included. This is simply a mechanism that ties property tax rates to income levels in much the same way that state income tax rates are tied to income brackets.

Other programs that are intended to benefit low income citizens but are not granted directly to individuals have also been excluded.  The Community Development Block Grant Program, much of which is used to develop affordable housing, has been excluded. Department of Education Title I grants, which are granted on the basis of a school district’s  aggregate income profile, have also been excluded.

The Big Four Welfare Programs

Four federally sponsored programs account for the majority of welfare spending in the country and in Vermont. These four programs address health care, food, a livable wage and housing.

Medicaid is by far the largest welfare program in the country and Vermont. This is a means-tested health insurance scheme now used by approximately 200,000 Vermonters, comprised of about 170,000 Medicaid enrollees and 35,000 benefiting from the Premium Tax Credit or Cost Reduction programs of the Affordable Care Act.

As reported by The Informed Vermonter under Human Services: Health Care, the cost of Medicaid in fiscal year 2016 was $1.69 billion.

The Supplemental Assistance Nutrition Program (Food Stamps) and several other US Department of Agriculture food programs represent the second largest welfare program in Vermont. Some 93,000 Vermonters have EBT cards or receive other types of food assistance under these programs. USDA grants for these programs in 2016 were about $167 million.

The Earned Income Tax Credit is a refundable tax credit program designed to boost the incomes of low earning working individuals. The Federal Earned Income Tax Credit provides refunds from federal income tax and Vermont’s Earned Income Tax Credit provides refunds from state income tax.

Vermont is one of 26 states with an Earned Income Tax Credit program based on the federal model. In 2016, about 45,000 Vermont tax filers (12% of total filers) received $113 million in tax credits/refunds from the combined state and federal programs. Remember that many tax filers will have joint returns and children, so many more than 45,000 individuals benefit from this program.

The last of the big four programs are the US Department of Housing and Urban Development’s Section 8 housing assistance programs, which provide means-tested rent assistance. In Vermont, the Section 8 program is administered by the Vermont State Housing Authority, an autonomous agency of the state government.

Section 8 grants were approximately about $58mm in 2016 and subsidized some 7,000 rental units in Vermont.

There are, of course, a great many more welfare programs. In the next section, The Informed Vermonter will try and identify most of these and estimate the total annual cost.

 

2 COMMENTS

  1. “Social Security, Social Security Disability and Medicare are all excluded from welfare as the individuals receiving these benefits have all made FICA payroll deductions to these programs over their working careers.”

    “These are pre-paid benefits, not welfare.”

    Regarding Medicare, this claim is inaccurate.

    Medicare comprises health insurance, pre-payment programs, and welfare (income redistribution from younger and comparatively poorer working Americans to retirees). Current Medicare beneficiaries paid for 13 to 41 percent of the lifetime benefits they can expect to receive. Data from the Urban Institute shows that a married couple with one average earner and one low earner ($74,400 in 2017 dollars) retiring in 2020 will receive $486,000 worth of Medicare benefits, having contributed $114,000 in lifetime payroll taxes.

    https://www.politifact.com/truth-o-meter/statements/2014/sep/09/national-republican-senatorial-committee/how-much-have-medicare-beneficiaries-paid-system/

    https://www.urban.org/sites/default/files/publication/98569/social_security_and_medicare_lifetime_benefits_and_taxes_2017_update_0.pdf

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