Budget passed under loom of veto threat
Paving the way for late night adjournment, the Legislature passed a $5.86 billion budget Saturday that makes investments in the state’s fiscal health and boosts spending on social services.
While the budget passed unanimously in the Senate and with broad support in the House in a vote of 117-14, Gov. Phil Scott will likely veto the proposal.
That’s because, in tandem with the tax bill, the legislation would lead to modest hikes in property taxes next year.
Scott has vowed to veto bills that raise taxes and fees, and in the days leading up to the end of the session, pressed lawmakers to adopt a plan to use $58 million in one-time funding to prevent an increase in property taxes.
Dominated by Democrats, the Legislature unsurprisingly rejected Scott’s plan, but ultimately made a nearly $10 million investment in the education fund’s reserves, which made rates lower than they would have been under the Senate’s tax plan.
The budget crafted by lawmakers this session was buoyed by unanticipated eleventh hour windfalls of one-time money: $35 million from a settlement with the tobacco industry and $44 million from unexpected tax revenue.
Budget writers, who only became aware of these funds in recent weeks, moved to use much of the money to pay down unfunded debts. The most notable investment would harness $34 million to chip away at the state’s massive teacher pension liability. Lawmakers said this move would save taxpayers $100 million in interest over time.
“This budget from our perspective is really a very responsible budget that is setting us on a very good path,” Sen. Jane Kitchel, D-Caledonia, who chairs the Senate Appropriations Committee, said on the Senate floor.
While budget writers didn’t take up Scott’s plan to use $58 million of one-time money to fill the hole in the education fund, they decided to use $9.8 million in one-time funds to restore the education reserves.
This investment, along with provisions in the tax bill, H.911, would set conditions for small property tax increases in fiscal year 2019 — a 2.5 cent hike in residential rates and a 5 cent hike in non-residential rates.
In addition, after the Scott administration decided this week to shut down the state-owned magazine, Vermont Life, which has been wracked with debt, budget writers said they had no choice but to immediately pay off $3.9 million in liabilities and to refund readers’ subscriptions.
Last month, Kitchel said that in crafting their budget, senators would prioritize spending on mental health services.
The budget bill that came out of conference committee puts $1 million toward a dozen psychiatric beds at the Brattleboro Retreat and allocates $4.3 million to increase compensation for mental health clinicians and other staff at Vermont’s network of local mental health nonprofits.
In addition, the bill would use $5 million of one-time money to address workforce shortages in mental health and substance use disorder treatment.
Lawmakers in the House and Senate also worked to restore funding to programs that serve disabled Vermonters and faced cuts under the governor’s proposed budget.
The budget would restore $4.3 million to a waiver program that provides support to more than 3,000 Vermonters with disabilities.
It would prevent the attendant services program from cutting in-home care for about 40 Vermonters with severe disabilities, like quadriplegia.
The budget would also create a tuition assistance program for members of the National Guard, an item that the Scott administration included in its budget that was jettisoned in the Senate last month.
Vermont is the only state in New England that does not have a program that provides Guard members with free college tuition, according to Maj. Gen. Steven Cray, the Vermont National Guard’s adjutant general.
Cray said in an interview last month that Vermont was losing recruits to neighboring states because there is no tuition program in place and that creating one would be a boon for the economy.
“This critical investment puts Vermont on a level playing field with surrounding states,” Rep. Kitty Toll, D-Danville, who chairs the House Appropriations Committee, told lawmakers Saturday evening.
The budget would also:
• invest $7 million overhauling the state’s approach to addressing child welfare cases
• restore cuts to a primary care loan repayment program that helps attract doctors and nurses to rural areas
• keep Vermont’s cost sharing reduction program online; the program provides subsidies to help low-income Vermonters with medical deductible and copay costs
• provides funding for PFOA cleanup options and blood draw clinics for affected residents in Bennington County
In his speech to House lawmakers, which came just after midnight Saturday, Scott made his distaste for the budget clear and suggested legislators would be back very shortly.
“I simply can’t support to add to the tax burden of Vermonters,” Scott said. “I believe their call for balance, moderation and fiscal responsibility has been loud and clear and we cannot let them down.”
In adjourning on Saturday, lawmakers did not schedule a veto session. In order to bring them back to address the budget and tax bills, Scott would need to call for a special session.