Seeking to maintain leverage in high-stakes budget negotiations, House Republicans voted to stall a proposal that would prevent a government shutdown if lawmakers and Gov. Phil Scott don’t iron out a budget deal by July 1.
Refusing to suspend rules and allow House members to take up the proposal ahead of schedule, Republicans blocked a bill that would ensure that Vermont has a budget at the beginning of the next fiscal year, even if lawmakers and Gov. Phil Scott haven’t resolved a budget impasse.
Democrats would have needed support from three quarters of House members to suspend the rules and take up the bill Wednesday afternoon — but with Republicans united in opposition, the vote only came in at 82-52.
That means the bill will likely have to wait until Friday for a final vote in the House, when the Democratic majority can send it to the Senate, where Democrats are also in control. Senate leader Tim Ashe, D-Chittenden, has indicated that he will not call senators to reconvene until the House passes a budget bill.
The proposal includes almost all of the spending package and much of the tax bill passed by the Legislature last month, but excludes the “controversial” items at the heart of the budget impasse — most notably the $34.5 million of surplus money Scott hopes to use to buy down property tax rates.
Supporters of the proposal say it will allow lawmakers and the Scott administration to narrow the scope of their negotiations to areas of disagreement, while assuring Vermonters that government operations will be up and running in July.
But Republicans cried foul Tuesday, arguing the proposal would relieve whatever pressure Democrats currently felt to hammer out a deal with the governor that would avoid a tax increase.
“I think it’s a very real issue,” Rep. Don Turner R-Milton, the House Minority Leader said of the threat of a government shutdown in an interview Wednesday. “But once you remove that pressure there’s not a lot of motivation, I think, from the majority to negotiate going forward.”
Republicans stressed that they’re not in favor of shutting down state government, but didn’t think emergency measures were needed to avoid it with a month left to strike a deal.
“This whole idea that we need a safety net, that doesn’t mean that we need it today when there’s more than a month,” Rep. Anne Donahue, R-Northfield, said during a House Republican caucus Wednesday afternoon.
“It kind of puts a bypass around real negotiations, on resolving the real issues,” Donahue said.
The Democratically-controlled Legislature and the Scott administration are locked in a stalemate over this year’s spending package, which proposed an increase in property tax rates.
Scott vetoed the budget and tax bills lawmakers passed earlier this month and called lawmakers back to Montpelier last week for an ongoing special session. He’s encouraging lawmakers to use $44 million to buy down property tax rates and put education finance policy changes into motion.
He says his proposed reforms would generate $300 million in savings by combining changes to special education, a statewide teacher health care plan, a task force to accelerate school consolidation and a threshold that penalizes districts that spend above a certain level on schools.
But most importantly, he wants the Legislature to come up with a plan that doesn’t raise taxes, which they have refused to do, raising concerns that an agreement may not be reached by July 1.
Seeking to alleviate these concerns, the House Appropriations Committee crafted and voted out a proposal Wednesday evening to prevent a shutdown.
Rep. Kurt Wright, R-Burlington, was among the Republicans who pointed out that if an agreement wasn’t reached with the governor, the rate for nonresidential property tax payers would revert to the default rate of $1.59 cents — a 5.5 cent increase over this year’s rate.
Wright said he’d like to see a provision in the bill that either lowers the default rate to this year’s level of $1.53 cents, or eliminates a default rate for next year altogether.
Without it, he said Democratic lawmakers were asking the governor to “trust there will be a good compromise” despite months of discord and a breakdown in communications. Given the circumstances, Scott would likely veto the proposal and the process would start again.
“That’s why passage of this bill does not necessarily lead to us avoiding a government shutdown and getting out of here earlier,” Wright said.
While the plan got a cool reception from Republicans, House Democrats lauded the measure in a caucus meeting Wednesday.
Rep. Kitty Toll D-Danville delivered an impassioned plea for support for the plan, which she said will protect the state’s bond rating.
Vermont State Treasurer Beth Pearce has warned the governor that a shutdown could harm the state’s standing with creditors which could, in turn, lead to higher interest costs and other financial hurdles for Vermonters.
“We can do what’s right for Vermont and still have the conversation regarding the one time use of money and ed funding on the side. But we cannot jeopardize the financial health of the state,” Toll said.
But Republicans argued that creditors would also be jittery if Scott didn’t like the proposal, and handed down yet another budget veto.
If the Legislature passed the proposal and the governor rejected it, it would mark his third veto of a spending package in a year. The last time a governor vetoed a budget was in 2009.
Scott has yet to announce his stance on the proposal, and on Wednesday his spokesperson, Rebecca Kelley said the administration needs “to learn more before taking a position on the entire approach.”
“We’ll need to look closely at the language of the proposed budget as it moves forward to ensure it does, indeed, remove or address all the necessary levers that impact our current areas of disagreement,” she said.
In an interview Wednesday, House Speaker Mitzi Johnson, D-South Hero, said there’s no reason for Scott to veto the proposal because it includes all of the aspects of the budget and tax bills on which he and lawmakers agree.
“We purposefully made this the Kumbaya bill,” she said.
Lawmakers and the Scott administration would have to hammer out an agreement on education finance and deal with these pieces in a separate bill, or face a $20 million gap in the education fund.
Johnson said lawmakers won’t walk away from the session without coming to a agreement on a budget deal with the administration.
But they’re only willing to go so far. The compromise the House Ways and Means Committee put on the table last week that buys down household property tax rates with $14 million of one-time money, “makes sense.”
The Scott administration rejected the proposal because nonresidential rates would still see a 5.5 cent hike.
“We’re trying to meet the governor halfway, he’s not,” she said. “And so we need to assure Vermonters and all of the agencies and individuals that depend on state government, and Wall Street, that we’re staying open for business.”