Vermont Gov. Phil Scott outlined an $8.6 billion proposed state budget for next year that he said could help address pressing problems but reflects one of the tightest fiscal environments in years.
“Despite the recent upgrade in revenue, this is still going to be a tough budget year,” Scott told lawmakers during his annual budget address, referring to rosier-than-anticipated predictions from economists about state revenues.
Addressing the challenges was going to take more than just shrewd fiscal management and a willingness to say no to desired programs, he said.
Lawmakers also have to face the fact that some of the policies passed in recent years have had unintended negative consequences for communities.
This includes bail reform that has allowed some people freed while facing pending criminal matters to commit new crimes, he said. Juvenile justice policies, meantime, have caused drug traffickers to consider Vermont “a destination state,” Scott said.
Scott said he bore some responsibility for signing some of these well-intentioned laws, but the impacts on communities are undeniable and the policies need immediate reform.
“I may have been wrong,” Scott said. “I’ve supported, and signed, some of the very legislation I’ll ask you to change today.”
Legislative leaders were unimpressed, and noted that the speech’s multiple references to crime struck a darker note than his State of the State address, which largely extolled the virtues of neighbors helping neighbors.
“I think the speech was long on fear and short on hope,” House Speaker Jill Krowinski (D-Burlington) said afterward.
She and other lawmakers did not take kindly to Scott’s multiple references to past policies and spending by the legislature that he insinuated have put the state in such a tough financial position.
“To hear jabs throughout the speech at policies that we’ve worked on, that had tri-partisan support, isn’t helpful. It’s not a good way to start off how we’re going to collaborate on the budget,” Krowinski said.
Sen. Jane Kitchel (D-Caledonia), chair of the powerful Appropriations Committee, agreed that the speech seemed to emphasize the obstacles facing the state and glossed over the progress made on many fronts, including investments in a childcare system that are bearing fruit and helping working families.
“I think we have things to celebrate, and I didn’t see a lot of celebration,” Kitchel said.
Scott failed to address a 17.3 percent forecasted increase in property taxes due to changes in the education spending formula, Senate President Pro Tempore Phil Baruth (D/P-Chittenden-Central) said.
While Scott said Vermonters can’t afford such an increase and he stood willing to work with the legislature to fix the problem, Baruth noted that the speech contained few constructive suggestions.
“We were listening for that and didn’t hear it,” he said.
Scott said he and his staff worked hard to keep the state’s general fund, which pays for most state operations, to a base increase of 3.6 percent. Limiting the general fund to $2.3 billion next year was intentional.“I didn’t just pick it out of a hat. It is what we can do within available revenue, without new or higher taxes and fees,” he told lawmakers.
As he often does, Scott stressed the critical need for the state to limit taxes and fees on Vermonters living in “desperation and fear” and facing high housing prices, high energy costs and inflation. People are getting “crushed by the burden of property taxes” and lawmakers need to help, he said.
“I truly believe most of us want to help people; it’s who we are. But burdening them with more taxes, fees and other costs is not the way to do it,” he said.
While the base general fund increase is lower than in previous years, the areas of focus are similar to past years’ and will continue to fund many programs on which there is broad agreement.
These include $6 million to help rehabilitate homes to increase the stock of rental housing and $2 million to help people repair mobile homes. The budget provides $12.5 million for cities and towns for flood relief; these matching funds will ensure municipalities can get maximum flood aid from the Federal Emergency Management Agency.
The proposal would also set up a $1 million loan fund to help property owners fix damaged dams and $500,000 for a flood control study of the Winooski Basin to help prevent future flooding.
“This will not be a budget that will raise eyebrows and cause hackles,” Greshin said.
The budget is benefiting from an infusion of funds from some new sources. This includes $10 million in cannabis tax revenue that exceeds what is needed for regulation of the industry and $7 million in expected revenue from the newly launched sports wagering industry in the state, Greshin noted.
The state is also benefiting from an increase in the federal Medicaid funding formula, which reduces the state contribution by $31 million.
But there have also been some surprise expenses, such as the need to pay $9.5 million toward the $16.5 million settlement negotiated by the Vermont Attorney General’s Office with the foreign investors scammed in the EB-5 scandal. The investors accuse the state of failing to manage the program.
The budget also includes $5 million for Vermont State University and tuition relief for community college students enrolled in certain degree programs, including nursing.
Like Greshin, Scott said he doubted anyone would be opposed to the initiatives in his budget, which he said enjoyed broad support.
“I don’t think there will be a lot of disagreement about what’s in this budget. The disagreement will lie in what’s not in it,” he said.
Sen. Ann Cummings (D-Washington), chair of the Finance Committee, agreed.
The $12.5 million to help cities and towns devastated by summer flooding was helpful but insufficient, she said. Communities like Barre and Montpelier have seen businesses destroyed and properties literally wiped off their grand lists, leaving them with immediate and long-term budget needs, she said.
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