Three Vermont Senate committees met Wednesday morning to begin work on the legislature’s third version of a budget bill, the first two having been vetoed by Gov. Phil Scott. By day’s end, the three panels had approved a proposal that moves slightly in Scott’s direction — but only slightly.
“I would not predict a veto,” Administration Secretary Susanne Young said after the hearing. “But this new proposal is not substantially different from the last one.”
The most recent budget, H.13, would have held residential property tax rates level but would have not stopped a 5.5-cent statutory increase in nonresidential rates from going forward. The committees’ new plan reduces the nonresidential rate by one penny.
The Appropriations, Finance and Education committees convened jointly due to severe time constraints. If there’s no budget on July 1, state government would be forced to shut down. And so far, the Scott administration has refused to disclose contingency plans for that eventuality.
The administration’s top fiscal officials came to the hearing with a new “proposal” consisting of a single-page flowchart. Its essence is this: The governor and legislature would split $33.2 million in unanticipated revenue. Lawmakers could use their half however they wish, and Scott would use his half to lower property tax rates.
Scott would still fully intend to keep property tax rates level, which would require another $14 million, according to his analysis. “The governor is willing to risk that the $14 million will be there” in additional surplus revenue, Young testified. If not, she said, the administration would find enough savings in general state spending to cover the difference by the end of the year.
Committee members were skeptical of the new administration plan, to the extent they addressed it at all. The plan fails to address their fundamental objections: The legislative majority opposes the use of onetime money to fund ongoing programs, it isn’t willing to book speculative future savings, it doesn’t want to use general fund revenue to lower property tax rates and it’s concerned about creating a bigger education fund gap in the next fiscal year.
“What is different about this plan?” Senate Appropriations Committee chair Jane Kitchel (D-Caledonia) asked Stephen Klein, chief of the legislature’s Joint Fiscal Office.
“I don’t see any change,” Klein responded.
“This is the same proposal with a different set of contingencies?” queried Sen. Ginny Lyons (D-Chittenden).
“Correct,” Klein replied.
Legislative fiscal analyst Mark Perrault testified that Scott’s proposal would lead to a repeat of this year’s standoff over property taxes. “Even if you’re able to agree on onetime money, you’re creating an issue for [fiscal year] 2020,” he said.
Scott’s plan, he said, would create a shortfall of $50 million to $55 million in the education fund. That would require a property tax rate increase of 7 to 8 cents — even without any increases in school spending at all.
“When I see a $55 million [gap], I ask why the governor is OK with creating a crisis next year,” said Senate Education Committee chair Phil Baruth (D/P-Chittenden). “I can’t see how anybody with good fiscal management could choose the governor’s option.”
The responsible course, agreed Senate Finance Committee chair Ann Cummings (D-Washington), would be to collect enough property tax revenue to pay for school budgets approved by voters on Town Meeting Day. But in the end, Cummings and her fellow Dem/Prog caucus members agreed to keep residential tax rates level and give Scott a one-cent reduction in nonresidential rates.
“I’ll hold my nose and vote ‘yes,'” Cummings said, “in the interest of compromise.”
It’s an ironic turn of events. Democratic lawmakers are preaching fiscal discipline, while the Republican administration is willing to “risk” future revenue increases and a fiscal cliff in the education fund next year.
The three committees voted to let their three chairs craft a detailed bill that will go before the full Senate on Thursday. Approval is all but certain; it would then go to the House. And face a likely gubernatorial veto.
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A fair compromise from Scotts team. There will be a $50 million deficit next year only if the Dems dont do anything to address the excessive spending in the Ed Fund. The total Ed Funf is $1.7 billion and the Dems arent willing to find $50 million of efficiencies in a budget that big. The Dems have squandered this entire special session for the purpose of preventing Phil Scott the ability to not raise taxes. Vermonters deserve better!
So Scott wants to split the baby?
Isnt there an adult in the room in Montpelier? Its the 21st of June.
A fair compromise would be to move all legislative mandated costs out of the Ed Fund back to the General Fund where they belong leaving the Ed Fund for K-12 education approved by voters at school meetings. No property tax increase would then be needed. Legislative mandated spending would be balanced with existing revenue. Dems do not need to agree with any of Governor Scott’s proposals but they should cover the costs of their own mandated programs. The Democratic leadership could then determine how best to use the remaining 20 to 30 million surplus. The Governor pledge to voters is met and Dems. cover spending for the programs for which they are responsible as well as deciding how to use remaining surplus.
“It’s an ironic turn of events. Democratic lawmakers are preaching fiscal discipline, while the Republican administration is willing to “risk” future revenue increases…”
It’s only ironic if you’ve been living in another country for the past 3 decades — or equally bad, followed budget matters only by listening to news reports.
The facts couldn’t be clearer. Republican Ronald Reagan campaigned on closing Carter’s outrageous deficits (roughly $79 billion when Carter left office) and then ballooned them to roughly $255 billion when his vice president left office 11 years later. Democrat Bill Clinton eliminated the deficit altogether, leaving a surplus of around $125 billion.
Bush 2 turned that into a deficit of $1400 billion, which Democrat Barack Obama reduced to $665 billion at the end of his term. The reduction would have been greater, but Republicans blocked his efforts to raise tax rates for the highest income earners.
The record speaks for itself: Democratic leadership reduces deficits by practicing fiscal discipline, while Republicans consistently preach discipline and practice voodoo economics.
The current Vermont imbroglio reflects precisely the same thing. If it comes as a surprise, or looks ironic, its time to bring your understanding of recent American history into agreement with actual facts, rather than highly successful propaganda.
Mr. Freitag – You said that “Dems do not need to agree with any of Governor Scott’s proposals but they should cover the costs of their own mandated programs.”
Exactly which programs are you referring to and why are they “Dem” programs?
Everything the Scott administration does is dishonest and in bad faith. Its too bad that Ms. Young has become just another one of his flying monkeys as she used to be trusted and respected on both sides of the aisle. Everyone now understands that she is, along with the rest of the vile people in this administration, just interested in playing extreme right wing partisan politics. Its too bad. After Scummy Shummy people were hoping for better.
Mr. Hoffer,
Thanks for the questions. Here is a list of programs that have been added to the Education Fund since that fund was opened to other than K-12 spending controlled by school boards when Shumlin was Governor and there was a super Democratic majority in the legislature. They are not Democratic programs per say but the decision to allow them in the Ed. Fund where they would be paid primarily with property taxes was. The implications of this were never made clear and many people still think money in the Ed Fund only covers school budget approved costs and not these many legislative mandated items. Whether or not these programs value is worth their cost is not the issue at this time. The shifting of their cost to the Ed. Fund which is funded primarily by school property taxes is. Here are the figures from Education Fund Outlook December 2017 :
Adult Education – 3 million
Prison Education – 3.3
Essential Early Ed – 6.6
Renter Rebate – 7.9
Flexible Pathways – 7.4
Teachers Pensions – 7.7
Act 46 merger incentives – 14.1
Reappraisal and Listing – 3.3
Other – 1.1
With record surplus revenue and since some of these items already taken out of the Ed Fund in the proposed budget, there is the ability to put the remaining items back in the General Fund and still have over 20 million in surplus funds.
I hope that the newfound interest in not “spending” one-time funds to keep tax rates level will be applied with equal vigor in the future to not spending one-time funds to fund program operations which become part of the budget baseline.
Everything comes back to funding education, which in reality means tax payers funding the of teachers and staff pay, and 66% of retirement, and more than 75% of premium healthcare plans for themselves and their families. All this in-fighting and taxing is about funding about 20,000 employees across the entire state. these employees will have to pay more of their own insuarance and retirement or this will continue on every year (MD ans RN salaries are only going up as well) and there is a limit to how much the state can tax its citizens (at least the ones who actually pay full property taxes that is). Give all education staff a 20% increase in salary across the board, but require them to pay 18% more of their own benefits Paying just 25% of your own Cadillac health insurance and only 33% of your own retirement with life expectancy increasing every year, will bankrupt the state at some point, at which time a federal judge will force a change just as is going to happen in several other states much bigger than ours soon..