Scott Outlines His Biggest Vermont Budget Proposal Ever: $8.4 Billion 

Gov. Phil Scott proposed the largest state budget in history on Friday — $8.4 billion — even as he warned that Vermont needs to prepare for the fast-approaching day when the torrent of federal stimulus funding coursing through the state’s economy runs dry.

In his annual budget address, the Berlin Republican encouraged lawmakers to work with his administration on one-time investments that would pay future dividends — such as broadband, affordable housing, and water and wastewater infrastructure — instead of expanding programs that might be cut in tighter budget years ahead.

“We know these windfalls won’t last forever, which is why we were thoughtful, deliberate and very disciplined when we put together this year’s budget,” the four-term governor said.

What Scott characterized as careful, conservative budgeting, however, struck some Democrats as falling short of the bold investments needed to address affordable housing, childcare and the climate crisis.

Scott’s plan to add $56 million for childcare was roundly panned as insufficient. Administration officials said the funding boost could help 4,000 additional kids get the care they need.

“I am concerned that this is not a long-term solution,” House Speaker Jill Krowinski (D-Burlington) said after the governor’s remarks, though she stressed that she looked forward to seeing details of his plan.

 Krowinski and other lawmakers have set their sights far higher, especially following this week’s release of a report by the RAND Corporation that found the state would need to spend $179 million to $279 million annually to create a high-quality, affordable childcare system that fairly compensates workers.

“What the governor proposed is a fraction of what’s needed,” Rep. Mike McCarthy (D-St. Albans) said.

Many lawmakers are already talking about raising taxes if necessary to fix the system, which Scott opposes.

Rep. Mark Higley (R-Lowell) said the governor is right to resist raising taxes for childcare. Lawmakers have insisted on adopting ever-stricter regulations on small providers, forcing many out of business, he said. On the housing front, Scott identified two programs for expansion. He wants $20 million more for the Vermont Housing Improvement Program, which issues grants to landlords to get rental properties renovated and back on the market. He said the program has already helped lift 300 families out of homelessness.

Scott seeks an additional $10 million for Our Healthy Homes, a program focused on ensuring that older housing stock — mostly mobile homes — have clean drinking water and working wastewater systems. Applications for the current year’s grant program far outstripped funding, officials have said.

But housing advocates who’ve been used to far larger investments in housing in recent years, including $100 million last year alone, said they were underwhelmed.

“I guess the word that I would use is a little disappointed,” said Chris Donnelly, director of community relations at Champlain Housing Trust.

Lawmakers have been talking about the need for another $175 million toward building new affordable housing, and the governor’s budget wasn’t even in the ballpark, Donnelly said. While he appreciates the governor's focus on zoning and permit reform, housing projects require time and sustained funding, Donnelly said.

“Budgets are an expression of priorities and values, and I just didn’t see a lot there,” he said.

Climate change is another area where Scott and lawmakers will likely continue to clash. While the governor cited the need to help Vermonters reduce their use of fossil fuels to heat their homes, his budget proposal includes little additional funding for that effort.

He pledged $5 million toward a Clean Heat Homes initiative, which he said was designed to combine weatherization work with clean-heat systems and electrical upgrades.

His larger message on climate, however, was one of caution, suggesting that the state needs to put more thought into how it invests in emission reductions. His budget proposal includes a $900,000 boost to the state Climate Office to help it devise a plan.

“Doing this strategically, with the understanding we can’t hurt the very people we’re trying to help, will ultimately get us where we all want to go faster and with much less conflict,” he said.

Such comments echo those made by administration officials to lawmakers working on the latest version of the Clean Heat Standard bill. Scott vetoed it last year, and an effort to override his decision failed by a single vote.

The bill, which sought to reduce oil and gas use in buildings through fees on fossil fuel companies that don't green up their offerings, has been revamped, rebranded and reintroduced. It’s now called the Affordable Heat Act, and passing it is a top Democratic legislative priority.

Krowinski said she was surprised to hear the governor talk about the need for a climate plan when Vermont already has a Global Warming Solutions Act obligating the state to act, as well as a Climate Council making policy recommendations to reduce emissions.

“We do have a plan that we’re working on implementing, so that’s what we’ll continue to focus on,” she said.

Some of Scott’s initiatives involved how not to spend money — at least not right away. He proposed setting aside about $150 million in surplus funds to meet future needs.

He also proposed $17 million in tax relief by expanding tax exemptions for senior citizens and the working poor. And, as he has several times before, Scott argued that military pensions should be exempt from state taxes. This time, though, he stressed the measure as a tool to expand the workforce by attracting well-trained veterans to Vermont.“It’s long past time to make it possible for them to start second careers here, and not in one of the 38 other states that don’t tax military pensions like we do,” he said to a standing ovation from Republican lawmakers and others.

Throughout his speech, Scott returned to the theme he outlined in his inaugural address earlier this month of bridging the opportunity gap between urban and rural areas. He backed that up with initiatives he said would help rural areas attract the economic development they need. This includes $10 million to help groups such as regional development corporations build the kinds of facilities that might attract new businesses; $3 million to finish the Lamoille Valley Rail Trail, which many hope will boost tourism in the northern part of the state; and $10 million to expand processing capacity of agricultural businesses.

Scott wrapped up his address by lauding the state's and nation’s history of immigration and decrying the tenor of the national debate on the issue. He hoped Vermonters could continue to show how the nation could be, in the words of former president Ronald Reagan, a “shining city on a hill.”

Rep. Mike Mrowicki (D-Putney) said he was struck by the difference between Scott’s soaring rhetoric about the importance of immigration and the relatively modest $4 million he pledged toward helping new Americans relocate here.

“It’s not that the issue is wrong," he said. "It’s that it’s a piddly amount."