Vermont’s annual state budget is one step closer to the finish line — and in it, lawmakers are making a go at whittling down this year’s double-digit property tax hike.
On Tuesday afternoon, a conference committee of House and Senate budget writers signed off on a final, $8.6 billion package to fund the government this coming fiscal year, which begins July 1. The legislation faces final votes on the Senate and House floors before it can head to Republican Gov. Phil Scott’s desk.
In most of the compromise budget’s individual line items, legislators did not stray far from the proposal Scott put forth in January. At his weekly press conference on Wednesday, the governor told reporters that the budget is “nowhere near perfect,” but “I think it can work.”
“Although I still believe it spends a bit too much, the budget appears to be on a path to something I can live with,” Scott said.
In total, the budget as finalized by the conference committee spends roughly $21 million more than the governor proposed — a difference of roughly a quarter of a percentage point.
Since lawmakers filtered back into the Statehouse in January, they have wrestled with a roughly $200 million problem: In order to pay for an increase in school districts’ budgets across the state, Vermonters were facing a nearly 20% increase in their property taxes.
The Scott administration first rang the alarm on the projected tax hike in December, before lawmakers convened for the 2024 legislative session. And in March, voters turned up the heat on lawmakers, when one-third of school budget votes failed on Town Meeting Day — a historic number that lawmakers have interpreted as a signal that Vermonters couldn’t afford the hikes.
While lawmakers plan to commence an 18-month study to see how they can structurally overhaul the state’s education system, state budget writers found a short-term, partial fix: $25 million in general funds to help buy down the tax hike. According to lawmakers, that would reduce a projected 18% statewide property tax increase to a more palatable 12.5%.
The 11th-hour solution comes thanks to Vermont’s consistently overperforming monthly revenues.
According to monthly reports by the state’s Joint Fiscal Office and Agency of Administration, monthly income, sales and meals and rooms tax receipts continue to surpass expectations, giving lawmakers more wiggle room than they previously anticipated. While the numbers are not yet final, this April appears to have been a particularly lucrative month, according to Rep. Diane Lanpher, D-Vergennes, who chairs the House Appropriations Committee.
Earlier this legislative session, Lanpher equated this year’s budgeting process to digging around in the couch cushions for spare change. Vermont’s pandemic-era federal slush fund had run dry, and a nationwide spending boom that had increased sales tax revenue was expected to slow. The situation was not so dire that lawmakers anticipated making Great Recession-era cuts to state government, but they did expect they would have to rein in spending.
So when Joint Fiscal Office staffers came to the six-member conference committee — comprised of three senators and three House members, including Lanpher — and said the state had millions more coming in than anticipated, it was as if lawmakers found a $20 bill lodged in the couch cushions.
“It’s like saying, ‘Oh my goodness, we better prepare for a storm,’ where you lock up everything and you get the umbrellas and you cancel your vacation,” Lanpher told VTDigger on Tuesday. “And then you find out, oh, it wasn’t three feet of snow. It was six inches. OK, you still had to shovel, but it’s not as intense.”
The final budget package also includes a compromise between the two chambers on the state’s pandemic-era emergency motel housing program. The deal scrapped a Senate proposal to cap the number of motel rooms the state would agree to pay for at any given time, but put in place eligibility requirements for unhoused Vermonters utilizing the program.
At his press conference Wednesday, Scott said he was amenable to the final deal, though he bemoaned that it had a higher price tag than the one he had proposed. In total, the motel program’s final price tag in the fiscal year 2025 budget would be about $44 million.
“As a reminder, pre-pandemic, I think we were around $7 million. But things have changed since then,” Scott told reporters. “So I’m happy that we came to some agreement on what the parameters are in the program itself, so I think we can make it work.”
Outside of the budget bill, the House this year passed three major new spending proposals: a sweeping, 10-year housing package, an expansion to the state’s judiciary system and an expansion of Medicaid and Dr. Dynasaur, which provides free or low-cost health insurance to young people and those who are pregnant.
The three House bills would have been paid for with new taxes, namely on corporations and Vermont’s wealthiest. But the bills were largely dead on arrival in the Senate, and did not make it into the final budget package.
To Scott, that was welcome news. At his press conference, he told reporters that he was glad to see the new tax proposals “die on the vine.” But Lanpher told VTDigger one day earlier that she thought it was a shame, saying that the bills would have marked “ginormous steps forward in Vermont.”
“You might say, ‘Well, are you disappointed?’ Only that we couldn’t get it all done this year,” Lanpher said. “But we now know what it takes and what to do and how to do it.”