Editor’s note: Inside the Golden Bubble is an occasional column about legislative politics.
[T]he Vermont Statehouse runs on the clash of ideas. Lawmakers almost never agree with each other, let alone with the governor. That’s to be expected.
Usually, there are skirmishes along the way and a few major battles. And when partisans dig in, the clashes turn into entrenched warfare.
And that is what’s happening now with the budget.
There has been a lot of talk about lawmakers and the Scott administration working together. But nine weeks into the legislative session, the Republican governor and the Legislature, controlled by Democrats, are at loggerheads, and it looks like neither side is going to budge anytime soon.
The entrenchment began with Gov. Phil Scott’s Jan. 24 budget proposal, which was an artfully delivered shot over the bow designed to upend conventional thinking about education spending.
The concept was simple: Ask local school boards to level fund K-12 public education and invest more money in the areas that need it most — pre-K programs and higher education. Move teacher retirement out of the general fund, where it arguably doesn’t belong, into the education fund (an idea that has been discussed for years). And require that teachers contribute 20 percent to the cost of health insurance premiums, like most Vermonters in the business world.
Scott’s education proposal is a problem for Democrats who for years have resisted significant changes in education funding for fear of running afoul of local control and the powerful teachers union.
Central to the plan was a change in the date for school budget votes from the time-honored tradition of Town Meeting Day in March to May 23. Scott said the scheduling shift was needed to give school boards more time to figure out how to level fund budgets.
It was no surprise that lawmakers rejected the budget vote date change.
Republican and Democratic legislators alike balked at the idea. At that point, school boards had been working for months to refine budget decisions. To ask them at the last minute to zero out increases in spending, legislators said, would be unfair.
No date change, however, means that next week at town meeting, communities will vote on school budgets as originally proposed, and property taxes are likely to go up by 2.35 percent, according to a calculation made by the Vermont Department of Taxes under the Shumlin administration.
As a result, Scott’s $35 million in hoped-for statewide school savings won’t materialize, and the switcheroo with the teachers retirement plan could be doomed. About $10 million for child care programs and $5 million for higher education will likely go out the window, too.
And now everyone is boxed in — the governor and the Democrats in the Legislature. And when politicians get stuck, they tend to devolve into fingerpointing. Scott’s administration is blaming the Legislature and lawmakers blame Scott for proposing an “unrealistic plan.”
Both parties are not so subtly blaming school boards for overspending. Vermont has the lowest student to staff ratio in the nation, five to one, and student population has been declining for years. Vermont has among the highest average per pupil spending rates in the country. The state is down to fewer than 80,000 students and we spend roughly $1.57 billion a year on K-12 education. In raw numbers, that’s roughly $19,000 per student.
A widely respected consultant issued a 293-page report to the Legislature last year on education spending in Vermont. Lawrence Picus found that the state could spend $163 million less a year on K-12 education and still continue to provide an adequate education for students.
So far, Scott administration officials say, lawmakers have been unwilling to offer alternatives to the governor’s education spending plan. The governor insists that lawmakers must cut property taxes. And he’s made it very clear that he will not accept any other tax or fee increases.
Rebecca Kelley, Scott’s communications director, says the governor is not giving up on level funding education. She says there are more savings to be had in teacher health care (up to $25 million) and administrative costs that materialize as school districts merge under Act 46. Details, she says, will be available this week.
Democrats, for their part, say Scott is merely shifting a general fund obligation — teachers retirement — on to the local property tax — and he’s giving them no choice but to cut their way out of a $50 million budget gap in the general fund.
And they are waiting to see what happens on Town Meeting Day. If local voters approve budgets, that will signal that there is no need to reform the education funding system this year. Democrats say Act 46, the school district consolidation law, will eventually bring down spending.
Sen. Philip Baruth, D-Chittenden, says the governor has not offered a Plan B.
“We think that’s an abdication of his responsibility,” Baruth says. “He’s made no suggestion other than level funding [school] budgets. It’s a fiction that should have disappeared a couple of weeks ago.”
But as far as Scott is concerned, there’s nothing fictional about his plan for education spending. He says the pain property tax payers are feeling is real and he is determined to give Vermonters relief.
“I’ve said that I will not support a budget that increases taxes or fees, and I would say the property tax rate is included in that,” Scott said.
Scott’s education proposal puts lawmakers in a bind on many levels. If they refuse to move forward with his plan, they face a daunting hole in the general fund. Plans to boost state college funding and pre-K — initiatives they support — will be dashed.
And they may have already lost the upper hand politically. If they fully reject Scott’s plan and do nothing to reduce the property tax burden, they will give the governor the opportunity to say he tried to address the issue but was thwarted by the Democratic Legislature.
Outside Montpelier where real people are worried about real increases in property taxes, Scott’s plan seems to make sense. (Caller after caller Friday on VPR’s “Vermont Edition” told House Speaker Mitzi Johnson that people in Vermont need property tax relief. Yesterday.)
Johnson is frustrated that Scott won’t budge on his education proposal, which she characterizes as a direct hit on local property taxpayers who would pick up the tab if local budgets aren’t level funded.
Johnson told VPR listeners that Scott gave the Legislature a budget that isn’t balanced and claimed that “the governor is shirking his responsibility.”
“Even if you could wave a magic wand,” Johnson says, the health care premium change wouldn’t go into effect until January, and the $15 million in health care savings the Scott administration claims wouldn’t be realized.
“People don’t understand how difficult it is to close a $50 million gap,” Johnson said.
This week, the House Appropriations Committee will begin an attempt to do just that.
In a budget spreadsheet from the Joint Fiscal Office, the Scott administration’s education proposals are off the table.
As House Appropriations chair Rep. Kitty Toll, D-Danville, put it, “The education piece was not well embraced and we are having to start with a whole different budget.”
Toll said the Agency of Education had little input in the governor’s office budget and she was concerned that experts from the agency were not consulted about these “massive changes.”
“I want analysis and data and a plan that tells me this is the right direction to go,” Toll said.
The plan is to review last year’s budget and make some changes here and there to find the money to fill the gap.
There is little appetite in the Statehouse for new taxes and fees — and not just because Scott has laid down the gauntlet. Lawmakers say they want to save any revenue capacity for possible federal cuts that could have a devastating impact on state government. See VTDigger’s special report on Trump’s budget blueprint.
As for where they’ll find the money this year, the House has already agreed to $22.5 million in spending reductions from the governor’s office and must find about $30 million more to close the budget. It’s likely those cuts will include $271,000 for Vermont Public Television. And lawmakers will also likely reject about $5 million in wish list spending from the governor’s office including state police body cameras, a research and development tax credit and National Guard scholarships.
Lawmakers may be able to avoid the most painful cuts. Medicaid utilization rates are down, and there could be $30 million in savings in that budget item alone, according to Andy Pallito, the commissioner of Finance and Management.
If Medicaid solves the budget problem, the Legislature could dodge the property tax question again this year.
But not without a fight. Scott has vowed to use other measures, including a veto, to make sure Vermonters see no increases in education taxes next year.
“We certainly don’t want to increase property taxes so we’ll look at any way we can to keep that from happening,” Scott told VTDigger.org.
Meanwhile, Senate President Pro Tem Tim Ashe cautioned lawmakers against overreacting and making big cuts or proposing new spending. He pointed to several states that have done “slash and burn” cutting and warned if Scott took that approach that it would result in a bigger fiscal problem.
“You’ll see that states that proceeded along those lines are in fact usually worse off than they were,” Ashe said.
He also said there were “cautionary tales” from states that decided to raise taxes and increase spending for social programs.
Ashe said every governor he’s seen has operated with the same “framework” of not wanting to raise broad-based taxes, and to limit increases in fees, hold the line on education spending and squeeze out savings in entitlement programs.
Then, as the session goes along, they need to find a way to “ease out of the box a little bit to realistically meet the needs of the state.”
CORRECTION: Taxes will likely go up 2.35 percent, not 2.2 percent as originally reported if school budgets pass as proposed, according to the Vermont Department of Taxes.
