Business & Economy

House seeks governor’s help on budget as administration puts gag on agency heads

Rep. Kitty Toll, D-Danville, chair of the House Appropriations Committee, calls on Gov. Phil Scott to help close an $18 million budget gap. Photo by Elizabeth Hewitt/VTDigger
House leaders are calling on Gov. Phil Scott to come forward with new proposals for how to close the remaining gap in the next fiscal year budget.

The lawmakers’ call came hours after the state’s finance chief issued a gag order to heads of agencies and departments directing them not to work directly with the Legislature on proposals for reducing the budget.

The House Appropriations Committee still must wrestle closed an $18 million gap between expected spending and revenues in the next fiscal year. The committee has already whittled the gap down from a total of $72 million.

In the final stages, lawmakers say they need help from the Scott administration. But the governor is resisting legislative requests.

House Speaker Mitzi Johnson, D-South Hero, and key money committee leaders issued a public call Wednesday for the governor to help the House find ways to close the remaining $18 million gap.

Phil Scott
Gov. Phil Scott speaks at a news conference. File photo by Erin Mansfield/VTDigger
Johnson said Scott’s initial budget proposal shifted general fund expenses to the education fund and onto property taxes.

“The governor’s proposed budget is built on a house of cards. We know that. He shirked his responsibility to put a balanced budget on the table,” Johnson said.

She argued that Vermonters rejected the governor’s proposal last week when more than 90 percent of school budgets in the state passed on Town Meeting Day. Scott’s vision had included having school districts rewrite their budgets to level-fund them this year as a way of freeing up money for other priorities, but that didn’t happen.

“Now that Vermonters have had a chance to weigh in on the governor’s budget proposal, it’s time for the governor to be the leader he was hired to be and meet us to help close that last $18 million gap,” Johnson said.

Scott raised expectations by proposing important investments, she said.

“He made a lot of promises in the campaign, and those promises that he made are, when you put them all together, are very hard to live by,” Johnson said. “It’s very hard, and some of the choices make you very unpopular. I know.”

Rep. Kitty Toll, D-Danville, who chairs the House Appropriations Committee, said she hoped the administration would take a collaborative approach at this stage. She sent a memo to Scott’s team Tuesday regarding the budget situation.

“I will solve this problem, but I would be much happier solving it as a team,” she said.

Scott spokesperson Rebecca Kelley responded to lawmakers that the governor did present a balanced budget without raising taxes and fees. She called suggestions that Scott’s proposal would increase property tax rates “misleading rhetoric.”

“The House has had seven weeks to explore and propose ideas to balance the budget in a way that addresses our economic, workforce and affordability challenges — as the governor did in his budget,” she said. “They’ve accepted the majority of the savings proposals offered by the governor, while offering no alternatives beyond the threat of across-the-board cuts to services and putting front-line staff at risk of layoffs.”

The administration is willing to work with lawmakers as they present “a complete budget proposal,” she said.

Republicans in the Legislature say that if Democrats don’t support Scott’s proposal, the responsibility now rests with them.

Senate Minority Leader Dustin Degree, R-Franklin, said it is up to Democratic legislators to come up with their own proposal to solve the budget gap.

“It sounds to me like for six years the Appropriations Committee waited for Peter Shumlin to tell them what to do. Welcome to divided government,” Degree said. “The governor put something on the table, it wasn’t to their liking, and I think it’s time for them to put something on the table and let Vermonters pass judgment on it.”

State officials told not to talk to Legislature on cuts

The House leader’s call came hours after Scott’s finance chief told staff that additional cuts to the budget should not be negotiated directly with the Legislature.

In a memo circulated Wednesday morning, Department of Finance and Management Commissioner Andy Pallito instructed business managers and heads of state departments not to communicate with the Legislature directly.

Pallito wrote that he understands some legislators have reached out directly to state officials “regarding further reductions” to the budget.

Andy Pallito
Andy Pallito is the administration’s finance chief. File photo by Amy Ash Nixon/VTDigger
“If you are contacted, please remind them that the Governor put forth a balanced budget, and we should continue to support that budget,” Pallito wrote.

Pallito added that any cuts should be directed from the Legislature through the secretary of administration.

“Individual agencies and departments shouldn’t negotiate further changes directly with the Legislature,” Pallito said. “If you are contacted, please send that information to me and your budget analyst.”

Pallito said the email to staff was prompted by communication from members of the House Appropriations Committee directly to staff concerning potential budget cuts. One of his primary tasks is to coordinate the construction and implementation of the budget, he said, and it is “imperative” that he be involved.

“We are looking at this budget holistically, and that can’t be done if cuts are made on an Agency-by-Agency basis without our department involved to assess the impact to the overall budget goals,” Pallito said.

He signaled that the governor would not work with the Legislature on a plan to close the gap until lawmakers put forward a proposal.

“Once we receive a proposal, we will review it and work with them to reconcile their proposal with the Governor’s goals,” Pallito wrote.

Mitzi Johnson
House Speaker Mitzi Johnson, D-South Hero. File photo by Anne Galloway/VTDigger
However, Johnson said the administration’s reluctance to work with the Legislature is unusual.

Agency and department heads historically maintain strong support for the governor’s recommended budget. However, the total lack of communication from the Scott administration this year has been unusual, she said. In the past, there has been informal communication as agency heads provide guidance on where there may be room to find savings, she said.

The Legislature has approached Scott’s administration about working together to solve the budget gap, she said. “We hear, ‘Well, yeah, we’d like to partner with you and as long as you agree with us we’re fine.’”

Lt. Gov. David Zuckerman, a Progressive/Democrat, said he feels the governor’s proposal should be a two-year discussion and that it transferred too much of a burden onto the property tax.

“If (voters at town meeting) wanted his proposal to go, they would have on their floors offered budget changes to their school budgets to do what he asked for. That’s not what voters did,” he said.

Zuckerman said the governor does have a responsibility to come forward now to help lawmakers reconcile the budget gap, especially because members of his administration are most familiar with the nuances and pressures on state spending.

“That’s knowledge that he has through his administration that policymakers don’t have, and they can’t read his mind, and now they can’t even have in his administration leaders from those agencies to talk about anything,” Zuckerman said.

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  • Scott Greene

    Enough Governor, Legislature, Lt. Governor, this is not DC, Albany, North Carolina. Work it out, be an example of well intended and civil leadership. Communicate. The citizens of Vermont despise the current state of political affairs in this country. Vermont is a reasonable state! Vermonters are reasonable.

    • bobstannard

      Agree. It’s more than a little childish for the governor/administration to lockdown the agency heads and refuse to work with the legislature. I think we were expecting more from our governor.

      • Homer sulham

        The tax and spend Democrats have created this yearly mess It makes sense that the onus is on them to fix it.

        • bobstannard

          Apparently you all seem to suffer from a short attention span. Do you recall when the economy was collapsing under Pres. Bush? Do you recall when we were confronted with huge shortfalls of $200+million? Do you recall how our leaders stepped up and worked to find solutions, and as per our constitution, put forth balanced budgets by working together?

          It’s easy for you to sit on the sidelines and criticize others. You take no risks. You don’t put your neck out there. Instead you simply chastise others. I spent 4 years on the House Appropriations Committee. I ran for and held office. I know exactly what it’s like to make hard decisions.

          I’m not saying that you don’t have the right to whine and complain. You do, but I am saying that you might, maybe, perhaps, consider for one minute what it might be like to be the person who actually has to make a decision; cast a vote that impacts others. Until you’ve done that it’s hard to be able to relate to the hard tasks others face.

          • Homer sulham

            The Democrats still spend to damn much money.

          • bobstannard

            Before you make a general, grossly inaccurate statement like the one above you’d be well advised to do a little research. History has shown the opposite of what you say to be true.

          • bobstannard

            That said, I would agree that both parties are not opposed to spending money; sometimes needlessly, but needlessly is in the eyes of the beholder.

      • tom Johnson

        lets start with 40% cuts to all Scott appointees, that will get them talking and then cut the admin budget 50%. Cooperation will be forthcoming. If you are given the sword, swing it.

      • Edward Letourneau

        He is letting the tax and spend liberals waddle in their own mess. When he veto’s their budget, he will still be clean and can say I warned you.

    • bobzeliff

      +1 on that.

    • Scott, I think you’re presenting a false equivalency. The Democratic controlled legislature wants Scott’s administration in the room so everybody will have some say in the process. The Republican controlled Scott administration is saying he/they won’t be in the room participating because the legislature won’t do everything Scott’s way.

      Our state budget is a large, complicated document. Scott is doing us all a huge disfavor by not participating in developing the details.

      • Jamie Carter

        An independent LOL….

        The spin is strong. The Liberals want Scott in the room so everyone has a say…, but he already told them what he wanted when he gave them a budget. If he scheduled a Beer Summitt you would complain he was wasting taxpayers time with his redundant actions.

        He gave them a budget, it’s now their job to propose their own. Once they do that THAN they can sit down and negotiate. RIght now all this is pure political posturing. I am extremely disappointed in Johnson, I thought she was better then that. I think her and her housemates have been watching too much “House of Cards.”

        Politics would be a much better place along with our state if we eliminated party affiliation all together.

        • Jason Brisson


    • patricia jedlicka

      I am taxed out and planning to exit stage right on retirement. This state is really a bit ridiculous when it comes to ‘political affairs’ and spending. All you reasonable people can stay and the rest of us who’d like to keep more of their hard earned paychecks, including retirement income, will find somewhere else to go! have fun!

  • Edward Letourneau

    Considering the liberal complaints on everything Trump suggests or does, and the never-ending taxing and spending of Vermont liberals who got us into this problems — its probably wise for the good governor to let them figure out what they have to do. In other words he is giving them the chance to clean up their mess.

    • Adam Maxwell

      Government taxes and spends so that the economy grows. That’s called basic macroeconomics. Seems that a lot of people think microeconomics should be applied to the economy as a whole, which tells me that they learned just enough economic theory to be dangerous.

      • Tim Vincent

        Government taxes and spends to provide services not provided by the private sector – like defense and police.
        Government does NOT create wealth (except inside the beltway).
        You have your own definition of “macroeconomics.”

        • JohnGreenberg

          Tim Vincent:
          “Government does NOT create wealth….” So no wealth was created by, e.g. the interstate highway system? by the creation of the internet?

        • David Bell

          “Government does NOT create wealth”

          Nearly every major scientific advancement in the last few decades was at least partly due to government funded research. How exactly is this NOT creating wealth?

  • Please Phil Scott, do not bring the politics of the national level Republican Party and Bannon-Trump straight into our Vermont state government. You were elected to work on behalf of ALL of Vermont, and have a fit of petulance is not meeting your responsibilities.

    • Craig Powers

      The Democrats can’t cut anything because they forgot how to over the last six years! To even think this has anything to do with national level politics is silly conjecture. Thankfully Phil Scott is bringing the Demo/Prog heavy legislature back to the center, instead of spending and taxing like drunken sailors on shore leave.

      • Perhaps you’d like to show me the budget provisions being pushed as part of the budgeting process that leads you to conclude the Legislators are “spending and taxing like drunken sailors on shore leave”?

        • Craig Powers

          Please review the budget gaps, and tax/fee increases, over the last six years of super majority rule. It is that simple.

          • Please review this year’s budget proposals and answer the question.

          • Craig Powers

            I did already. Your ignoring the last six years.

          • Neil Johnson

            250 million to be saved with an ethic commission, 47 state ahead of us proved this

            $118 million to save by providing teacher the best Vermont Health connect plan with ZERO deductible. Instead they insist on a Cadillac plan not even available to the public.

            I’d love to work on that budget, waste, favoritism, fraud is rampant. Get some people that really know what they are doing and I bet you could find another $250 million inside of week.

      • patricia jedlicka

        What an insult to drunken sailors! 🙂

        • Craig Powers

          My grandfather was one in WWII (on occasion 😉

    • Neil Johnson

      Rama, how much less is this years budget compared to last years?

  • John Freitag

    Despite continued public partisan bickering and trying to play the blame game , there is more good news here than meets the eye. The budget gap was narrowed from $72 million to $18 million by the House Appropriations Committee adopting recommendations from the Governor.
    The bottom line is that the Governor was elected in large part due to people feeling the need to take a break from continued new taxes and fees, and this should be respected.
    At the same time people re-elected a Democratic majority in the House and Senate. The priorities on what gets funded within the Governors budget parameters should in large part be up to the Democrats.
    This will require some honest discussion and hard choices, but that is what the job is about and that is where the focus should be.

    • David Zuckerman

      Actually, they did take many recommendations from the Governor, and that is good news all the way around. However, they also had to cut out his spending increases on higher education and early childhood education because the budget he gave did not work without voters shorting their local school board recommended budgets. The voters did not do that. So there was a $50,000,000 piece of that $72 million that they needed to find without his help. Pretty impressive they have found as much as they have. But that is why with his help (and the business managers of the various agencies), the gap could be closed. But if the savings are not there (without violating his promise of protecting the “most vulnerable”) then that needs to be presented.

      • John Freitag

        David ,
        Thanks for the reply and acknowledgement that the Governor and House Appropriations Committee by working together have been able to cut the deficit from $72 million to $18 million.
        Clearly the Governor’s proposal to fund increases to early childhood and higher education by level funding K-12 education did not fly and he can not now expect these increases without now proposing how that would now take place. It is likely given his pledge of no new taxes and fees this will not happen and he and we should move on from this at least for now.
        At the same time the Democrats, who are in a leadership position in the House and Senate, having rejected the governors’ budget must now make their own proposals on what priorities they want to fund while having no new taxes or fees this year. They are the majority and they have right and responsibility to do so. The talent in the Democratic leadership is there, please less politics and blame and more leadership. The ball is in your court.

        • David Zuckerman

          The Governors recommended cuts and savings that were in his original budget were part of what the Appropriations committee has done. They have gone way beyond the cuts he found and what he recommended because the property tax shift to pay for higher education and early education also included shifting other state obligations to the education fund. It is not to cast blame, just to explain the situation that we all, collectively, find ourselves in. So to “move on from this for now” means finding more cuts than he originally proposed. He laid out the box of no taxes and not cutting in ways that would hurt vulnerable Vermonters. So he is responsible for that box. Now, all of us have to work together. That is what we are talking about. That is not politics. That is all sides acknowledging that voters did not want to shift general fund obligations to the property tax. Therefore…the budget presented no longer works. Leadership means all people coming to the table. That does not mean “your court” type examples.

  • Jason Brisson

    Failed leadership by the Democrats in the House, cannot be blamed on the Governor. He presented a budget that was denied outright, where was working with the governor then?! Either Johnson steps up to the plate, or she demonstrates how truly ineffective she is.

  • Hmm… Phil Scott did a lot of talking about improving the state and saving money. Apparently finding and getting the savings is beyond is capability.

    • Willem Post

      He submitted a balanced budget which showed where he saved money, and he capped his budget to the same level as last year.
      If the legislature can do better, they should show it.

  • David Austin

    Rep. Johnson’s assertion that the fact that a majority of school budgets passed is somehow indicative of a rejection of Gov. Scott’s budget proposal is quite a stretch. Given the current education funding scheme, rejecting a local budget would not necessarily realize much in the way of savings on the tax bill of local residents. I imagine that most voters are probably smart enough to realize this. From a management perspective, the Governor’s actions make sense. It is understandable that those in the Legislature who lack any experience in the business world would be uncomfortable with the Governor’s approach. For those who are familiar with how the real world works, I guess it comes down to partisan politics.

    • patricia jedlicka

      In our town, all anyone heard was that the school budget was increasing only very slightly, so there was no opposition and the budget passed by 20 votes (110 votes out of a town of 1800 – but we have to show up to vote. There is no Australian ballot here!) That said, I’d guess no one really even understands the school budget. It is a mumbo-jumbo multi-page document that contains numbers (no one knows how they are compiled or calculated) and there were multiple corrections to the report as town meeting was being held!! unbelievable. I bet some guy $10 that we’d see an increase because of the errors. Honest to God, is this any way to run a town? or a state, for that matter? I think it’s archaic, and a bit embarrassing (for me anyway) that we seem stuck in the 18th century. Some towns have voted to hire professional managers, and I think that’s a good way to go. Where I live, there are 6 guys who volunteer, and God forbid, they make a bad call and you ask them about it – you get publicly chastised at town meeting!! (Baby Boom!!! 🙂

    • David Zuckerman

      Actually, his budget proposed level funding local budgets per student and then using the savings from that to fund the $50,000,000 in additional education fund costs with your local tax dollars. The legislature had heard repeatedly, no new costs for the ed fund, but this is a $50,000,000 new cost for the ed. fund. As a business person I understand that 100%.

  • Patty Smith

    Where is the leadership Gov. Scott promised voters? His insistence that department heads NOT work with the legislature to draft a balanced budget appears self indulgent, closed-minded, and a bit ridiculous. Fortunately for Vermonter’s, we can chose a new governor very soon.

    • Willem Post

      A management has a chief executive.
      He would need to specifically give permission to one of his managers to set up a meeting with so and so and discuss this and that.
      Without such a procedure, there would be chaos, AND an unbalanced budget.
      As any good executive, Scott insists on acting through channels, i.e., no free lancing.

  • Willem Post

    An across-the-board 5% cut in all department budgets should be easily achievable by selective head count reductions and increasing the efficiency of operations.

    Private enterprises make such cuts, and larger ones, all the time.

    Seven weeks of hand-wringing is quite enough.

    Government budget growth (5.25%/y compounded) has been much faster than Gross State Product growth (2.86%/y compounded) during the past 6 years.

    This growth trend has to reversed, i.e., the private sector should, as a rule, grow faster than the government sector to have a growing economy.

    • waltermoses38

      Oh Willem, that is so difficult for the present legislature to understand. And, they don’t have Shumlin to hold their hands.

      • Willem Post

        Shumlin was leading them astray and they willingly followed his “Vermont a Leader” mantras, voting for almost anything he proposed.
        It all sounded good until the inevitable happens; people finally catching on they have been plucked beyond reason.

    • Dave Bellini

      Not that easy Willem. The state has cut and cut again, positions in government. At the same time the state keeps starting new programs and expanding services. Look a little closer. Millions in overtime pay so keep the departments going. “Across the board cuts” don’t work when programs and services are expanding.

      • Willem Post

        These easy to get federal subsidies to START these programs are sooooo hard to resist.
        Easy to start, hard to get rid off.
        The reason there was not a thorough house cleaning till now is because tens of thousands of voters like all the bennies bestowed on them.

  • Steve Baker

    Didn’t the Governor propose a balanced budget?

    • David Zuckerman

      Actually, now that local voters have voted for their school budgets, the answer to this question is no. His budget idea was entirely unrealistic and voters rejected it. His balanced budget included trying to tell voters what to do for funding their local schools. Voters said no. With that, his budget is either out of balance by $50,000,000 or he proposed a property tax increase of $50,000,000. That is the point. His budget is no longer in balance without a $50,000,000 tax increase. Since he proposed not raising taxes, nor cutting programs to vulnerable Vermonters and adding funding for early childhood education and higher education it is now not possible. It has actually been the House Appropriations committee that has found the ways to reduce the budget proposal he gave.

      • Steve Baker

        Zuckerman anything balanced or even near balanced what be unrealistic to you and all the Tax and Spent Progressives.
        When in your political career have you Ever voted for, sponsored, or been in favor of a Tax Cut or Lower Spending?
        Your only solution is to extort more tax revenue from the few productive Vermonters.

  • Kyle Williams

    Over $5 billion in State spending and their complaining about finding $18 million in cuts, that’s around 0.3%. No wonder we have budget problems year after year

  • Daniel Carver

    Potential solutions to close the gap:
    Rescind the increase of the household income sensitivity level from $90,000 to $ 135,000.
    Ensure Medicaid recipients qualify for their benefits.
    Curtail state support funds to sanctuary cities, (Ok that proposal probably won’t fly.)
    In short, there are endless ways the Legislature can propose to close the gap–own their version of a balanced budget–and then meet with the Administration for some horse trading to create a compromised budget.
    Come on Mitzi! Don’t give up! Keep at it!I know you can get the team to focus on creating a balanced budget! Rah! Rah! Shish-boom-bah!

  • Patrick Zachary

    Go Phil. I’m with you. Time has come to reel in our legislators who know not what they impose on us. Why are we the most (or one of) expensive state in the union…our legislators have no clue what they are doing, what they are proposing and it’s consequences. Time to get a grip. We can’t afford to drive off a cliff. My favorite quote is from someone who represents me in the legislature – ” I guess we should read the law before we pass it…..Any guess who that is?