Panel finalizes state budget, paving way for adjournment

Panel finalizes state budget, paving way for adjournment
The budget conference committee works late Wednesday to finalize the 2018 state fiscal package. Photo by Elizabeth Hewitt/VTDigger

House and Senate negotiators finalized a compromise for the next state budget late Wednesday.

The conference committee agreed on the fiscal 2018 budget bill hours after House and Senate leaders declared an impasse in discussions with Gov. Phil Scott about his proposal to change how teachers’ health benefits are negotiated.

Scott has threatened to veto the budget if the Legislature does not adopt a proposal that satisfies his requirements on the teacher issue. Work on the budget stalled a week and a half ago as legislative leaders tried to negotiate with the governor. Wednesday they announced they would instead turn their efforts toward resolving the final legislation of the year.

Agreement on the budget is a sure sign adjournment is near. The bill is generally the last to pass every year.

The conference committee members will meet to officially sign the legislation Thursday morning, once legislative fiscal staff have finished writing and checking the bill. The budget conferees are also waiting for other committees to complete legislation, including the education finance bill.

The Legislature potentially could adjourn later Thursday if the House Republican Caucus is willing to suspend a rule that requires a 24-hour wait between the finalizing of the budget and a vote on it on the House floor.

Members of the House and Senate Appropriations committees worked to find middle ground between the versions of the budget that each chamber passed with unprecedented levels of support earlier this year.

Scott’s threat to veto the budget if the Legislature does not produce a satisfactory teachers’ health care plan bothered some legislative budget writers.

House Republicans have vowed to sustain a Scott budget veto, and earlier in the day the Senate minority leader also voiced his support for the governor.

The House earlier passed its budget on a vote of 143 to 1. The Senate passed its version unanimously.

But Rep. Kitty Toll, D-Danville, chair of the House Appropriations Committee, said the budget is “almost held hostage” by the governor’s threat and that the teachers’ health care issue is not a part of the big bill.

House Appropriations Chair Kitty Toll, D-Danville. File photo by Anne Galloway/VTDigger

“I just see it totally outside the budget,” she said.

She noted the high levels of support for the budget in both legislative chambers this year and said lawmakers managed to make progress on Scott’s priorities including mental health, child care and the Vermont State Colleges System while honoring his parameter of no new taxes.

“I don’t see what there is in this budget for him not to like,” she said.

The conference committee agreed to a total state budget of $5.82 billion — about $4.8 million less than the package the Senate approved, and almost $10 million more than the House budget.

The major final sticking point among legislators was a part of the Senate’s budget that transferred an annual contribution for teachers’ retirement from the general fund to the education fund. In fiscal 2018, that contribution is $7.9 million.

House members staunchly opposed the move, irked that it would increase property tax rates.

Ultimately, the Senate agreed to move the retirement contribution but pay for it entirely from the general fund through a combination of reductions, use of money that will be available only one time, and a change in the allocation of the sales tax.

The final agreement anticipates that in next year’s budget, a greater share of sales tax revenue will go to the education fund. Currently 35 percent of total sales taxes the state collects goes into the fund; that would increase to 36 percent.

House and Senate lawmakers also were stuck on differences in proposals for dealing with a prison in Windsor, which the governor in his budget proposed to shutter.

Both the House and Senate preferred to keep the prison open in some way. The House would have kept it operating as usual; the Senate proposed to turn it into secure transitional housing for inmates who are preparing to re-enter the community.

The final budget adopts a version of the Senate’s transitional housing proposal, allowing the commissioner of the Department of Corrections some flexibility on when the prison will be closed and converted.

The budget also includes:

• An additional $3.88 million to the Vermont State Colleges System, $880,000 of which is to be used to support the merger of Johnson and Lyndon state colleges.

• A $8.37 million increase for the state’s mental health system.

• An additional $2.5 million to improve access to child care.

• Language to support a $35 million bond to create affordable housing, a proposal that originated with the governor.

• A $5 million reduction that the secretary of administration will be directed to find across state government.

Note: This story was updated at 8:13 a.m. on May 18 to include budget figures.

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  • Dave Bellini

    143 – 1. So what’s the problem? Why did republicans vote for this overwhelmingly if they find it unacceptable?

    • John McClaughry

      By any standard this general fund budget is a remarkable achievement. A Democratic legislature constructed it with no new taxes and no noticeable gimmicks (when has that happened?). I am baffled by the governor’s statement that he will veto the budget unless a provision he wants is included in a completely different bill.

      • Peter Gregg

        In a word, “leverage”. That the budget was voted on as a win at 143-1 shows unity and is great, but, in the end there is no indication of how it would have fared had the education portion been included. A budget is a budget and should not be divided up to suit power plays. The people of Vermont deserve a budget that is inclusive and shows intent of equity in savings.

      • Gary Murdock

        If the budget still relies on a bill that increased focus on collecting existing taxes, that included a provision to change the state income tax from a percentage of federal taxable to federal adjusted income, then it includes a gimmick. They will be coming for deductions next year, so it’s nothing more than a delayed tax increase.

        • Edward Letourneau

          Correct. First they took away the state deduction for local taxes, and now they are getting ready to take away federal deductions when calculating Vermont income taxes.

  • Keith Stern

    A $5 million reduction that the secretary of administration will be directed to find across state government. Eliminate the state department of education and deputy commissioners and they’ve saved more than that.

  • John Freitag

    Sadly, the legislature has chosen to pass up the opportunity to begin to put our fiscal house in order by caving to the demands of the VTNEA. There are major obligations like the underfunded teachers retirement fund that will continue to be a drag on the budget for years to come. There are major needs like the clean-up obligations for Lake Champlain. At the same time Vermonters are property taxed and fee’d out.
    Not being willing to make reasonable adjustments like moving teachers retirement to statewide negotiations which would provide savings for years to come is extremely shortsighted and fiscally irresponsible. It virtually guarantees that next year the legislature , as happened in the Senate passed budget this year, will be looking to raise property taxes. The Governor should veto this budget that does not take advantage of these important savings.

  • Steve Baker

    Well you’re listening to the final stages of “the sky is falling” if we don’t pass this budget. Remember, the Democrats have rolled over the longest stretch of little to no economic growth in Vermont history.
    Population down, spending up !