[L]eaders of Vermont’s Democratic-controlled Legislature are firing back at Republican Gov. Phil Scott’s threats to veto legislation raising new taxes or fees that would prompt a June veto session. But thanks to the way the main tax bill is structured, the governor could be forced to choose between two of the biggest revenue increases.
“I don’t believe we need to have a veto session,” Senate President Pro Tem Tim Ashe, D/P Chittenden, said in a radio interview Friday. “I hope we don’t have a veto session. And frankly in our adjournment motion, we may not put in a veto session.” Ashe made the remarks on “The Dave Gram Show” on Waterbury-based radio station WDEV.
The governor this week reiterated threats he first made in March to veto a list of bills calling for tax and fee increases, saying he was signaling his intent following complaints last year that he had not done so earlier in the legislative session.
Scott has been adamant since his 2016 campaign that he does not want to raise taxes or fees or create new ones, saying to do so would hurt Vermont’s affordability.
The governor’s salvo this week came in an interview with Neal Goswami of WCAX-TV. “I am fairly certain that we’ll need a veto session in June,” Scott said.
Lawmakers normally adjourn for the year by mid-May and, since the early 1990s, have set a date to return in June in case the governor, after that May adjournment, vetoes bills that are deemed crucial. Most years, the June date passes without lawmakers returning, either because they lack the two-thirds majorities in both House and Senate to override the governor, or it’s determined the issue can wait until lawmakers return the following January.
It’s unusual for a governor make direct veto threats; they usually hint about the possibility while expressing displeasure with measures lawmakers are working on. It’s also unusual for legislative leaders to threaten not to schedule a veto session — a move that would put the onus on the governor to exercise his power under the state Constitution and call lawmakers back to Montpelier for a special session.
Last week 50 members of the House Republican caucus sustained the governor’s veto on a bill that would have created a new toxic chemical review agency, calling into question whether the House would be able to override anticipated vetoes on other measures, including the minimum wage and paid leave bills.
The biggest and most hotly debated legislation seen as likely to play a role in a veto session this year – as of 2 p.m. Friday – was H.911, a bill passed by the House to bring several big changes to Vermont’s tax code. Among them: it would seek to eliminate effects of the federal tax law passed at the turn of the year that would have the effect of raising Vermonters’ state income taxes by an aggregate of $30 million. And it raises $60 million from increased income taxes, which would offset school property taxes by 10 percent.
Scott has been calling loudly for property tax reductions – this week he floated a new proposal to levy fees on school districts that don’t raise student-to-staff ratios as a way to cut costs. He also has called the House-passed income tax increase a non-starter.
But some lawmakers and longtime legislative observers were indicating Friday that because of the federal tax law changes a veto scenario could be tough for Scott. Vetoing H.911 likely would kill provisions proposed by the governor’s office that would erase the $30 million in higher state tax collections tied to the federal tax law changes. Signing it would put in place the House-passed shift from property to income taxes.
But a big part of the school tax formula appeared to be changing by the end of the day Friday, when the Senate Finance Committee voted to remove from H.911 the property-to-income-tax shift, leaving a big piece of the House agenda to be negotiated with the Senate before it reaches Scott’s desk.
One other provision of H.911, though, makes it a must-pass bill, lawmakers said. It contains language on the “yield,” a word that refers to the system under which the state collects residential property taxes to support school funding. If H.911 were somehow not to pass, about a quarter of the $1.6 billion of projected funding for schools in the coming fiscal year would disappear.
Veto threats — at least implied ones – and other saber rattling are not uncommon around the Vermont Statehouse this time of year, and both Ashe and House Speaker Mitzi Johnson indicated in interviews they expected the governor eventually would budge from his hard line on taxes and fees and compromise with lawmakers.
“We’re hoping we can actually get a lot of work done in the next two weeks to come to agreement on things, but that can only happen if the administration comes to the table,” Johnson said in an interview.
Scott’s top aide, Administration Secretary Susanne Young, said failure to reach agreement, and a refusal by lawmakers to schedule a veto session to return to Montpelier would mean, “the governor would have to call a special special session to start over again with new bills and have the Legislature here for a period of time to craft a new budget or a new revenue bill before June 30. That just seems irresponsible. It is not what Vermonters want us to be doing here in Montpelier.”
