Moving to prevent a government shutdown, a House panel voted out a budget proposal Tuesday that would ensure the state of Vermont is funded in the next fiscal year while allowing negotiations in a dispute over “controversial” surplus money to drag on as long as needed.
The new budget bill, which is expected to land on the House floor when lawmakers reconvene for a special session Wednesday, would look almost identical to the budget passed by the Legislature last month.
The only major difference is that it wouldn’t touch the $34.5 million of one-time money at the heart of this session’s budget impasse.
That money would be set aside in the general fund to be appropriated when lawmakers and Gov. Phil Scott hammer out a budget deal.
Fundamental differences between the governor, a Republican who has made a no new taxes pledge, and the overwhelmingly Democratic Legislature remain. The two sides are locked in a stalemate over this year’s spending package, which includes a significant increase in property tax rates.
Scott vetoed the budget and tax bills lawmakers passed this month. If the parties don’t reach agreement by July 1, the government would face a shutdown, requiring an emergency appropriation from the Legislature to continue operations.
The latest budget proposal, which the House Appropriations Committee passed Tuesday afternoon, wouldn’t get lawmakers and the governor any closer to a deal.
But it would alleviate concerns over a government shutdown. In that scenario, state agencies could be forced to close their doors and the state’s credit rating would likely take a hit.
Rep. Kitty Toll, D-Danville, who chairs House Appropriations, said lawmakers had to take steps to prevent that from happening. “State government needs to know that they’re going to be funded. Vermonters need to know that we’re not going to shut down government,” Toll said.
In a statement Tuesday afternoon, Senate President Pro Tem Tim Ashe, D/P-Chittenden, and House Speaker Mitzi Johnson, D-South Hero, announced they were asking the Legislature’s appropriations committees to craft a bill that would prevent a government shutdown.
“The State of Vermont must stay open. We cannot and will not allow a government shutdown. This is not Washington, D.C. While some may speak cavalierly of a government shutdown, we will not let this happen,” Ashe and Johnson wrote in a statement.
Ashe and Johnson painted a dire picture of a potential shutdown, which they said would result in state parks closing, services for disabled Vermonters being suspended and payments for health care being withheld.
The legislative leaders blame the governor for putting the state in an “unnecessarily risky” position.
“A government shutdown would be an embarrassment for the state, risk Vermont’s stellar fiscal reputation, and jeopardize our bond rating,” they wrote.
They said the bill would “exclude any major points of dispute” between the Scott administration and the Legislature. Instead, it would focus on keeping the government open and preserving the state’s bond rating.
Vermont State Treasurer Beth Pearce has warned the governor that a shutdown could harm the state’s standing with creditors which could, in turn, lead to higher interest costs and other financial hurdles for Vermonters.
Toll said avoiding this risk was an impetus for her committee’s proposal.
“It is critical that our bond rating isn’t jeopardized by this political dance right now,” she said.
The Scott administration has insisted that it’s close to reaching a budget agreement with lawmakers and has said that the special session could be over in a matter of days.
But if this proposal passed the Legislature and the governor signed it, it would reduce pressure to reach an agreement by the start of the fiscal year.
When reached for comment on the proposal Tuesday evening, Rebecca Kelley, a spokesperson for the governor, said the administration did not have a response, as it had yet to see the proposed bill.
Last week, the governor summoned lawmakers back to Montpelier for an ongoing special session and is pressing them to adopt a plan that will harness the surplus monies to buy down property tax rates.
Lawmakers say the use of one-time money will merely carry forward a gap in the education fund into next year.
The Scott administration floated a five-year plan earlier this month that officials say will fill that hole and generate $300 million in savings from reforms to Vermont’s education system.
The plan includes changes to funding for the state’s special education system, a statewide teacher health care plan, a task force to accelerate school consolidation and a threshold that penalizes districts that spend above a certain level on their schools. Lawmakers and the Joint Fiscal Office have called the savings into question.
In the budget lawmakers passed last month, which was endorsed with nearly unanimous support from Democrats and Republicans, lawmakers proposed investing the $34.5 million of one-time money into paying off retired teachers pension liabilities, which would save taxpayers $100 million over 30 years.
