It’s not what Gov. Phil Scott wants to fund that irked Democrats responding to his budget address Thursday. It’s how he wants to fund it. And what his budget doesn’t fund at all.
In delivering his third budget address, Scott said he wants to bolster funding for child care subsidies, fully fund clean water initiatives, subsidize electric vehicle purchases and increase spending on state colleges — all popular ideas with the Democrats who will write the budget.
He even moved away from his pledge not to impose new taxes and fees on Vermonters — a position that led to a record number of vetoes in the past two years — and proposed $10 million in new fees and some $7.5 million in new taxes.
Democratic lawmakers said they appreciated what they described as the collaborative tone of Scott’s budget address, which comes after two years of budget battles that led to a record number or vetoes and a session last year that dragged into July.
“We are encouraged that there’s a really different tone than what we’ve seen in the past,” said Speaker of the House Mitzi Johnson, D-South Hero.
“I think this budget represents something that’s a lot more collaborative,” said Senate leader Tim Ashe, D/P-Chittenden. “Even where there’s disagreement, there’s space to work without a showdown being set up right out of the gate.”
But in responding to the governor’s budget, Democratic lawmakers suggested it wasn’t Scott’s proposed initiatives, but how the governor proposes funding them, that would be the source of conflict in this year’s legislative session.
“It’s going to be the financing of these proposals that is going to be the hard work,” said Senate Majority Leader Becca Balint, D-Windham, who sits on the Finance Committee. “It’s not going to be the topics themselves.”
Balint noted that even before the speech, the Scott administration showed a willingness to engage in a back-and-forth over the budget during its briefing of legislative leaders, a contrast to previous years when officials presented broad ideas with little dialogue.
Two of the governor’s proposals in particular received immediate blowback from House and Senate leaders who decamped to their offices immediately after his address to speak with reporters: spending an additional $7 million on child care subsidies and using $8 million from the estate tax to pay for clean water initiatives.
The Scott administration hopes to collect $7 million for child care from a new sales tax on online marketplaces like Amazon and eBay. That new revenue would funnel into the education fund.
But Democrats Thursday expressed concern over dipping into the education fund for programs not specifically linked to preK-12 education, arguing that the intent of directing sales taxes to the education fund was to help relieve the pressure on property taxes that pay for schools.
“Saying that we need to modernize the tax system to use some of that additional internet tax money — the translation there is it’s pressure on your property taxes,” Johnson said.
“We’re finally getting enough (sales tax) so we might be able to actually lower property taxes and the governor’s taking that for child care,” said Sen. Ann Cummings, chair of Senate Finance Committee.
“We definitely need the money for child care — it’s a good initiative — but some of us went through lot of pain the past two years fighting that battle,” she added.
Democrats also balked at Scott’s proposal to use $8 million of estate tax revenue to pay for water cleanup efforts. Their main objection is that relying on the existing revenue to pay for clean water could mean making large cuts elsewhere. The estate tax currently feeds into the general fund.
“We have to see what $8 million of service to Vermonters is not being paid for to divert it,” Johnson said of the estate tax.
Ashe said the estate tax was also unstable, depending largely on the wealth of Vermonters that die in a given year, which he said was less of an issue if it went to a massive pool of money like the general fund.
“If it’s being viewed as maybe a substantial chunk of the ongoing payment for water quality, and we have one of those years where it goes down, it raises the question: Will we just do a third as much water quality work? A half as much?” he said.
Scott’s finance commissioner, Adam Greshin, said the administration’s efforts to raise revenue elsewhere would prevent moving the estate tax from leaving a hole in the general fund. Scott noted in his speech that even in 2014, the lowest year for estate tax revenue since 2004, it brought in $9.9 million, more than the $8 million he is proposing to use for clean water.
Other lawmakers were surprised that in laying out his agenda for the legislative session, Scott remained virtually silent on one major policy sector: health care.
House Health Care Committee Chair Bill Lippert, D-Hinesburg, and its vice chair, Anne Donahue, R-Northfield, said they had hoped that the governor’s budget would include proposals to bolster funding for mental health services, or improve health insurance affordability.
“I was certainly taken aback that there were no references at all to health care,” Donahue said, noting that she hopes the Scott administration will work with lawmakers and propose health care initiatives in the coming months.
Sen. Dick Sears, D-Bennington, the chair of the Senate Judiciary Committee, complained the budget didn’t have enough funds to fight the opioid epidemic. While his budget doesn’t provide additional money for addiction treatment or prevention, Scott proposed an additional $2 million to hire service workers who help families afflicted by the opioid epidemic.
“We’ve got to deal with it, we’ve got to face it and it’s going to take more than money, but it’s going to take money, and I didn’t hear enough to me to solve the problems,” said Sears, citing the backlog in the courts and the increasing number of children taken into state custody because of the crisis.
Sen. Anthony Pollina, P/D-Washington, called Scott’s budget proposal a “shell game” that moved money from one fund, or program, to the other without making any significant investments in ideas to improve areas like higher education.
“He’s not willing to make investments in things at this point again. He basically just wants to move things around,” Pollina said. “It will be interesting to see where we’re going to take money from to fund some of the things he talked about doing.”
Correction: A previous version of this article incorrectly quoted Sen. Becca Balint saying that the Scott administration did not brief lawmakers on the governor’s budget proposal ahead of his address in previous years.
