This is an excerpt from the Final Reading of Friday, March 27. Xander Landen is a VTDigger Statehouse correspondent.
Lawmakers and Scott administration officials are starting to comb through a massive COVID-19 relief package that was signed by President Donald Trump Friday afternoon, and will provide Vermont with $2 billion to help weather the pandemic and its economic impacts.
The bill includes an expansion of federal unemployment benefits and dollars that will provide direct relief to Vermont’s schools, child care sector and hospitals.
The largest portion of the package includes $1.25 billion that Vermont will have great flexibility in using to cover expenses related to the pandemic that the state has incurred this month, and for months going forward.
But speaking to lawmakers on the House Ways and Means Committee on Friday, Steve Klein, the director of the Joint Fiscal Office, noted a key limitation of $1.25 billion: It can’t be used to replace hundreds of millions of dollars in revenue the state is projected to lose, or that will be delayed for months because of COVID-19.
“Right now the approach is everything has to be tied to expenditures in this period and not revenue replacement,” Klein said. “Which is a real problem.”
In their latest analysis, state economists project the general fund will see a $224 million hole by June 30, the end of the fiscal year — largely because the governor and the federal government effectively postponed April 15 tax deadlines for three months.
Lawmakers and the administration are planning on passing a budget adjustment to address the deficit in the coming weeks.
Klein said the state will need to be “creative” in spending the $1.25 billion, and threw out examples of what it could be used to cover — helping eliminate copays and deductibles for Vermonters, providing struggling hospitals with financial assistance, or addressing housing issues that arise because of the pandemic.
Speaking to senators in the afternoon, Vermont Commissioner of Finance and Management Adam Greshin said many other states are also wondering whether the money can be used to replace lost revenue.
“I’d be surprised if all 50 of them haven’t asked that question,” Greshin said.
The finance commissioner said that the federal government may make changes to allow states to use the funds to address their cash flow problems in a subsequent COVID-19 aid package.
Sen. President Pro Tim Ashe, D/P-Chittenden, pointed out that there was little in the federal package to provide support to workers deemed “essential” in the pandemic.
He said that with the boost in federal benefits, some workers on the frontlines of the crisis may receive less on the job than they would if unemployed.
“People who maybe work at a supermarket, but feel they can’t go to work will get more money than the people who are still going to work,” Ashe said.
Klein noted that under the federal package, the state would have the flexibility to give financial assistance to essential workers.
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