As the Vermont Legislature hones its state budget proposal for next year, it is opting for a slower approach to spending the $1 billion the state is expected to receive in Covid-19 relief — bucking Republican Gov. Phil Scott.
With just weeks left in the legislative session, lawmakers are still deciding how they want to direct federal aid from the American Rescue Plan Act, a Covid-19 relief package President Joe Biden signed into law in March.
Scott is pushing the Legislature to adopt a $1 billion plan that would include major investments in broadband, climate change, economic development, affordable housing and other sectors over the next several years. But when it comes to spending the federal windfall, lawmakers want to take a different path.
Given that the state has more than three years to decide how the federal money will be spent, they say there’s no need to hastily allocate all of it in the coming weeks.
“We know that we need to do careful work around this, and our unwillingness to fully embrace his plan is not obstinance, and it is not a political battle,” Senate President Pro Tempore Becca Balint, D-Windham, said in an interview last week.
“We have a responsibility to make sure we’re spending the money the best way we think honors what each of our communities need,” she said.
The Senate Committee on Appropriations voted out a state budget bill on Monday that would allocate about half of the American Rescue Plan Act money, or $478.5 million. The plan is to leave the roughly $500 million that remains to be doled out during the 2022 legislative session.
In total, Vermont entities are expected to receive $2.7 billion in American Rescue Plan Act funding, but much of will flow directly to recipients, such as K-12 schools, colleges, municipalities and individuals. Lawmakers and the governor will have flexibility to determine how roughly $1 billion of the funding is spent.
Balint said that senators broadly agree with how the Scott administration wants to allocate the federal funds, and their plan for using it looks quite similar to the governor’s. Democrats have noted they share spending priorities with Scott — including goals to invest in broadband, affordable housing and efforts to fight climate change. But legislators favor allocating a smaller portion of it this year and directing more of it to workforce development and education.
The Senate’s budget proposal would harness $100 million of the federal funds for broadband expansion, $115 million for water and sewer projects, and $31 million for “climate action investments,” including $18 million for weatherization initiatives.
Scott pitched his $1 billion spending proposal in April, a month after the federal government approved the funds and after the House had already passed its version of the budget, with a plan to spend $650 million of the American Rescue Plan Act dollars.
House Speaker Jill Krowinski, D-Burlington, said the governor’s proposal came too late to get a thorough vetting in the Legislature.
“That’s why we’re saying, ‘Let’s work on the areas where we have common ground, and then let’s take time to look at these other ideas and proposals so that we get it right,’” Krowinski said.
The speaker said the state did not need “to rush with getting all of these funds out the door.”
Krowinski also pointed to congressional consideration of President Joe Biden’s infrastructure package, which could send Vermont yet another round of federal aid for major projects. Even more federal money on the table might change policymakers’ thinking about how American Rescue Plan Act funds should be spent.
“If we don’t have time pressures on this, and we know another relief bill is coming, I think we just need to be really thoughtful about that,” Krowinski said.
Earlier this month, in a letter to lawmakers about a separate state Covid-19 relief bill, Scott said he believed American Rescue Plan Act funds should be allocated in a single piece of legislation “in a truly strategic and fully transparent way.” He criticized lawmakers for using the new money — instead of state dollars or other federal resources — to partially fund that package.
The governor said the funds should only be used for “tangible infrastructure that provide the greatest economic benefits and will truly transform our economy.”
Over the next four years, Scott’s $1 billion plan would spend $249 million on affordable housing projects, $143 million on economic development, and $170 on water and sewer projects. It would also reserve $250 for “connectivity initiatives,” including broadband expansion, and $200 million on efforts to address climate change.
During a press conference last week, Scott reiterated that he’s “opposed to utilizing the money other than for infrastructure” and wouldn’t rule out vetoing a budget if he disagreed with its use of federal money.
“If you look back over the last four years, if I feel strongly about a situation, and the budget is not something that I agree with, I wouldn’t hesitate to veto if it was something I thought was detrimental to Vermonters,” Scott said.
Democrats have criticized Scott’s plan for lacking “human” investments — spending on the mental health system, workforce development and higher education.
Speaking to members of the Senate Democratic caucus on Tuesday, Sen. Jane Kitchel, D-Caledonia, who chairs the Senate Committee on Appropriations, said the governor’s proposal didn’t include money for Vermont’s workforce or help the state’s court system fully reopen as the pandemic subsides.
The Senate’s budget includes more than $16 million to help the justice system respond to the Covid-19 crisis.
In total, the Senate’s proposal would use $23 million for workforce development initiatives, including $5 million for scholarships for state college students preparing for “critical occupation careers” such as bookkeeping, graphic design, web design and small business management.
It would also reserve $3 million to help adult learners in the state college system to finish degrees.
Unlike Scott’s proposals for using American Rescue Plan Act funds, the Senate’s budget would also direct $53 million in federal dollars toward the higher education system, which has been strained by the pandemic.
This includes $21 million for the Vermont state college system to address pandemic-related deficits and $20 million to invest in “system transformation” over the next four years. The University of Vermont would receive $2.2 million “to offset the impact from level room and board fees.”
The Senate budget proposal would spend $56.5 million of the American Rescue Plan Act funds on economic development, including $20 million for another round of grants to businesses that have weathered losses during the pandemic.
And it would rely on $18.5 million of the federal funds for housing costs. The largest chunk of this funding, $12 million, would be used to help the state expand its shelter capacity, as Vermonters experiencing homelessness leave the hotels and motels where they’ve stayed throughout the pandemic.
The spending bill would dedicate an additional $40 million in state money to help build affordable housing throughout the state.
Balint said that the back and forth between the Legislature and the administration over how to spend the federal funds is the “usual dance” between the two branches.
“What is getting lost is that we have a responsibility, when we hold the purse strings, to spend the money in the best way that we see fit,” Balint said.
“So to adopt his plan, at this point, without doing due diligence in our committees, would be malfeasance,” she said.
