The Vermont Senate on Thursday approved a $7.2 billion budget that harnesses nearly half of the federal funding bestowed upon the state by the American Rescue Plan Act.
The spending plan, which cleared the chamber in a unanimous vote, would dedicate $115 million to clean water projects, $100 million to broadband expansion, $53 million to stabilizing Vermont’s strained higher education system, and $23 million to workforce development initiatives.
After a final vote in the Senate on Friday, the budget would head back to the House, which approved its own version in March.
Speaking to her colleagues Thursday morning, Sen. Jane Kitchel, D-Caledonia, the chair of the Senate Committee on Appropriations, said this year’s spending bill is “probably as complicated a budget I’ve ever had to put together in my time in the Senate.”
In addition to the federal relief dollars, lawmakers had a more than $200 million surplus of state dollars with which to work.
The Senate’s budget includes more than $16 million in federal funds to help reopen the state’s justice system, which has faced a backlog of cases during the pandemic. It contains $20 million for additional grants to businesses that have faced losses during the pandemic and $52 million to help the state upgrade some of its outdated IT systems.
“One of the hardest parts of our work is seeing all the needs of our constituents, doing the very best to address those needs, and knowing we still may fall short. Because the needs are so many,” Senate President Becca Balint, D-Windham, said in a statement. “This budget seeks to meet immediate needs, while also addressing some longer-term needs. This is the complicated dance we must do.”
Overall, next year’s proposed $7.17 billion budget spends slightly less than than the state did this year. The current $7.36 billion budget was also buoyed by federal Covid-19 aid.
In doling out the latest round of federal funding, lawmakers are seeking to take a slower approach than Gov. Phil Scott.
The Republican governor has been pushing the Legislature to adopt his plan to pour $1 billion of American Rescue Plan Act funds into addressing broadband, climate change, economic development, affordable housing and other challenges over the next several years.
The Senate’s proposed budget would spend $478.5 million of the federal funds, leaving roughly $500 million to be spent in the 2022 legislative session.
In total, Vermont is expected to receive $2.7 billion from the American Rescue Plan Act, but the majority of it is flowing directly to recipients, including schools and municipalities. Lawmakers and the governor have flexibility to determine how roughly $1 billion of the funding is spent. The state has until December 2024 to allocate the federal money.
Lawmakers say they want to know whether Vermont will receive additional funding from President Joe Biden’s proposed infrastructure package before they use up all of the American Rescue Plan Act money.
“We have more time to be thoughtful in terms of how we budget these federal resources with the benefit of more experience, with the more firm knowledge about what will be additional infrastructure money available to the state,” Kitchel said. “We will start next year with more information, but this is not, as I’ve said, the only train leaving the station.”
Like the House’s proposed spending plan, the Senate’s sets aside $150 million of one-time state money to help pay down growing debt within Vermont’s pension system. That’s on top of the $343 million the state will owe in pension and health care liabilities next year.
Senators also moved to increase benefits for low-income families who are part of the Reach Up program.
The budget adds $2.7 million to the program, hiking benefits by $132 per month. A family of three would receive $832 payments, or $857 payments in Chittenden County, if it became law.
The package includes a combined $109 million in spending on housing, including $12 million to expand homeless shelter capacity, and $40 million in state dollars for affordable housing projects. It would direct $41 million of federal dollars toward a plan to provide emergency housing and rental assistance for those who are homeless.
The bill puts forward $31 million for “climate action investments,” including $18 million for weatherization initiatives. Unlike Scott’s proposal for spending American Rescue Plan Act funds, the budget does not include $100 million for the state to fund its forthcoming climate action plan.
That plan is expected to be adopted by Vermont’s newly formed climate council by the end of the year and will be focused on efforts to cut the state’s carbon emissions. But lawmakers say that they intend to provide up to $100 million for the plan in the coming years after it is released.
Scott has been raising concerns over how the Senate’s budget appropriates the federal funding.
Jason Maulucci, Scott’s spokesperson, said lawmakers have “unnecessarily” used American Rescue Plan Act funds to pay for $145 million worth of initiatives that could be covered by surplus state dollars.
He said that compared to the governor’s plan for spending the federal aid, the Senate’s budget doesn’t spend enough in areas such as climate change and housing. Scott proposed directing about $250 million to housing over the next four years and $200 million to climate change initiatives.
“Legislators for years have talked about the urgency of this issue, yet they have only included $31 million for climate action — over 80% less than the Governor has recommended (and almost 50% less for this year alone),” Maulucci wrote in an email.
“This is after they’ve said for years, ‘action cannot wait,’” he added.
Maulucci said Scott isn’t asking for every dollar of the federal funds to be appropriated this year, “but he is asking for a clear strategic plan that ensures Vermonters see the most long-term economic value out of every penny of this money.”
“The Senate budget proposal spends half of the money, without laying out any cohesive strategy or vision for how to use this once-in-a-lifetime funding opportunity to solve core, long-standing economic challenges and help every community grow and thrive,” Maulucci said.
Democrats have said that Scott’s plan lacked key investments, including funds to stabilize the higher education system, restart the court system and invest in workforce development.
“I realize that the governor has put forward his proposal to spend all $1 billion,” Kitchel said. “However, his proposal does not include any of the funding to go for areas which we have talked about, one of which is startup of the courts, the other is grants to higher ed, nothing for human capital investment.”
Under the Senate’s budget plan, the state colleges would receive $41 million to address pandemic-related deficits and to invest in “system transformation” over the next four years. UVM would receive $2.2 million, and private colleges would get $10 million for pandemic expenses. The proposal includes several programs aimed at upskilling members of the workforce and offering free state college tuition.
Despite disagreements over the specifics, Democratic leaders and Scott have said their ideas for how to spend the federal windfall are generally aligned.
“The Senate, House, and Administration largely agree on spending priorities, including broadband, affordable housing, and tackling climate change,” Balint said. “We can take action in several of these areas now and take time to do careful, deliberate work on others.”
