Vermont lawmakers resolved a lingering disagreement over the state budget on Thursday, clearing a path for the Legislature to adjourn for the session on Friday.
As they sought to reconcile competing versions of the fiscal year 2022 budget, Senate and House negotiators had struggled to reach consensus over how to fund retired teacher health care obligations.
The Senate had proposed establishing a new system to pre-fund those expenses by dedicating $14 million of ongoing revenue from the education fund. Senators argued that covering the costs of teachers’ health care benefits before they retire could save the state more than $800 million in the long run.
Retired teacher health care costs are currently borne by the general fund, which pays for most state government functions and programs. Senators have said that unless the state acts to reduce its swelling health care liabilities, it may have to make cuts to programs and services in future years.
The House had rejected that proposal, expressing concerns about adding an ongoing expense to the education fund and putting pressure on state property taxes.
House members said they wanted to wait until the state’s forthcoming pension task force completed its work before making a decision on the matter. That panel, proposed in legislation that has passed the House and Senate, would be charged with making recommendations to address mounting debt in the teacher and state employee retirement systems.
As part of the budget compromise, the House agreed to reserve $14 million of education fund revenue that could be used to pre-fund teacher health care in the future. The Senate’s plan would be reconsidered next session, after the task force completes its work.
“It still keeps the issue very much out there,” Sen. Jane Kitchel, D-Caledonia, the chair of the Senate Committee on Appropriations, said Thursday. “It is evidence of a commitment that we need to and want to deal with this obligation that is creating a very large unfunded liability out on the ledger of the state of Vermont.”
The Senate also agreed to the House’s plan to adopt a lower property tax rate next year. Senators had initially moved to keep property taxes in fiscal year 2022 the same as fiscal year 2021.
[Get the latest status on more than 30 key pieces of legislation in VTDigger’s 2021 Bill Tracker.]
But a nearly $20 million surplus in the education fund and lower-than-expected education spending allowed legislators to bring down the statewide property tax rate by 1.5 cents compared to this year. If signed into law, next year’s average homestead property tax rate would be $1.52 per $100 in property value.
The budget deal is expected to face up-or-down votes on the House and Senate floor on Friday.
While lawmakers waited on budget negotiators to finish their work Thursday, a number of key bills were approved by each chamber, with many making their way to the Gov. Phil Scott’s desk:
Racism as a public health emergency
The Senate signed off on a joint resolution declaring racism a public health emergency in the state.
The document, J.R.H.6, lists a variety of data points on racial disparities in health outcomes for Vermonters who are Black, Indigenous and people of color. It resolves that the Legislature commit to the “sustained and deep work” of eradicating racism and race-based health disparities.
The upper chamber also sent Scott legislation, S.47, that would allow electric vehicle makers to open direct-to-consumer outlets for vehicle maintenance and sales in the state.
Tesla bill
The proposal has been described as the “Tesla bill” because it would open the door for Tesla, Inc. — the California-based maker of a popular line of high-end electric cars — to operate its own shops in Vermont. That would allow the company to sell and service vehicles directly in the state.
Tesla maintains that its cars must be sold and serviced directly by the company rather than through third-party dealers.
Marijuana modifications
The Senate also delivered legislation to the governor Thursday aiming to improve social equity in Vermont’s budding marijuana market and modify the rollout of legal pot sales.
That bill, S.25, includes some advertising restrictions, sets up a legislative format for licensing fees to be approved before January 2022 and establishes a fund to help people of color and others hurt by past marijuana prohibitions to open cannabis businesses.
The Senate agreed with changes made by the House to the bill and sent it to the governor.
Rental housing registry
In the House, lawmakers approved S.79, which would create a statewide system to enforce safety standards in rental properties throughout Vermont.
The bill proposes establishing a task force that would maintain a statewide registry of rental properties, and inspect them when tenants or property owners filed complaints about properties’ failure to meet the state’s rental housing health codes.
After hours of debate, with Republican members arguing that the legislation could stifle business opportunity and the rental market, the legislation passed on a voice vote with overwhelming support.
