Business & Economy

Where is Vermont’s newly approved $7.32 billion budget going?

Note: This story is more than a week old. Given how quickly the Covid-19 pandemic is evolving, we recommend that you read our latest coverage here.

When Gov. Phil Scott announced he had signed the state budget into law, he called it “transformational.” The spending bill, he said last week, would make “historic investments” to help Vermont recover from the Covid-19 pandemic and address “longstanding challenges.” 

“With smart state investments and a very strategic approach for using federal funds, this budget puts us on a new path to a more prosperous and equitable future for all of Vermont,” Scott said. 

The $7.32 billion budget for fiscal year 2022, which starts July 1, is unlike most others in Vermont history. That’s largely because it benefits from an infusion of federal dollars from the American Rescue Plan Act, which was signed into law in March. 

The budget uses nearly $600 million of the federal ARPA money, and harnesses more than $200 million in surplus state dollars that officials identified early this year. 

The windfall has allowed state leaders to pour money into long-established priorities, such as broadband buildout, affordable housing and climate change measures. 

Speaking to reporters last week, Senate Appropriations Committee Chair Jane Kitchel, D-Caledonia, said that with this year’s budget bill, lawmakers were able to use federal money to “really make all the political promises become a reality.” 

“How many people have campaigned on broadband, or more housing?” Kitchel asked. “So thanks to the federal dollars, we actually are setting ourselves down a path to really make significant progress in that area.”

Here is a breakdown of where next year’s budget is going: 

Climate change and clean water 

The budget directs $50 million toward a variety of efforts to combat climate change. 

It commits $20 million of the federal money to weatherization efforts, and an additional $20 million to the Clean Energy Development Fund, which is dedicated to expanding renewable energy in the state. 

In prior years, lawmakers struggled to find money for efforts to clean up waterway pollution. But relying on the federal cash, the budget commits $115 million to clean water and sewer projects. 

After the legislation passed last month, Brian Shupe, executive director of the Vermont Natural Resources Council, said lawmakers “committed to unprecedented levels of investment in a better and more equitable Vermont” with spending aimed at addressing climate change and cleaning up polluted waters.”

“These investments will make Vermont’s communities, and our environment, stronger,” Shupe said. 

Lawmakers and the governor have also said they want to spend an additional $200 million on “climate mitigation efforts” and about $100 million more on clean water projects in the coming years, using the ARPA money. 

While state leaders have allocated about $600 million of the ARPA funds in the fiscal 2022 budget, they still have more than $600 million available for the fiscal 2023 budget, and will figure out how to use it when the Legislature convenes in January.

Housing, higher education, economic development

Using both state and federal dollars, the budget makes new investments in housing and workforce development.  

In all, it spends $190 million in additional funding on affordable housing and efforts to relocate people experiencing homelessness from the hotels and motels where they’ve lived during the pandemic. 

Lawmakers also boosted investments in workforce development and in helping to stabilize the struggling state colleges. 

The budget gives the Vermont State Colleges System more than $60 million above its typical appropriation. The system plans to use the money to help cover an operating deficit, “support system transformation over the next four years” and run a series of workforce development initiatives. 

With the funding, the system was able to announce this week that it’s offering one year of free tuition to students in certain disciplines facing a critical shortage of workers, such as nursing and child care. 

Kitchel touted the investments in expanding the state’s workforce and in a Covid relief bill that Scott signed into law in April. 

She noted that lawmakers provided additional money for the state’s Vermont Youth Conservation Corps and the state’s apprenticeship program, plus tuition assistance to students attending the state colleges and the University of Vermont. 

“One of the things that I take pride in is what we’ve been able to do on the human capital side. And that is something that we don’t talk about very much, but the investments that we're making in Vermonters who are already here,” Kitchel said. “We cannot forget them.”

Lawmakers and the governor also provided additional aid to businesses that faced losses during the pandemic. The budget includes $20 million in financial support — on top of $10 million that businesses already received this year with the passage of an earlier Covid-19 aid package

But businesses have said $30 million isn’t nearly enough to cover the losses they’ve weathered during the pandemic. 

In a commentary May 29, Betsy Bishop and Charles Martin of the Vermont Chamber of Commerce said that, while state leaders made important investments in the state’s future, they didn’t do enough to help struggling businesses. 

“While we celebrate these advocacy wins and historic investments in Vermont’s child care, broadband and housing infrastructure, it is unacceptable that legislators did not advance substantial immediate relief for our state’s businesses,” they wrote.

Broadband expansion 

The Legislature’s plan to build out broadband will give the state’s communications union districts and small private internet providers access to $150 million so they can expand service to areas of the state that lack it. 

The buildout fund uses ARPA money. The buildout isn’t expected to be completed next fiscal year, but will be spread out in the years to come. And as with the climate change measures, lawmakers and the governor plan to dedicate even more federal dollars to internet expansion next year. 

The Vermont Community Broadband Board, a new government entity, will be responsible for managing the money and providing resources for the CUDs — community-owned fiber-optic networks that serve multiple towns. 

The budget bill also includes $52 million to update aging state information technology systems, such as the Department of Labor’s unemployment insurance system, which was overwhelmed during the pandemic. 

What else do you need to know?

While lawmakers decided to delay a debate over how to overhaul the state’s beleaguered pension system, the budget sets aside $150 million that can be used to reduce the growing pension debt next year. 

And in reaching final agreement on the budget bill, the House and Senate decided to slightly decrease property taxes next year. A nearly $20 million surplus in the education fund and lower-than-expected education spending allowed legislators to lower the statewide property tax rate for education by 1.5 cents from this year. 

Next year’s average homestead property tax rate will be $1.52 per $100 in property value — $1,520 per $100,000 of property value. However, about two-thirds of Vermont taxpayers pay the education tax based on their income, rather than their property value, according to the state tax department.

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Xander Landen

About Xander

Xander Landen is VTDigger's political reporter. He previously worked at the Keene Sentinel covering crime, courts and local government. Xander got his start in public radio, writing and producing stories for NPR affiliates including WBUR in Boston and WNYC in New York. While at WNYC, he contributed to an award-winning investigation of how police departments shield misconduct records from the public. He is a graduate of Tufts University and his work has also appeared in PBS NewsHour and The Christian Science Monitor.

Email: [email protected]

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