Updated at 6:47 p.m.
Gov. Phil Scott on Monday vetoed a pension reform bill brokered by lawmakers and unions representing state employees and teachers, arguing that S.286 does too little to improve the financial health of Vermont’s public retirement system.
Democratic leaders in the Legislature appear to have more than enough votes to override Scott’s veto. Two-thirds of those present in the House and Senate must support an override for a vetoed bill to become law. Both chambers passed the bill unanimously earlier this year, with all Republicans present voting in the affirmative.
In his veto letter to lawmakers, Scott bemoaned that it was “unfortunate” his veto would “likely be easily overridden, not for me, but for Vermont taxpayers and State employees who will bear the burden in the future.”
“I will acknowledge, this bill takes some positive steps, and the easiest thing for me to do would be to sign it, assure the public we solved the problem, and move on,” Scott continued in his letter. “But given the scope of this problem and the risk it poses to the financial health of our state, I cannot bring myself to do that. It would be disingenuous because I know we could have done better.”
In a joint statement, House Speaker Jill Krowinski, D-Burlington, and Senate President Pro Tempore Becca Balint, D-Windham, wrote that they “could not be more disappointed” by the governor’s decision.
“We plan to take action to override the veto expeditiously and leave no doubt as to where we stand in support of the stability of our pensions system and our public employees,” Balint and Krowinski wrote.
S.286 would require both the state and workers to pay in more. Labor leaders agreed to cost-of-living adjustments and higher employee contributions. Lawmakers, meanwhile, pledged a $200 million lump-sum payment and said they would reinvest returns on investment from the reforms into more aggressively paying off the system’s debts.
If enacted, the proposal would trim an estimated $2 billion in unfunded retirement system liabilities off the state’s bottom line. But Scott has argued this does not go far enough, and ramped up pressure on lawmakers in recent weeks to make additional changes.
Democratic leaders in the Legislature have previously said they weren’t interested in reopening the pension deal, and faulted Scott for sitting out the pension debate for over a year.
Chief among Scott’s demands: that new employees be able participate in a 401(k)-style retirement plan instead of the pension system. The Republican has said such an option could help the state better recruit a younger, more mobile workforce. But his administration has yet to provide any analysis to show that it would save the state more money than what lawmakers had negotiated with labor.
Both the unions and State Treasurer Beth Pearce have argued that the governor’s idea could actually worsen the pension system problems by aggravating the imbalance between employees paying into the system and retirees drawing benefits.
Stunned labor leaders met news of Scott’s veto with indignation.
“Are you kidding me?” said Vermont State Employees’ Association executive director Steve Howard. “To have the one person who sat it all out and sat on the sidelines and abdicated his responsibility and let Vermonters down veto this bill is really extraordinary.”
In a written statement, Vermont-National Education Association president Don Tinney noted that a top Scott administration official — Mike Pieciak, the commissioner of the Department of Financial Regulation who recently announced plans to step down this month — served on a task force whose recommendations formed the blueprint for S.286.
“Today’s veto is an affront to teachers, an affront to state employees, and an affront to troopers who all worked with lawmakers and a high-ranking member of the governor’s own cabinet to craft this bill in months of open — and publicly available — meetings over the last year,” Tinney said.
