The Big Bill has never been quite so big.
Gov. Phil Scott on Thursday signed an $8.1 billion state budget into law, investing nearly a half-billion dollars in leftover federal Covid relief aid into housing, climate action, clean water and broadband initiatives.
Together with the annual transportation bill, H.736, which Scott also signed Thursday, and a handful of other measures, Vermont is set to spend a total of $8.3 billion this upcoming fiscal year.
The Public Assets Institute, a public policy think tank, estimates state spending next year will be about 40% higher than the year before the Covid-19 pandemic hit.
The extraordinary level of federal spending in the wake of the pandemic has been a temporary boon to the state’s coffers. Lawmakers and the governor began the 2022 legislative session with a little over $500 million remaining from the state’s American Rescue Plan Act allocation to spend.
The final spending packages approved by Scott include $96 million for a broadband buildout, $104 million for water quality and sewer infrastructure projects and $225 million for various climate initiatives — including $80 million for weatherization, $45 million for a municipal energy resilience program and $8 million for advanced metering. Another $80 million in one-time money will help build more affordable housing or rehabilitate code-violating rental units.
The transportation bill also includes $36 million in one-time money for electric vehicle incentives and charging infrastructure, as well as $1.2 million to maintain zero-fare public transit and $1.25 million for microtransit pilot studies. The paving budget will also get a more than 30% boost, topping $158 million.
“In January, I presented a budget that prioritized workers, kids and communities and made investments to make sure Vermonters got the most value out of the once-in-a-lifetime opportunity presented by historic levels of federal aid and state surpluses,” Scott wrote in a statement issued by his office. “While we will never agree on every issue, I am grateful to the Legislature — and the leadership and collaboration with committee chairs — to build consensus and find compromise to pass a budget that will move us closer to a more prosperous future for all regions of our state.”
Federally funded one-time investments aside, lawmakers in this budget also committed to more aggressively funding, on an ongoing basis, certain chronically underfunded parts of state government.
Vermont has long spent less on public higher education than nearly every other state in the country. At the start of the Covid-19 pandemic, a financial crunch nearly closed three campuses in the Vermont State Colleges for good.
In this budget, the state college system and the University of Vermont (which is governed separately) each received a $10 million increase to their base appropriations, the figure they can expect to receive year-over-year. The state colleges also received an additional $15 million one-time investment to help pay for reforms as the system consolidates its three four-year schools into one. (The merger is intended to be largely administrative; campuses are not slated to be shuttered.)
At the annual cost of $26 million, lawmakers also increased the reimbursement rate for community-based mental health agencies and home health aides by 8%. Workers in those sectors have long worked for wages hovering around the minimum wage, and advocates for human service providers told lawmakers that severe staff shortages were severely impacting services and in some cases putting clients at risk.
On major climate, clean water and broadband investments, the administration and lawmakers were basically in agreement from the start.
But Scott criticized the Democratic-controlled legislature for spending too much on “government systems” in their budget proposals, and he strenuously opposed efforts to condition $40 million in housing investments on creating public, statewide registries for rental units and contractors, key consumer protection measures sought by Democrats.
Lawmakers ultimately caved on the rental registry, scrapping it entirely; watered down the contractor registry; and agreed to the housing money anyway.
Another key point of contention between Scott and Democrats: economic development. Lawmakers initially passed on the bulk of Scott’s economic development ideas, but the final package funded most of his proposals, including $40 million for the state’s Capital Investment Program, a business and nonprofit grant program which will be renamed the Community Recovery and Revitalization Grant Program.
The budget, together with S.11, an economic development bill Scott signed into law earlier this week, will spend $114.5 million on business grants, relocation incentives, workforce training and a Covid relief fund for employers covering pandemic-related leaves.
