Budget writers in the Vermont House have essentially wrapped up their work on the state’s more than $8 billion budget, drafting a spending plan that invests tens of millions of dollars into housing, significantly increases Medicaid reimbursement rates to service providers, and sets cash aside for child care and paid leave.
Technically, nothing is finalized. But members of the House Appropriations Committee gave legislative staff the thumbs-up Friday afternoon to spend the weekend producing an up-to-date bill that incorporates the decisions made over the last few weeks. The panel is expected to review and formally sign off on it Monday.
Rep. Diane Lanpher, D-Vergennes, who chairs the committee, said it initially got to work wanting to stay focused on housing, childcare, paid family leave and workforce problems. But it also found itself responding to an urgent call from providers to shore up reimbursement rates to a wide variety of programs and services, including adult day care, home health agencies and assisted living and residential care facilities.
“That was a big piece that was not expected,” she said.
Amid a historic housing crisis, affordable housing builders and advocates had asked lawmakers for $175 million in one-time money this year to continue an aggressive pace of construction. The House budget would give builders another $50 million, plus add another $10 million to the Vermont Housing Improvement Program, which gives landlords grants to create new (or rehabilitate old and vacant) affordable rental units.
If the House’s budget construct ultimately makes it into law, new one-time appropriations for construction this year would total about $99 million, since a mid-year spending package that passed into law earlier this week allocated another $39 million.
But while the House budget would continue to invest heavily in permanent housing, it would significantly pull back on emergency shelter. Advocates had asked the state to set aside $72 million to continue housing nearly 3,000 unhoused Vermonters in motels across the state after pandemic-era federal funding dries up. The lower chamber’s budget offers only $26 million — the same figure recommended by Gov. Phil Scott’s proposed budget — plus some modest increases in support services.
The House’s spending plan includes good news for the Vermont State Colleges System and its students. It fully funds $9 million in one-time money for the system’s ongoing unification efforts, and gives it a $2.5 million bump to its base appropriation — the figure the system can count on year-over-year.
The budget would also make permanent the state’s 802 Opportunity scholarship program, which offers free tuition at the Community College of Vermont for those with a family income of $75,000 or less. And another $3.8 million in one-time money would continue to fund the system’s critical occupations scholarship program.
House lawmakers are also taking advantage of a much higher baseline in revenues to increase their ongoing commitment to several Medicaid-funded services, including long-term, primary and specialty care, and emergency services.
All told, the budget would spend $20.7 million more in state funds to boost reimbursements, which would draw down another $26 million in Medicaid dollars. The biggest winners would be community-based alternatives to nursing homes, which would get a nearly 80% rate increase, as recommended by a rate study conducted by the state. That would bump their per-day rate from $47 to $85.
Advocates for long-term care services are expected to continue pressing for more — particularly for adult day services, or non-residential supports for adults with disabilities. The $21 per-hour reimbursement rate included in the House budget draft is welcome, according to advocates, but not enough to stabilize providers amid acute inflation.
Scott has not yet threatened a veto. But administration officials have made clear they are displeased with the House’s spending plan, which is likely to advance with little Republican support.
“The House budget represents financial malpractice,” said Adam Greshin, the governor’s commissioner of finance.
The administration’s chief complaint? Scott had sought to set $150 million aside to have on hand to draw down federal funds over the next several years, chiefly from the trillion-dollar infrastructure package passed by Congress in 2021. The House’s budget squirrels away a little over $40 million for that purpose, enough to draw down next year’s funds, but nothing for future years.
Thanks to federal stimulus spending during the pandemic, Vermont’s revenues are still in boom times, but the state’s economists warn of a downturn in 2024. Better to set surplus funds aside now, administration officials argue, before revenues dip.
Lanpher countered that Vermont has long left federal dollars on the table for lack of enough money in the state’s Transportation Fund.
“The unfunded pressure of the T-fund is not new news,” said Lanpher, who quipped she had the “distinct pleasure” of chairing the chamber’s transportation committee as recently as last year. And she argued increases in fees at the Department of Motor Vehicles — which Democrats are proposing, and the administration opposes — could cover some of the federal matches the administration is so concerned about.
Scott has also made clear he is not interested in the broad-based taxes that would be required to fund the paid leave and child care proposals being advanced by Democrats. The House budget includes $37 million for startup costs for paid leave, plus a $92 million placeholder for child care. (A full fiscal analysis has not been produced for the Senate’s child care bill, S.56).
“It’s evident from the economic forecasts that we have that we’re in for some volatile, rocky times,” said Greshin. “So perhaps adding $150 million of new base — not one time, base initiatives — is not such a good idea. And maybe we ought to sober up a bit.”
Once the House Appropriations Committee signs off — with Republicans likely voting in opposition — the legislation would then head to the floor, where the full House would weigh in. After that, it will be on to the Senate.