Updated at 7:30 p.m.
Gov. Phil Scott on Saturday vetoed the $8.5 billion state budget sent his way by the Democratic-controlled Legislature.
The governor’s action was widely anticipated, but in a more unexpected turn of events, House Speaker Jill Krowinski, D-Burlington, followed the governor’s announcement by calling on Scott to declare a state of emergency “to address the transition of those in motels and avoid mass homelessness in Vermont.”
A battle over whether to continue providing shelter to nearly 3,000 unhoused Vermonters who’ve been relying on a state-run motel program has dominated this year’s budget debate. But that debate has been between Democratic leaders and their left flank — not Democrats and Scott. Both legislative leaders and the governor have argued the program is simply unaffordable absent the federal cash that underwrote the effort during the pandemic, and must come to an end.
Under pressure from left-leaning lawmakers and advocates, the Legislature at the last minute added $12.5 million to the budget to ease the transition for those about to lose their housing, and Democrats, including Krowinski, have pointed to this pot of funding as evidence that the budget needed to be enacted without delay.
“With this veto, that means we don’t have a budget and so the money that could have went out the door to help with this transition, with helping community partners and municipalities have the resources to help with this — there’s nothing,” she said in an interview Saturday.
Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, did not join Krowinski in her call for a state of emergency, but in a blistering statement released Saturday afternoon, he deemed Scott’s veto “the most flawed and harmful of any in recent memory.” Some 800 people are slated to leave the motels as soon as June 1, with more following later this summer, and Baruth wrote that “the Governor knows that June is the crucial month.”
“He knows very well that the Legislature cannot act until late June; with this veto, he has made continuing uncertainty about (motel) funding and solutions a certainty,” he wrote.
“Our approach to the (motel) program transition has been based on the notion that the Administration could be counted on to act swiftly, and in concert with the Legislature, as expanded eligibility wound down. Clearly, that trust was misplaced,” he continued.
The governor did not appear inclined to answer Krowinski’s call, although administration officials have previously acknowledged that certain measures, such as deploying the Vermont National Guard, are already under consideration. His press secretary, Jason Maulucci, wrote in an email that administration officials were “taking action to prepare for the transition that the Administration, Speaker and Senate Pro Tem have all agreed must take place.” He added that the governor would “take all steps and use any tools he feels are appropriate to ensure the best outcomes for the state.”
Scott’s veto letter to lawmakers Saturday itself made no mention of the motel program. He focused instead on the message that he has been delivering for months now: that the budget spends too much and hikes taxes at a time when Vermonters can least afford them.
Universal school meals are expected to put roughly $30 million in additional pressure on the property tax and Department of Motor Vehicles fees are slated to rise by 20% across-the-board. The budget also makes a downpayment on child care legislation that will require a 0.44% payroll tax beginning the following year.
“My budget leveraged a historic $390 million in surplus revenue to fund our shared priorities like childcare, voluntary paid family and medical leave, housing, climate change mitigation, and more — all without raising taxes or fees,” Scott wrote. “This approach is critical because Vermonters have made it clear that living in our state is not affordable.”
After years of unprecedented budget surpluses thanks to an influx of federal spending during the pandemic, there is increasingly concrete evidence that a downturn is close at hand. Budget negotiations at the federal level could see the country default on its debt as soon as June 5, plunging the economy into chaos. And in Vermont, for the first time this fiscal year, all three of the state’s major funds missed their revenue targets in April.
“I’m also concerned the substantial increase in ongoing base spending, that Vermonters must bear into the future, is not sustainable,” Scott added. “This increase — more than twice the rate of current inflation — is especially concerning because it does not include the full cost of the new programs created this year that rely on new tax revenue or will otherwise add to Vermonters’ costs.”
The budget proposal Scott presented to lawmakers in January itself represented a roughly 9% increase in spending; the budget the Legislature ultimately passed upped that to 13%.
“With one-time money subtracted, the Legislature’s budget and the Governor’s differ by about three percent — with nearly all of that difference flowing to mental health, adult-days and other critical service providers,” Baruth wrote in his statement.
Democrats command supermajorities in both the House and the Senate, but overriding the governor is still expected to be a complicated task, particularly in the lower chamber. Twelve Democrats and five Progressives in the House voted against the budget in mid-May to protest the bipartisan decision to end the motel program.
Democratic organizers of the effort have said they plan to sustain the governor’s veto in hopes of forcing legislative leadership to re-open the budget and continue the motel program — at least temporarily. Despite motels sheltering the vast majority of the state’s unhoused population, local shelters are already full, and the dissident lawmakers say the state needs more time to put adequate alternatives in place.
One of them, Conor Casey, D-Montpelier, who once served as the executive director of the Vermont Democratic Party, said Friday bucking his party’s leadership is difficult.
“I’ve worked with them for years. I know they’re really good people. I know they have big hearts. But I think we have to, we have to have a position of strength here, as a separate branch of government with veto proof majorities. And we can do it,” he said.
And the sum in the budget set aside for the transition was ultimately “a band-aid,” he said.
“You can send out this $12.5 million, but these service agencies — they’re not going to be hiring new employees that they then have to, like, lay off in a year because it’s one-time funding. And they’re not going to be able to hire contract positions either,” he said.
An override requires support from at least two-thirds of the members present in each chamber. It’s unclear if the group that initially voted against the budget will all stick together during the vote. But if they do, Democratic leaders will have two choices: negotiate with their left wing to continue the program, or negotiate with Scott and Republicans to cut from the budget and arrive at a deal that way.
Lawmakers are set to reconvene June 20 to take up any vetoed legislation, facing a compressed timeline to act. The new fiscal year begins July 1.