Republican Gov. Phil Scott, seen here on Wednesday, September 28, 2022. File photo by Glenn Russell/VTDigger

Updated at 5:34 p.m.

Gov. Phil Scott has vetoed child care legislation that would infuse more than $120 million annually into the chronically underfunded sector, extending subsidies to most families and significantly hiking reimbursements to providers.

“I know some headlines will probably read ‘Scott vetoes child care,’ but I’m not vetoing child care. I’m vetoing the payroll tax,” Scott said at a Tuesday afternoon press conference. “No governor in state history has been as committed to funding child care, and I’m very proud of that record.”

The Republican governor’s veto of H.217 was widely predicted. Scott had stopped just short of pledging one but has been telegraphing his intentions for months, saying he strongly objected to the new tax that would partially fund the measure.

The governor does support further investments in child care, and in his budget submitted to lawmakers in January, he proposed using $50 million from the General Fund to expand subsidies. It’s an idea that lawmakers even incorporated into their financing mechanism for their child care bill, trimming the cost of the payroll tax to 0.44%.

But the administration settled upon $50 million because this is how much officials estimated they could spend without having to raise new taxes — Scott’s red line. Democrats, meanwhile, argued that the state would have to spend far more to truly stabilize the labor-intensive sector in which workers often qualify for public assistance while parents struggle to pay a bill that often eclipses the cost of a mortgage or college tuition. 

And even the sum contemplated by lawmakers in H.217 falls short of the funding called for in a study commissioned by lawmakers in 2021, which pegged the cost of reform between $179 million and $279 million annually.

Calling the bill “a truly significant benefit for Vermonters at a minimal cost,” House Speaker Jill Krowinski, D-Burlington, released a statement Tuesday estimating that the payroll tax would only cost an individual earning the state’s median wage less than $1 a week.

And she said that while Scott’s veto “represents a setback, it only strengthens our resolve to champion the well-being of our communities.”

“We will continue to fight for affordable child care, recognizing its immense value to our families and the future of our great state,” she continued. 

Scott anticipated this argument in his veto letter to lawmakers, writing that “supporters of raising taxes and fees will always point to the relatively small amount raised for each individual program or service — trying to suggest it is not that much money.  But that type of narrow here-and-there thinking adds up, year after year, and has made living in Vermont increasingly unaffordable.”

If the bill becomes law, starting on Jan. 1, 2024, the state will reimburse child care providers at a rate 35% higher than in fiscal year 2023 — enabling them to significantly raise wages.

Currently, families living at or below 150% of the federal poverty level are not charged a co-payment to receive a full subsidy from the state. The bill would eliminate co-pays for those making up to 175% of that metric, increasing that threshold from $45,000 to $52,500 for a family of four. And the bill would extend partial child care subsidies to families up to 575% of the federal poverty level — $172,000 for a family of four.

Aly Richards, the CEO of child care advocacy group Let’s Grow Kids, said in a statement that the organization was “disappointed” in the governor’s decision to veto a bill “passed by an overwhelming supermajority in both the House and Senate with support from Republicans, Democrats, Progressives, and Independents.”

“This bill is a direct example of what we can achieve with collaboration and when policymakers truly listen to the needs of their constituents,” she wrote.

It should be no trouble for lawmakers to override Scott. The measure passed out of the House by a 118-27 vote and out of the Senate 24-6. (If all members of the two chambers are present, it requires 100 votes in the House and 20 votes in the Senate to meet the two-thirds majority needed to override a veto.) 

Sen. Ruth Hardy, D-Addison, one of the bill’s chief architects, accused Scott of “playing politics” by vetoing legislation he knew would become law anyway. 

“It’s just kind of unbelievable to me,” she said. And she noted the gendered implications of the legislation, given that women represent the vast majority of the child care workforce and remain most often the primary caregivers in the home.

“Of the people that I heard from about this bill, I would say over 90% of them were women,” she said, adding later that “the sort of incremental steps that he was proposing does not actually put us in the place where we need to be in order to take care of families and make strides for gender equity in Vermont.”

In a statement, Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, said Scott “has talked about the need to expand and enrich our childcare offerings, but he has never been willing to address the problem at the scale it demands.”

“Fortunately, overwhelming majorities in the House and Senate have made it clear that the Governor’s rhetoric on this issue will not be the last word,” Baruth continued. “This bill will be our number one priority for the veto override session, at which time we will speak loudly, in the only way that matters in the end. We will vote to end the childcare deserts in our state, and we will vote to pay childcare professionals a respectable wage. Vermont’s kids can’t wait any longer.”

Lawmakers are set to reconvene June 20 in Montpelier to take up vetoed legislation, including the fiscal year 2024 state budget.

VTDigger's political reporter.