When Vermont’s legislature reconvenes in less than two weeks, at the top of lawmakers’ agendas will be an annual bill that amends the current fiscal year’s state budget. Once an unremarkable affair, the state’s Budget Adjustment Act has in recent years grown in size, scope and importance, thanks in large part to Vermont’s robust Covid-19 response and lawmakers’ need to direct massive influxes of federal cash within the modest budget of a small state.
This year, the bill’s outsize importance persists, but for a different reason: The BAA — as it is often referred to within the Statehouse — will be the Legislature’s first opportunity and fastest vehicle to deliver timely dollars to Vermonters impacted by this summer’s floods.
Historically, the budget adjustment becomes law before the session’s mid-point. Once it is approved, changes to the state’s spending take effect immediately. (The Legislature’s more robust annual budget for the upcoming fiscal year, nicknamed “The Big Bill,” is passed at the end of each legislative session.)
In hammering out the BAA, the House and Senate’s fiscal committee rooms will serve as an arena in which Democratic legislative leaders — armed with a powerful supermajority unafraid to override the governor’s vetoes — will tussle with a Republican administration averse to spending increases.
Gov. Phil Scott’s lieutenants have adopted a noticeably cautionary rhetoric when it comes to state budgeting this year. Administrators attribute their grim demeanor not only to the flood-related bills coming due, but also a long-anticipated economic downturn and slowdown of state revenues.
Officials have warned for months that certain consumer spending patterns have slowed, resulting in hot-and-cold tax collections from one month to the next. Still, according to the state’s most recent November revenue report released last week, revenues for the year have slightly exceeded projections.
“I would caution everyone: This is going to be a very, very lean year in terms of our own budget,” Scott said at a press conference last week focused on the state’s most recent bout of flooding, which was milder than the summer storms but nevertheless severe.
Democratic legislative leaders aren’t so pessimistic, but they can also read the writing on the wall.
The budget adjustment bill begins its journey in the House Appropriations Committee, of which Rep. Diane Lanpher, D-Vergennes, is chair. Last Thursday, she told VTDigger that what’s really happening to state revenues is a return to pre-pandemic normal. In fact, she said that revenues look healthier than they were before the Covid-19 pandemic struck and Vermont saw unprecedented federal aid pour into the state.
Lanpher said that Vermont’s budget woes on the horizon don’t compare to the dramatic slashes the state government was forced to endure during the Great Recession. She is confident that the state can afford more than a bare-bones, lights-on budget.
That doesn’t mean this year will be easy.
“I know it’s going to be tight,” Lanpher assured fellow members of the House Appropriations Committee at a Tuesday hearing during which they discussed the budget. “But it’s not below zero.”
With the BAA historically being among the Legislature’s first bills across the finish line, Lanpher told VTDigger that she sees the bill as the Legislature’s opportunity to respond to the state’s most urgent needs.
High on that list this year is Vermont’s ongoing housing crisis, particularly its emergency motel housing program for Vermonters experiencing homelessness. After politically fraught debates and a series of extensions, the program is set to end April 1, potentially unhousing hundreds of Vermonters in one fell swoop. That April 1 date is coming “real fast,” Lanpher said last week, and must be reckoned with.
Then there’s the floods. “Oh boy,” Lanpher said, sighing, before launching into the intricate logistics of how the state will pay for the damage wrought in July and August.
According to state officials’ most recent estimates, this summer’s flooding inflicted well over $500 million in damages to both public infrastructure and private property, as measured by claims filed to the Federal Emergency Management Agency, or FEMA. A significant portion of those damages should be covered by insurance and disaster aid from FEMA, Lanpher said. But the tens of millions of dollars remaining will be shouldered by the state, municipalities and individuals.
There are some flood recovery appropriations that are non-negotiable for legislative leaders and the Scott administration alike — namely, the match dollars that FEMA requires a state to put up in order to leverage federal aid. State officials are still solidifying those costs and when they will come due. Some may need to be set aside in the BAA, while others won’t be required until years down the line. The road to recovery from a natural disaster of this summer’s magnitude is long.
In fact, the state has only just recently closed out some of its remaining recovery projects from Tropical Storm Irene, which made landfall in Vermont in 2011. Until this summer, Irene was Vermont’s modern cautionary tale of the wrath of extreme weather events and climate change.
And yet, using the metric of dollars, this summer’s flood was significantly worse. Damage claims accepted by FEMA thus far — and they are still growing — are more than double what were made after Irene, which totaled roughly $239 million in public and individual costs across the state in 2011, according to a presentation by Vermont’s Chief Recovery Officer Doug Farnham.
Vermont’s political realities were also vastly different 12 years ago. The state had arguably its most successful Capitol Hill advocate occupying an influential role in Washington at the time: former U.S. Sen. Patrick Leahy, D-Vt.
A longtime member, then eventual chair of the U.S. Senate’s powerful Appropriations Committee, Leahy had a legendary talent for shepherding federal aid into Vermont. The months following Irene were no different: The retired senator and hobbyist photographer has spoken often about how, after the tropical storm struck the state, he took aerial photos of the damage from a helicopter. He then showed them on the Senate floor to persuade his colleagues to approve assistance for his small state, otherwise unable to bear the brunt of recovery alone. It worked, and the federal dollars poured in.
That is no longer Vermont’s reality, with Leahy having retired from his post at the beginning of the year. Just two weeks after flooding hit Vermont in July, Gov. Phil Scott was asked at a press conference: Are you thinking about Leahy’s absence from Vermont’s congressional delegation now that disaster has struck?
“I’ve been thinking about that ever since he left office,” Scott replied.
It’s not only Leahy’s absence in Washington that Vermont has to reckon with, according to state House Speaker Jill Krowinski, D-Burlington. Try as hard as Vermont’s current delegation might, Washington’s current political environment is “extremely difficult” and not in Vermont’s favor, she said in an interview with VTDigger last Thursday.
As a politically divided Congress hashes out budget deals, “items like funding for Ukraine and border security are getting interjected with these very critical issues around urgent climate crises happening in our country,” Krowinski said.
Caught in the crosshairs, Vermont’s three members of Congress — U.S. Sens. Bernie Sanders, I-Vt., and Peter Welch, D-Vt., and U.S. Rep. Becca Balint, D-Vt. — are “just having a really hard time responding because of the political dynamics,” Krowinski said. “I mean, there was some of that before, but I feel like it’s worse now for them to navigate in that space.”
The delegation, as well as Scott, have made numerous appeals to the White House for more flood aid. Congress did top off FEMA’s dwindling Disaster Recovery Fund earlier this year with $16 billion, part of which may be headed Vermont’s way. But other calls for federal aid have, thus far, not borne fruit.
Earlier this month, Welch spoke at a U.S. Senate Appropriations subcommittee hearing to plead Vermont’s case for additional community block grant funds, which could be utilized to rebuild devastated downtowns. After his testimony, he told VTDigger that the subcommittee’s leaders — U.S. Sens. Brian Schatz, D-Hawaii, and Cindy Hyde Smith, R-Miss., no strangers to natural disaster in their home states — seemed receptive to his message.
But the stakes are high. Without help from Washington, Welch said, “The local communities don’t have the fiscal capacity” to fully recover. Specifically, the state could use federal aid to help rebuild ravaged water treatment infrastructure, and help homeowners, business owners and farmers financially recover. Federal aid for the latter two groups thus far has been limited to disaster loans, which carry interest.
“If it’s your business or your farm, or it’s your home, there’s still a lot of pain you’re experiencing,” Welch said. “Our delegation is doing everything we can to stay on this, to try to do the level best we can to help those farms get back on their feet, along with the businesses and homeowners.”
Still, the outcome of that effort is far from certain.
When asked about the state’s capacity to help Vermonters recover from this summer’s floods, Scott told reporters last week, “There isn’t any surplus left, and there isn’t any federal funding coming our way that would help offset this at this point in time.
“We’ll do whatever we can to help,” Scott continued, “but at this point in time, I just want to level-set and caution everyone not to assume that we’ll be able to accommodate their financial loss.”
