MONTPELIER — Vermont lawmakers are one step closer to approving a new state budget bill. But it’s still not clear whether Gov. Phil Scott will sign off on the spending plan as he continues to spar with legislative leadership over education reform.
The Senate Appropriations Committee on Tuesday approved its version of a budget for the upcoming fiscal year, which starts in July. Its $9.4 billion proposal, which advanced unanimously, would make a number of changes to the plan the House drafted and passed last month. The bill, H.951, is set to be considered on the Senate floor next week.
A central debate in this year’s budget-building process has been how much money legislators will use from the state’s main operating fund, its General Fund, to reduce the amount of money that needs to be raised from property taxpayers for education. Changes to how the state’s schools are funded and governed, in an effort to lower the cost of the system overall, has been the headline issue in Montpelier this year.
Together with this year’s property tax rate-setting bill that cleared the Senate Finance Committee on Friday, the Senate is proposing to use $101 million to “buy down” taxes in the upcoming fiscal year. The tax legislation, H.949, is also known as the “yield bill.”
That’s slightly lower than the $105 million that Gov. Scott has proposed for property tax reduction. However, senators followed Scott’s lead in proposing to use their full earmark in the upcoming fiscal year. The House, in its bill, proposed squirreling half of that same $105 million away for the year after to offset property taxes, or for another purpose.
The Senate’s plan would result in a statewide average increase of 3.8% to property tax bills, which is slightly higher than the 3.6% average increase Scott’s plan would result in, Julia Richter, one of the Legislature’s economists, told Senate Appropriations on Tuesday. The House plan, however, would lead to a 6.7% average increase in bills.
Senators would also use another $4 million, for a total of $105 million, to reduce taxes, but in a different way. The $4 million would, as the Senate’s “yield bill” proposes, be used to offer larger tax credits to certain renters in the upcoming fiscal year.
Sen. Andrew Perchlik, D/P-Washington, chairs the Senate Appropriations Committee. He said the panel decided to use a larger amount of money, in the short term, to buy down tax increases because lawmakers still have on hand most of a pot of money they set aside last year for federal funding cuts.
Lawmakers have used those funds so far to preserve food benefits during last fall’s federal government shutdown.
“I think if we didn’t have that money, we might feel more like we should only do half,” he said of the buy-down plan. At the same time, Perchlik added, “We knew the property tax was going to be something hurting a lot of Vermonters.”
What’s in the budget
Overall, the Senate’s budget includes about $7 million more spending from the state’s General Fund compared to the bill that passed the House. The House’s legislation, for its part, had about $17.5 million more than what the governor proposed.
The Senate’s bill would allocate an additional $50,000 to restore full funding in the upcoming fiscal year for a program aimed at building up a workforce of primary care providers in rural areas. Gov. Scott’s proposed budget slashed state dollars for the Vermont Area Health Education Center, or AHEC. The House’s budget built back in some of those funds, but the organization was lobbying legislators for more money to match what it had in years past.
Other proposed spending includes $60,000 for the Statehouse’s Sergeant-at-Arms to operate enhanced security. In recent weeks, that has included a single point of entry to the building, where guards are stationed with a metal detector and a bag-scanning X-ray machine.
Senators also opted to fulfill the lion’s share of a University of Vermont request to direct money from a state trust fund for student aid to help build a long-planned sports complex. That proposal faced strong pushback in the House Appropriations Committee, where members argued it would be a departure from the trust fund’s purpose.
The Senate budget would direct $12 million to the UVM project, as opposed to the $15 million the school had asked for, with Scott’s support. But senators would also send $600,000 from the student aid fund to Vermont State University to build housing on its campus in Johnson.
To address concerns in his committee about taking money away from student aid, Perchlik said, the Senate’s bill would, in addition, give the trust fund a new source of revenue: a portion of a state tax on retail cannabis products.
To source revenue for many of its one-time spending initiatives, the Senate’s budget bill — like the House’s — would use about $9.5 million of interest the state has accrued in recent years on a fund set up to pay for upgrades to its information technology infrastructure. That idea has drawn opposition from Scott, as well as a group of technology firms that wrote to the committee earlier this month criticizing the idea.
After it gets approval from the full Senate, the budget will head back to the House to consider the new changes. It’s all but certain to head to a committee of conference to hash out a final draft, which will ultimately go to Gov. Scott for a final sign-off.
So far, the governor has maintained he’ll veto the budget bill unless legislators advance a version of this year’s education reform legislation that he likes. And since he doesn’t yet support the education bill that’s moved from the House into the Senate, it’s not clear whether he will sign off on the budget, either.
“We’re making an effort to create a budget that the governor will sign,” Perchlik said of the spending bill.
