MONTPELIER — Gov. Phil Scott on Tuesday presented the Vermont Legislature with a $6.83 billion budget proposal for fiscal 2022, offering a $210 million package of one-time spending initiatives intended to strengthen the state’s COVID-19 recovery and address stubborn problems.
The budget, which does not include new taxes or fees, would allocate a total of $4.6 billion in state spending, including $1.99 billion in the general fund and $1.89 billion on preK-Grade 12 education. It anticipates $2.2 billion in federal spending, not counting yet-to-be allocated additional federal coronavirus relief.
Scott, in an address before a virtual joint session of the Legislature, asked for caution in using one-time funds to “solve problems and fund projects that have been stalled for years” as well as lay the foundation for a stronger recovery.
“If we don’t learn from past mistakes, and choose to use one-time money to create ongoing obligations that we can’t afford in the future, we’ll be forced to increase the burden on working Vermonters, slowing our recovery and missing an incredible opportunity,” Scott said.
Working together, he said, “we can pass a budget that could truly transform the future and set us on a path that supports all Vermonters in every corner of our state.”
Scott called for education property tax exemptions for all child care facilities, and expansion of the state lottery to increase child care funding, and an end to taxes on military pensions. He also cited a “moral imperative” to rethink how the state spends $2 billion on PreK-Grade 12 education, and said he was confident that school budgets can be passed this year without raising statewide property taxes.
The $210 million one-time spending package allocates $25 million for brownfield remediation, including the Bellows Falls Garage and the Jones and Lamson building in Springfield.
It also includes a $53 million technology fund to update the state’s technology infrastructure, $19.9 million in broadband buildout funds the state hopes to use to leverage federal broadband dollars, $20 million for weatherizing homes of lower and middle-income families, $10 million to boost outdoor recreation in all 14 counties, and $42 million to the Agency of Human Services to mitigate reliance on federal Medicaid dollars.
Also included are $1.75 million for town and village center tax credits to stimulate development; and $5.5 million for the Better Connections rural transportation improvement program.
The broadband funds would pay for $16 million in broadband expansion grants and loans, $2.5 million for internet service expansion, and $1.5 million to local utilities and Communications Union Districts.
If broadband expansion was easy or affordable, “We would have done it by now,” Scott said. “Let’s invest the dollars we have to put ourselves in the best possible position to hit the ground running when federal money arrives.”
The budget also proposes $20 million in one-time funds for the Vermont State Colleges System. That’s less than half of the $54 million VSCS sought in second-phase bridge funding, but Scott and administration officials noted the system has already received $89 million from the state in two years. He said he’s looking forward to working with the Legislature on reinventing the colleges system and addressing its fiscal challenges.
Also proposed in one-time spending is $3 million for the Vermont Homeowner Investment Program including a 25 percent set aside for Black, Indigenous and Person of Color ownership.
While revenues continue to run ahead of earlier projections, which have since been adjusted upward to reflect results through the first six months of fiscal 2021, Scott and administration officials caution those revenues reflect massive federal relief spending, not economic health. The state still has nearly 20,000 fewer people working than it did a year ago.
The spending plan represents a late update in planning due to better than expected revenue tax projections, updated last week by the state Emergency Board.
Scott said the state would meet its pension obligations for the year to the tune of $381 million, which is $103 million more than fiscal 2021.
During a background session for reporters, Commissioner of Finance and Management Adam Greshin said the state had been bracing for a revenue gap of between $70 million and $75 million.
“When the Emergency Board consensus forecast came out and we got an upgrade to base revenue we no longer needed to use one-time money,” Greshin said.
But he warned that the state is not projected to reach its pre-pandemic Fiscal 2021 revenue forecasts until fiscal 2023, “so we have to keep that perspective.”
Vermont is one of seven states that taxes military pensions, and Scott called on the Legislature to eliminate those taxes. His budget includes $1.4 million to do so.
Scott opened his budget address with a reflection on the violent insurgency at the U.S. Capitol on Jan. 6, and the challenge ahead for Vermont, and the country, in the wake of that assault.
“In the end, the Constitution was followed, and truth and democracy prevailed. But we cannot pretend it didn’t happen or sweep it under the rug,” Scott said. “The violence was a sobering sign of how fragile and fractured we’ve become … We must reflect on it and find a path forward that unites us.”
“We must face the darkness of oppression, hate and injustice (the real enemies of America) with unity, love and truth; see differences of opinion, not as obstacles, but as an opportunity to listen and learn from each other; seek consensus whenever possible, compromise when necessary; and be comfortable agreeing to disagree because that keeps us talking, so we leave a healthy democracy for the next generation,” Scott said.