Scott vetoes budget; showdown continues

MONTPELIER — Gov. Phil Scott Thursday evening struck down a spending package that would have ensured government funding beyond the end of the month, just hours after his campaign called Democratic and Progressive leaders “extremist” for stoking fear among Vermonters about a government shutdown.
By killing the latest budget bill, Scott made good on his promise to reject the proposal if lawmakers didn’t make a further concession to ensure level property tax rates next year. He also tied former Gov. Howard Dean for the record of most vetoes in single year, reaching 11 Thursday night.
In his veto letter, Scott invited legislative leaders to try to override his veto, which is unlikely given a Republican superminority in the House. He said that if that fails, there is still plenty of time to sit down and reach a deal before June 30, when the government would shut down.
“I’m confident with more focus — and an earnest commitment to meet in open session to discuss how we come to agreement — we can resolve the one remaining area of disagreement in a short amount of time,” the governor said.
Scott suggested an “easy solution,” revising the budget bill to prevent the possibility of a default tax rate increase.
“This would ensure we have a budget in place long before July 1 and require us to work together, on a level playing field, to resolve our remaining differences in the tax bill,” Scott said in his veto letter.
When that was proposed during debate over the bill in the Senate, however, Democrats said such a move would remove their only piece of leverage in negotiations with the governor.
The battered budget proposal, H.13, was pitched by legislators this month as a non-controversial bill that would ensure that Vermont has a budget at the beginning of the next fiscal year, even if lawmakers and the governor don’t fully resolve an impasse of property taxes in time.
The legislation incorporates most of the vetoed budget and tax bills that were passed last month with broad bipartisan support, while carving out provisions in the few areas in which Democratic lawmakers and the Republican governor disagree.
The bill doesn’t set tax rates, allocate surplus revenue or address education finance policy reforms, for example, and Democrats have sent letters to Scott promising to sit down for good faith negotiations in separate legislation — if he signed H.13.
Legislative leaders have said that their latest proposal represents significant compromise. It effectively levels residential property tax rates and sets aside the $34.5 million in surplus funds the governor wants to harness to buy down taxes next year.
That message was reiterated in a statement released by Senate leader Tim Ashe, D/P-Chittenden, and Speaker of the House Mitzi Johnson, D-South Hero, immediately after Scott’s veto letter was made public.
“The bill reflects movement by the Legislature toward the governor, while the governor has not made a single concession,” they wrote. “The bill would guarantee there will be no government shut down. It does not increase a single tax rate, nor does it include anything the governor opposes.”
“The governor’s veto is disappointing,” they added. “We expect more from the governor.”
Scott has accused legislative Democratic leaders of being disingenuous. Although there is no tax increase written into the bill, it does not include language to prevent a statutory nonresidential property tax rate from kicking in next year and leading to an increase on last year’s rates.
If the rate is not set in another proposal, it defaults to the statutory level of $1.59 — a 5.5 cent increase over this year’s average rate, which the governor says would violate his pledge of no new taxes.
If the budget passed with the default rate in place, Scott argues it would eliminate the leverage he has to lower rates in future negotiations, allowing Democrats to walk away from the table without consequence.
Democrats say that the bill doesn’t raise taxes and leaves the dispute over nonresidential rates to be settled in future talks.
Ashe told reporters Thursday morning that “the best thing for everyone, including for the governor” would be for the governor to sign the latest proposal into law.
“But if the governor vetoes H.13 … it starts to raise the question of whether their goal was to veto the budget and whether their goal was the brinkmanship of a shutdown of state government,” he said.
Concerns over the threat of a shutdown have been amplified as the reality of a potential shutdown becomes imminent.
Attorneys with the Office of Legislative Council wrote in a memo Thursday, prepared at the request of Ashe, that without a spending bill “most, if not all, state programs would ultimately lack funding to operate.”
Funding for Vermont State Colleges, state police, state parks, Medicaid programs, food stamps, Department of Motor Vehicle services and dozens of other programs and agencies would all be at risk, according to legislative council.
State Treasurer Beth Pearce has said a government shutdown would hurt the state’s credit rating and Wednesday she reiterated that both sides need to put the economic well-being of Vermont ahead of efforts to score a political win.
Pearce wrote that by reaching mid-June without a budget agreement in place, state government has already “failed” its citizens.
“When Vermonters are forced to contend with whether to defer paying a bill this month because next month’s check may not come, or cancel a vacation because their favorite state park may be closed over the Fourth of July break, we have already failed,” she wrote.
Those warnings have been regularly repeated by Democratic leaders in the Statehouse in recent weeks. But Scott’s campaign sent an email to supporters yesterday telling them not to be fooled.
“A small number of extremist Democrat and Progressive party leaders, and their political allies, are trying to scare Vermonters about a government shutdown,” the mailer said. “Don’t believe them.”
Scott campaign spokesperson Brittney Wilson said “legislative leaders are trying to startle Vermonters with a government shutdown, which is very unlikely and being used as a scare tactic.”
She added, “In addition to that, we have $171 million in surplus revenue but they’re still insisting on raising taxes — that’s all pretty extreme and unnecessary.”
Pearce, a Democrat, has asked the administration to tell the public how they will deal with a shutdown.
Many state employees are awaiting the end of the month with trepidation, uncertain as to whether they would receive pay or health benefits in a shutdown scenario, said Steve Howard, the executive director of the Vermont State Employees Association.
Howard said his union, which represents about 6,500 government workers, hasn’t received clarification from the administration about what a shutdown would look like for employees.
“Are those people going to work for nothing? Are the people who are sitting at home — are they going to get back pay?” Howard said.
“When you hear that the chief executive of the state wants to use a government shutdown as leverage … it makes state employees feel that they are pawns in a political game that they never asked to be part of,” he added.
Secretary of Administration Susanne Young said the administration doesn’t have a contingency plan in place because there’s still ample time to reach an agreement with lawmakers.
“We don’t believe there’s going to be a government shutdown. We’re planning to be fully operational on July 1,” Young said.
“We’re confident that the Legislature does not want operations, any operations, to stop on July 1,” she added, “and we’re confident that we’re going to find a path forward with them.”

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