As Gov. Phil Scott allows Vermont’s fiscal year 2018-19 budget to become law without his signature, it’s natural to question what all the fuss was about and what it means to Vermont residents.
In a nutshell, the fiscal news is mostly good.
It’s good because the budget posted a larger-than-expected surplus of about $55 million. The surplus, contrary to Gov. Scott’s attempts to claim credit for it, has much more to do with a world and national economy hitting on all cylinders than anything Scott (or President Trump) have done.
Nonetheless, the Democratic-led Legislature wanted to use the bulk of that surplus to buy-down debt on the teachers’ pension fund, saving Vermonters a guaranteed $100 million over 20 or so years, and to slightly increase the non-residential property tax to pay for the expenses to which the government was obligated. Gov. Scott wanted to use $40 million of the surplus to buy down the property tax increase, and postpone raising taxes for education until the following year—a move that would automatically leave the Legislature with a projected $40-$50 million shortfall at the beginning of the next fiscal year. That shortfall, if the state did not see surplus funds next year, would mean taxes would increase exponentially to make up for the annual increase plus the deferred $40 million — a somewhat risky and irresponsible way to fund education spending that was approved by voters at Town Meeting all across Vermont.
Gov. Scott, when he was Lt. Gov., advocated against using one-time funds for precisely this purpose, as did most Republicans in the Legislature.
The Democratically led Senate, on the other hand, compromised with the governor to keep the residential property tax rate flat using $20 million in one-time funds from the surplus, plus the budget bill creates a statewide teacher health benefit and sets up a task force to study how to reduce staff-to-student ratios at PreK-12 public schools. The budget also allows about $4 million to buy down some of the tax increase for the non-residential and business category of property tax for the coming year, though that rate will still increase by 4.5 cents. About a third of nonresidential tax revenue, which is assessed on properties like second homes and small businesses, comes from Vermonters, while the other two-thirds come from out-of-state property owners.
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The political ramifications, on the other hand, are mixed. Gov. Scott and his chief of staff Jason Gibbs have come under deserved criticism for their last-minute exploits to hold the budget process hostage to a take-it or leave-it ultimatum by the administration. They also deserve criticism for creating an increasingly hostile and partisan atmosphere in Vermont politics, something we didn’t expect from Gov. Scott and his team.
On a governance front, it’s less civil than when Gov. Scott came to office, but all is not lost. Ultimately, Scott backed off his high-stakes gambit; he accepted the Senate budget proposal that was backed by a unanimous Senate (Republicans and Democrats supported it and thought the governor should as well); and each side has their talking points for the campaign season ahead. Scott will run on his efforts to hold down school taxes (albeit with one-time funds that can’t be depended on going forward), and Democrats will champion their fiscal integrity, good governance and willingness to compromise.
But Gov. Scott also loses the belief that he would be an honest broker. On the contrary, he has twice held the budget hostage on needless last-minute shenanigans, reversed his position on gun rights (to his credit, but it’s a grave affront to gun rights advocates), and he has still not taken the lead on a substantive issue to the point that he’s become a candidate without a credible agenda to take the state forward.
And if he keeps practicing the art of contentious, partisan politics, he’ll lose his image as a nice guy (if he hasn’t already) as well. That’s a lot to lose in the past year and a half.