Editorial: Governor’s budget: It’s easy to just say ‘yes’
It’s not surprising that any governor of Vermont faced with creating a budget with more than $1 billion in one-time ARPA money (with $500 million still left to spend), plus another $2.2 billion coming from the congressional infrastructure package, would choose to spread it around to as many constituencies as possible for maximum political benefit.
So it was with Gov. Phil Scott’s $7.7 billion budget address delivered this Tuesday. Like last year, another year of record federal aid, the governor didn’t have to fret about which programs to trim, but rather which programs got extra funding and which taxes got reduced.
Scott, nonetheless, gave lip service to being prudent with these one-time funds, and being sure every dollar counted.
“Let’s do our very best to make sure that every negotiation, every decision and every investment withstands the test of time and meets this extraordinary moment,” he said during his address. “Because we will not get a second chance.”
To that end, he did focus federal aid on several big-ticket items that should stand the test of time:
- $145 million for housing initiatives;
- $200 million to expand broadband throughout the state;
- $51 million for cell towers;
- $72 million for water, sewer and storm water infrastructure;
- $216 million for climate change and community resiliency projects;
- $50 million to retire certain government debts;
- $394 million to fully funds the state’s current retirement (pension) obligations;
- $25 million for various higher-education initiatives; and
- $12 million to the state’s child care subsidy program for low-income families.
There were also dozens of smaller initiatives that will help juice the economy and serve various state needs. It is, as the governor said in his address, a very complex budget that addresses a boatload of state needs.
Among the governor’s controversial items, however, were his proposed tax cuts. Scott proposed sending $45 million — half of the Education Fund’s surplus — back to Vermonters with a one-time property tax rebate; a tax that overwhelmingly favors wealthier Vermonters. He also proposed a combined $50 million tax cut package for military veterans, retirees, low-income workers, people with student loans, nurses and childcare workers.
It’s precisely such gratuitous spending that Scott had warned against — $95 million in tax cuts that would in no way create a lasting impact on the state’s economy. Yes, it would satisfy a majority of Vermont taxpayers and it would help some in need, but it would not build critical infrastructure that would help create better jobs and a more robust economy for years to come. (Helping specific workers — nurses and childcare workers — hugely impacted by the pandemic, on the other hand, makes sense.)
Democratic leaders are apt to make the same mistake. Senate President Pro Tempore Becca Balint, D-Windham, and House Speaker Jill Krowinski, D-Burlington, criticized Scott’s tax cut package as being spread broadly but too thinly, diluting the impact on any one group, whereas their plan would direct more tax relief to working families. “The legislature is interested in doing something more significant and focused that will help a broad swatch of working families,” the two leaders wrote in a joint statement that targeted $60 million in tax cuts to that segment of the population.
Not mentioned by either party in comments about the budget was how to handle the proposed $200 million in appropriations recommended in a pension reform deal struck by legislative leaders and the state’s public sector unions last week. That deal suggested the state spend an additional $200 million this year (on top of the $394 million noted above) to pay down a $3 billion unfunded liability in the pension systems for teachers and state workers. As part of that deal, teachers and state workers for the first time committed to annual increases in pension contributions, as well as modest decreases in cost-of-living adjustments. The proposal still has to be discussed and approved by the full legislature, as well as by the governor, before it is accepted.
Those issues will likely be part of the Legislature’s budget battle with the governor this session — mild stuff, all-in-all, compared to previous years when needed programs were on the governor’s chopping block and climate change initiatives were largely ignored.
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