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House lawmakers finish draft budget

MONTPELIER — Lawmakers on the Vermont House’s powerful budget-writing committee finished their draft of a roughly $8 billion state budget late Friday night, voting 10-0 on a spending blueprint that makes major one-time investments in broadband, housing, clean water and climate.

“I’m feeling like we oughta call it Olly Olly income-free on that,” House Appropriations Committee Chair Mary Hooper, D-Montpelier, told her committee members after finishing a run-through of the panel’s final wishlist.

“Concur!” replied Rep. Peter Fagan, R-Rutland, the panel’s vice-chair.

Friday night’s unanimous vote was not technically binding. Legislative staff expected to spend the weekend producing an up-to-date bill that incorporates the decisions made in the last few days for the panel to review and formally approve Monday. Then the budget bill would head to the floor, where the full House would consider the spending plan. After that, the Senate would have its say.

Vermont’s state budgeting process begins with the governor, who sends lawmakers a proposed spending plan in January. This year, the House’s version of the budget reflects broad agreement with Gov. Phil Scott on general priorities.

The appropriations panel, for example, agreed with Scott’s pitch to put another $95 million in one-time money toward broadband expansion. Committee members likewise agreed to invest over $160 million in various climate change initiatives, the largest buckets of which include weatherization and electric vehicle incentives and infrastructure.

But the details — particularly where housing is concerned — are nevertheless expected to cause friction between the Republican executive and the Democrat-controlled legislature.

Low- and middle-income Vermonters are finding themselves boxed out of the market as home prices and rents soar, and both the governor and the Legislature have resolved to spend heavily on housing.

The panel agreed with the governor’s proposal to send an additional $50 million to the Vermont Housing and Conservation Board for mixed-income housing, manufactured homes and improved farmworker and refugee housing.

The hot market has been a boon to the state’s coffers, and property transfer tax receipts have climbed a whopping 86% since 2020. As a result, the panel opted to give the housing and conservation board an extra $10 million from the property transfer tax, above what the administration had recommended.

But the panel nixed $10 million requested by the administration for a so-called “missing middle” program, which would subsidize the development of starter homes. Moderately priced houses cost more to build right now than they can then be sold for, the administration argues, which means that middle-income, first-time homebuyers have no way to break into the market. But lawmakers have suggested they aren’t convinced.

“We just didn’t understand or have enough background information on that. (The) policy committee hadn’t had a chance to dig into it,” Hooper said, adding that the Senate would likely continue to examine the idea when it picks up the budget.

Scott has also requested that the Vermont Housing Improvement Program receive $20 million to help landlords rehab vacant and code-violating properties. As a negotiating tactic, Senate lawmakers have responded by attaching that money to S.210, a consumer protection bill for renters that the governor would otherwise be expected to quickly veto.

The House’s budget bill does not appropriate $20 million for the rental improvement program — doing so would eliminate the Senate’s leverage — but it leaves space on the bottom line for that to appear later on if S.210 makes it over the finish line.

A key task in this year’s budget development process was figuring out how to spend the roughly $420 million left over in federal American Rescue Plan Act funds. But with federal money stimulating the overall economy and boosting tax receipts, long-neglected areas of state government have seized on a higher baseline of revenues to ask for more ongoing support.

For years, Vermont spent less per capita on public higher education than nearly every state in the country. At the start of the pandemic, the fragile state college system was plunged into a full-blown financial crisis, and the chancellor at the time proposed a radical solution: closing three campuses outright, permanently.

Leaders shelved that idea amid a public furor, and have since plowed tens of millions in one-time money into the schools to stabilize them and put them on a path to reform. But the House’s budget goes even further, increasing the Vermont State College System’s annual appropriation — the money they can expect to get each year — by $10 million. The University of Vermont also received a $10 million bump.

Vermont’s designated agencies, the private nonprofits that deliver mental health services on behalf of the state, have been pleading with lawmakers for a 10% rate reimbursement increase. The agencies rely mostly on low-wage workers, and with even the retail and fast-food industries offering pay now well above $15 an hour, the nonprofits say they are seeing historic vacancy rates, reduced services and months-long waitlists. At a cost of $16 million, the panel decided to give those agencies a 7% increase.

The committee also gave the thumbs up to $4.9 million in additional funding for the state’s child care subsidy for low-income Vermonters, although they nixed $6.9 million proposed by the governor for expanded afterschool programming.

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