MONTPELIER — In his annual State of the State address Thursday afternoon, Republican Gov. Phil Scott reinforced to a full House chamber some of his perennial concerns: state demographics, public safety, affordability and housing.

And at least partially at fault for these grim trends, he scolded, is a Legislature emboldened by its veto-proof Democratic supermajority.

“Now, I’m a realist, and I know you have a supermajority. I know all too well,” Scott said. “You’ve proven the final budget, and the growing burden of taxes, fees and other policy-driven costs, is in your hands. So all I can do is make my case.”

Scott’s rhetoric Thursday built on years of headbutting between the Republican executor — who has shown little hesitation in vetoing legislation during his seven years in office — and a Legislature which, especially in the last year, has been eager to flex the muscle of its historic supermajority to override those vetoes.

Indeed, just hours before Scott delivered his remarks, the House voted 112-32 to override yet another of his record-setting vetoes. This one, a holdover from last year’s session, was a bill rewriting the state’s recyclable beverage container redemption law.

It wasn’t only Democratic legislators’ budgeting that the governor bluntly criticized. On the issue of public safety, he pointed to the Legislature’s recent efforts at bail reform, saying that criminal suspects are “put back on the streets, hours after being apprehended only to reoffend again and again,” leading to Vermonters questioning “the wisdom of the work done here in this building.”

And on the housing crisis, Scott pointed to the Legislature’s lack of appetite to pass major reforms to Vermont’s land use bill, Act 250, saying, “This issue is too important and too consequential for two committees, and a couple of special interest groups, to control the outcome.”

It was a framing that Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, rebuked — especially when, in the same speech, Scott also urged the Legislature to “put aside” partisanship and election year agendas.

“He’s so much about bipartisanship, but he seemed to indicate that any problems that might exist were because of us people in this building, rather than the administration,” Baruth told reporters after the conclusion of Scott’s speech.

He noted that the governor controls the Department of Public Safety, the Agency of Human Services and the Department for Children and Families.

“But he seemed to be saying that only statutes that we pass would have any responsibility for those problems,” he said. “And so I guess if you’re governor, and you don’t have to point the finger at yourself, why do it? But it was a bit of a departure from the idea that we’re all in it together.”

In his speech, Scott said that it’s these three seemingly disparate issues — public safety, affordability and housing — that coalesce to contribute to Vermont’s preeminent, ongoing demographic challenges. A quickly aging population is leaving the workforce and placing a greater burden on the state’s health care and social services, he said, while the remaining workforce is left to shoulder those costs.

It’s a dynamic with which the state has reckoned year after year. Scott on Thursday harkened back to several of his own prior State of the State addresses — 2017, 2018 and 2020 — where he rang the same alarm.

With fewer young people in the state to bear the state’s tax obligations, Scott said their burdens are growing heavier — and they can’t afford it. He pointed to a Dec. 1 letter in which his administration warned that property tax bills across the state are expected to rise an “unacceptable” 18.5% in the next year. Vermonters, he said, are “all going to struggle to figure out how to pay for this.”

Gov. Phil Scott delivers his State of the State address before a joint session of the Legislature at the Statehouse in Montpelier on Thursday, Jan. 4, 2024.
Photo by Glenn Russell/VTDigger

“Not to mention inflation that’s still making everything more expensive, or future burdens like the payroll tax you passed last year, that will take effect in July,” Scott said, addressing the Legislature directly. “Or the 20% increase in DMV fees that began three days ago — both over my, and some of your, objections.”

“Concern about taxes, fees and increased costs is a concern about people,” Scott said.

It’s for this reason that Scott cautioned legislators to adopt a more conservative approach to this year’s budget. In his own budget proposal, set to be released later this month, Scott said he will advocate for a 3% spending increase across state government — an increase, yes, but one that lags significantly behind the rate of inflation. The budget proposal will be “sobering” to some in the Statehouse, he predicted.

“With historic one-time federal aid ending, another large increase in our pension obligation and last year’s spending decisions catching up to us, we are back to where we were several years ago with difficult decisions to be made,” Scott said. “For many of you, this will be the first time you’ll work on a budget without hundreds of millions of dollars in surplus. For others, it’s deja vu.”

According to Senate Minority Leader Randy Brock, R-Franklin, a cautionary approach to budgeting is long overdue.

“There was going to come a day in which the federal largess was going to wind down. Well, it’s wound down,” Brock told VTDigger after the conclusion of Scott’s speech. “Now, we have to look at prioritizing what we do and recognizing there’s some things that we may want to do, but we simply cannot do. And that is the discipline that we’ve got to hold ourselves to. I hope more and more members of the majority party will recognize that, as well.”

Baruth said Democratic leadership found Scott’s characterization of the state’s fiscal picture “a little dire,” though the budget challenges ahead “are definitely real.”

House Speaker Jill Krowinski, D-Burlington, told reporters that she agreed with the governor that there will be “tough decisions to make” this year come budget time. But she questioned whether that means lawmakers need to stay within a certain limit, as Scott suggested.

“Instead of saying we can only work with this number,” she said, “I think we need to say, what are the challenges in our communities and how best can we serve people?

“It doesn’t matter how much money we have or we don’t have,” Krowinski continued. “We’re always trying to forge a path forward that we know will have the greatest impact on all Vermonters that helps them get ahead.”