Scott urges state to seize ‘historic moment’

  • Gov. Phil Scott delivers his 2022 budget address in the Pavilion State Office Building on Tuesday, January 18, 2022. The auditorium was mostly empty except for staff, interpreters and the media. Legislators tuned into the address on Zoom. (VtDigger - Riley Robinson)

Published: 1/18/2022 9:46:40 PM
Modified: 1/18/2022 9:45:35 PM

MONTPELIER — With unprecedented levels of federal aid and record surpluses at the state’s disposal, Gov. Phil Scott outlined a $7.7 billion budget proposal on Tuesday “to make the most of this historic moment.”

“There is absolutely no doubt that the economic future of our state will be defined by what we do today,” the Republican governor said during his annual budget address.

Big-ticket, federally funded items in the governor’s budget include $145 million for housing initiatives, nearly $200 million to expand broadband, $51 million for cell towers and another $72 million for water, sewer and stormwater infrastructure.

The spending plan also includes a $50 million tax cut package, $50 million to retire certain government debts and $216 million for climate change and community resiliency projects.

The budgeting process in Vermont begins with the governor, who takes a first pass at the state’s spending plan. The Vermont House then responds with its version, followed by the Senate.

The governor typically delivers his annual budget address in the House chamber, before lawmakers and assorted state officials. But as with so many pandemic-era events — including last year’s speech — this one was a mostly virtual affair. Scott delivered his live-streamed speech at a podium in the Pavilion auditorium, with only a masked smattering of press, security personnel and aides attending in person.

Tuesday’s speech leaned heavily on well-trod themes for the third-term governor: affordability, workforce development and the state’s aging population.

His proposed budget does not raise taxes and pitches several tax relief initiatives.

They include a combined $50 million in tax cuts for military veterans, retirees, low-income workers, people with student loans, nurses and child care workers.

A retired couple with an income of less than $65,000, including Social Security and a military pension, would go from owing about $1,000 dollars in state income tax to zero, per the governor’s budget plan. And a single child care worker making $18 dollars an hour wouldn’t have to pay any Vermont income tax.

Democratic leaders in the Legislature expressed ambivalence about Scott’s tax cut proposals when he offered a sneak peak of them in his State of the State address earlier this month. And they are already mulling an alternative: a nearly $60 million tax cut targeted at families with young children.

In a joint statement released after the governor’s speech, House Speaker Jill Krowinski, D-Burlington, and Senate President Pro Tempore Becca Balint, D-Windham, criticized his tax cut package for being a mile wide and an inch deep.

“At face value, (Scott’s) proposal seems to offer a little relief here, and a little there. The legislature is interested in doing something more significant and focused that will help a broad swath of working families,” Balint and Krowinski wrote.

Still, despite sitting across the aisle from Scott, the two Democratic lawmakers also emphasized that their vision for the future shared much in common with the Republican executive. And they expressed a similar optimism about the once-in-a-lifetime opportunity afforded by federal aid.

“It’s incredible to be able to sit and listen to a budget address that isn’t about cuts. It isn’t about taking money away from programs. It’s about investing, investing, investing and that is super exciting for the governor. It’s exciting for us,” Balint said at a news conference following Scott’s speech.

Credit agencies have downgraded Vermont’s ratings in recent years because of its high debt load — primarily pension driven — and its aging demographics. The governor is now proposing to spend a little over $50 million to retire several of the state’s outstanding debts, including $22 million in transportation borrowing and another $20 million in general obligation bonds for capital projects.

“This will save taxpayers millions in interest payments in the years to come,” Scott said.

The governor’s budget also fully funds the state’s current retirement obligations with a combined payment of $394 million. But it is silent on the appropriations required by a pension reform deal recently hashed out between legislative leaders and the state’s public sector unions.

In a briefing before Scott’s address, his finance commissioner, Adam Greshin, said the deal had come together too late for the governor to respond inside the budget.

“B​ut the governor — as always — is eager and willing to work with the House and the Senate to get to yes with pension reform,” Greshin said.

If enacted, the governor’s budget would see the University of Vermont’s annual appropriation increase by $10 million. The state college system would receive a $5 million bump. His spending plan would also direct an additional $12 million to the state’s child care subsidy program for low-income families.

VtDigger’s Sarah Mearhoff contributed to this article.

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