Uncertainty Abounds on Vt. Shutdown

Valley News Staff Writer
Published: 6/13/2018 11:58:14 PM
Modified: 6/13/2018 11:58:24 PM

White River Junction — Upper Valley lawmakers are split on whether Vermont’s Democratic-led Legislature and Republican Gov. Phil Scott can reach a budget deal by July 1 and avoid a possible shutdown of state government.

Some legislators believe the two sides will reach an 11th-hour agreement, as pressure builds to pass a spending plan before month’s end. But others worry that state leaders are too entrenched to reach a compromise.

“Both sides are either locked into their positions or moving in the opposite direction of reaching a solution,” state Sen. Joe Benning, a Lyndonville Republican whose district includes several Bradford-area towns, said on Wednesday. “So how do we get out of this mess? I, frankly, as I sit here, do not have an answer at this point.”

The Legislature is in its fourth week of a special session Scott called after vetoing a bipartisan budget bill last month. At issue is how the state spends about $64 million in unanticipated revenues, and whether Vermonters should be asked to foot the bill for increased education spending.

Scott has vowed to veto budgets that would increase taxes or fees, and argues the additional revenue should be spent to lower tax bills.

But Democrats say the money would be better spent paying off the state’s debt and underfunded teacher pensions. Lawmakers predict the state could save up to $100 million over time, if about $35 million in unexpected revenue is used to meet pension obligations.

The budget before Scott also includes $12 million earmarked to offset personal income and corporate tax refund liabilities.

The unexpected revenue, legislators say, comes from one-time payments and increased economic activity, and cannot be counted as a stable revenue source. The Legislature passed a second budget plan last week, which Scott is threatening to veto because of projections it could increase non-residential property taxes 5.5 cents per $100 of assessed value, or almost $140 on a $250,000 commercial property or second home.

“The likelihood is growing every day that I’ll be vetoing that budget,” Scott told reporters on Tuesday, according to VtDigger. “I feel as though that’s the only tool I have to make sure that we continue with these conversations, or let’s say start the conversations, because we really haven’t had any at this point.”

If the Legislature were to agree to Scott’s plan, it’s possible the strong revenue numbers might not appear next year, leaving policymakers to face a large hole in the state’s education fund, said state Rep. Jim Masland, D-Thetford Center.

Scott proposed using $58 million in unexpected revenue to offset education taxes in the coming year.

He’s also put forward a five-year plan to reduce taxes by implementing higher student-to-staff ratios in schools, enacting a statewide health care plan for teachers and changing special education programs.

“It appears that the governor wants his entire tax stabilization, education funding plan or there will be a government shutdown,” Masland said. “He wants it all or nothing.”

State Sen. Dick McCormack, D-Bethel, also accused the governor of being irresponsible. By paying off debt, he said, the Legislature is looking to save Vermonters millions on interest payments.

“That is not radical or ambitious economics,” McCormack said. “What the governor is proposing is a quick fix.”

But Republicans counter that some of the additional revenue can’t be considered “one-time” if the economy continues to perform well.

“I think that legislative leaders have certainly a very valid point. We shouldn’t be using one-time money for ongoing expenses,” said state Rep. Jim Harrison, R-North Chittenden. But the revenue ultimately belongs to taxpayers, he said.

“Why should we keep it and hold onto it for a rainy day?” asked Harrison, whose district includes Bridgewater.

There might be enough revenue to both pay off debt and hold the line on taxes, he suggested. Scott made similar claims on Tuesday, after receiving a briefing on the excess money.

“I believe we can come to agreement because we have enough cash to settle both initiatives,” Scott, a former lieutenant governor and state senator, told the Associated Press.

While McCormack is critical of the governor, he also is optimistic that Scott can be trusted to settle on a final budget before a government shutdown.

“I worked with Phil Scott and I know he’s capable of compromise,” McCormack said. “I know he’s capable of working across party lines.”

But with a budget before the governor, McCormack said, it’s now on Scott to make the next move.

“The ball is really in his court at this point,” he said. “We have made moves in his direction. And I guess now I need to hear, if he doesn’t like what we’re sending, then what now?”

Masland and Harrison also predicted a deal will be reached to avoid a shutdown, but couldn’t say what that might look like.

“No one wants a shutdown,” Harrison said. “The reality, though, is that until you’re facing the deadline, the negotiation doesn’t start.”

But Benning, the senator from Lyndonville, is less optimistic lawmakers and the governor will hammer out a compromise in time.

“It’s been very clear to me that the governor is not moving from his position,” he said, adding Democratic lawmakers aren’t backing down either.

As a member of the minority party, Benning feels as though he’s sitting on the center line of a tennis court watching as the ball goes back and forth.

State Rep. Susan Buckholz, D-West Hartford, shared those concerns.

The governor doesn’t appear to be willing to negotiate, and rhetoric involving the budget is often heated, she said.

“I’m very concerned that we’re not going to reach an agreement,” Buckholz said.

Scott has until the end of today to veto the Legislature’s second budget.

Lawmakers have promised to attempt to override any veto. But if that effort is unsuccessful, Senate and House leadership have pledged to form a bipartisan group to negotiate a plan.

Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.

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