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Follow VPR's statehouse coverage, featuring Pete Hirschfeld and Bob Kinzel in our Statehouse Bureau in Montpelier.

Second Budget Veto Imminent, As Lawmakers Try To Appease Scott

Gov. Scott delivered his 2018 budget address before a joint session of the Vermont Legislature.
Emily Alfin Johnson
Gov. Phil Scott has indicated he'll veto the budget passed by House lawmakers Tuesday. It would be Scott's third veto of a state budget since he assumed office last January.

Prior to this year, a Vermont governor had vetoed the budget only twice in state history. Gov. Phil Scott may soon match that number in 2018 alone.

Last month, Scott vetoed the first state budget that lawmakers sent him, saying he wouldn’t sign off on any spending plan that allowed for an increase in statewide property tax rates.

The Vermont House gave final approval Tuesday to a budget proposal they say accommodates the governor’s directive. And Senate President Pro Tem Tim Ashe said he expects his chamber will sign off on the latest spending plan later this week.  

“There’s nothing in this bill that the governor opposes,” Ashe said Tuesday. “There is no … tax rate increase. That is reserved for a fight elsewhere about how to use all this one-time money that’s come into the state this year.

The Scott administration, however, said lawmakers’ latest plan is likely doomed to the same fate as the first one they sent him.

“Majority leadership appears inflexibly committed to raising tax rates on Vermonters in a year we have a surplus – and multiple proposals – to avoid it,” Scott’s spokesperson, Rebeca Kelley, said in a statement Tuesday. “Their unwillingness to compromise or seriously consider any alternatives, and their complete lack of urgency surrounding this issue, are unnecessarily pushing the state closer to the July 1 budget deadline.”

House lawmakers passed their latest budget proposal on Tuesday. The Vermont Senate is scheduled to begin floor debate on that spending plan at 2 p.m. on Thursday.

Democratic leaders in the House and Senate said it’s Scott who’s been unwilling to compromise.

Their latest budget includes no language related to property tax rates.

Instead, the proposal includes all appropriations both sides agree on, which encompasses the vast majority of the $5.8 billion needed to run state government next year.

And they say they’ll leave the question of property tax rates to a separate bill.

With the fiscal year set to expire at the end of June, Morristown Rep. David Yacavone said lawmakers’ approach ensures government won’t shut down as a result of the fiscal impasse.

“The aged, the blind, the disabled and so many more must not be pawns in this political scrimmage,” Yacavone said. “This vote helps to assure that essential services for those with the least among us are protected.”

But Scott’s Chief of Staff Jason Gibbs said last week that lawmakers’ proposal contains a poison pill.

Under existing statute, if lawmakers don’t pass a property tax bill before July 1, then the rate for businesses and second homeowners will jump by five and a half cents.

“And as a result would put [lawmakers] in the position of being able to delay the negotiation on non-residential property tax rates to the point of July 1, when it would automatically increase,” Gibbs said.

Ashe called Gibbs’ reasoning a political “sleight of hand” that underscores the administration’s intransigence. Ashe said the Legislature has already made major concessions to appease Scott, by using one-time money to avoid an increase in property tax rates for residents.

“If what the governor’s saying is he won’t sign any bill that passes a state budget until he is assured that the Legislature basically adopts exactly his starting point on fairly broad sweeping and radical education proposals, then the Legislature can’t just do that,” Ashe said. “The governor has to start governing and moving in the direction of the Legislature, as we have moved in the governor’s direction.”

Scott said newly release revenue numbers for the month of May bolster his stance on tax rates. Personal income and estate tax receipts came in more than $8 million above projections, adding to the $44 million surplus expected for the current fiscal year.

Administration Secretary Susanne Young said the windfall ensures “there is sufficient tax revenue available to avoid residential and non-residential statewide property tax rate increases in [fiscal year 2019].”

Ashe, however, said the question isn’t whether the Legislature has money to buy down next year’s tax rates, but whether it’s a fiscally responsible use of those funds.

Ashe said there’s no guarantee the Legislature will have one-time money to buy down rates again next year as well. And he said if they don’t, then taxpayers will effectively see two years’ worth of rate hikes squeezed into one.

Ashe said this kind of budgeting practice “creates a false sense of crisis in the education fund.” And he said Scott is looking to use that “crisis” as leverage in a broader “ideological” battle.

“I can already see the future, which is they will propose even deeper cuts to public education … as a way of solving this so-called education funding crisis,” Ashe said.

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