Gov. Scott is at odds with lawmakers over pension and budget bills
As lawmakers enter the final stretch of the 2022 legislative session, the threat of a gubernatorial veto now hangs over two landmark spending bills.
Gov. Phil Scott is demanding changes to the Legislature’s $8.1 billion budget plan, and is also calling for revisions to a pension bill that contains more than $200 million to shore up the public retirement system.
At his weekly press briefing Tuesday, Scott doubled down on his criticism of lawmaker’s pension reform proposal.
“This bill doesn’t solve the problem,” Scott warned. “And in five to 10 years, the necessary fixes will be much tougher for both taxpayers and state employees.”
The legislation, which is slated for a House vote as early as next week, represents a months-long negotiation between lawmakers and the unions that represent state employees and teachers.
Lawmakers have agreed to devote significantly more money toward pensions and post-retirement health benefits. The unions, in exchange, have signed off on increases in worker contributions to pensions, and also agreed to modest reductions in retirement benefits.
While Scott said he supports the general framework in the bill, he said the proposal would reduce the $5.7 billion unfunded liability in the pension system by less than half.
“I believe that moving to a defined contribution plan, whether for all or for … new members would be a serious mistake for this state."
And he said Vermont needs structural changes to solve the pension problem, namely a provision that would give new state employees the option of choosing a 401K-style retirement plan.
Asked Tuesday whether he’d veto the pension bill if lawmakers failed to include the language, he said he was seriously “contemplating it.”
“I can’t seem to let this go, because we have this opportunity right in front of us, and it seems simple to me to offer choice, to offer people to option of either going with a defined contribution or a defined benefit,” Scott said.
Many lawmakers say they aren’t averse to the defined contribution option in principle, and say it might be a better option for young employees who don’t envision a career in state government and want some portability for their retirement plan.
They say they haven’t had time to vet the concept, however, and explore what sorts of ripple effects it might have across the pension system.
Those concerns intensified this week when State Treasurer Beth Pearce testified before House lawmakers.
“I believe that moving to a defined contribution plan, whether for all or for … new members would be a serious mistake for this state,” Pearce said. “It would add costs to the system. It doesn’t resolve the unfunded liability.”
Pearce, whose office oversees the public pension system, said she’s been reviewing analyses on defined contribution plans.
She said case studies in other states have shown that these plans can add to overall pension costs, and undermine post-retirement financial security for employees.
Scott said the budget approved by the Senate this week is an improvement on the House-passed spending plan.
But he said he can’t abide the Legislature’s decision to entirely eliminate funding for a $50 million capital investment program in his budget proposal.
“The fact is, investing in initiatives to grow the economy, to make Vermont more affordable, and retain and attract the workers we desperately need will do far more to change our trajectory than the bridge funding the Legislature has prioritized.”
Scott said he wants to use the one-time infusion of federal money from the American Recovery and Reinvestment Act to fund infrastructure and economic development initiatives that will yield dividends over the long-term.
Scott said lawmakers, meanwhile, appear to be focusing more on “government systems.”
"We’re going to get to yes. We always do. We’re going to figure it out. We’re going to stay engaged with the executive branch and we will pass a budget."
Caledonia Sen. Jane Kitchel, chair of the Senate Committee on Appropriations, acknowledged as much as she talked to reporters on Wednesday.
“I think when we were coming in and looking at the budget: Critical systems that Vermonters rely on, and they are the mental health systems, our treatment systems, also our long-term care systems that help keep Vermonters who are elderly or with disabilities in their homes and in their communities,” Kitchel said.
The Senate budget, for instance, nearly triples the increase that Scott’s budget proposed for community mental health agencies. The Senate has also increased funding for state colleges by $20 million over what Scott called for.
Senate President Pro Tem Becca Balint said Wednesday that she’s confident the House, Senate and administration will eventually iron out their differences.
“In terms of concerns about whether we are going to continue to fund essential services, we’re going to get to yes," Balint said. "We always do. We’re going to figure it out. We’re going to stay engaged with the executive branch and we will pass a budget."
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