Gov. Phil Scott’s Friday, Jan. 20 budget address underscored his longstanding message of fiscal conservatism and his desire to be disciplined in spending the “once in a lifetime” unprecedented federal aid. The Governor noted that spending more now will inevitably mean cuts in future years.

The proposed budget is $8.4 billion, largest ever in state history.

The Governor previewed a $17 million affordability package with tax cuts to help all Vermonters. He asked the legislature to finally fully eliminate the tax on military pensions and alluded to enacting the state and local tax deduction cap workaround. The Governor also requested $4 million to help refugees, immigrants, and new Americans settle into Vermont communities. 

Economic Development 

• $10 million for rural development and investment grant program to help develop and facilitate industrial space across the state to welcome new businesses and industries. 
• $5 million one-time increase in the Vermont Training Program. This investment will also meet the state’s obligation for the CHIPs and Science Act, which will allow us to draw down those federal dollars. 
• $12.5 million one-time increase in the brownfield mitigation to help infill development in downtowns where soil contamination is a major obstacle. 
• $4 million for the New and Relocated Worker Program. 
• $200,000 annual base increase for Regional Development Corporations. 
• $9 million for state colleges and $10 million for transitional infrastructure. The state colleges would also see an annual increase of $2.5 million.  
• $1 million in the state’s internship program. 

Housing 

• $20 million for a missing middle rental housing rental revolving loan fund for development focussed on the gap in middle-income rental housing development.  
• $15 million into the Vermont Housing Improvement Program. The Governor already asked for $5 million in BAA. The program has already helped move 300 families out of homelessness. 
• $10 million for the Healthy Homes Initiative. 
• $22 million in general assistance transitional housing for those experiencing homelessness. 
• $500,000 to help municipalities make improvements to zoning. 

Childcare and Paid Leave 

• $56 million in ongoing financial assistance in childcare using existing continued revenue growth. 
• The Governor took aim at requirements that prevent families from accessing subsidies because they do not have access to a childcare center that is eligible for those subsidies, so he suggested making changes to those requirements. 
• One-time finding to recruit, educate, and retain early childhood educators. 

Healthcare Stabilization and Public Safety 

• $10 million in additional funding to go towards stabilizing the healthcare systems of the state.  
• The Governor proposed removing the provider tax on home health agencies which is about $6 million. 
• $9.2 million for a two-year pilot to help primary care providers address mental health
• Identified beds for violent people with mental illness 
• $10 million to help unify public safety and public service team on the ground as is being piloted in Bennington currently. 

Infrastructure, Climate Change, and the Environment 

• $150 million to take full advantage of federal programs that require state matches for infrastructure, noting that for every invested state dollar, we get four federal dollars back. 
• $3 million in the Budget Adjustment Act to help communities identify projects and use federal funds. 
• $5 million for a Clean Heat Homes Initiative. 

Other 

• $444 million for the continued pension obligation.

Republican lawmakers applaud federal $$ match, Dems criticize Medicare move

“Vermont Senate Republicans were pleased to hear Governor Scott’s proposed budget will make crucial investments in our communities without raising taxes,” said Republican Sen. Randy Brock. “Critically, this budget will draw-down additional federal dollars to upgrade our infrastructure, promote economic growth, and revitalize struggling rural communities. Put simply, as Governor Scott noted, for every one state dollar put up, we’ll receive at least four federal dollars in return.”

“The priorities the Governor outlined in his budget address reflect the areas of greatest concern to Vermonters,” noted Assistant Senate Minority Leader Brian Collamore (R-Rutland). “With additional investments to stabilize our health care system, build additional workforce housing, mitigate the effects of climate change, and much more, this budget will help set the course for a more resilient future.”

“Notably, this budget makes a significant investment in child care, with an additional recurring appropriation of $56 million, bringing the state’s total commitment to nearly $120 million annually,” added Brock. “The magnitude of the Governor’s proposed investment cannot be understated. But to truly maximize this additional funding, we must also look to other child care reforms to help reduce costs for Vermonters.”

Senate President Pro Tempore Philip Baruth and Speaker of the House Jill Krowinski, both Democrats, issued this statement:

“We are deeply concerned about the Administration’s stated intention to move Medicare-eligible state retirees from the State of Vermont’s insurance plan into Medicare Advantage plans without the support of state retirees. We are particularly concerned about the potential legal, financial and health implications and believe this shift undermines collective bargaining rights.

“In November 2022, the Vermont’s Retired Employees Committee on Insurance (RECI), established by 3 V.S.A. § 636 to advise and make recommendations to the Secretary of Administration on state employee retiree health insurance benefits, voted to oppose the Administration’s proposal. Additionally, the Vermont State Employees Association (VSEA) and the Vermont Retired State Employees Association (VRSEA) have publicly opposed this shift.

“We share the concerns raised by many state retirees that access to essential health care services could be threatened. In April 2022, the Office of Inspector General for the U.S. Department of Health and Human Services (HHS) released a report highlighting a pattern of delayed or denied coverage for services through a Medicare Advantage plan. Investigators estimated that, in 2019, approximately 85,000 requests for prior authorization of care were likely to have been improperly denied and approximately 1.5 million payments for services were improperly denied. 

“Additionally, we are concerned about the legality of such a shift. 3 V.S.A. § 479(a) is clear that Medicare-eligible state retirees must be covered by the same medical plan as current state employees, stating that ‘a member who is insured by the respective group insurance plans immediately preceding the member’s effective date of retirement shall be entitled to continuation of group insurance…in the group medical benefit plan provided by the State of Vermont for active State Employees.’

“Shifting the decision-making power to the private insurance industry, without support of state retirees, undermines the decades of protections that state retirees have enjoyed as a result of the state employees’ collectively bargained contract. We share the concerns of many retired state employees about the legality and the financial and health implications for our state’s retired public servants. State retirees have dedicated years of service to the State of Vermont and they deserve the assurance that the healthcare benefits they were promised will be protected.”

“Six years ago, the State of Vermont was in a much different place,” concluded Collamore. “With Governor Scott’s proposed FY2024 budget, we will have effectively doubled our investment in both child care and our state colleges, fully funded our pension obligations, and worked to make Vermont more affordable–all without raising broad-based taxes.”

“Vermont Senate Republicans look forward to working with the Governor and our legislative colleagues to advance these shared priorities, and make the policy changes necessary to ensure their full success,” concluded Brock.

Budget information sourced from Lake Champlain Chamber legislative report.