As the second week of the special legislative session crawls to a close, I am reminded of the old saying, “Hurry up and wait.” But how did we get here and where are we going?
Back in May the Legislature approved the 2019 budget by tri-partisan votes of 29-0 in the
Senate and 117-14 in the House. The Tax Bill was also approved, though by smaller
margins. However the Governor broke out his veto pen and nixed them and a number of
other bills. Since then the rhetoric has only continued to escalate with the governor’s
spokesperson Rebecca Kelly actually saying, “… the majority leaders will use every trick
in the book to impose a property tax hike on Vermonters.” Well that’s just silly. So what
is really going on behind the rhetoric?
Governor Scott really only had one problem with the budget that the Legislature so
overwhelmingly approved – it used $34 million in one time tobacco settlement money
(money that is not consistent like sales tax revenue) to make a payment an underfunded
pension plans. That is a responsible action, one that will, over time, save us $100 million
on addition interest payments. So… a good plan.
However the governor was elected on a “no new taxes” platform, and he knows the
history of those who break that promise. So he has backed himself into a no-compromise
position. School budgets approved across the state this year increased spending by about
2%, actually less than anticipated. But that 2% increase means that property taxes go up
by about $34 million, which is unacceptable to the governor.
Here is the thing: the legislature doesn’t determine education spending. The voters do that
when they approve their school budgets. The legislature adds up the total, looks at the
Grand List and sets the tax rate to raise that amount of money. We can artificially affect
the tax rate by adding more money to the Education Fund, which we did last year (like
this one time tobacco money) as part of the final bargain, or by moving certain expenses
in or out of the Education Fund (like pension payments, education in prisons, and
Flexible Pathways). But the voters determine the amount of money needed for Pre K-12
So the real argument is over whether we follow the legislature’s fiscally prudent plan, or
follow the governor’s politically popular plan. The debate is muddied with talk of default
tax levels and with alternate proposals. The governor’s proposals are not compromises,
because he cannot shift his position at all, but they are policy changes with varying
degrees of merit. The legislatures proposals are compromises, but as such they seek to
meet in the middle, which is not far enough for the governor. He is talking about a
government shutdown if he doesn’t get his way.
A shutdown is really the nuclear option, so to avoid it the legislature just approved a
different kind of compromise: we voted on a budget bill with the $34 million taken out
and set aside to be settled in a separate bill. This way we can avert a shutdown and the
99.9% that we agree on can be approved; services will continue to be delivered, road
projects will keep moving forward, Vermonters will receive medical care, and our bond
rating will not suffer.
Governor Scott has said he will veto this bill because he is afraid if losing leverage to
negotiate the final $34 million.