Updated at 5:34 p.m.
Republican Gov. Phil Scott gave his 2024 State of the State address Thursday afternoon.
Find a full transcript of the governor's speech here.
Scott used his address to warn Democratic lawmakers of a “sobering” new economic reality that will require elected officials to slow the rate of growth in the state budget and limit the scope of government in Vermonters’ lives.
Shrinking state revenues and the expiration of historic federal aid, the fourth-term governor said, will result in a fiscal year 2025 budget proposal from him later this month that grows at less than the rate of inflation.
Scott said the year ahead will mark an abrupt shift from the hundreds of millions of dollars in surpluses that lawmakers enjoyed in previous post-pandemic budgeting cycles. The state budget enacted by lawmakers last year grew by about 13%, and Scott said Thursday that the spending plan he’ll unveil this year will propose an increase of about 3%.
“Once again, we’ll face the discomfort of saying ‘no,’ choosing between many good things, and maintaining the discipline to focus on what Vermonters need most,” he said. “I know from experience many of you view 3% growth as an ‘austerity’ approach.”
Democratic supermajorities in the House and Senate mean that Scott’s control over the state’s purse strings is more limited now than when he assumed office in 2016. Last May, Democrats overrode Scott’s veto of the state budget.
The governor acknowledged the same outcome could be in store in 2024.
“I’m a realist, and I know you have a supermajority. You’ve proven the final budget, and the growing burden of taxes, fees and other policy-driven costs, is in your hands,” he said. “So all I can do is make my case.”
Scott began making that case Thursday by highlighting the 18.5% increase in education property tax rates that the Department of Taxes is forecasting for next year. The estimate represents a potential $250 million in new tax obligations, Scott said, or about $650 a year on average for a household that lives in a $250,000 home.
Scott said minimizing the financial pressure on Vermonters will require limiting state budget increases, and finding new ways to bend the cost of education, such as school consolidation, mandating minimum classroom sizes, or moving to a statewide teacher contract.
“Think about those folks that are just barely getting by, living paycheck to paycheck, already deciding what bills to pay and what to do without,” Scott told lawmakers.
Vergennes Rep. Diane Lanpher, the Democratic chair the House Committee on Appropriations, said Thursday that it’s true that Vermont won’t have access this year to the same level of one-time appropriations that flowed from federal aid bills during the pandemic.
But she said the needs of the residents for whom government assistance is a last resort don’t ebb and flow alongside yearly budget cycles.
“We still have Vermonters that are living in crisis day to day, not knowing if they’re going to have a roof over their head or if they’re going to be able to feed themselves or their family or where they’re going to go or how they’re going to function,” Lanpher said. “So we … would like to meet them where [they] are living today.”
Asked if the Legislature could meet those needs with a state budget that rises by 3%, Lanpher said, “I don’t know that answer yet.”
House Speaker Jill Krowinski said her chamber won’t anchor itself to the same 3% figure that Scott refuses to exceed. And she said tying the state’s spending plan to an “arbitrary” growth cap is at odds with the Legislature’s approach to budget writing.
“Instead of saying, ‘We can only work with this number,’ I think we need to say, ‘What are the challenges in our communities? And how best can we serve people?’” Krowinski said.
Scott also called for action Thursday on two issues he said pose the most immediate threat to Vermont’s quality of life: housing and public safety.
On housing, Scott said it’s become clear that historic public investments in affordable housing — $500 million since March of 2000 — won’t be sufficient to address the housing crunch created by median home prices soaring and rental vacancies plunging.
Scott placed blame for the difficulty of constructing new housing squarely on the state’s landmark land-use law, called Act 250. And while he didn’t call for any specific reforms to the statute Thursday, he said he’ll be pushing for major changes during the 2024 legislative session.
“We’ve committed the funds and laid the groundwork, but if we don’t truly address Act 250, we won’t solve our housing crisis,” he said.
But Senate President Pro Tem Phil Baruth, a Democrat from Chittenden County, says the law has critical value.
“I don’t believe that Act 250 is the problem," Baruth said Thursday. "I believe in certain cases it can be a problem. And for certain developers looking to develop certain projects, it might be a deal breaker.”
Baruth accused Republicans of pushing to get rid of Act 250, and says the law protects Vermont’s landscape, and aesthetic and water quality. He says these things draw people to the state, and are important to protect.
More from Brave Little State: Vermont is changing. Should Act 250 change with it?
On the issue of public safety, Scott’s speech was also short on details for reforms, though some of his top cabinet officials have already begun making the case in the Statehouse for increasing use of bail to keep offenders in prison pending their trials.
“When those who victimize others are put back on the streets hours after being apprehended, only to reoffend again and again, Vermonters question law enforcement, prosecutors, our courts, and they question the wisdom of the work done here in this building,” Scott said.
Krowinski said she’s eager to hear “more details and concrete proposals” on precisely what Scott has in mind to increase access to housing and improve public safety.
She said the Legislature will pursue a number of public safety reforms, including eliminating a backlog of pending criminal cases, streamlining the appointment of judges and improving access to mental health services.
For some lawmakers, the most concerning part of Scott’s address was what they say it did not include. Scott opened his address with a nod to the floods of 2023, and concluded with a smattering of heartwarming anecdotes about recovery efforts in flood-ravaged communities across the state.
Montpelier Rep. Conor Casey said the governor failed to acknowledge the crisis situation many households and businesses still face as a result of flood damage.
“All the warning signs were there that we can’t expect significant investments in flood recovery or mitigation when the [governor’s] budget does come out,” said Casey, a Democrat.
Casey is a co-sponsor of an omnibus flood bill that calls for $85.5 million in state funding to help individuals, businesses and municipalities recover from the flood. After hearing Thursday’s speech, Casey said he’s concerned that lawmakers won’t have an ally in the executive branch as they seek to advance that legislation.
“We need a clear message from the state that says, 'Help is on the way,'” Casey said. “The governor did not deliver that message today.”
Abagael Giles contributed reporting to this story.
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