In his annual budget address Tuesday, Republican Gov. Phil Scott called on Democratic lawmakers to rein in spending growth that he says has “crushed” working-class Vermonters with higher taxes and fees.
Above you can listen to analysis of Scott's speech provided by Vermont Edition host Mikaela Lefrak, Vermont Public reporter Peter Hirschfeld and Report for America corps member Carly Berlin, who covers housing and infrastructure for VTDigger and Vermont Public.
The fourth-term governor’s 43-minute speech was laced with critiques of fiscal management in a Democratically-controlled Legislature that has used its supermajority in recent years to override Scott’s vetoes of major spending bills.
“I truly believe most of us want to help people. It’s who we are,” Scott told members of the House and Senate Tuesday. “But burdening them with more taxes, fees and other costs is not the way to do it, especially when they have less expensive options.”
Scott was referencing a number of initiatives enacted by the Legislature over his objections, including last year’s state budget, which relied on a general fund increase of 13%.
The $8.6 billion spending plan unveiled by Scott on Tuesday relies on a general fund increase for fiscal year 2025 of 3.57%.
“When we spend beyond our means, it catches up to us, and ultimately with taxpayers,” Scott said. “And when we fail to address the fundamentals of decades-old problems, they get worse, making it harder to find money to catch up.”
In order to live within its means this year, Scott said, Vermont will need to forgo the high-priced housing, broadband and child care packages that defined the previous three budget cycles. And he said incoming revenues for fiscal year 2025 will leave little room for anything beyond a level-funding of existing programs and services.
“I don’t think there will be a lot of disagreement about what’s in this budget,” he said. “The disagreement will lie in what’s not in it. But pretending we can fund everything isn’t realistic.”
If Scott was looking to forge a collegial relationship with Democrats heading into this year’s budget cycle, then leaders in the House and Senate say he missed an opportunity to cement one.
“To hear jabs throughout this speech at policies that we’ve worked on and had tri-partisan support on isn’t helpful,” House Speaker Jill Krowinski told reporters after the speech. “And it’s not a good way to start off how we’re going to collaborate on the budget.”
Democrats also objected to Scott’s bleak characterization of the problems Vermont faces with public safety, housing, aging demographics and overall fiscal health.
“I think his speech was long on fear and short on hope,” Krowinski said.
Education
Lawmakers also faulted Scott for not producing concrete policy proposals to address some of the most pressing issues facing Vermonters, including a projected 17% rise in education property taxes next year, which, according to Senate President Pro Tem Phil Baruth, has become the top concern among lawmakers in Montpelier.
Scott in his speech nodded to proposals he has made to contain costs in Vermont schools in years prior, like minimum classroom sizes and property tax caps. But he noted that his ideas had been rejected by the Legislature before, and implied that this time, he wanted lawmakers to make the first move.
“I’m not naïve. Without a willing partner, I’m sure any proposal I put on the table will be used to drive divisive attacks and headline clicks, and we won’t get anything done,” Scott said.
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But Baruth, calling it “the elephant in the room,” pointed to education spending as the prime example of the governor’s alleged habit of washing his hands of difficult matters.
“In terms of courage, he always uses phrases like ‘take things head on, do the hard work.’ If you're going to do the hard work, if you're going to take it head on, you would talk about that tax increase and say, ‘I can do this from my end. What can you do?’” Baruth said.
Several lawmakers also pointedly noted that Vermont’s education system has remained without a permanent leader since the spring, when Education Secretary Dan French stepped down from his post.
“Some of the solutions should be coming from the (Agency) of Education. And that's under the governor's control. And we haven't had a secretary since last June,” said Sen. Ann Cummings, a Democrat from Washington County who chairs the tax-writing Senate Finance Committee.
Public safety
During his State of the State address earlier this month, Scott listed public safety as one of the three most urgent issues facing Vermont. And in his budget address, he outlined a tougher-on-crime approach that he said will curb quality-of-life issues now plaguing not just larger cities but small towns as well.
Specifically, Scott wants lawmakers to repeal or revise two criminal justice reforms that he enthusiastically signed into law.
“Let’s start with something you don’t hear too often in this building: I may have been wrong,” he said. “I’ve supported, and signed, some of the very legislation I’ll ask you to change today.”
Scott wants to repeal a 2018 law that made it more difficult for judges and prosecutors to hold alleged offenders in custody pending their criminal trial. He also wants to undo portions of a 2019 law known as “Raise the Age” that was enacted to prevent juveniles and young adults from being charged as adults.
“I agree people deserve second chances, and maybe even third or fourth, especially when it comes to mistakes made as a young adult or when struggling with addiction,” Scott said. “But I wish I had better anticipated the challenge of implementing laws to raise the age of criminal accountability, because we weren’t ready. We put the policy idea ahead of the fundamentals, the real work of actually helping our youth.”
Scott said criminal gangs are exploiting the statute by sending young couriers into the state to deliver narcotics such as fentanyl. And he said the state’s child welfare system lacks the physical infrastructure and safety apparatus to house violent young offenders who, save for Raise the Age, would be sent to the Department of Corrections.
“Like many other areas, we moved too far and too fast into a policy experiment,” Scott said. “And we didn’t plan for, or build, the system needed to address extreme cases, or have the workforce to support it. We focused so much on our well-intentioned goals that we didn’t think through all the possible consequences.”
The Legislature, according to Krowinski, is as committed as Scott to addressing what she said are legitimate public safety concerns among Vermonters.
“But I think sending kids to jail isn’t going to solve our problems,” she said. “We need to make investments in our justice system to handle the backlog that we have.”
Housing
As it has been in past years, housing remains a top priority. But Scott has made clear in recent months that his legislative agenda would focus on regulatory reform – not direct investments – and his budget proposal reflected this.
In the last two years alone, Vermont has directed over $250 million to bring new units online, Administration Secretary Kristin Clouser said in a press briefing before Scott’s address. But housing-related line items in Scott’s budget this year are far less ambitious. They include:
- $6 million to bring blighted rental units up to code
- $4 million to help low-income homeowners make improvements to septic and wastewater systems
- $2 million for manufactured home repairs
- $7 million to expand shelters
Emergency housing is becoming another point of contention between lawmakers and the governor. Scott’s budget holds firm to two spring deadlines by which hundreds of unhoused Vermonters must leave state-subsidized hotel rooms. But while administration officials are attempting to stand up temporary shelters as alternatives, they’ve also been upfront that they won’t have nearly enough beds ready to meet the outstanding need.
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Lawmakers have heavily criticized the governor for failing to secure shelter for those in motels, and the House is poised to pass a mid-year budget adjustment bill that would extend their stay until June 30.
“Even though they told us that they would fix that problem last year, a year has gone by and we're in the exact same position where we will have to carry that investment,” Baruth said.
Climate and resilience
Climate scientists agree that human-caused climate change is bringing more extreme weather to the state. A 2021 study from the University of Vermont found the Lake Champlain Basin alone could see more than $5 billion in flood damage by the end of this century. And Scott emphasized repeatedly that Vermont needs to become more resilient to future flooding events — though he didn’t speak much about climate change.
Among other initiatives, the governor proposed setting aside $500,000 in matching funds to partner with the Army Corps of Engineers to study ways to improve flood resilience up and down the Winooski River watershed.
The governor also proposed using $12.5 million in state dollars to help Vermont communities leverage FEMA Hazard Mitigation funds, totaling about $100 million for home buyouts and floodplain restoration. And he called for $1 million to be set aside for the Unsafe Dam Revolving Loan Fund, which helps fund repairs of private dams in the state.
Lawmakers welcomed the governor’s proposal to fully fund the state match needed to draw down FEMA money. But Democrats have made clear they want to go much further to help individuals and businesses recover. Washington County's Sen. Ann Cummings, whose districts include some of the cities hardest hit by the July floods — Barre and Montpelier — called the governor’s proposals “helpful” but also “nowhere near enough.”
In talking about what he sees as a crisis of affordability in the state, the governor lamented the “unknown of higher fuel and electricity costs,” a veiled reference to efforts by lawmakers to reduce greenhouse gas emissions in the home heating sector by passing the Affordable Heat Act last year. Legislators also introduced a bill in the House that requires Vermont utilities get 100% of their power from renewables by 2030.
Budget priorities
Thanks to a revenue upgrade that state economists delivered last week, administration officials said the governor’s budget does not include any cuts or reductions to existing programs and services.
And even in a more limited revenue context, Scott said Vermont still has some capacity to fund new programs next year. The proposed new expenditures include:
- $4.9 million to expand Vermont’s opioid use disorder treatment system
- $9.9 million to expand skilled nursing facilities
- $1.7 million to fund 20 mental health workers in state police barracks
- $1 million in start-up funds for a youth psychiatric inpatient facility
- $9.3 million for a health care payment reform project
- $5 million to shore up finances at Vermont State University
- $1 million for tuition subsidies for certain degrees at the Community College of Vermont
Some lawmakers, however, say using small-dollar line items to address major public policy dilemmas won’t lead to any substantive progress.
“We can’t nibble around the edges. We can’t do what we were doing five years ago or proposing five years ago,’ said Brattleboro Rep. Emilie Kornheiser, the Democratic chair of the House Committee on Ways and Means. “These are difficult times, and they’re new times and if we want to build a strong future for Vermont, we need to actually … buckle down, do the work, and focus on that vision of that future with a full set of policy priorities that have details and funding attached to them.”
Caledonia County Sen. Jane Kitchel, the Democratic chair of the Senate Committee on Appropriations, said the Legislature’s $170 million child care bill last year has shown that government initiatives can deliver net benefits to Vermonters even if they require an increase in taxes.
Lawmakers overrode Scott’s veto of the child care bill, which relied on a new payroll tax on virtually every working resident in the state. Lawmakers say the new law has funded the creation of an additional 1,000 child care slots, increased pay for workers, and lowered child care bills for parents.
“I would submit that if we are really thinking about strategies to attract families, to support working families … what we’ve done with our child care initiative is one of the most important actions that we have taken relative to workforce, workforce availability, affordability, and supporting working families,” Kitchel said.
Lawmakers are already considering more big-ticket packages in 2024. Legislation introduced in the House and Senate would make tens of thousands of Vermonters newly eligible for government-subsidized health insurance. A bill in the House that has support from leadership contains nearly $90 million in appropriations for flood recovery and climate resiliency.
Scott prevailed on Democrats Tuesday to shelve any policy proposals that will require new revenues, and therefore an increase in taxes and fees. He also acknowledged that their supermajorities in both chambers limit his ability to stop them if they try:
“You don’t have to listen, or even consider, my priorities or objections," Scott said.
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