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Every week, Vermont Public's politics team provides a succinct breakdown of some of the biggest issues at the Statehouse.

Capitol Recap: Vermont lawmakers assess spending priorities against stark fiscal realities

A woman speaks at a podium in front of a group of people holding signs that say "Fair Share for Vermont," "Fair Share for Housing," and "Fair Share for Families"
Pete Hirschfeld
Vermont Public
Anika Heilweil with the Public Assets Institute speaks at the Vermont Statehouse about a campaign to boost state revenues next year by increasing taxes on high-income Vermonters. Democratic lawmakers say this kind of tax legislation could help the state fund priorities around housing, health care and public safety.

House lawmakers are asking their appropriations committee to add more than $250 million in spending to next year’s budget, and Democratic leaders will soon have to decide whether to throw those initiatives by the wayside and live within the current revenue forecast, or raise taxes so they can accommodate the additional spending.

When Republican Gov. Phil Scott delivered his budget address in January, he predicted that Democratic lawmakers would be less concerned about what was in his spending plan than what wasn’t.

Scott was right. Committees of jurisdiction in the House of Representatives have sent letters to the House Committee on Appropriations seeking increased allocations for housing, health care, public safety and more.

“We’re in a different fiscal reality than many lawmakers and advocates have been accustomed to over the past few years. The simple truth is we just can’t do everything we want this year. We have to separate want from need, and we have to be realistic.”
Gov. Phil Scott

A photo of a woman in glasses standing outside the emptied red-and-yellow carpeted Vermont House chamber. Chandeliers hang down from the ceiling in the background.
Zoe McDonald
Vermont Public
Vermont Speaker of the House Jill Krowinski talks to reporters following the governor's budget address on Jan. 23.

House Speaker Jill Krowinski said this week that she and her leadership team have not yet decided whether to move forward with a major revenue bill. If they do pursue a tax increase, she said, the new assessment won’t fall to working class Vermonters.

More from Vermont Edition: What you should know about Vermont's proposed wealth taxes

“I don’t want to put that burden on their backs,” Krowinski said. “And so we would want to be looking to make sure that corporations and the wealthy are paying their fair share. Have we gotten to that decision point yet? No, we still have some more work to do. But that is my mission, to ensure that we’re doing everything we can to help working families in our state.”

Drilling down on priorities

The House Committee on General & Housing alone is asking budget writers to add more than $150 million to the budget Scott proposed in January. The federal pandemic aid that Vermont used to fund nearly $1 billion in affordable housing subsidies over the past four years has largely run dry. Waterbury Rep. Tom Stevens, a Democrat, said the state needs to continue investing nonetheless.

“Where I came down, and where our committee came down, is if we’re going to continue to say that housing is one of the most important things, one of the highest priorities that we can have … and then propose a 90% drop in investment, to me that’s not taking it seriously enough,” Stevens said.

The House Committee on Human Services is asking for more than $50 million in additional spending. The request includes $27 million more than the governor’s recommended allocation for the state’s motel housing program.

A man in a suit and tie stands outside the doorway to the human services committee room.
Pete Hirschfeld
Vermont Public
Wolcott Rep. Dan Noyes says he's concerned about being able to cover additional funding for residential care programs for low-income seniors.

The committee also wants $17 million more for adult care services, including $7 million for what are known as “enhanced residential care” programs. Wolcott Rep. Dan Noyes, a Democrat, said the committee identified the need for additional funding after analyzing Scott’s budget proposal.

“We kind of tried to figure out, OK, what does this look like in terms of where are there holes? What’s not funded in the proposed budget? And where do we feel like we need to try to get out in front of it, try to figure out where the state should allocate funds in order to not have more nursing homes go out of business?” he said.

Noyes said enhanced residential care programs — generally smaller, community-based facilities — are the only housing and care options for many low-income seniors. He said Medicaid reimbursement rates that don’t cover the cost of delivering care have left some facilities on the verge of insolvency.

More from Vermont Public: Shuttering sites and spiking costs: The crisis facing older Vermonters who need affordable care

“I mean, people are going to go without services,” Noyes said. “Where are people going to go if we don’t have the facilities?”

Facing the fiscal reality

Scott’s fiscal year 2025 budget proposal lives within the revenues forecast to flow into the general fund next year. He said at a recent press briefing that the fiscal constraints facing elected officials this year are more pronounced than in recent years.

“We’re in a different fiscal reality than many lawmakers and advocates have been accustomed to over the past few years,” he said. “The simple truth is we just can’t do everything we want this year. We have to separate want from need, and we have to be realistic.”

Definitions of “need” vary in Montpelier. And South Burlington Rep. Martin LaLonde, a Democrat who chairs the House Judiciary Committee, said Vermont needs more money for public safety than the governor proposed in his budget.

“Do we want to live in a state where people are feeling unsafe, and they’re saving money in their pocketbooks? Or do we want to have a state that feels very safe, and it will cost some money? There’s no doubt.”
South Burlington Rep. Martin LaLonde

LaLonde’s committee has asked budget writers for an additional $15 million next year to hire more court staff, deputy prosecutors and public defenders. He said the public safety issues many Vermont communities face right now are a symptom of the system’s inability to process criminal cases in a timely fashion.

He said he thinks Vermonters are willing to pay more in taxes if it leads to the deterrent effect that comes when offenders are held to account soon after a crime is perpetrated.

“Do we want to live in a state where people are feeling unsafe, and they’re saving money in their pocketbooks?” LaLonde said. “Or do we want to have a state that feels very safe, and it will cost some money? There’s no doubt.”

Brattleboro Rep. Emilie Kornheiser, the Democratic chair of the House Committee on Ways and Means, said she agrees with Scott’s assessment of the fiscal climate in Montpelier.

“We knew coming into this session that this would be one of the tightest budget years we’ve had in a long time,” Kornheiser said. “And in the aftermath of the pandemic, and post-flood, we knew there would be significant needs for Vermonters, still.”

Addressing those needs, she said, might require financial resources beyond what existing revenue streams will provide. Her committee has been preparing a number of potential tax bills, in the event that House lawmakers land on a spending plan that requires new revenues.

They include an increase in the property transfer tax on high-value homes; an increase in state taxes on short-term rentals; an assessment on corporations that put offshore profits in overseas accounts; and a 3% surcharge on incomes over $500,000 that would raise approximately $100 million a year.

Kornheiser said the guiding principle for any revenue package out of her committee will be “fairness.”

“I think making sure that we’re raising sufficient revenues to meet the needs of the state … and to make sure that we have a tax structure that folks can afford the taxes that are due, and that those taxes benefit both them and the greater good,” she said.

Any revenue package approved by the Legislature this year will add to the considerable tax increases residents and businesses are already facing as a result of decisions at the state and local levels. The school budget increases approved on Town Meeting Day, and a payroll tax that goes into effect July 1 (It will pay for a childcare bill that lawmakers enacted last year over Scott’s objections.) will add more than $300 million to overall tax obligations.

Scott said the incremental effect of tax bills approved by the Democratically controlled Legislature in recent years are more than residents and businesses can bear.

“So I want to remind taxpayers,” Scott said, “I will continue to have your back and advocate for fiscal discipline, while also making smart investments that help us in the long run.”

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The Vermont Statehouse is often called the people’s house. I am your eyes and ears there. I keep a close eye on how legislation could affect your life; I also regularly speak to the people who write that legislation.
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