Vermont lawmakers are considering postponing or even eliminating some of their key spending priorities as they attempt to gird next year’s state budget against potentially drastic cuts in federal funding.
Fiscal analysts say proposals under consideration in the Republican-controlled Congress would lead to significant cuts in the federal revenues that budget writers in Vermont — and every other state — rely on.
Vermont lawmakers won’t have a clearer picture of the federal funding situation until after adjournment, which is tentatively scheduled for late May. Washington County Sen. Andrew Perchlik, the Democratic chair of the Senate Commitee on Appropriations, said there’s no way Vermont can adequately prepare for a “worst-case scenario.”
“But we’ve tried to build that budget with that eye towards an uncertain future, to prepare … for the worst that we can prepare for,” Perchlik said.
We don’t know what we’re dealing with yet.Middlebury Rep. Robin Scheu
Those contingency measures, however, could come at a cost to community-based providers that play a key role in Vermont’s health care system. The budget finalized by the Senate this week includes tens of millions of dollars in increased funding for mental health agencies, federally qualified health centers and nursing homes, all of which serve a disproportionately large share of low-income patients.
The Senate plan would delay implementation of those rate increases until Nov. 1, Perchlik said, so that lawmakers can consider redirecting the money to backfill losses in federal funding, when and if they materialize.
“We would need every penny we can to just protect the most vulnerable Vermonters — senior citizens in skilled nursing facilities and things like that,” Perchlik said. “We would need the money that we thought we could spend on increasing rates just on keeping facilities open.”
That plan gives some lawmakers pause, including Middlebury Rep. Robin Scheu, the Democratic chair of the House Committee on Appropriations. Scheu said the decision to increase funding for those agencies reflects the financial stressors they’re already experiencing. And for every dollar the state invests in rate increases, it draws down more than a dollar from the federal government.
“Should we (delay the increases), we are also leaving a significant amount of federal money on the table that we wouldn’t get back,” she said.
Scheu said she agrees that lawmakers may need to postpone some budget line items. The difficult choice, she said, will be figuring out which ones. Uncertainty over where federal cuts will come, and how deep they’ll be, Scheu said, has been hanging over her committee for months.
“That’s really stressful, to just not know,” she said. “The news could be bad but then we’d know something. It’s sort of like when you get a diagnosis you at least have some relief that you know what you’re dealing with. We don’t know what we’re dealing with yet.”
Lawmakers have begun to develop the process by which they’ll respond to potential cuts. The budget bill approved by the Senate says that if revenues drop by anywhere between 1% and 4%, then Secretary of Administration Sarah Clark will prepare an expenditure reduction plan that would need to be approved by the Legislature’s 10-person Joint Fiscal Committee. Lawmakers will draft an adjournment resolution that would bring the entire Legislature back to Montpelier this fall if revenue reductions exceed 4%.
Republican Gov. Phil Scott said that if federal cuts open up substantial holes in the state budget, he’d use his executive power to summon all lawmakers back to Montpelier.
“I think we’re all in the same frame of mind that if it gets to a point where we can’t handle this … that we would have to bring the General Assembly back,” Scott said.
Scott said there’s little value in attempting to predict what Congress will do.
“I still don’t know exactly what the ramifications are of the tariffs,” he said. “If we just continue to react to everything that happens, we’ll be chasing our tail, and we won’t be focusing on the work we have here in Vermont.”
As lawmakers enter the final weeks of the legislative session, Scott said his most pressing concern is with the size of the Legislature’s budget, and the fact that it doesn’t include full funding for some of his top priorities, which include about $30 million for revolving loan funds for housing and rental units for middle-income residents.
