Democratic lawmakers gathered in a Statehouse room earlier this week to inventory the horrors that might visit Vermont if it experiences another government shutdown.
The funding lapse, according to House Appropriations Committee Chair Robin Scheu, would be far worse than the one the state experienced last fall. Medicaid funding would cease entirely, she said, as would food benefits from the Supplemental Nutrition Assistance Program. State employees — even those performing essential services, Scheu said — would stop getting paychecks and be forced to stay home.
“The long-term consequences could be devastating,” the Middlebury representative warned fellow House Democrats.
It isn’t a federal government shutdown that lawmakers are beginning to worry about. In his State of the State address in January, Republican Gov. Phil Scott said he wouldn’t allow a state budget to go into law unless the Democratically controlled Legislature delivers an education reform bill that forces Vermont school districts to merge into larger governance units.
"We need to be clear on what a veto of the budget … would potentially do."House Majority Leader Lori Houghton
With less than a month left in the legislative session, mandatory consolidation remains a nonstarter in the House. And as hopes of a breakthrough diminish, lawmakers are contemplating the beginning of a new fiscal year — it arrives on July 1 — without a dime to fund state government operations.
“We’re trying to be prepared and understand what may happen if in fact he follows through on his threat,” Scheu said.
Senate President Pro Tem Phil Baruth isn’t as concerned at this point. The governor’s ultimatum, he said, is probably just “theatrics” intended to get Democratic lawmakers to bend to his will.
House lawmakers’ public fretting over the doomsday scenarios that might play out in the absence of a state budget, he said, is its own form of political kabuki.
“I’m still confident at the end of the day the two chambers can agree on something and the governor can join in,” he said.
Vermont has never experienced a state government shutdown. A new analysis from the Legislature’s Joint Fiscal Office suggests the state is ill-prepared for such an outcome. Unlike the federal government, which retains broad spending power even if Congress can’t pass a budget, the state’s spending authority would be more limited. That’s because the Vermont Constitution bars the state from spending any funds from the treasury, including federal funds, without an enacted budget.
The unprecedented nature of a shutdown in Vermont, according to the JFO, means “it is impossible to say what payments” the state could or could not make. But legislative analysts say it wouldn’t be good.
“It is difficult to overstate the seriousness of a shutdown,” the analysis said. “The impacts would be all encompassing and potentially extreme.”
House Majority Leader Lori Houghton has urged lawmakers to begin briefing their constituents on the seriousness of the situation, and to urge them to contact the governor’s office with their concerns.
“Vermonters are already really anxious about what’s happening at the federal level, and we need to be clear on what a veto of the budget … would potentially do,” the Essex Democrat said.
Scott has held firm to the ultimatum he first issued on Jan. 7 — “I will not sign a budget or an education bill or a tax bill that deviates from Act 73 or fails to fix what’s broken.”
Act 73, which lawmakers passed last year, calls for school districts of between 4,000 and 8,000 students. The law also creates what’s known as a foundation formula, starting in fiscal year 2028, that would see the state set spending levels for public schools.
That new funding system would significantly reduce per-pupil spending in many districts. Scott says larger districts will guarantee the economies of scale needed to operate under those fiscal constraints.
Though he’s signaled a willingness to bend on the exact size of those districts, he continues to insist on mandatory mergers of some form.
Scott said Thursday that the onus is on lawmakers to avoid a shutdown by staying true to “what we passed last year.”
“Have the will and the courage to move forward and do what’s right for the state of Vermont,” he said. “We can get this done. We can get this done in a week. … Shame on them if they let it go two months without coming up with a solution.”
Baruth said history suggests Scott won’t actually let the state enter a new fiscal year without a state budget. The governor employed a similar tactic in his first term in office, vetoing two state budgets in 2018 over disagreements with Democrats on spending.
On June 29, with less than 48 hours before the end of the fiscal year, Scott allowed a third budget to go into law without his signature, even though Democrats didn’t capitulate to his demands.
Baruth said he spoke with Scott’s aides during that standoff.
“And his people told me confidentially, ‘We’re not going to shut the government down over this,’” he said. “I think much the same is true here.”
