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Demographic Challenges The Focus Of Gov. Scott's 2020 Budget Address

A person stands at a podium.
Josh Kuckens
Times Argus
Gov. Phil Scott delivered his 2020 budget address on Tuesday, Jan. 21.

Updated 5:40 p.m.

Governor Phil Scott has proposed a state budget he said will help Vermont's "demographic crisis." It increases state spending by roughly 2%, though it doesn't include any new taxes or fees. It does offer tax cuts for workers, financial incentives for businesses and entrepreneurs, and new money for the tourism economy.

More from VPR — Read the full text of Scott's speech here.

Administration Secretary Susanne Young said a recent dip in population growth served as a “sobering reminder that we have a lot of work to do to grow our population and grow our workforce.”

She said the initiatives outlined in Scott’s $6.3 billion budget proposal will help Vermont address that problem.

More from VPR: Census Report Numbers Highlight Vermont's Population Decline [Jan. 9, 2020]

“Our number one challenge with the state is our demographics,” Young said. “We’re asking legislators to focus their efforts on meeting the challenge.”

Scott’s budget includes $25 million in new initiatives, including $3 million in cash payouts for “anchor” companies that invest at least $20 million in facilities located in Vermont. The Republican governor wants to institute income tax exemptions for nurses who received their degrees in Vermont. He also wants to exempt military pensions from the state income tax.

Those tax proposals would cost Vermont $2.4 million in foregone revenue annually, but Young said the tax cuts would boost worker retention and alleviate a nursing shortage.

More from VPR: In Midst Of Financial Struggle, Vermont Hospitals Boost Workforce Program [Nov. 17, 2019]

A plaque that reads "executive chamber."
Credit Peter Hirschfeld / VPR
In his $6.3 billion budget proposal, Gov. Phil Scott outlined spending priorities like cash payouts to anchor companies that invest in facilities located in Vermont.

Scott’s $6.3 billion budget proposal will not require any increases in taxes or fees, according to administration officials, who said organic growth in state revenues will be sufficient to cover most of the proposed 2% increase over the current year’s budget

Young said the governor also wants to legalize online sports betting and introduce Keno to Vermont, which she said will yield an estimated $4 million annually.

Scott’s budget also assumes $13 million in savings next year from what Finance Commissioner Adam Greshin calls “efficiencies,” such as theshuttering of the Woodside Juvenile Rehabilitation Center.

More from VPR: Vermont Officials Want To Close State's Only Juvenile Detention Center [Nov. 25, 2019]

Spending Proposals From The Governor

  • $3 million to boost childcare subsidies for low- and moderate-income parents
  • $500,000 in post-secondary education grants for adult learners
  • $500,000 increase for the Vermont State Colleges system
  • $1.4 million for a rental housing rehabilitation program
  • $2.8 million to complete the Lamoille Valley Rail Trail
  • $2 million for “grid optimization companies”
  • $3 million for electric vehicle incentives
  • $1 million for a home visitation program for families with newborns
  • $600,000 for a suicide-prevention pilot program in Rutland
Reaction From Democratic Lawmakers

After Vermont’s Republican governor laid out his laundry list of new spending initiatives Tuesday, Democratic lawmakers weren’t dismissing any of them out of hand. Not yet, at least.  

Senate Pro Tempore Tim Ashe said lawmakers in the Democratically-controlled House and Senate will be scrutinizing Scott’s plans closely.

“The devil is always in how you pay for it,” he said. “What cuts are you making to accommodate those kinds of investments?  And so we’ll have our work cut out for us in the weeks ahead to figure that out.”

Scott’s call for $3 million in cash payouts to businesses that invest at least $20 million in their facilities in Vermont, for instance, is a new concept according to Ashe.  

More from VPR: State Offers Grants For Those Who Move Here To Work For Vermont Companies[Jan. 1]

“One of the signature economic development initiatives was to pay companies to stay here, not to grow but to stay,” Ashe said. “That is a shift in the way we’ve thought about economic development, and our committees will really have to take a look.”

As for Scott’s desire to legalize sports betting and introduce Keno to Vermont, House Speaker Mitzi Johnson said the administration faces a tough sell in her chamber. 

A person stands at a podium.
Credit Josh Kuckens / Times Argus
Times Argus File
Speaker of the House Mitzi Johnson joins democratic leadership for a press conference responding to Gov. Phil Scott's budget address.

“Expanding the lottery and stealing money from the education fund haven’t gone all that well in the House in the past,” she said.

Stealing from the education fund, because Scott wants to take revenue from Keno and put it toward increased childcare subsidies for low-income parents. Revenue from state lottery proceeds has traditionally gone to public education. Johnson said lawmakers may be reluctant to alter that precedent.

Scott’s proposal for the $1.7 billion general fund budget represents a 2.8% increase over current spending levels. Caledonia County senator Jane Kitchel, who chairs the Senate Appropriations Committee, said it seems like a reasonable target.

“That’s kind of within the ballpark of what we’ve been able to deliver in the last couple years,” she said.

But Scott’s budget address did spotlight at least one area where he and the Legislature are hopelessly at odds. Scott indicated Tuesday that he’ll vetothe paid family leave bill that lawmakers are expected to give final approval to later this week.

More from VPR: Paid Family Leave Bill Clears Milestone In Vermont Senate [Jan. 17]

Senate lawmakers have enough votes to override that veto. Asked Tuesday whether her chamber has the two-thirds supermajority needed to override as well, the House Speaker offered this:

“We’ll all wait and see.”

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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