Gov. Phil Scott delivered his State of the State address on Wednesday, but he also dropped an unusually large mid-year spending proposal on lawmakers’ desks.
The so-called “budget adjustment bill” is customarily a $5 million to $10 million tweak to accommodate spending fluctuations over the first six months of the state fiscal year.
This year, however, Scott is asking lawmakers to allocate more than $200 million toward housing development, workforce supports and COVID-related health care projects.
Thanks to higher-than-expected state revenues and federal funding packages, Finance Commissioner Adam Greshin says Vermont is in a position to spend far more on budget adjustment this year than the administration has asked for in the past.
“We’re presented with a unique opportunity to invest funds that we did not anticipate would be available to clean up some of the lingering deficiencies on the state’s balance sheet, and also to put money to work for Vermonters in several key areas,” Greshin told VPR this week.
"If there are new proposals in the budget adjustment, we are going to take a deep look at them, and make sure that they fit with the priorities that Vermonters have expressed very clearly to us."Montpelier Rep. Mary Hooper
The $80 million set aside for affordable housing constitutes the lion’s share of the spending package Greshin and Administration Secretary Kristin Clouser presented to lawmakers on Wednesday.
“Finding housing that Vermonters can afford has been and continues to be a significant challenge across the state,” Clouser said.
The proposal includes $20 million for the Vermont Housing Improvement Program, which provides rental property owners with up to $30,000 per unit to renovate vacant or blighted rental units.
“With this $20 million, the goal is to create 400 new units to serve households for folks who are homeless and families who are in need of quality, affordable housing,” Clouser said.
Scott wants to give another $50 million to the Vermont Housing and Conservation Board, for multi-family housing complexes and shelter expansions. The plan also includes $5 million for a pilot program that’s supposed to spur development of mid-priced homes for moderate-income Vermonters.
The Scott administration also wants to put more than $30 million toward financial incentives to recruit, retain and educate workers primarily in the health care sector.
Most of that money would be directed toward mental health and nursing agencies that provide direct care to Vermonters, according to Clouser.
“The workforce challenges impacting Vermont’s home- and community-based services have been significantly amplified by the COVID-19 pandemic,” she said.
"At this point, it does not look like [more ICU beds are] needed, but … this virus has done weird things, so we don’t want to be caught short, so we’re being precautionary."Finance Commissioner Adam Greshin
And after exhausting the state’s share of federal Coronavirus Relief Act money at the end of December, the administration wants to replenish COVID-response funding by allocating $25 million to create more inpatient beds for patients who don’t require critical care.
That COVID-response money would also be used to boost ICU capacity.
“At this point, it does not look like [more ICU beds are] needed, but … this virus has done weird things, so we don’t want to be caught short, so we’re being precautionary, but we think it’s an important endeavor,” Greshin said.
Montpelier Rep. Mary Hooper, who chairs the House Committee on Appropriations, said budget adjustment usually involves tinkering with a few million dollars here and there to resolve issues that arise over the first half of the fiscal year.
“This year, we have been thinking about both about just what are the usual mechanics we need to attend to, but also how do we position ourselves to continue responding in the urgent manner that is necessary to the pandemic,” Hooper said.
But Hooper said budget adjustment appropriations should be limited to areas in which the need is urgent.
“It’s … terribly important that we have the usual analysis and understanding of what is being proposed,” Hooper said. “So if there are new proposals in the budget adjustment, we are going to take a deep look at them, and make sure that they fit with the priorities that Vermonters have expressed very clearly to us.”
And some of Scott’s proposals may not make the cut. For instance, Scott wants to spend more than $50 million to pay off outstanding government debts.
Greshin said that proposal would reduce the cost of servicing Vermont’s debt in future budget years.
“And it also will I think, in addition to saving general fund money, set us up in the good graces of the ratings agencies that increasingly have been looking at Vermont as having a rising tide of debt to service,” he said.
Hooper, however, said she’s not convinced that some of those debt-elimination proposals are the best way to use general fund dollars right now.
“We in my committee are very fond of paying off and eliminating deficits, but we want to make sure that the dollars are working very well for us,” Hooper said. “And I am looking at other unfunded obligations that we have, and wanting to make sure that we put those dollars in the best place.”
Hooper said lawmakers are entirely supportive of significant new investments in housing. But the governor wants to use federal American Rescue Plan money to fund most of his proposed housing initiatives, and there are drawbacks, according to Hooper, to using ARPA funds for that purpose.
Hooper has asked other House committees to vet elements of Scott’s spending plan. She said in a letter to fellow committee chairs that she hopes to put a final spending plan to a vote on the House floor by Jan. 20.
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