2.27.2017 – Budget Adjustment, Working Lands, and the Governor’s Budget Speech

The Budget Adjustment Act (BAA) was voted on this week and went through easily. BAA is a mid-fiscal year “true up”. Vermont has a long-standing tradition of a balanced budget; we do not deficit spend but maintain a balanced budget though we are not constitutionally required to do so. If we encounter shortfalls because of a revenue downgrade or the necessity for additional spending, we make adjustments to assure that the budget is in balance.

One of the bright spots of the week was a report from the Working Lands Enterprise Initiative. Enacted in 2012, the state has invested $3.8 million, which has leveraged an additional $7.4 million. 129 projects have been funded in all 14 Vermont counties and 428 full-time jobs have been created. The farms and businesses that have been awarded grants have realized $18.1 million in additional sales. 98% of the businesses have entered new markets, 33% have hired new staff, and 30% have increased wages for their employees, which in turn pumps more money into our local economy.

We heard from several grant recipients – two in the forestry sector and two in the agricultural sector – about how the grants helped their respective businesses.

Governor Phil Scott gave his budget address on Tuesday. He presented an overview of a level-funded budget that he claims “does not increase taxes or fees, does not impact Vermonters in need, and matches base spending with base revenue”. As with budget speeches in the past, regardless of political party, there is a balance between policy choices, funding options, and whether they really work. There are things with which I can agree and would like to see happen, things with which I agree but question the funding source, and things with which I just don’t agree – the good, the maybe good, and the ugly!

On the list of things I would like to see happen is additional funding for Vermont State Colleges, the University of Vermont and the Vermont Student Assistance Corporation, and scholarship money for Vermont National Guard members to attend Vermont colleges and universities. Additional money for pre-kindergarten programs for high-poverty children is a great investment. The same is true for housing and water quality. The goal of affordable health care for all is good as well – the more Vermonters who are covered for health care, the better. Currently, 97% of Vermonters have health care coverage.

The governor proposes an $800,000 investment in the Guardian ad Litem program to help children whose families have been affected by the opioid epidemic. He acknowledged the folks who have been fighting for these children including teachers.

In his speech, the governor lauded our teachers and school board members for the hard work they do but then asked them to level-fund their already finalized budgets regardless of circumstances such as special education costs, a bus purchase, etc. As a school board member myself, I know that we worked very hard to create the most cost-effective budget possible that meets the needs of our children while keeping in mind the taxpayers pocketbooks. After all, we are taxpayers too!

One of the last things I did before leaving for Montpelier this week was to sign the warning for our Town Meeting report with the budget that was finalized at the beginning of January. The notion of going back to the drawing board to figure out a way to level-fund our budget does not sit well with me. The governor then suggested that we should have extra time to do this and rather than vote on Town Meeting Day we have a special town meeting on May 23 to vote. One immediate reaction was from some Town Clerks wondering who was going to pay for the special town meeting.

One local superintendent emailed to say that he had polled his school board chairs and none was willing to reopen their school budgets or postpone their budget votes until May. He also has serious reservations about the governor’s education proposals.

The governor also asks these hard-working teachers to assume, regardless of the contract they signed, 20% of their health care premium instead of the 15% they contractually agreed to. So let’s get this straight – we value and appreciate our teachers but we want to level-fund their budgets and salaries and make them pay more for their health care, at the same time they are taking on additional responsibilities due to the opioid epidemic. Something’s not right with that picture.

Another proposal that is worrisome concerns moving the costs for higher education ($89.7 million), some of the costs for teachers’ retirement ($35 million), and moving and increasing funding for childcare ($9.6 million) to the Education Fund. The governor also funds an additional $1.6 million in Innovation Grants from the Education Fund for a total of $135.9 million. He shifts $86 million to the Education Fund from the General Fund but this still leaves a difference of approximately $50 million. This and other provisions drive up the state property tax, all told, by roughly six to seven cents. Additionally, one wonders what will happen in the future. In the past, the Legislature has underfunded the General Fund transfer to the Education Fund – this drives up property taxes.

It will be interesting to see how things unfold as the fine points for funding these changes are revealed – the devil is always in the details!