‘More good than harm’: Phil Scott signs $8.6 billion state budget into law

Republican Gov. Phil Scott on Thursday signed Vermont’s $8.6 billion budget into law, funding state government for the fiscal year starting July 1.

Negotiations over the state budget, H.883 , were notably more amicable this legislative session than last, when it became a proxy war over the fate of the state’s emergency motel housing program. Last year’s battle resulted in a rare budget veto , followed by an override just weeks before the start of the fiscal year.

This year, there was no such showdown. State budget writers largely stayed within the confines of the budget that Scott proposed to lawmakers in January, only exceeding his bottom line by roughly a quarter of a percentage point .

In a letter to legislators accompanying his signature on Thursday afternoon, Scott commended them for this year’s negotiations, saying that the budget process “shows that when we work together — and both sides are willing to give a little — we can craft a budget that meets the needs of Vermonters without adding to their tax burden.”

Scott said the budget invested in key priorities, such as housing, economic development and public safety. “Importantly, it does not rely on new or higher taxes, achieving balance without adding to the significant tax load Vermonters already carry,” he wrote.

That doesn’t mean the bill is perfect in Scott’s eyes. “Compromise,” he wrote, “means accepting some things that I don’t support.”

The governor raised alarm bells over the bill’s increases to insurance, registration and securities fees levied by the Department of Financial Regulation, warning that they “may dissuade financial institutions from increasing their presence in this state.”

He also said he was “concerned about the substantial increase in base spending, which may not be sustainable under a more modest — and typical — revenue environment.”

This year’s budget process marked somewhat of a return to the norm, following years of additional federal aid related to the Covid-19 pandemic. For the past several budget cycles, lawmakers were able to pour hundreds of millions in one-time funds into major state programs and investments.

Heading into this year, lawmakers and state economists expressed worry over the potential for an economic downturn and wrung their hands over expenses related to last summer’s catastrophic flooding. However, Vermont’s revenues have largely stayed strong after the federal money has dried up, offering lawmakers a budgetary off-ramp.

This was most evident in the final few weeks of the legislative session, when lawmakers on the budget conference committee had the happy surprise of banner revenues in April, plus stronger than predicted revenues in preceding months. As a result, legislators were able to spend another $25 million to buy down the state’s ballooning property taxes, used to fund the state’s public education system.

It was the Legislature’s reliance on fleeting revenue like this, however, that prompted another round of finger-wagging from Scott in his letter Thursday.

According to Scott, the budget “is also overly reliant on one-time and contingent funding,” which, “will create unsustainable expectations if further one-time funds are unavailable.”

“By not making difficult choices this year and focusing scarce resources on programs we can’t sustain,” he continued, “we are setting up a very challenging budget development” in the following fiscal year.

In the end, Scott said, he signed the bill into law “because, on balance, this budget does more good than harm.”

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