Vermont Business Magazine Governor Phil Scott and Speaker of the House Mitzi Johnson issued statements after the Legislature passed a revised budget Wednesday night. Scott, Johnson and Senate President Pro Tem Tim Ashe had carved out the compromise over the last couple of weeks and announced it Wednesday morning. The governor had vetoed the budget and property tax bills in early June. The deal does not achieve the governor's goal of instituting a statewide teacher health insurance contract, but it would lower the residential property tax bill and keeps the non-residential rate at current levels. The Legislature will study the feasibility of a statewide teacher contract.
The budget deal (SEE TABLE BELOW) compels local school districts and teachers to find savings during this phase of negotiations. Most teacher plans have to be renegotiated as they transition in accordance with the Affordable Care Act (Obamacare). The plans generally have lower premiums and higher deductibles. The governor maintains that within the new structure, $26 million a year can be saved, which then can be applied against the statewide property tax.
Unlike Scott's proposal from April that would require certain savings through a statewide contract, the compromise deal estimates savings of $13 million over two years ($8.5 million in FY18 and $4.5 million in FY19) by lowering payments back to school districts predicated on health insurance savings the districts should be able to achieve. A persistent concern has been under that scenario, the savings might not actually come exclusively from health insurance, but from other parts of the local education budget.
Depending on home value, the typical residential property taxpayer should see savings of $25-$75, based on the $13 million deal.
The deal also pushed more money into the Education Fund by increasing the Sales Tax allotment to 36 percent. The Sales Tax has been lagging in recent years as consumers increasingly shop online. The Sales Tax contributes about $133 million to the Ed Fund, but is running nearly $2 million behind with only one month left in the fiscal year. The Sales Tax is the second largest component of both the General Fund (to Personal Income) and the Ed Fund (to the Property Tax).
Scott also had vetoed the marijuana legalization bill. However, as expected, a compromise with House Republicans could not be reached and the bill died. Scott and Democrats had cobbled together revised language, but that deal fell well short of getting enough votes in the House without the GOP lawmakers. With a two-thirds needed to suspend rules and take up the bill immediately, the vote was Yeas, 78; Nays, 63.
Governor Scott: “I am very pleased to have reached an agreement with the Legislature on an education savings proposal that realizes savings from the Vermont Education Health Initiative’s (VEHI) transition of health care plans. This agreement will save Vermont taxpayers millions of dollars and provides a path to achieve greater efficiency in the future. With this proposal in place, the Legislature passed a budget today that – for the first time in recent memory – does not raise taxes and fees.
“Further, with the savings achieved through the agreement, property tax rates will not rise this year. Residential property tax rates will be lower and non-residential rates – including businesses, renters and camp owners – will remain the same as Fiscal Year 2017. This is good news for Vermont, represents the first real reduction in the tax burden in generations, and we will continue to push for fiscal responsibility in the coming session.
“The budget I proposed in January made critical investments in economic development, affordable housing, higher education, addressing our opiate epidemic, and protecting our impaired waterways. As is always the case with the legislative process, there was disagreement on how to prioritize investments, find savings and achieve balance without raising taxes and fees. But, in the end, we passed legislation and a budget that will make a real difference in the lives of Vermonters.
“That progress includes the $35 million housing bond and investments in small business development centers and downtown development I proposed – each of which will drive economic growth. Additionally, I called for increased investment in early care and learning, technical and higher education, and economic development marketing. While I’d like to have seen more investment in these areas, this budget took an important step toward a cradle-to-career continuum of learning and growing our economy.
“The budget that passed today is the result of hard work and compromise. I thank each member of my Administration, the Legislature, and all in state government for their work and commitment to serving Vermonters. We have more to do to change the trajectory of our state, but I am very proud of what we achieved together this session.”
Speaker Johnson: “Legislative leaders stepped up to find a way to avoid a state government shutdown after the Governor’s veto put Vermonters in a really tough position. The budget passed the legislature in the Spring with nearly unanimous support and made critical new investments in higher education, mental health care, affordable housing, economic development, and childcare. The budget did not raise taxes or fees, it replenished budget reserves, and strengthened our communities.
After the Governor’s veto, everyone came to the table to focus on a compromise that worked for all parties. Compromise involves everyone getting a bit of what they want, while giving up parts of what they had hoped. We achieved that sweet spot with this bill.
This agreement codified the legislature’s willingness to meet the governor halfway on his proposal. In these negotiations, we focused on proposals that your local representatives supported with their votes at one point or another during this long process. The budget, with the accompanying yield bill language, passed the House and Senate today during the special session.
We are proud of the work we did this session for our state. Vermonters can be very proud of the Legislature’s budget, its tripartisan support, and the solid, fiscally responsible investments the legislature made in our communities and economy to ensure our state is stays on the path to a strong, healthy future.” VBM vermontbiz.com