House And Senate Play Tug-Of-War Over $8 Million In Budget Negotiations

Apr 26, 2017

Senate lawmakers have given unanimous approval to a state budget that includes funding for a range of spending initiatives that did not make it into House’s spending plan. But the accounting tactic used by the Senate to fund those programs will be a major point of contention as legislative leaders enter negotiations for a consensus budget plan.

When Senate lawmakers finalized their version of the state budget last week, they made a lot of advocates very happy.

The Senate’s plan funds all sorts of initiatives that the House’s version of the budget did not include. There’s $3 million in grants for child care providers, for instance. There’s a $4 million increase for state colleges — double what the House came up with. And senators found nearly $10 million for wage increases for community mental health workers, which is triple the amount House lawmakers had included.

It was welcome news to people like Jeb Spaulding, the chancellor of the state college system. Spaulding says he appreciated the $2 million, one-time increase the House budget included. But he says state colleges need a $4 million a year, ongoing boost in order to avoid operating at a deficit.

“If we don’t get that money, tuitions will continue to go up faster than they should, Vermonters will accumulate more debt than they should, and too many Vermonters won’t pursue post-secondary education at all,” Spaulding says.

House Speaker Mitzi Johnson says her chamber appreciates the value of the proposed investments. She says House lawmakers would love to include them as well. What Johnson objects to, however, is the way the Senate wants to pay for it all.

“What the Senate did was raise property taxes by $8 million,” Johnson says.

The Senate plan frees up money for the new spending initiatives by wiping clean an $8 million line item that pays for the state’s share of teacher retirement contributions. By taking that obligation off the books of general government, and transferring it to a separate fund, called the education fund, the Senate has given itself $8 million in extra money to work with.

It also put a new, $8 million obligation into an education fund paid for mostly by property taxes.

“That’s what we’re talking about here is, which pocket of Vermonters’ money do we pay for an obligated expense with?” Johnson says. “I’m reacting to, and I guess defending, the Vermonters who say, the property taxes are enough.”

Caledonia County Sen. Jane Kitchel, the Democratic chairwoman of the Senate Appropriations Committee, says she appreciates the House’s concern.

But Kitchel says that the general fund — that’s the pot of state money that pays for general government expenses — has assumed more education-related costs in recent years.

In 2015, for instance, the general fund took on a $26 million a year obligation for health care benefits for retired teachers. Kitchel says that’s in addition to the growing fiscal demands of the pension fund for retired teachers.

“Between those two expenditure areas, it’s $100 million of general fund that has grown very substantially over the last three or four years,” Kitchel says.

Kitchel says increases in education-related costs have left other critical government programs to fight for a smaller share of the overall budget pie.

“We were looking at how little was left under the current allocation of general fund for critical systems, like our mental health system that’s in crisis,” Kitchel says.

The philosophical debate over the merits of the Senate plan will play out in the closing days of a legislative session that could end as early as next week, and Kitchel and her Senate colleagues will have to win over more than just the House.

Gov. Phil Scott is also critical of the Senate plan. At a press conference this week, he said he would not sign a budget that shifted new obligations to the education fund, unless there were offsetting savings to neutralize the impact on property tax rates.