With Nod To 'Affordability,' Scott Budget Seeks Tax Breaks For Seniors, Workforce Development Funds

Jan 23, 2018

In a budget proposal that one administration official describes as having “no bells … and no whistles,” Republican Gov. Phil Scott is calling for a $5.9 billion spending plan that pegs the rate of growth in the budget to the increase in Vermonters’ incomes in recent years.

The “general fund” portion of the budget plan - that’s the pot of money that pays for general operating expenses in state government - will hit nearly $1.6 billion in fiscal year 2019 under Scott’s plan. That’s a 2.3 percent increase over this year, which Secretary of Administration Susanne Young says is tied to Vermonters’ wage growth over the past six years.

“We want … a budget that doesn’t exceed the ability of Vermonters to afford it,” Young told reporters during a media briefing prior to the governor’s address.

Young says underlying growth in state revenues, which are expected to jump by $82 million next year, means the administration can support the spending plan without any new taxes or fees. She and Commissioner of Finance Adam Greshin say the proposal includes several new investments that will advance Scott’s goals of making Vermont more affordable, and increasing the state’s workforce.

Among the more expensive items is a proposal to exempt social security income from the state income tax. Scott wants to phase the exemption in over three years; once it’s fully instituted, the change would cost the state $6 million annually in foregone revenue.

That proposed tax break is in addition to a plan unveiled by Scott during his State of the State address that would exempt military pensions from the state income tax.

Scott wants to spend an additional $500,000 annually on adult technical education centers, with the goal of retraining unemployed or under-employed workers for available jobs. He wants another $300,000 to pay for the creation of economic development proposals for the state.

Scott is also looking for about $3.1 million to launch a program he says will encourage working-age out-of-staters to relocate to Vermont. Secretary of Commerce Michael Schirling says the overall goal is to add 2,200 people to the workforce annually. He says one way to accomplish that is by “developing technology that will help us reach out to those who appear interested in moving to Vermont and getting them information.”

Audio & Full Transcript: Gov. Phil Scott's 2018 Budget Address

Scott’s budget includes several million dollars in capital bill appropriations to create more bed space in the mental health system. Specifically, Scott wants about $4.5 million to construct a 12-bed  mental health “forensics unit” for people with psychiatric issues who have been caught up in the criminal justice system. That unit would be built at the Northwest State Correctional Facility in Swanton.

Scott is also asking for money to replace a temporary psychiatric facility in Middlesex with a 16-bed building somewhere in central Vermont.

Greshin says accommodating the new spending requests without raising taxes or fees requires agencies to decrease spending on other government programs. Precisely where those cuts are targeted is difficult to pin down; in a budget booklet handed out to reporters after the briefing, the administration attributes nearly $16 million in reductions next year to “policy actions” at the Agency of Human Services.

The budget proposal today is perhaps most notable for what it doesn’t include: a plan from Scott to avoid an increase in property tax rates.

The Scott administration distributed a memo to lawmakers last week with a number of possible ways to curb spending on education - the list includes mandatory reductions in staffing numbers at Vermont schools.

But Young says rather than offer up a proposal for how to avoid a property tax increase, Scott will instead work with lawmakers in the coming weeks and months to try to develop a consensus proposal.