Scott Vetoes State Budget, Lawmakers Call For Government Shutdown Contingency Plan

Jun 14, 2018

Gov. Phil Scott Thursday night vetoed the state budget passed by lawmakers last week. And with Scott and the Legislature still at odds over one key policy issue, elected officials are calling on the administration to develop a contingency plan in the event of a government shutdown.

Audio for this story will be posted.

State Treasurer Beth Pearce has seen her share of partisan gridlock over the years. She says nothing compares to what’s unfolding in the state capital these days.

“You know, I’ve been in the treasurer’s office as a deputy or a treasurer for 15 years. [I've] never seen anything like this,” Pearce said Thursday of the impasse between Scott and Democratic lawmakers. “This does not serve Vermonters well.”

The sticking point is over a singular issue: Scott wants to use $34 million in one-time money to keep property tax rates flat next year; lawmakers say it’s a fiscally reckless way to spend the cash.

Neither side seems willing to budge at this point.

And with the fiscal year set to expire in end of day June 30, Pearce said it’s time for the administration to begin planning for what until recently seemed unthinkable in Vermont — a government shutdown.

"The good news is that neither the Legislature nor the administration wants to shut down government by July 1, and I think that's important." — Gov. Phil Scott

“We’re talking days from a year-end, and we don’t have a plan in place,” Pearce said. “We need to have these answers.”

At a press conference on Lake Elmore Thursday to kick off a state parks promotion, Scott downplayed fear of a government shutdown.

“I think [Pearce] is more concerned than she needs to be at this point in time,” Scott said.

What happens July 1 without a budget?

Scott deflected questions about whether his administration has in fact begun developing the contingency plan the state treasurer has called for.

“The good news is that neither the Legislature nor the administration wants to shut down government by July 1, and I think that’s important," Scott said.

The bad news, at least for people who rely heavily on government services, is that the Legislature and administration seem equally averse to capitulating to each other in their weeks’ long budget standoff.

Scott said the Legislature will have the authority to make appropriations come July 1, even if there’s no formal budget in place.

“We will utilize every possible means within our constitutional authority to keep services going,” Scott said.

Senate Appropriations Chairwoman Jane Kitchel, however, said Vermonters deserve a more detailed contingency plan, in the event the budget logjam doesn’t break.

“Because it’s everything that people take for granted: public safety to prisons, to protection of our children, protection in our services to the most vulnerable,” Kitchel said.

Scott said he thinks Democrats are using the specter of a government shutdown to confuse the issue, and draw attention away from the central fiscal dispute.

“There are many people that are utilizing this as a scare tactic so to speak, to frighten Vermonters,” Scott said. “And I don’t think Vermonters have anything to fear."

Scott vetoed the first budget lawmakers sent him because it would have resulted in an increase in statewide property tax rates. Lawmakers say the latest budget plan they passed excludes the tax provisions Scott had objected to.

But Scott said he needs a guarantee from lawmakers that rates won’t go up, and he said their newest proposal doesn’t have one.

What's next?

Lawmakers will likely try to override Scott's budget veto sometime next week.

With 53 Republicans in the Vermont House, however, a united front from GOP lawmakers will be enough to sustain the governor's veto.

If lawmakers are unable to override the veto, Kitchel said the Legislature will deliver yet another budget — its third of the year — to Scott's desk before July 1.

Senate President Pro Tem Tim Ashe, however, said that next budget won't "abandon the principles" that have thus far prevented lawmakers from going along with Scott's plan to use a budget surplus to buy down property tax rates.

Scott said Thursday he doesn't understand their opposition.

“It’s hard to believe that we come to July 1 and shut down government to raise taxes. I mean I can’t understand that," Scott said. "I fail to see where everyone can’t win out of this situation.”

Ashe said Scott's plan would artificially depress property tax rates for one year, and lead to "sticker shock" next year, when taxpayers see two years' worth of rate increase bundled into one.

Ashe said many lawmakers think the administration is pressing its plan precisely to ensure that "shock," because it would bolster Scott's case for a more interventionist approach from Montpelier when it comes to cost-cutting measures in the education system.

This post was edited at 8:23 p.m. to include news of Scott's veto