As Special Session Begins, Divide Between Governor, Lawmakers Widens

May 23, 2018

Last week, after telling lawmakers he’d be vetoing their state budget proposal, Gov. Phil Scott sent a letter to legislative leadership, insisting the two sides “are very close to an agreement.”

It appears Scott may have misjudged the severity of the divide.

Acrimony between Democratic lawmakers and key administration officials seemed only to intensify during the opening day of a special legislative session called to resolve the budget impasse.

And as Scott renewed his call to use one-time money to avert an increase in statewide property tax rates, lawmakers doubled-down on their opposition to his proposal.

“Of course, we could maintain last year’s property tax rates that we put in statute. It would just be an ill-advised decision,” Senate President Pro Tem Tim Ashe said Wednesday. “So you would pour in one-time money, govern on a credit card, and find ourselves back in the same situation next year. That’s what the governor is proposing, which is effectively deficit spending.”

Commissioner of Finance Adam Greshin said lawmakers’ reluctance to use $34 million one-time money to buy down property tax rates is misguided, given the state has $160 million more in revenues than it had anticipated in January.

Furthermore, Greshin says the administration’s plan includes provisions to ensure the $34 million is paid back next year, thanks to a number of cost-cutting mechanisms also included in its proposal.

“This is not just about the money,” Greshin told lawmakers Wednesday. “This is about reforming a system that is in need of reform so that it can perform for our children this year, next year and in the future.”

Lawmakers, however, have little faith in the savings potential of the “reforms” Greshin referenced.

Administration officials say Vermont can cut payroll costs in public schools by more than $250 million over the next five years, by assembling a task force that would help school districts find ways to reduce staffing levels.

“Our student numbers, as you might know, are steadily declining,” acting Education Secretary Heather Bouchey told lawmakers. “But we have not seen changes in our staffing levels at that same time. And this just doesn’t make sense, based on pure logic alone.”

Administration officials also say a special education reform bill passed by lawmakers will save $62 million over the next five years.

Ashe and House Speaker Mitzi Johnson say it is possible, and probably even likely, that the student-to-staff ratio taskforce, and the special education bill, will result in reduced education expenditures.

“What we’re not willing to do is pretend we can assign these massive round numbers of out-year savings projections,” Ashe said. “The experts themselves have not said it, and therefore we’re not going to say it.”

Without a guarantee those savings will accrue, according to Johnson, using one-time money to buy down tax rates now only sets up taxpayers for a rate shock in the future.

Johnson says there’s another reason it’s a bad idea for lawmakers to buy down property tax rates.

The reason those rates are set to go up next year is because local voters approved school budget increases on Town Meeting Day.

That tax rate impact, Johnson says, “maintains that connection between communities’ votes and their budgets, which is ultimately what keeps spending in check.”

Insulate taxpayers from the consequences of local school-spending decisions, Johnson says, and the state bypasses the self-regulating feature that is supposed to breed fiscal restraint among school boards.

Lawmakers adjourned Wednesday, and aren’t scheduled to return to Montpelier until next Wednesday.

Ashe and Johnson say they won’t negotiate with the governor or his team until the session resumes next week.