As Veto Showdown Intensifies, Democratic Lawmakers Test Scott With Final Budget Offer

May 11, 2017

As they battle with Republican Gov. Phil Scott over the issue of teacher health benefits, Democratic leaders in the House and Senate are trying to cast themselves as champions of property tax relief with a new plan for guaranteed savings in the education system.

For the last two weeks, Democrats and Scott have been at loggerheads over the governor’s push for a statewide contract for teacher health benefits.

Scott says the proposal would allow his administration to negotiate savings of $26 million a year in health care costs for public school employees. House Speaker Mitzi Johnson and Senate President Pro Tem Tim Ashe say they’re unwilling to sign onto a plan that, in their view, would erode the collective bargaining rights of public employees.

The House and Senate put forth a compromise plan Thursday afternoon that they say would deliver the savings without reaching into district contract negotiations. It would mandate $26 million in annualized spending reductions across the K-12 education system, but leave it to local districts to decide how to meet the savings targets.

“This is the only plan on the table that guarantees a 3-cent reduction in property taxes this year, right now,” Johnson said Thursday afternoon. “We’ve addressed the primary concern that I’ve been hearing from people about, which is property taxes. We’ve addressed that concern very clearly in this proposal. And we return it to property taxpayers this year.”

The “3 cents” Johnson referenced is the amount by which residential property taxes would drop in fiscal year 2018, under the House and Senate plan.  Non-residential property taxpayers would not enjoy the same dip.

Johnson and Ashe say it’s close to their last, best offer in grueling negotiations with a governor who has said he’ll veto the state budget if lawmakers don’t acquiesce to his proposal.

"We've addressed the primary concern that I've been hearing from people about, which is property taxes. We've addressed that concern very clearly in this proposal. And we return it to property taxpayers this year." — House Speaker Mitzi Johnson

Scott, however, says the Legislature’s plan still doesn’t meet the benchmarks needed to ensure lasting spending reductions. And he says he won’t support the plan until it ensures that the savings are derived exclusively from reductions in school health care spending.

“If we have $26 million that we need to realize year after year after year, then we have to go to something to make sure that we put into place that has the full force of the law,” Scott says.

Scott says the only way to guarantee ongoing savings is to reset teacher health plans in ways that curb growth in the future. If, under the House and Senate plan, districts negotiate more generous benefits this year, and choose to hit their savings targets through reductions in other operational line items, then Scott says the same pressures that have contributed to rising health care costs in the past will continue unabated in the future.

Scott said Thursday he’d deliver a counterproposal to legislators later that night. That counter offer, he said, would likely include language mandating that all teachers in the state get virtually the health benefits package.

Ashe, however, says that framework strips teachers of the right to collectively bargain their own health plans.

“We have said that this year, we do not want to intervene in collective bargaining, that’s the difference,” Ashe says.

Ashe says the Legislature’s plan encourages districts to produce the savings through health benefit negotiations, without forcing them to do so.

“We’re moving districts toward a unified benefit and we’ve discussed our willingness in the future to think about a statewide health benefit, so at this point it’s still a negotiation,” Ashe says. “I’m still hopeful that there’s room to reach an agreement, and there is. But we’ve got to move forward.”

Ashe says the window for negotiations is down to its final hours, and that the Senate will vote on the teacher health package Friday, and adjourn for the session, whether lawmakers find middle ground with the governor or not.

"If we have $26 million that we need to realize year after year after year, then we have to go to something to make sure that we put into place that has the full force of the law." — Gov. Phil Scott

If they move forward without a compromise, however, then Scott has indicated he’ll veto the budget, which would bring lawmakers back for a veto session in June. The House does not have the votes to override that prospective veto, which means the entire debate could play out all over again in a few weeks.

Ashe says at this point, he’s at a loss for what else to give Scott.

“Here we are, actually putting the money on the table, giving it back to taxpayers, and I believe that at this point we’ve met the veto threat,” Ashe says. “We have provided the tax relief exactly, in fact more, than what the governor had proposed.”

Johnson says Scott’s plan doesn’t offer a guarantee of any savings. Scott has outlined the teacher benefit package he’d try to put in place if the state does move to a statewide contract. It would require school employees to pay 20 percent of their premiums, and also to have at least $400 in out of pocket exposure for deductibles and co-pays.

Actuaries at the non-profit that administers the teacher health care plan say the out of pocket costs would bring new price sensitivity to policy holders, and influence consumer behavior in ways that lower overall medical expenses for the approximately 36,000 people covered under those plans.

“There is no way to guarantee the outcome of a negotiation,” Johnson says. “The governor can’t guarantee the outcome of a negotiation that would be centralized with the state.”

Jeff Fannon, president of the Vermont-NEA, the union that represents teachers, says he thinks the Legislature’s plan is a fair one that keeps collective bargaining intact. Fannon says it will put pressure on local districts to identify savings. He’s says it’s possible that if districts can’t extract those savings through property health benefit negotiations, then they could have to reduce expenditures that directly impact educational programs.

Bristol Rep. David Sharpe, the Democratic chairman of the House Education Committee, says it wouldn’t be such a bad thing if districts did resort to hitting their new savings targets by reducing staff. Sharpe says staff-to-student ratios have become untenably high in Vermont schools.

“We’re moving in the wrong direction with regard to the number of staff in our schools versus the number of pupils in our schools,” Sharpe says.  “And so if school districts decide they want to continue to be generous with their health care plans, and instead address the savings by reducing staff, I think that’s acceptable.”