MONTPELIER, Vt. — Gov. Phil Scott yet again vetoed the state budget, leaving just about two weeks left before there could be a government shutdown if no deal is reached.
“I appreciate that the new budget sets the homestead ‘yield’ at the current level and that some effort was made to separate the remaining areas of disagreement from the budget,” Scott wrote in his veto statement. “I also appreciate that several amendments to H.13, though they were not adopted, were introduced by both Democrats and Republicans in the House and Senate.”
He adds that those amendments would have addressed what he sees as a default tax increase on the budget if the budget, H.13, were signed and no other action was taken. However, these amendments were not adopted by fellow lawmakers.
“H.13 leaves in place an automatic $23 million [5.5 cents] property tax rate increase on non-residential payers – our rental property owners and renters, camp owners, and employers,” he wrote.
There is another bill, H.4, which is supposed to address issues of contention not resolved in the budget bill, the majority party is arguing that this is where the tax rate can be dealt with. Scott’s administration argues that leaving a default tax rate increase in H.13 takes away his leverage in negotiating.
In the hours leading up to Scott’s decision, his opposition in the minority party made it clear that they dispute the notion that the budget includes constituted a tax increase. Senate President Pro Tem Tim Ashe, D/P-Chittenden, offered his thoughts on Twitter.
In this segment the Gov claims the bill on his desk to prevent a government shutdown includes a tax increase. Simply not correct. We passed a bill he could and should sign, with nothing in it he opposes. We cannot have a gov't shutdown. https://t.co/AyiXBnFJWW
— Tim Ashe (@TimAsheVT) June 13, 2018
Speaker of the House Mitzi Johnson, D-South Hero, also turned to Twitter to express her frustration.
I’m disappointed @GovPhilScott vetoed the budget today-a bill that guarantees there will be no govt shut down, doesn’t increase tax rates or include anything the Gov opposes. The bill reflected movement toward the Gov’s position. He hasn’t made a single concession. #vtpoli
— Mitzi Johnson (@MitziJohnsonVT) June 15, 2018
Meanwhile, in addition to conflict over the non-residential tax rate, a key issue of contention continues to regard now $55 million in unexpected tax revenue. Previous estimates had the amount figured at $34 million, but with more revenue announced Scott said in a Thursday press conference that “we have more money than we ever anticipated.”
While Scott wants to use this money for paying down the tax rate, the majority party insists using one-time money to buy down the tax rate is “governing with a credit card” and they would rather see the money used to pay down pension liabilities for state workers.
Scott in his veto letter reiterated his stance.
“Nevertheless, our large and growing surplus, combined with other unanticipated revenue, allows us to craft a budget and tax bill that fully funds school budgets, keeps statewide property tax rates level and makes a significant payment towards the unfunded teachers’ retirement debt,” he wrote.
Senate minority leader Joe Benning, R-Caledonia, in an interview said he questions the notion that unanticipated tax revenue in a time when it seems the economy is getting stronger really constitutes one-time revenue.
“The fact that we are experiencing a time period of unanticipated revenues, tells me that the economy is improving, and that money can be relied on in the future less and less like this is a one-time fee,” he said. “And even if it was a one-time fee, municipalities practice tax stabilization all the time.
“The excuse for the legislature has always been that we’ve got to pay down this teacher’s retirement debt, but there has been a plan in place to pay that down already.”
On the potential government shutdown, Vermont Treasurer Beth Pearce has been calling for an emergency contingency plan to ensure that state workers and other liabilities are continued to be taken care of in the case of a shutdown.
“It remains unclear whether we will have the authority to employ the staff necessary to administer the pensions and other programs,” she wrote in a letter to lawmakers.
At the press conference, Scott said his administration will “utilize every possible means within our constitutional authority” to make sure all liabilities are met. He added that he doesn’t think “Vermonters have anything to fear.”
What’s next is lawmakers will see if they can override the governor’s veto next week. There are 53 Republicans in the House which – if most of them support the governor – would sustain his veto.
Benning said that he doesn’t think lawmakers should be surprised by the governor’s actions.
“In fairness to the governor, the governor ran on and was elected on the belief that there should be no new taxes and no new fees,” he said. “He had made that very clear in his inaugural and he wrote at least one letter that I recall seeing while the legislature was in session reminding us of that.
“So it did not surprise me that he vetoed the budget, I had voted for the budget but against the tax bill. I liked the way money was being spent, I just didn’t like the way money was being collected.”
He added that as far as the two chambers are concerned, this whole special session has been mostly the work of the Houes and administration so far.
“I have kind of felt like the Senate has been out of the loop because all the money bill discussions have been taking place in the House,” he said. “Other than that one day of the Senate rubber-stamping what the House has already done, the Senate really hasn’t sat down to have a conversation and I am very worried that the present position of leadership in the Senate, and the House, as well as the governor’s continued position, are about to lead us down a path we’ve never been before.”