Governor signals potential budget conflict regarding use of massive federal funds

Wikimedia Commons/JP Valery

MONEY TO BURN: At least $5 billion in federal funds have come into the state since the COVID-related shutdowns began, and now the governor and lawmakers disagree on how to spend it.

At Tuesday’s press conference, Gov. Phil Scott signaled a potential budget conflict regarding the state’s intake of massive federal funds intended as relief for COVID-related issues.

The governor said House and Senate lawmakers are currently working out differences regarding the state’s next budget. The state received at least $5 billion in federal funds since the start of the pandemic.

“This year, given the unprecedented amount of federal money as well as upgrades in state revenues, we have an opportunity to address some important issues,” Scott said.

The governor would like to use over $15 million to help alleviate the state’s health care worker shortage, but lawmakers don’t approve.

Scott also wanted to see big investments in housing.

“I asked the Legislature to take half of this session’s $145 million [more than $75 million] housing package and put it in the budget adjustment because we could and should begin this work now … this would help tremendously,” he said. “Unfortunately the money we asked for to address middle-income housing was stripped out by the House. And more concerning, $20 million more was taken out in the Senate version.”

RELATED: Transcript: Governor Phil Scott Calls for Changes to Legislature’s Budget Adjustment Bill

The governor added that he has concerns about how American Rescue Plan Act (ARPA) funds are spent.

“Last year, after the state received historic funding, I was clear that this one-time money must be used on tangible, transformative initiatives,” Scott said. “Specifically I asked that the money be dedicated to housing, climate change, water and sewer infrastructure, as well as broadband.”

Scott said that initially, it seemed that he and lawmakers were largely on the same page for these funds. He said now the state is using money intended as savings for things that this new federal money could easily cover.

“Unfortunately the BAA [Budget Adjustment Act] currently uses the federal ARPA funding where surpluses general funds could be used instead. … I laid out a plan for the entire pot of ARPA money, and I haven’t seen one from them, at least not yet.”

A recent report by Leonine Public Affairs indicates that Vermont’s lawmakers may seek a housing initiative that they previously couldn’t advance past the governor’s office. It states that lawmakers want “a new version of a rental registry bill,” which had already been vetoed by Scott.

The Scott administration has a reputation as an advocate for responsible fiscal policies in the past, including in 2018 a budget showdown between Scott and lawmakers regarding $58 million —  the governor wanted to pay down property taxes while opposition lawmakers wanted it for other causes.

Vermont Secretary of the Agency of Administration Kristin Clouser commented on the scope of some of the other proposals for this money.

“Total appropriations exceed $200 million in this BAA,” she said. “And the bill contains critical proposals in key issues for Vermonters. … We continue to have concerns about how decisions made now will impact Vermont’s future vision.”

Some of the administration’s greatest concerns include that the latest proposals are not addressing “the larger economic revitalization needs of the state,” she said.

She said just one house amendment to the BAA resulted in $106 million in new ARPA spending, and the Senate added $114 million. She said altogether these two proposals go $86 million more than the governor’s proposal.

She noted there were five spending categories that were agreed to, which she suggested are not being followed, which were housing, climate change mitigation, water/sewer infrastructure, broadband, and economic recovery.

She said of the $508 million in available ARPA funds, these proposals instantly reduce that to $423 million. She said that amounts to almost the total of all money proposed for broadband in the governor’s proposal, and it’s greater than the amounts allocated to water and sewer needs.

“The legislature has made these significant cuts without providing a vision or roadmap as to how or if they plan to fund these essential infrastructure projects in the future,” she said. ” … Infrastructure projects proposed by the governor are critical and they are expensive, that is why they have not been done, and they might never be done if we fail to direct these resources to once-in-generation investments.”

An example of infrastructure needs in Vermont is keeping the roads driveable. It’s not uncommon that Vermonters will get irritated at the state of the roads when they aren’t repaired.

Michael Bielawski is a reporter for True North. Send him news tips at and follow him on Twitter @TrueNorthMikeB.

Image courtesy of Wikimedia Commons/JP Valery

One thought on “Governor signals potential budget conflict regarding use of massive federal funds

  1. How about instead of quickly and recklessness spending it all that we spend it down slowly and lower state income taxes in the meantime?

    A lower state income tax rate might actually attract new businesses and more Vermont residents!

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