MONTPELIER, Vt. — In his second budget address, Gov. Phil Scott kept close to his campaign promises and continued his crusade to keep state spending in line with Vermonters’ annual wage growth — about 2 percent.
“Today I present to you a balanced budget that makes strategic investments to grow the economy, make Vermont more affordable and protect the most vulnerable. And for the second consecutive year, it does not raise taxes or fees,” Scott said Tuesday before a joint session of the House and Senate.
Keeping spending flat
To keep spending under control, Scott cited a new “growth rate calculation,” a six-year rolling average of wage growth to be used as a benchmark for each new budget. For the fiscal year 2019 budget, the estimated growth rate is 2.36 percent, Scott said.
State spending in the governor’s budget is $3.87 billion, up $82 million from last year’s spending of $3.79 billion. Scott said the increase is within the confines of the wage-growth formula.
The governor’s budget priorities saw a number of important changes, from phasing out taxes on Social Security benefits and paying down debt on state pensions to establishing a new statewide funding system for education.
On revenues, the governor announced that he wants Vermont to part with the five remaining states that fully tax social security benefits. To that end, Scott urged lawmakers to phase out taxes on Social Security benefits for seniors living on law and moderate incomes. The request earned him one of the longest and loudest applauses of the speech.
On Vermont’s pension liability, Scott proposed paying an additional funds to ensure that the state doesn’t lose its top credit rating.
“Our per capita debt assigned to every Vermonter has increased since 2013 while it declined in all other triple-A states,” he said. “Additionally, Vermont’s pension liabilities – the money owed retired public employees, including teachers – is the second highest among these same states.”
The governor’s budget proposes $20 million more than required to keep pension debt under control.
On the education front, he said school boards continue an uphill battle to maintain education quality while keeping property taxes under control.
“We have districts which trimmed programs for kids to restrain budget growth to one, two or three percent each year, only to learn their tax rates are going up eight, nine or 10 percent because others have increased spending dramatically,” he said.
“With only 76,000 students in an education infrastructure built for well over 100,000, inefficiency prevents us from investing more in educational programs for our kids even as taxes skyrocket.”
The governor’s plan to save money is to getting staff-to-student ratio a little closer to the national average.
“We should chart a course that steadily moves us from an average of one adult for every four students to having one adult for every five students, over the next fiver years – using the natural retirement and attrition of the current workforce.”
Changing the ratio stands to save Vermont over $100 million a year while leaving the state with the lowest ratio in the nation.
Also on the economy, Scott once again highlighted Vermont’s ever-shrinking workforce and promoted career readiness with his “cradle-to-career” initiative. He noted that 50 percent of all high school graduates don’t pursue postsecondary education.
To deal with this, Scott is calling for more adult career and technical education efforts and he’s asking the state for $500,000 to purchase training equipment and more spaces for this more job-specific form of training.
While getting more Vermonters to work was one theme, so was getting more workers to Vermont. Scott announced a new $3.2 million targeted ad campaign called “Think Vermont,” which will reach out to people who may be interested in the state, such as former Vermont college students or frequent Vermont vacationers.
“These (conventional) efforts aren’t working in today’s competitive world. In 2018, the technology exists to identify people who want to hear our story. So, let’s use these tools coupled with direct contact to close the deal.”
To help address the opioid crisis, Scott highlighted a new initiative to get Department of Labor employment services directly into Vermont’s Recovery Centers.
“This work has already begun. Employment counselors will serve three recovery centers by the end of this Spring, and all of them by the end of the year – at no additional cost to Vermonters,” he said.
On green energy, Scott said that by “focusing on chimneys and tailpipes” – the two greatest sources of emissions – the state could stimulate more economic investment and job creation.”
He said the state’s Clean Energy Plan has identified wood-heat as an essential piece to achieving 90 percent renewable energy by 2050. He said that his Climate Action Commission has recommended $300,000 to help homeowners replace non-EPA certified wood stoves for more efficient modern stoves. He said in addition to achieving cleaner energy, this wood-heat strategy will help support the local forest-products economy.
And on his push for more electric vehicles, Scott wants to use $1.8 million from Vermont’s share of the Volkswagen emissions settlement to double the number of renewable energy vehicles in Vermont by 2022.
Also, on the EV push, he said his administration would work for less expensive charging rates at times when it has the least strain of the electric grid. And he would like to see Vermont take a lead role in the manufacturing of battery storage.
Another big challenge for the state has been the high cost of the Lake Champlain cleanup of phosphorus pollution. Scott now sees the challenge as a potential economic opportunity.
“My administration is exploring how the state can help create a commercial enterprise that captures a large amount of Vermont’s excess phosphorous and convert it to a wholesale or retail product,” he said. “We’ll soon be looking to harness the imagination and competitive nature of entrepreneurs, scientists and inventors, seeking proposals for the most efficient and commercially viable ways to segregate, process, package and sell phosphorous.”
Scott said with the right innovation and technology, Vermont could tap into the large market for phosphorus in the energy, fertilizer and compost industries.
State Rep. Vicki Strong, R-Albany, said the item that caught her attention was the governor’s push to fix the state’s broken education funding.
“I like his courage to address the funding issue, the formula we’ve been using, and to say it’s not working,” Strong said.
She added that one way to help fix education funding is to expand school choice. She said she’s hopeful that as the education funding discussion advances, so will greater opportunities for school choice.