Gov. Scott delivers low-key balanced-budget address

By Anne Galloway
VTDigger.org

There are no “bells and whistles” in Gov. Phil Scott’s 2019 budget. As expected, there are no new taxes and no new fees.

For the full text of Governor Scott’s address, click here.

Nor have any big initiatives been proposed in the budget. Instead, the governor’s office gave the Legislature a menu of options for solving the state’s $80 million education fund gap last week in the form of a memo. A $150 million prison plan was presented as a report last week, but wasn’t mentioned in the governor’s budget address Tuesday at the State House.

The increase in General Fund spending will go up from $1.49 billion to $1.56 billion, for an increase of 2.33 percent. The total budget, including federal spending, transportation and education, will go up from $5.8 billion to $5.9 billion.

Scott has exerted fiscal discipline as promised. For the second time in a row, the governor has balanced the budget without raising taxes and in an unusual move he’s decided to “hit the pause button” on environmental fees.

In his speech, he reiterated his pledge to rebuild the state’s long lagging economy in large part by reducing the tax burden on Vermonters. His vision for the future, he told the Legislature in his budget speech Tuesday, is “filled with endless potential, a growing workforce, a stronger economy and where no Vermonter must look elsewhere for prosperity.”

The affordability calculation for the state budget, Scott says, is a percentage increase that matches the 2.36 percent growth in wages this year. The annual budget growth rate under Scott’s predecessor, Democrat Peter Shumlin ranged between 3.5 percent and 5 percent. During that period, the state’s recovery from the Great Recession was slow and expenditures outpaced tax receipts. The state’s economy continues to grow at about 2 percent.

Scott described a precarious economic future for the state that can only be safeguarded with prudent, fiscally conservative budgeting and hammered home his success in bringing spending in line with revenues. “The truth is, for decades, the cost of state government has been designed to grow about 5 percent each year,” Scott said. “So, balancing this budget without raising taxes was not easy. It took careful, diligent and difficult work.”

The low-growth budget Scott has proposed supports about a dozen small-bore pilot projects funded with a few hundred thousand dollars at a pop. The largest initiative is a $3.18 million investment in Think Vermont, an economic development program aimed at persuading working age tourists to make their short-term stays a long-term proposition.

Scott also wants to bring retired Vermonters home, and said about 26,000 native born Vermonters live in Florida and another 27,000 live in New Hampshire. “It isn’t just the weather,” Scott said. “Many folks on fixed incomes want to stay here in Vermont and can’t afford that second home elsewhere. They deserve, as much as anyone, to live with the dignity in retirement they earned through a lifetime of work.”

The governor proposes to eliminate state taxes on Social Security benefits for single retirees whose overall income is under $55,000. Vermont is one of only five states that fully tax social security retirement benefits, according to the administration.

What wasn’t mentioned in the speech, or highlighted in the budget narrative, is a $16.8 million reduction in human services spending.

Adam Greshin, commissioner of the Department of Finance and Management, gave two examples of changes that are part of an effort to make state government more efficient. One of those changes is the [elimination of six operations directors] for 12 field offices at the Department for Children and Families. “We thought it would be more efficient not to have a director at each office,” Greshin said.

In the Department of Vermont Health Access, officials have realigned the coordination of care for Medicaid patients with chronic diseases who have been served by several state programs with similar objectives. The $1.5 million in savings is to be used to support a loan repayment program for doctors through the Vermont Department of Health.

“Our plan is to work with the Legislature to solve this challenge,” Young said.

The Scott administration is proposing small increases to existing programs and a half dozen pilot projects across state government. Some highlights:

Elimination of Social Security taxes on single retirees who earn $55,000 a year or less. The program would be rolled out over three years and would cost the state $1.9 million this year and by year three would cost about $6 million.

A doubling of the Down Payment Assistance Program, which helps working families buy homes. The Scott administration proposes an increase of $125,000. Last year 30 families were given grants through the program.

Adding $250,000 to the National Guard scholarship programs.

Exempting military retirement pay from the state income tax.

A $250,000 increase to the historic tax credit program for downtowns and village centers.

Sets aside $625,000 for rehabbing aging housing stock.

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