End of Session Report- The Money

The legislative session came to an energetic close on May 12th when the gavel fell around 11:30 pm. We passed a balanced budget, and a few hundred bills and resolutions that will make our state better overall. Some of us were hoping for more progress, less spending and greater transparency of the administration. We are getting there. For the next few weeks I’m going to be digging into just why I think that, by reporting on the past session —topic area by topic area—with some help from my esteemed colleagues in the respective committees of jurisdiction. This week I’m covering the Money. That includes our budget, or appropriations (thanks Rep. Tiff Blumle and Rep. Kari Dolan), The Capital Bill (Rep. Tristan Roberts and Rep. Connor Casey) and Vermont’s Tax System (Rep. Julia Andrews).

A Balanced Budget

On May 12th the House and Senate gave final approval to a balanced $8.4 billion budget that funds our state government for the 2024 fiscal year. The “Big Bill”, H.494 invests in top constituent priorities, including housing, childcare, workforce development, climate and conservation, and vital human services.

Here is a a very broad overview of the final budget package sent to the Governor and here is a list of the one time investments.

These investments support our economy, our communities, and our families. We built the budget in a way that boldly steps up to respond to problems rather than kicking the can down the road. This process carefully weighed costs and benefits, made very tough choices, and then delivered sufficient dollars to meet the needs of today while moving toward a stronger future.

Key investments include:

Health and Wellness

H.494 starts a $20 million two-year pilot to expand the “hub and spoke” substance use treatment system to include mental health and family services; funds a statewide expansion of mobile crisis units (to relieve pressure on hospital emergency rooms); and invests in recovery centers, recovery housing and after school, youth mentoring and substance misuse prevention programs. It also funds the Vermont Food Bank, Reach Ahead and Prevent Child Abuse Vermont.

The budget also contains a major ($99.7 million) update to rates that support our medical and human services programs. These rates have been underfunded for years, lagging significantly behind rates offered by private payers in the region, causing a substantial and destabilizing shortfall for providers serving the Medicaid population. This investment is one that moves us closer to health equity and equal access for all residents of Winooski. We’re boosting the rates for primary and specialty care, dental care, home health, nursing homes and residential care, adult day care, substance use and mental health, ambulance services and more. Importantly, increasing these rates will help us attract and retain workforce, meet demand for services, and free up hospital emergency rooms.

Housing ($211 million)

Here is a link to an overview of housing investments in the budget. The budget includes $109 million to expand affordable housing and $102 million for emergency shelter and support services for unhoused Vermonters, recovery housing, transitional housing for Vermonters exiting prison, and housing for young people exiting the foster care system. 

An additional $12.5 million in one-time funds was added to the budget by conference committee. These dollars will help our community partners, working with the state, to transition people to more permanent housing or other temporary shelter.

The FY24 budget also includes clear language directing the administration to take an all-hands-on-deck approach, including a coordinated effort between all state agencies and community partners to support Vermonters who are transitioning out of the motels. And as soon as the budget is signed into law, the $12.5 million will be immediately available in flexible grants to meet people’s short-term needs, such as rental deposits, car repairs and transportation, furniture or appliances. These grants could also help with hiring or retaining shelter staff.

Childcare ($76 million)

This investment — the first in a multi-year system transformation — will make childcare affordable for families, raise rates to provide financial stability for childcare providers, and boost pay for our valued early childhood workforce.  Note the child care package is funded on an ongoing basis through H.217 a separate bill that I’ll cover in an upcoming post.

Workforce and Higher Education ($74 million)

The budget contains a $47 million package to attract and retain workers in fields with severe shortages, including nursing, dental hygiene, teachers, psychiatric care and the skilled trades. It also funds UVM and Vermont State University, successful scholarship programs like 802 Opportunity and Critical Occupations, adult education, small farms and organic dairy producers, and allocates funds to help small business, rural industry, and working lands enterprises. 

The Capital Bill

Capital Investments in our Communities

The General Assembly passed the Capital Construction bill for FY24 and FY25. H.493 makes capital expenditures for public infrastructure projects. Every two years, the State identifies a bonding capacity for capital investments that will be fiscally sound over the long term. This year, the recommendation was for a $108 million bonded capital bill spent over two years. The legislation that we passed used General Fund surpluses instead of bonding for those projects. This will help to reduce the states debt burden and ensure that funds are available for future capital needs.

Many of the state capital dollar investments will go directly back to communities and importantly, it will also be used to meet our state match allowing us to draw down federal dollars. This includes investments in municipal water systems such as wastewater treatment plants and municipal drinking water systems. The capital bill also funds a series of Building Communities grants which directly benefit our cities and towns.  These include: cultural facilities grants, historic barns and agriculture grants (a program that has preserved over 100 historic agricultural buildings), historic preservation grants (in partnership with the Preservation Trust of Vermont), recreational facilities grants program, and regional economic development grants.

Overall, the Vermont Capital Bill for FY24 and FY25 reflects the legislature’s commitment to investing in public infrastructure and supporting local communities, while also addressing critical needs related to human services and property management.

A More Effective Public Safety and Correctional System 

The Capital Bill addresses pressing issues related to the states correctional facilities. Specifically, it begins looking at the replacement of the Chittenden Regional Correctional Facility, which currently houses women. The state is exploring a range of options, including a reentry facility where residents could leave the facility on a daily basis to attend off-site rehabilitative programs or employment. Harsh, punitive living environments in correctional facilities are counter-productive to rehabilitation and create difficult working environments. That’s a major problem right now: an ongoing officer shortage has left remaining Corrections employees, both in facilities and probation and parole officers in the field, overburdened. As we replace correctional facilities going forward, our policies must focus on evidence-based, trauma-informed practices.

Vermont’s Tax System

Modernizing Vermont’s Property Tax System

This year the legislature analyzed the current property tax system and how it can be improved to become more predictable and understandable for taxpayers. H.480 will ensure consistent standards and practices for property valuation and reappraisals across Vermont and create a more equitable property valuation system suited to the needs of a modern tax system. We’re likely to continue our work on property taxes and property valuation in the next legislative year as well.

Supporting School Budgets with the Yield Bill

The  Yield Bill is an important (if not esoteric) piece of legislation where each year, the legislature sets the property tax rate based on the sum of the school budgets passed across the state. This year we saw budgets pass all over the state with significantly increased spending - due to increased needs in the aftermath of the pandemic. Fortunately, there were also increased revenues to support those budgets. Looking ahead to next year, however, we anticipate that education spending will likely go up again but our non-property tax revenues might not increase. So when the legislature set tax rates this year, we put aside some of the revenue to offset next year’s taxes, without veering from the Commissioner of Taxes’ forecast (often called the December 1st letter).

Supporting Vermont’s Priorities

This legislative session we worked to support state government priorities and strengthen Vermont in the context of an unstable and unpredictable national and global landscape. In order to do this the Ways & Means committee examined where resources are available now and where they may be developed in the future. Good tax governance requires regularly and predictably adjusting fees to track with inflation, developing a progressive, equitable tax system, and ensuring we have a solid mix of revenue sources so as times change funds can supplement each other. The massive boost of federal COVID-era grants created a massive one-time increase in our budget. While the availability of those funds is coming to an end, they have bolstered the economy so much that Vermont is in a healthier financial state than before the pandemic. While opportunities for one- time spending will be fewer (another reason to be strategic and impactful with these choices), overall the revenue base is expected to be higher.

With the economy doing so well, corporations have also benefited in the last few years. The legislature restructured Vermont’s corporate tax structures so less profits could be hidden (or attributed to other jurisdictions), and corporate revenues are up as a result. Massive infusions of federal and state spending don’t just help once, they continue to flow through the economy.