Week four of the legislative session started on Tuesday morning with the Senate holding a veto override vote on H.158, a bill that would have expanded Vermont’s bottle bill. The Senate failed to override Governor Phil Scott’s veto by a vote of 17 in favor and 13 opposed. The vote failed as it did not reach the two-thirds necessary to successfully override a veto. The vote likely ends the debate on expanding the bottle bill for 2024.
On Tuesday afternoon Governor Scott delivered his FY2025 budget address to a joint assembly of the legislature. The address focused on the governor’s top priorities – affordability, public safety and housing. The $8.6 billion proposed budget represents an overall increase of about 3.6 percent in the General Fund. In his speech Scott reiterated his call to curb the spending trends of the past few years that were fueled in part by billions of dollars in Covid-era federal programs. With those federal funds winding down, the governor urged lawmakers to curb spending, making the case that more increases will impose too much of a burden on Vermont taxpayers.
By the end of the week the House passed the FY2024 budget adjustment act (BAA). The annual mid-fiscal year spending adjustment bill drew opposition from some Republican lawmakers, who in floor speeches argued against increased spending. Extending the “motel program” established during the pandemic, which pays for unhoused Vermonters to stay in local motels, was a particular point of contention. Ultimately the BAA easily passed the House, and will now go to the Senate for consideration.
Act 127 of 2022, also known as the pupil weighting law, significantly reformed Vermont’s school funding formula. The intention of the law was to promote equity in school funding, especially for underserved districts. Factors like inflation, healthcare costs and the end of federal pandemic aid have all created intense pressure on school budgets. Act 127 has become a focal point as lawmakers eye the rising cost of education.
Last Friday in an open letter to school districts, House Ways and Means Committee Chair Emilie Kornheiser and Senate Finance Committee Chair Ann Cummings expressed serious concerns about escalating school spending. Their letter was meant to dissuade districts from increasing spending, which is anticipated in part because of a provision in Act 127.
On Thursday, the House and Senate Education committees, along with the Senate Finance Committee and the House Ways and Means Committee, heard from multiple school districts about the financial pressures they are facing. Supporters of Act 127 are concerned that the law has become a scapegoat as a confluence of budget pressures drive up the cost of education. They advocate for maintaining Act 127’s equitable funding and recommend addressing increases in other ways.
In Vermont, increased spending by school districts can significantly impact the state’s education funding system. This system is referred to as ‘self-balancing’, meaning the Education Fund matches spending by local school districts. When a district spends more, it increases the weight on the Education Fund which can lead to higher taxes statewide, as the fund is primarily supported by property taxes. So any major increase in spending by one district can affect tax rates across the state.
The tax and education committees are expected to continue to discuss the issue in the coming weeks.