- Associated Press - Thursday, June 7, 2018

MONTPELIER, Vt. (AP) - The Vermont Legislature approved a second budget bill Thursday, but like its predecessor, it faces a likely veto from Republican Gov. Phil Scott.

The Senate suspended the rules Tuesday and voted 22 to 3 in favor of the budget bill, which passed the House on Tuesday. Democratic leaders introduced the second budget bill last week as a compromise that would keep the government open while property tax negotiations continue.

“One thing that cannot be said enough is that the implications of not having a budget July 1 are very, very significant and very serious,” Democratic Sen. Jane Kitchel, of Caledonia County, said during the debate before the vote.

Scott said Wednesday he would likely veto the bill because it contains a provision that would automatically increase nonresidential property taxes. While there still are weeks left until the state government would shut down, the standoff pushed the state closer and closer.

BACKGROUND



Scott and the legislature have been in a standoff over the budget and property tax bills since Scott vetoed both last month and called legislators back to Montpelier for a special session. Scott, citing his campaign promise to oppose any increase in taxes, wants to use $34.5 million in one-time funds from unexpected tax revenue and a settlement with the tobacco industry to pay down property tax rates and hold them at the previous year’s level.

Democratic leaders oppose Scott’s plan and would rather fund teacher pension obligations, an option they said will save the state $100 million in avoided interest. They have referred to Scott’s plan as “governing on credit.”

AFTER THE VETO

Last week, Democratic Speaker of the House Mitzi Johnson and Senate President Pro Tempore Tim Ashe, a Democrat and Progressive, announced a second budget bill last week. They said this budget bill excludes the points of contention and would allow the state to have a budget when the new fiscal year begins on July 1 while negotiations continue over property tax rates. The second budget bill does not appropriate the $34.5 million in dispute.

Scott said he would support a compromise budget bill, but last week he said the one introduced by Democratic leaders contained a provision he could not support. While the second budget bill maintains the residential property tax rates, it contains a provision that would automatically increase non-residential property tax rates on July 1.

Republicans in both the House and Senate introduced amendments that would have maintained non-residential rates as well, but they failed in both chambers.

WHAT’S NEXT

Democratic leaders have said there is enough time to negotiate property taxes after they guarantee the state government will not shut down next month, but Scott said he is worried there will not be enough motivation to return to the negotiations.

Both sides are hopeful the state government will be open on July 1, but they also have maintained their right to hold non-negotiable positions.

The battle over property taxes hints at a larger dispute over education in Vermont. Larger public school budgets, which were approved by voters earlier in the year on Town Meeting day, are driving the increase in property taxes.

Scott said Vermont’s public education system has not changed despite a decrease in statewide enrollment, but an overhaul of the public education system would likely create more legislative disputes.

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