Updated at 5:34 p.m.
Republican Gov. Phil Scott gave his 2024 State of the State address Thursday afternoon.
Find a full transcript of the governor's speech here.
Scott used his address to warn Democratic lawmakers of a 鈥渟obering鈥� new economic reality that will require elected officials to slow the rate of growth in the state budget and limit the scope of government in Vermonters鈥� lives.
Shrinking state revenues and the expiration of historic federal aid, the fourth-term governor said, will result in a fiscal year 2025 budget proposal from him later this month that grows at less than the rate of inflation.
Scott said the year ahead will mark an abrupt shift from the hundreds of millions of dollars in surpluses that lawmakers enjoyed in previous post-pandemic budgeting cycles. The state budget enacted by lawmakers last year grew by about 13%, and Scott said Thursday that the spending plan he鈥檒l unveil this year will propose an increase of about 3%.
鈥淥nce again, we鈥檒l face the discomfort of saying 鈥榥o,鈥� choosing between many good things, and maintaining the discipline to focus on what Vermonters need most,鈥� he said. 鈥淚 know from experience many of you view 3% growth as an 鈥榓usterity鈥� approach.鈥�
Democratic supermajorities in the House and Senate mean that Scott鈥檚 control over the state鈥檚 purse strings is more limited now than when he assumed office in 2016. Last May, Democrats overrode Scott鈥檚 veto of the state budget.
The governor acknowledged the same outcome could be in store in 2024.
鈥淚鈥檓 a realist, and I know you have a supermajority. You鈥檝e proven the final budget, and the growing burden of taxes, fees and other policy-driven costs, is in your hands,鈥� he said. 鈥淪o all I can do is make my case.鈥�
Scott began making that case Thursday by highlighting the 18.5% increase in education property tax rates that the Department of Taxes is forecasting for next year. The estimate represents a potential $250 million in new tax obligations, Scott said, or about $650 a year on average for a household that lives in a $250,000 home.
Scott said minimizing the financial pressure on Vermonters will require limiting state budget increases, and finding new ways to bend the cost of education, such as school consolidation, mandating minimum classroom sizes, or moving to a statewide teacher contract.
鈥淭hink about those folks that are just barely getting by, living paycheck to paycheck, already deciding what bills to pay and what to do without,鈥� Scott told lawmakers.
Vergennes Rep. Diane Lanpher, the Democratic chair the House Committee on Appropriations, said Thursday that it鈥檚 true that Vermont won鈥檛 have access this year to the same level of one-time appropriations that flowed from federal aid bills during the pandemic.
But she said the needs of the residents for whom government assistance is a last resort don鈥檛 ebb and flow alongside yearly budget cycles.
鈥淲e still have Vermonters that are living in crisis day to day, not knowing if they鈥檙e going to have a roof over their head or if they鈥檙e going to be able to feed themselves or their family or where they鈥檙e going to go or how they鈥檙e going to function,鈥� Lanpher said. 鈥淪o we 鈥� would like to meet them where [they] are living today.鈥�
Asked if the Legislature could meet those needs with a state budget that rises by 3%, Lanpher said, 鈥淚 don鈥檛 know that answer yet.鈥�
House Speaker Jill Krowinski said her chamber won鈥檛 anchor itself to the same 3% figure that Scott refuses to exceed. And she said tying the state鈥檚 spending plan to an 鈥渁rbitrary鈥� growth cap is at odds with the Legislature鈥檚 approach to budget writing.
鈥淚nstead of saying, 鈥榃e can only work with this number,鈥� I think we need to say, 鈥榃hat are the challenges in our communities? And how best can we serve people?鈥欌�� Krowinski said.
Scott also called for action Thursday on two issues he said pose the most immediate threat to Vermont鈥檚 quality of life: housing and public safety.
On housing, Scott said it鈥檚 become clear that historic public investments in affordable housing 鈥� $500 million since March of 2000 鈥� won鈥檛 be sufficient to address the housing crunch created by median home prices soaring and rental vacancies plunging.
Scott placed blame for the difficulty of constructing new housing squarely on the state鈥檚 landmark land-use law, called Act 250. And while he didn鈥檛 call for any specific reforms to the statute Thursday, he said he鈥檒l be pushing for major changes during the 2024 legislative session.
鈥淲e鈥檝e committed the funds and laid the groundwork, but if we don鈥檛 truly address Act 250, we won鈥檛 solve our housing crisis,鈥� he said.
But Senate President Pro Tem Phil Baruth, a Democrat from Chittenden County, says the law has critical value.
鈥淚 don鈥檛 believe that Act 250 is the problem," Baruth said Thursday. "I believe in certain cases it can be a problem. And for certain developers looking to develop certain projects, it might be a deal breaker.鈥�
Baruth accused Republicans of pushing to get rid of Act 250, and says the law protects Vermont鈥檚 landscape, and aesthetic and water quality. He says these things draw people to the state, and are important to protect.
More from Brave Little State: Vermont is changing. Should Act 250 change with it?
On the issue of public safety, Scott鈥檚 speech was also short on details for reforms, though some of his top cabinet officials have already begun making the case in the Statehouse for increasing use of bail to keep offenders in prison pending their trials.
鈥淲hen those who victimize others are put back on the streets hours after being apprehended, only to reoffend again and again, Vermonters question law enforcement, prosecutors, our courts, and they question the wisdom of the work done here in this building,鈥� Scott said.
Krowinski said she鈥檚 eager to hear 鈥渕ore details and concrete proposals鈥� on precisely what Scott has in mind to increase access to housing and improve public safety.
She said the Legislature will pursue a number of public safety reforms, including eliminating a backlog of pending criminal cases, streamlining the appointment of judges and improving access to mental health services.
For some lawmakers, the most concerning part of Scott鈥檚 address was what they say it did not include. Scott opened his address with a nod to the floods of 2023, and concluded with a smattering of heartwarming anecdotes about recovery efforts in flood-ravaged communities across the state.
Montpelier Rep. Conor Casey said the governor failed to acknowledge the crisis situation many households and businesses still face as a result of flood damage.
鈥淎ll the warning signs were there that we can鈥檛 expect significant investments in flood recovery or mitigation when the [governor鈥檚] budget does come out,鈥� said Casey, a Democrat.
Casey is a co-sponsor of an omnibus flood bill that calls for $85.5 million in state funding to help individuals, businesses and municipalities recover from the flood. After hearing Thursday鈥檚 speech, Casey said he鈥檚 concerned that lawmakers won鈥檛 have an ally in the executive branch as they seek to advance that legislation.
鈥淲e need a clear message from the state that says, 'Help is on the way,'鈥� Casey said. 鈥淭he governor did not deliver that message today.鈥�
Abagael Giles contributed reporting to this story.
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