The Vermont House advanced a state budget plan this week. But it relies on hundreds of millions in federal funding that many fear could evaporate in an instant if Congressional Republicans have their way. Already, lawmakers are hinting they may not be able to use more than $100 million in surplus funds to offset property taxes 鈥� and that far more difficult decisions may be in the offing.
Also this week: The feds abruptly announced they would hold back any remaining pandemic recovery funds to schools. That could leave Vermont districts holding the bag for an estimated $17 million in unreimbursed expenses. And U.S. Education Secretary Linda McMahon has since 鈥� Title I 鈥� if schools don鈥檛 certify in writing that they鈥檝e canceled any diversity, equity and inclusion programming. Title I funding goes to America鈥檚 highest poverty schools and totals about $42.7 million in Vermont, according to the Vermont Agency of Education.
Tariffs, meanwhile, could cost Vermonters $1 billion, according to Vermont Treasurer Mike Pieciak. And that doesn鈥檛 even include the losses to businesses that rely on the state鈥檚 $2 billion export market.
For this week鈥檚 edition of Capitol Recap, reporters Peter Hirschfeld and Lola Duffort spoke about how the Trump administration鈥檚 actions are beginning to upend assumptions in Montpelier.
This interview was produced for the ear. We highly recommend listening to the audio. We鈥檝e also provided a transcript, which has been edited for length and clarity.
Peter Hirschfeld: For the first few months of this legislative session, Lola, there's been this weird disconnect between what's going on in the Statehouse and what's happening nationally.
And I know that you and I have both been somewhat reluctant to talk about prospective federal action, because we don't want to stoke fear, right, and don't want to become unwitting cogs in the chaos machine. But it's becoming abundantly clear that actions undertaken by the Trump administration are going to ripple in Vermont 鈥� and that those ripples could become more destructive waves in the relatively near future. We got a little bit of an example of that earlier this week.
Lola Duffort: Yeah, the first shoe dropped when the Deputy Education Secretary for Vermont went in front of lawmakers and told them, "We thought we would still have access to remaining pandemic-era funds, and in fact, we were given assurances by federal staff that that was the case as recently as last Wednesday." But then two days later they were told, "Actually, no, you don't." Even if that money has been spent and you were just waiting to submit invoices 鈥� that's no longer the case.
We're talking about $17 million here, which in the grand scheme of things is not yet catastrophic. But, you know, definitely a harbinger of things to come, and indeed, one of those things came the very next day.
Peter Hirschfeld: Yeah, I know that we learned from the Trump administration that there's going to be this edict where, if schools don't certify in writing that they are not engaging in any programs or activities that advance the mission of diversity, equity or inclusion, then they stand to lose out on a whole lot of federal funding. I know you're chasing this story down. What do you know so far?
Lola Duffort: They're talking about Title I funding, which in Vermont this year totaled $42 million 鈥� so that's real money.
Now you might be thinking in the grand scheme of things, we spend over $2 billion on schools, that doesn't sound like a big deal. The thing to know about Title I funding is that it is sent to the highest poverty schools. So the highest need schools rely on this funding. I heard back from one superintendent who told me that, 鈥渃atastrophic," would "likely be an understatement,鈥� when it comes to the impact locally.
And then of course, there is the larger state and also national budget, and how those interface.
Peter Hirschfeld: The budget that Congressional Republicans are looking at right now and that might come up for a vote around Memorial Day is looking at $880 billion in federal cuts.
There are a lot of Democrats who say there's nowhere you're going to be able to find that level of reduction unless you go to Medicaid. And so state lawmakers are in a position where they are advancing a state budget that relies on hundreds of millions of dollars in federal funding that might not be there by summer.
I was asking Robin Scheu, the chair of the House appropriations committee: Is it awkward to be advancing a state budget that relies on funding that may be illusory? And she said, yeah, this is incredibly uncomfortable.
Lola Duffort: I think it was last week you wrote a story about certain Democratic leaders saying, "Maybe we'll need to ask Vermonters to backfill a part of that." But additional news this week broke that I think will speak to the financial capacity of everyday Vermonters to backfill any of that 鈥� I'm talking, of course, about tariffs.
Peter Hirschfeld: We heard from State Treasurer Mike Pieciak, just the day after these tariff announcements were made by President Trump, that Vermonters could see a $1 billion hit as a result of this. That doesn't include the knock-on effects to the Vermont economy of potentially losing access to global markets. Vermont does $1.9 billion a year in global exports.
I talked with some economic officials; they say this is a huge part of our economic engine. And if we see retaliatory tariff strikes from foreign countries, there are a lot of local businesses that I've talked to this week that are worried that is going to upset supply chains and inhibit their ability to sell their goods around the world.
Lola Duffort: Our most devoted Capitol Recap listeners may recall that we had promised to spend this episode talking about education finance reform and the Democratic counterproposal to Gov. Phil Scott's foundation formula. That is now my plan for next week, but you know 鈥� the best laid plans.
Peter Hirschfeld: We vow to keep people apprised one way or the other. I do find myself wondering if a couple of months from now, the priorities that lawmakers had planned to focus on this year will become tier two issues in the face of what they're dealing with from the feds.
Lola Duffort: Indeed.
