With just a few weeks left in the legislative session, the Vermont House and Senate have agreed on a $9.01 billion budget proposal for the next fiscal year, which starts in July. Their proposal is now with Gov. Phil Scott for consideration, and, legislators hope, a signature.
Senate President Pro Tem Phil Baruth, a Democrat from Chittenden County, joined Vermont Edition to discuss the budget adjustment process, making cross-party compromises during the session, and his concerns over future federal cuts.
The following transcript has been edited for length and clarity.
Mikaela Lefrak:
The House and the Senate have agreed on this big spending plan of just over $9 billion. A committee has been hard at work whittling down that budget in the hopes of getting a signature from Governor Scott. For example, the budgets proposed a base spending is $21 million less than the version the Senate passed at the beginning of May. Can you tell us about some of the ways that you cut spending?
Sen. Phil Baruth:
What I would want people to understand first is that the budget grows every year. I think sometimes people turn into their televisions and they hear record amount of money being spent in Montpelier, but if you think about every expense you have, they all go up year after year. And so, you're spending record amount for a house or record amount for a loaf of bread, etc. So, you know, the $9 billion plus that we're spending this year is very much in line with what we spent last year, and then add inflation on top of that. So, the governor adds 3% inflation to his ask. So, when it came to us, his ask was over 9 billion. As you pointed out, we cut about $21 million from our original budgets. We also cut those 10 or more positions for full time employees in the state government. So with that said, we sent the governor something that was considerably cheaper and that was lighter on personnel, which he had asked for in his message to us, what we call the Dear Jane letter, and I'm hopeful that he'll sign it. The major place where we changed our minds in the Senate, if people will remember, a couple of years ago, we passed a historic childcare bill, and along with that came a very small payroll tax to fund it. That was designed to bring costs down for parents, create more slots, and then make sure that childcare providers earned more money, and that has been playing out. Very pleased with the way that bill was being implemented. With that said, the payroll tax was generating more money than we needed this year, because the uptake of the program is still in process. So people are still finding out about it, applying for it.
Mikaela Lefrak:
They're using it a little bit less than the state thought that they would at this point.
Sen. Phil Baruth:
Exactly, and so what the governor had proposed and the House would agree to, was that we reduce the amount of general fund spending that we were kicking in, which we had promised we would spend the payroll tax plus $76 million in general fund to get parents and childcare providers where they needed to be. But this year, it turned out we didn't quite need the $76 million, so the governor had proposed using less of that money and using that money elsewhere.
Mikaela Lefrak
How did Gov. Scott propose a zero rate increase too to the subsidies for childcare providers. The house and Senate's budget still proposes raising that to 5%.
Sen. Phil Baruth:
Yes, so, what we were concerned with was that this would get to be a habit, that every year we would steal a little bit from the general fund transfer to childcare. So, we put in language making sure that that's not the intention going forward, and then we agreed with the governor and the House that we could take a little bit of that money to make up the budget this year. So that was the major difference in general fund spending. As you noted, we did wind up with an additional 5% for infant and toddler care. They're the most expensive kids to take care of. So, we strengthened the child care program. We like to think.
Mikaela Lefrak:
Okay, and that's still going to need the approval of Governor Scott who proposed a 0% rate increase instead of a 5% can the state afford this?
Sen. Phil Baruth:
Oh, yeah, I believe we can. The payroll tax that we put into place was less than half a percent, and it's generating enough money and as long as we remain true to our commitment to fund out of the general fund to the level necessary, we can certainly afford it. And what it's doing is paying lots of dividends for us in terms of how parents view us as a state that they would like to move to. So, all of our rankings in terms of a great place to raise your family have skyrocketed since we put in place that childcare initiative.
Mikaela Lefrak:
Well, let's talk a bit about how this budget could fill potential gaps caused by cuts to federal spending. There's a lot we still don't know right now about what's going to happen at the federal level. Congress is currently debating a federal spending program. They could cut things like SNAP benefits and Medicaid and other programs that are significant for Vermonters, but it's still very much a work in progress. Senator Baruth, can you tell us a bit about the legislature's plan to I think it's used revenue surpluses to plug some of those gaps?
Sen. Phil Baruth:
Sure, you know, this keeps all of us up at night, everybody in state government, but I know people around the state who are working with nonprofits or working in schools. There are hundreds and hundreds of federal grants that are now being threatened. And that's the calling card of the Trump Administration, that everybody's money is threatened, and if you don't perform exactly as they demand, they will cut off that funding. It's called impoundment, and it's against, in my view, against both statute and the Constitution. But with that said, we're living in that world now. So, what the budget does? First, we have topped off reserves of $100 plus million dollars. But additionally, we put in what's sometimes called a waterfall. So, if we get more revenue than was predicted in. $45 million will be put aside, and it'll be bad added to these other reserves. So, we'll wind up with north of a couple of $100 million that can be used in an emergency. So only an emergency would you touch those reserves. But let me give you such an emergency. If the current health care language that's in the House Budget bill goes through, it would cut Medicaid for our poorest Vermonters drastically. And the choice then is either to let those people go without health care or to pick it up at the state level. And so we are in the most responsible way that we can imagine, we are trying to prepare for that eventuality.
Mikaela Lefrak:
But whatever the state can put towards making up for the cuts to federal Medicaid funding. I mean, it's a, it's a drop in the bucket, right? I mean, the amount that the federal government puts towards Medicaid is enormous and the billions of dollars, right?
Sen. Phil Baruth:
And the bulk of that money, I have to say, ironically, will be cut from red states that voted for Donald Trump. For instance, Speaker [Mike] Johnson, 40% of his constituents live on Medicaid. So, these are people who have no problem turning around and, you know, in effect, knifing the people who put them in power, so they have misplaced their trust. We're trying to protect our people to the extent we can, but you're right. We are not the federal government. We can't cover the commitments that we made when we expanded health care under Obamacare.
Mikaela Lefrak:
Let's speak a bit about the ways in which the state budget proposal and other legislation that's still under consideration right now addresses Vermont's shortage of affordable housing. I know that Governor Scott has pushed for more money for a program by the Vermont Housing Finance Agency that offers low interest loans to developers who are building moderate income rental housing that is part of this state budget proposal. Yes, but some of the governor's other requests around housing are not?
Sen. Phil Baruth:
Well, we've got, as we always do with housing, we've got a number of must pass bills that are moving outside the budget. So, there are, there are a couple of parallel bills, one from the House, one from the Senate, that are making the rounds. One of those will go through, and it'll have a variety of things, including what's called CHID, which is a version of tax increment financing districts, but at a very small local level that will be essentially project specific. So, allow rural communities that don't have a big tax base to get in the game in terms of putting more affordable housing on the table. So that's going to take a little work to get to an agreement between the House and the Senate. The governor is very much behind that. So my hope is that we'll have that but just a couple of things I would mention, as always, we're putting millions of dollars into VHCB, the Vermont Housing Conservation Board, millions into disability housing initiatives, and then Vermont Housing Improvement Program, VHIP, so that you can take an apartment, let's say that needs an upgrade in order to bring it onto the rental market. You can get help with that, and the governor has been a big voice for expanding VHIP as we go along. So all those funding sources, together with money we got from the pandemic funding increases have produced, I would say, a billion and a half plus for housing over the last five or six years. We're continuing to say that to the extent we can but that you know that ARPA money, the tsunami of money we got during and right after the pandemic, is gone. So, we're trying now to also make regulatory changes that will make it easier for housing to be built, especially in rural areas. Let's
Mikaela Lefrak:
We have Robin calling in from Williston. Robin, you're on the air. Go ahead.
Caller Robin from Williston:
Hi there. Thank you for taking my call. I was curious about if there were provisions in this recent budget proposal to protect Vermont's judiciaries, one of the unsung heroes of our state government system, specifically things like the state court improvement program or grants from the Bureau of Justice Assistance. Are there plans in place to protect our judiciary if these grants are taken away?
Sen. Phil Baruth:
I would say we've been less worried about judiciary, suffering under taking away federal grants, but they would come under the umbrella of those reserves that I mentioned. We have been funding what I think of as efforts to eliminate the backlog aggressively over the last four years, and we've continued that. So, we've allowed funding for the upgrading of the Judiciary's data system their own kind of private data management system, and we've also added retired judges and other folks, along with you know, clerks and others to help move the backlog along. But the judiciary is not immune, and no branch of local or state government is immune from those federal threats. And again, without putting too fine a point on it, that is the point. Donald Trump came into office; he raised tariffs globally so that everyone had to fear for losing their federal money. And he's doing the same thing to every state, every town, every municipality, and it's all about trying to pressure people to come into line with his vision of the world and it's it's a shame, and it's something I lose sleep over, but the voters put him in office, and we have to deal as best we can with the situation.
Mikaela Lefrak:
If you'd like to learn more about the state of Vermont's Judiciary, I'd suggest listening to a recent interview we did here on Vermont Edition with Vermont Supreme Court Justice Karen Carroll, who is stepping down from the bench to retire in August and had some very interesting perspectives on ways in which the judiciary has changed over her career.
Sen. Phil Baruth:
The Vermont State Colleges, if you go back six or seven years, were looking at closing three of their campuses. It was a huge, huge issue. There was a convulsion, I would say, in the state house over that, because those campuses in Lyndon and Johnson and other places are the lifeblood of their communities, and they are job creators, and they offer the only higher ed in those areas. So, we have been working for the last five years to fund a bridge formula that would transform the system. They unified it into Vermont State University. The results have been, I would say, very, very heartening. So, their enrollments this year are up 15% and they are looking at a healthy path going forward. This year marked the end in the budget of our, you know, really extraordinary relief to them. So, we gave them the last installment of $5 million as well as other monies that we had laid in for the transition. And we had a, you know, celebratory occasion in the Cedar Creek room, just marking that that we didn't give up on higher ed. We didn't give up on those communities. We trusted them to transform, and they paid off.
Mikaela Lefrak:
I want to end on another important topic for Vermont's legislature and all politicians at this time, which is compromise, cross party compromise. Governor Phil Scott came on Vermont Edition at the end of April, and during our interview, I brought up the fact that Republicans gained a larger foothold in the Vermont House and Senate after the last election, and I asked the governor if he felt the increase in Republicans on committees and such has led to more cross party compromise and better legislative outcomes. When the governor said he was struggling a bit with the new reality, I believe he was referring to the new reality of federal funding cuts and how they were going to impact Vermont. Senator Bruce, I'm just curious to hear what you think of the governor's comments there, and generally, what you think the impact of those last elections have been on the Vermont Senate, where Republicans gained six seats.
Sen. Phil Baruth:
Yeah. Well, one thing I will say is that Democrats and I'll speak for the Senate, but I imagine the House would agree. We heard the message from voters absolutely loud and clear, which is that their property taxes were too high. I think it's hard beyond that to discern a clear message, but I think people would agree that that was the number one issue, and it was a dramatic result. So, I came in committed to working with the governor on his major effort to bring down property taxes to near flat. And so he just yesterday signed the yield bill, which produces a near flat rate of on average for Vermont communities. So that's relief that we delivered on in conjunction with the governor and Republicans. So that's, I think, a testament to the new version of the House and the Senate. Beyond that, I would say I have always worked very closely and really enjoyed my Republican colleagues. It is not like Washington. If people are looking for something hopeful, I think we can take away the idea that Vermonters still work together, we still eat together, we still joke together, unlike what you see in the extreme polarization in Washington. That doesn't mean that at sometimes we don't disagree, we do, but I think there's a collegiality in the State House now that I would point to. So, we're all struggling under the Trump Administration to keep the ship afloat, but I think we are agreed that we need to work together to make that happen.
Broadcast live on Tuesday, May 20, 2025, at noon; rebroadcast at 7 p.m.
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