Although it is still early in the session, the Vermont House has already done some noteworthy work. Faced with a revenue shortfall for the current fiscal year of $51 million, the House Appropriations Committee made adjustments to the budget adopted in May of last year. The data on which the original budget is built reflect estimates and projected trends that are made several months prior to the start of the fiscal year on July first. The budget adjustment process allows the impact of actual experience to be incorporated into the appropriation levels for the year. The action taken in January brings the budget back into balance. This was accomplished by moving some funds from areas where spending was less than expected, by the addition of non-budgeted federal funds paid to the Agency of Human Services, and by tapping some of the reserve funds set aside for budget adjustment purposes. The budget adjustment bill (H.125) passed on a tri-partisan vote of 141 to 0.
Despite the unanimous agreement on the budget adjustment issue, other issues presented more of a challenge. In his budget address Governor Scott laid out a plan to revise how Vermont pays for education. The proposed changes included level funding all school budgets and moving several programs from the General Fund to the Education Fund. Payments to the Teachers’ Retirement Fund, higher education support, and child care support as well as PreK-12 education would come out of the Education Fund which would also see an increase in Innovation Grants. The total additional cost to the Education Fund would be about $136M which the Governor would offset by a transfer of $86M from the General Fund, leaving a difference of $50M. To make up this difference, he proposed using one time funds and requiring all teachers to pay 20 percent of their health insurance premiums, up from an average 16 percent currently. Furthermore, he proposed deferring voting on school budgets from Town Meeting day to May 23. Coming only weeks before school boards had to finalize their budgets, it left little time for the Legislature to review and evaluate the proposal, and threw school boards around the state off balance. These changes would also come just as many school districts are implementing consolidation under Act 46. Adding an additional $50M in costs to the Education Fund will have the effect of raising the statewide property tax rate by at least 5 cents according to the Joint Fiscal Office.
The plan for education as proposed by Governor Scott is going to require a lot more analysis that is going to take several weeks. We have taken steps with Act 46 to address education costs, and we need to give those steps time to work before more major changes are made. The Legislature now has to do its job to make sure all the consequences are apparent and determine whether the proposal should be adopted in the future.