Vermont House Members Jessica Brumsted, Bill Lippert, Terry Macaig, Jim McCullough, Kate Webb and Mike Yantachka
The Legislature met last week in a veto session to address the statewide budget and education property tax bills. Although these bills are essential to fund state government and our schools, the Governor believed that the Legislature had foregone an opportunity to garner savings resulting from statewide changes in health insurance coverage for school employees and vetoed them. The veto forced the Legislature to go back into session to avoid a government shutdown.
By the time Senators and Representatives returned to the statehouse on June 21, much negotiating had already taken place with the Speaker of the House Mitzi Johnson, Senate President Pro Tempore Tim Ashe and Governor Scott’s representatives. After negotiations stalled, Governor Scott joined the negotiations on the last day prior to the veto session. An agreement was reached, and a new bill combining the budget and property tax language passed on a voice vote in both the House and the Senate. While no one was particularly happy with the result, no one felt essential values had been compromised.
So what does this mean? First, the statewide property tax rate for residential property tax payers will decrease by 2 cents as passed in May, while the nonresidential rate will remain at last year’s rate of $1.535. Second, a greater share of the statewide sales tax will be used to offset the cost of education. Only minor technical changes were made to the budget that had originally passed the House and Senate with a single dissenting vote. This was the easy part.
The challenge came in addressing the issue of health insurance for school employees. Democratic leadership believed that savings were already built into the new plans, and these savings were best accounted for at the local level. In contrast, the Governor believed that more savings could be obtained if these policies were negotiated at the state rather than local level, identifying savings if all schools negotiated an 80-20 premium split with teachers paying $400 per person toward out-of-pocket costs.
The compromise reached by Democratic leaders and the Governor retains bargaining for the health insurance contracts at the local level, but withholds $13 million from schools for FY 18, thereby requiring schools to reduce spending accordingly, preferably through negotiations over health insurance benefits. It requires each school district to achieve savings in health insurance in the amount that would have been saved in FY18 if Scott’s 80/20 benefit plan had been implemented. The savings will be measured by comparing the cost of the current insurance plans against the new plans that will start on January 1, 2018. For districts that do not achieve those savings, the difference between the target costs and the actual costs will be deducted from state Education Fund payments to the district. To ease the effect on property taxes, 65% of the deduction will be applied to FY18 payments and 35% to FY19 payments. At the time of this writing, we do not have information on how the Champlain Valley School district will be affected.
The bill also creates a nine-member commission that will study whether the state should implement a statewide teacher health insurance benefit, a provision that was included in the vetoed property tax bill. This panel will “determine whether and how to establish a single statewide health benefit plan for all teachers, administrators, and other employees of supervisory unions and school districts.”
The compromise also mandates that all school contracts, other than those districts that have already settled their school contracts, will expire in 2019 so lawmakers can implement the recommendations of the commission. Contracts negotiated by July 1, 2017, will remain in effect as negotiated. Districts currently in impasse on health insurance negotiations are provided an opportunity to reopen negotiations.
Despite the frustration expressed by many legislators that the bill had flaws, we recognized the hard work that went into achieving this compromise. Speaker Johnson, President Pro Tem Ashe and the Governor issued the following joint statement:
“We are pleased to announce we have reached an agreement in principle on an education savings proposal that will take an important step to make Vermont more affordable. If passed by the full legislative body, this proposal will help the state achieve significant savings in the education fund and lower property tax rates. The agreement reached upholds the principles each of us committed to during the legislative session, building on areas of agreement and our shared goal to improve the lives of Vermonters. Importantly, it ensures that we will have a budget that does not raise taxes and fees, including property tax rates.”
Before adjournment the House and Senate passed nearly identical resolutions strongly opposing the announced U.S. withdrawal from the Paris Climate Agreement and recognizing Governor Phil Scott for enrolling Vermont in the US Climate Alliance. We were all pleased to support this timely resolution.