Budgets and broadband, tax increase decreases

The Vermont House has worked productively in the last two weeks. We approved the annual Budget Adjustment bill (H.138), a mid-year technical adjustment to keep the state’s Fiscal Year 2021 budget in balance. H.138 passed with strong support and included investments to support the Legislature’s continuing response to the Coronavirus pandemic. Much of the adjustment was a result of reallocating unused Coronavirus Relief Funds, which were supposed to expire at the end of last year but were extended by the $900 billion relief bill passed by Congress last December. CRF money was redirected to assistance for the hard-hit hospitality industry, for emergency food, hotel housing for the homeless, and rental assistance,for support of Vermont State Colleges, and for completion of broadband expansion projects.

Speaking of broadband, the pandemic has highlighted the necessity of high-speed internet for education, work, and communications. The Energy & Technology Committee has been working on a major bill to accelerate broadband deployment to every part of the state. Building on the Communication Union District model that was authorized in 2015 and enhanced last year, availability to planning grants and low-cost loans will be provided to CUDs to build fiber networks throughout Vermont. CUDs are organized by towns that want to build fiber to the areas where for-profit internet service providers find it unprofitable to reach. Most for-profit companies build their infrastructure along the main arteries with a higher residential density. Fiberoptic lines cost about $33,000 per mile to build. The more subscribers within that mile, the lower the cost per subscriber.

Local telecommunications carriers like WCVT or Consolidated Communications also provide internet service. The U.S. Department of Agriculture recently accepted bids from traditional carriers to extend broadband in rural areas under the Rural Digital Opportunities Fund. With the objective of getting service to every Vermonter as quickly as possible, we are encouraging CUDs and telecom providers to work with each other to avoid duplication of effort. The rate at which high-speed broadband can be built depends not only on funding but on the availability of skilled line workers and of the required materials, both of which are in short supply. Our bill will also include funding for workforce training in partnership with Vermont Technical College. Even with this support, broadband to the “last mile” will take years to accomplish. We will continue to work on the details of the bill over the next few weeks.

There’s good news on the 9.5 cent education property tax rate increase that created a stir in December. Improved non-property tax revenues in the Education Fund and input from school districts have resulted in a reduction to roughly a one cent increase. This may change as more information about actual budgets becomes available, but it is not expected to change dramatically.

Also on the education front, the sustainability of the pension funds for teachers and state employees has become a top priority with the release of a recommendation from State Treasurer Beth Pearce that would increase contributions and decrease benefits. The source of the underfunded pension fund problem was a decision by the Legislature in the 1990s to underfund the system based on overly optimistic assumptions about investment returns. The unfunded liability is $1.5 billion at present and is expected to grow by another $600 million if remediation steps are not taken. The Legislature is studying the report and seeking alternatives by working with all parties to assure Vermonters that they will have their retirement benefit while also curtailing the unfunded liability. Pension contracts are an obligation that should not be set aside. Teachers and state employees should not be penalized for the fiduciary mistakes made by government. We must solve this dilemma fairly.

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