MONTPELIER — Vermont Gov. Phil Scott proposed a $9.4 billion budget to state lawmakers on Tuesday that he called a “disciplined” spending plan for the upcoming fiscal year in the face of wavering support from the federal government.
Scott’s proposal is about 3% larger than the budget he and the Legislature put in place for the current year. But he said the spending plan calls for fewer new initiatives than state budgets in recent years, largely because the state no longer has the ability to use Covid-19 era relief funding from the federal government for new purposes.
He also pointed to how the state’s top economists lowered, by about $8 million, their past estimates for how much revenue the state will bring in over the current fiscal year, which ends in June. That decrease — albeit a modest one — showed the state needs to be frugal, Scott said Tuesday, addressing a joint assembly of the House and Senate.
At the same time, officials from Scott’s administration pointed at a briefing with reporters earlier Tuesday to how Vermont is poised to lose hundreds of millions of dollars in cuts to Medicaid and other human services programs supported by the federal government over the next several years, as state officials have projected.
Scott’s budget would leave available $70 million lawmakers set aside last year to respond to federal cuts this year, the officials said. But they acknowledged that amount would not be enough to fully plug the gaps in some key programs.
The budget proposal would use $105 million to reduce the average property tax increase across the state this year from an estimated 12% to about 5.5%. That request is up from the $75 million his administration had previously indicated it wanted to use for that purpose.
The additional $30 million would come from a pot of money lawmakers set aside in 2025 to offer tax relief or to respond to cuts from the federal government, Scott administration officials told reporters on Tuesday.
Meanwhile, compared to the current year’s budget, Scott wants to reduce, by $10 million, the amount of revenue from the state’s purchase-and-use tax that is directed to Vermont’s Education Fund. That tax is levied on the purchase of new vehicles.
Instead, that money should be directed to the state’s Transportation Fund, he said, which is facing significant funding challenges as revenue from taxes on gasoline has long slowed. Scott said his goal is to eliminate the use of vehicle purchase tax revenue for education costs completely in the future.
Administration officials indicated Tuesday that the Vermont Agency of Transportation could need to lay off additional employees in the coming year as a result of those funding challenges, though they did not provide specifics.
Scott also said his administration would again present a package of changes to Act 250, the state’s signature land use law. He also proposed an expansion of the “accountability court” set up in Burlington last year, which is aimed at slimming a persistent backlog of pending court cases, to other counties.
Tuesday’s spending plan would cover the 2027 fiscal year, which will start in July 2026 and end in June 2027.
This story was republished with permission from VtDigger, which offers its reporting at no cost to local news organizations through its Community News Sharing Project. To learn more, visit vtdigger.org/community-news-sharing-project.
