Rep. Curt Taylor's Session Journal
Week 3 - Quick Summary
The House completed its first week of hybrid legislating with committees meeting in person and The Floor meeting virtually.
The Governor released his FY2023 Budget proposal.
The House passed the Budget Adjustment Act (H.679) balancing the FY2022 budget. The BAA is now off to the Senate.
My committee (Corrections and Institutions) received the Governor's Capital Budget Adjustment (CBA) proposal.
Legislating in a time of COVID
Our first week using a hybrid model of legislating had its ups and downs. There were the occasional slips from those who have not yet mastered the Mute button: a couple swear words, family members in the background, dogs barking. There were also small problems with microphones, echoes, and other technological hiccups.
Proper decorum and protocol during the virtual floor sessions was a little lax. In committee (see photo) the required masks only marginally inhibited communication.
The public and many lobbyists have not returned to the State House. The halls and extra rooms were not busy. During virtual floor sessions members took their devices and headphone to other rooms and corners of the State House in order to participate. Pre-COVID the cafeteria is one of the busiest, most packed rooms in the State House, particularly around the lunch hour. This week many member brought their lunch and ate in committee rooms.
For those that see easy casual contact, the chance encounter on the stairs, and the quick conversation between meetings as essential to the legislative process, this new atmosphere was a welcome change from full-time Zoom. For those nervous about the spread of COVID and its impact on our health care system this week was a reluctant experiment.
All members are requested to do rapid COVID tests each of the two days (Sunday and Monday) prior to traveling to Montpelier for the week. PCR Tests are available some days at the Capitol. The health impact of this first week under the golden dome will be know soon enough. We were warned that this hybrid experiment may be reversed at any moment and we could be back to all remote.
The Governor's Budget - $$$$$$ and it's only just begun?
Money was on the minds of most Vermont legislators last week as the Governor released his proposed budget for fiscal year 2023 (July 1, 2022 to June 30, 2023) and addressed a virtual joint session of the General Assembly. The amount of money is staggering for our small rural state: $7.7 billion !
Pie Charts: Coming and Going
These charts show where the funds come from and where the Governor hopes to spend them.
"The Governor proposes. The Legislature disposes." This is only the beginning of the budget process that won't end until the last days of the session when the House finally passes a bill that, when signed by the Governor, will specify where all that money must go. The House committee on Appropriation will write that bill. The House committee on Ways & Means will decide where the money comes from: taxes, fees, etc. For FY2022 and FY2023 a good deal of those funds will come from Federal programs. Which is why the Governor can propose such a large budget increase (several billion dollars) without there being any increase in taxes.
What makes this budget unique?
Several new words and anacronyms have been added to the vocabulary of those that talk budgets: reversions, swaps, carry forward, surplus, one-time, ARPA, SLFRF, and more. The new words reflect an new problem for Vermonters: What to do with all the money?
Reversions are funds allocated to various departments for FY2022 that were not spent and are being returned to the General Fund. COVID and a tight labor market are the primary reasons such funds were not used. Reversions are also one side of ARPA swaps.
Swaps are changes in funding source from the General Fund to ARPA or SLFRF. The funding source for some expenditures can be changed or swapped. If an expenditure fits the federal guidelines, something being paid for with General Fund (GF) dollars can be paid for with ARPA dollars. The GF dollars can then be used elsewhere or carried forward.
Carry Forward is taking funds left over from the previous budget year and using them in the next.
Surplus - We usually spend a lot of time trying to figure out how to make up for budget shortfalls or how to patch budget holes. This year we wrestle with the opposite problem; how to use the surplus.
One-Time means we only get it once. The excess of federal funds that we have received during these last two years will not be received next year. This means we have to spend that one-time money on things that will not need continued funding. Rather, we want to use the funds to reduce our future obligations. The Governor wants to spend one-time funds to pay off some of the state's debts, thereby reducing our future debt obligations.
ARPA is the $1.9 trillion American Rescue Plan Act passed by the federal government in March of this year. This should not be confused with the Coronavirus Aid, Relief, and Economic Security Act (CARES) which was the $2.2 trillion economic stimulus bill passed by the federal government in March of 2020.
SLFRF is the $350 billion piece of ARPA that is going directly to states and municipalities. Vermont is receiving $1.25 billion.
For the next five months various committees in the House and Senate will be taking testimony and discussing:
what to do with reversions,
what expenditures might be swappable with ARPA funds,
what is really a one-time expense and
what to do with those carry-forwards and the previous year's surplus.
The General Fund Budget Adjustment Act (BAA)
We are now about half-way through FY2022 . This is when we usually hear of budget shortfall and financial holes that must be filled. Usually revenue projections turn out to have been too rosy; expenditures higher than expected. In the past we struggled to move $10,000 chunks around to balance the budget. In the end the budget is always balanced.
This year we hear of reversions, carry-forwards and surpluses. COVID related expenses can be paid for with federal dollars so state dollars are freed up for other purposes. The result is a particularly complicated BAA (H.679).
What was adjusted?
Click the down-arrow to the right for a list of what changes were made in this particularly complicated budget adjustment
Highlights of this year’s BAA include significant one-time investments in workforce retention, housing, childcare, and providing services to Vermonters who have been, and continue to be, deeply impacted by COVID-19.
● $60 million for workforce retention-related payments to partners that provide critical support in our communities, including assisted living residences, nursing homes, residential care homes, home health agencies, designated and specialized service agencies, substance use treatment providers, and recovery centers.
● PLUS: Recruitment and retention funds for staff at the Department of Corrections, the Vermont Veterans’ Home, and Vermont Psychiatric Care Hospital
● AND: $6 million for retention payments for childcare staff
● $55 million to the Vermont Housing and Conservation Board for housing and increased shelter capacity
● $50 million in additional funds for our pension reserve, bringing the total to $200 million — a proposed one-time investment that will reduce our liability by $2 billion over time
● $20 million to the Vermont Housing Incentive Program to support the creation of affordable apartments and accessory dwelling units in existing properties. The goal is to create 400-plus units to serve households experiencing homelessness and families in need of affordable housing
● $9.7 million to Vermont State Colleges for the second round of the new Critical Occupations scholarship program, and to fully fund the first round
● $6 million to the Vermont Foodbank to help Vermonters experiencing food insecurity
● $2 million to the Working Lands Enterprise Initiative to help farm, forestry and related businesses innovate and grow
● $1 million to UVM for a second round of its workforce training initiative for Vermonters
● $1 million for adult day providers
● $440,000 to maintain the 988 Suicide Prevention Line
● $350,000 to stabilize our Adult Education and Literacy network and $515,000 for our three public independent Career and Technical Education Centers
● $300,000 to support our community public, educational and governmental (PEG-TV) stations
● $250,000 additional for Municipal Planning Grants that support planning and zoning efforts to increase housing in our downtowns
The proposed Capital Budget Adjustments (CBA)
Vermont's capital budget specifies how funds received from the sale of the state's general obligation bonds are to be spent over a two-year period. We are now a little more than half-way through the first year of that budget. We can, and do, make adjustments.
This year the Governor's proposed changes showed a couple marked differences as to how capital dollars are budgeted. Keep in mind that this is totally separate from the pension fund debt the state carries.
The Governor wants to reduce our capital debt load and thereby reduce our yearly debt service costs. Currently the state has a debt load of about $650 million worth of general obligation bonds with an annual payment of about $80 million to service that debt. Any reduction in debt results in a reduction of debt service costs. To accomplish this reduction the governor recommends three big changes:
Pay down some of the debt. Funds freed up by ARPA swaps can be used to retire some of the bonds we are servicing. Specifically the Governor want to use $20 million to retire some bonds.
Pay as we go. A Pay-Go approach pays for expenses as a project develops rather than taking on the debt for the whole project and paying out the expenses as they are incurred. It's a bit more complicated than that but that's the general idea. I may write up more about this as it does need explaining.
Move certain expenses from capital dollars to General Fund dollars. Over the years there has been discussions about whether or not capital dollars should be used for much of a projects early work: planning and design. Some think the General Fund should take on these costs and capital dollars should only be used for actual construction. The Governor came up with an interesting scheme whereby a special fund is created for these expenses. Funds saved by not taking on debt for these services are put in the fund and dolled out as needed. The administration claims that this fund will be self-supporting and will not impact the General Fund. The details of how that works have yet to be explained.
What happens next?
My committee is responsible for producing the Capital Bill Adjustment. Over the next several months we will take testimony and pour over spreadsheets to adjust the items in the capital budget. That bill will have to go to the Senate the Governor before becoming law.
Next week we settle into the legislative process. There are no more joint assemblies to hear speeches by the Governor. The gender-bias and ethics trainings are done. Hopefully, the technological clitches of the hybrid model will be minimized. And if we manage to keep from spreading COVID among us, we should be able to make progress finding and enacting solutions to the many challenges of Vermont's future. Those challenges, as enumerated in the Governor budget book are:
Supports Fiscal Year 2023 total General Fund uses of $2.07 billion.
Fully fund all state retirement and debt service obligations and maintain or exceed statutory reserve requirements.
Make major investments in workforce training and expansion through education, internships, and outreach.
Expand early care and learning subsidies for families and launch new initiatives to help those suffering from mental illness and addiction.
Upgrade or replace legacy software and equipment to deliver better, more timely information and services.
Onward and upward!