This.

After a five year period of unprecedented spending growth, Republican Governor Phil Scott presented a budget plan Tuesday that he says will match the government's appetite for spending with Vermonters ability to pay budget.

I present today follows through on my commitment to Vermonters to prioritize affordability and solutions to address demographics like a 21st century education system and housing people can afford, while revitalizing cities, towns and villages in all parts of the state.

Plus, a look at the numbers behind the administration's sweeping proposal for education funding reform.

And a new study shows tourism in Vermont is a $4 billion industry.

All that and more ahead on Vermont this Week.

From the Vermont Public studio in Winooski, this is Vermont this week, made possible in part by the Lintilhac Foundation and MilneTravel.

Here's moderator Mitch Wertlieb.

Thanks for being with us.

I'm Mitch Wertlieb.

It's Friday, January 31st, and joining us on the panel today, we have Tim McCquiston from Vermont Business Magazine, Calvin Cutler from WCAX, and Kevin McCallum from Seven Days.

Thank you so much, all of you, for being here today.

We're going to dig into the, budget addressed by the governor.

Now, we have some numbers to go along with everything that's happening here.

So we're getting a little more into the nitty gritty.

We're going to bounce around a lot with these topics today, because there is so much to discuss.

And I want to start by asking, Calvin about this sort of overall budget that the governor has put forward.

He's proposing an education formula that would cut funding, he says, by over $180 million.

What's all in this plan by Scott?

Yeah, I mean, you're referencing they are going to a foundation formula basically, you know, school districts, getting paid flat rates from the state, essentially.

That's one really big departure from how we've funded schools.

The governor also wants to consolidate some over 120 or so supervisor unions and school districts into about five, statewide.

So there are some pretty far reaching implications here.

I mean, the governor, you know, I think for his budget address, stick to a lot of the same themes that we've heard him talk about his entire tenure, really, of affordability, public safety, etc..

But, I mean, this is a $9 billion state budget coming in times, hot off the pandemic.

Inflation is still a really big challenge, $133 million just in increased costs and inflation in health care, from from last year.

I mean, it's it's certainly significant.

And it's really now it's off to the races at the state House.

Kevin McCollum, would you say this is a pretty ambitious move here by the governor feeling now that that, you know veto proof majority is gone.

He doesn't have to worry about that.

Now Democrats still have a majority.

But they've got to work more closely with with Republicans.

And so, Governor Scott, for example, says we're going to eliminate the universal school meals program, which Democrats are happy about right now.

I think it's definitely clear that Governor Scott is taking an expansive view of what he sees as a mandate from voters in November.

If you thought that the only thing that the governor was going to do to try to address affordability in the state of Vermont was to consolidate some school districts and try to keep the property taxes down to zero.

He is proposing to do those things, but he is also taking a whack at a lot of other programs in the state under the guise of or, in service of this idea that Vermonters, en masse voted for more affordability in the state.

And so that's why you see this this approach where he's mentioning under the umbrella of affordability, all manner of housing programs, all manner of climate rollbacks.

So I really it's going to be interesting to see whether Democrats agree with him and give him some leeway to propose, changes to affordability and changes to programs based on the idea that that voters want this.

So let's do all of these things, bringing down the property taxes.

Obviously, that was such a revolt by voters with all the school budgets voted down.

How's he planning on, getting that done, keeping those property tax rates flat?

Right.

So I think what we were looking at was a 5.9% increase.

If we do nothing this year or next year, rather.

And that's on top of the 14%, increase that we saw this year.

So he said, look, I've figured out a way to keep those increases to zero.

And basically that's by taking $77 million from the general fund, buying down the education fund, and then, eliminating this program called Universal School Meals, which is an $18.5 million program that basically lets all kids in all schools in the state eat for free.

The idea being, look, it's just better to have kids on full stomachs, focusing on their on their studies and not having to worry about, well, these kids, you know, can't can't afford it and these kids can't.

So he wants to go after that.

And that was one of the first proposals from his budget address that got immediate pushback from Democratic lawmakers.

Generally speaking, Democratic lawmakers have struck a tone of, collaboration with the governor and wanting to work with him.

That's the overlying tone.

But very quickly, they also said, whoa, wait a minute.

What, you're going to take food out of kids mouths to keep property taxes low?

That's not something we can get behind.

And I think the only other thing I'll add on this too, is, you know, that's 77, maybe $100 million they're looking to buy down that cost this year with those two initiatives.

The governor's plan here to reimagine and revamp schools is a four year plan.

So there's also some questions, of of sort of what are we going to do next year?

You know, are we going to try to buy down property taxes next year?

We've got a lot of cost pressures, like health care that aren't going away anytime soon.

Commercial insurance premiums are rising by double digits every year, the huge driver of school budgets.

And so, that's I think one of the underlying outstanding questions going forward is how long can we keep buying these down?

Well, there's a couple of things when when Kevin was discussing this.

One is that the governor has been talking about affordability since day one, and this is his fifth term he's starting.

Is that what are we up to now?

That's a long time.

There's no excuses now, right?

Given given what Mitch was saying about the the majority being only a majority and not a super majority, the other the other part that Calvin was alluding to is that you have the $77 million, which is basically the surplus from the current fiscal year.

So this is like this extra money that is fallen.

And the governor even said, oh, the economy's strong and kind of like ran past the like, you don't want to give these people too much of an opening.

Right.

Or they'll they'll run through it.

So is that money going to be available now?

The state economists said, yeah, there's going to be it's going to be that you're going to see a surplus in the general fund going forward.

But can you push all that money into it?

And the answer is, well, like what Kevin was saying, he wants all this affordability stuff.

Where is that?

Where's that going to come from.

You know, you of really make cuts.

The other thing about the universal school meals is if we're if if they cut universal school, school meals, that will be the headline.

And that is not going to happen.

I think we can safely say that's not going to have this.

Is it going to be a bargaining chip on other things we're going to talk about on this show?

I'm not sure how much of a bargaining chip it is, like Kevin was saying, like there's so much pushback just on that one issue, but he would still have to get to zero property taxes.

He would increase.

He'd still have to find that that extra 20 million or so.

So where is that going to come?

It's not a huge amount.

If they really want to find 20 million, they're going to find 20 million.

I think, you know, they'll want to get to near that zero number.

Now, they don't know exactly what it is because the school budgets are determined locally.

That's not going to happen until March.

You know, we're discussing before the show, Kevin, about how the school districts are already starting planning to cut back.

So, there's still there's still much in play that it'll be really fascinating session.

You know, it's interesting you talk about the push back immediately on universal school meals and, you know, it's right.

I was a little you're you're right in there I was shocked.

That is about 80 million.

You said 85.

Yeah.

It's obviously that's a lot of money, but it's not so much that it could be like this big solution for it.

And I did speak with Education Secretary Zoe Saunders shortly after the budget address was made.

And I brought that up to her about, you know, this is a popular program.

She said that what they'll do instead is they're not going to leave the poorest kids behind.

We'll do some means testing.

And I have to be honest with I don't know exactly what that means, but her point was that they will try to find the money to make sure that those most vulnerable kids in the schools are still getting free meals, but it won't be universal.

It won't be every child.

Emily Kornheiser, when we asked her and her colleagues about this, said basically, like, it doesn't make any sense to eliminate a program that's now on track, working well.

And she made a remark about how, a lot of schools don't even have cash registers anymore in their cafeterias, like they've just done away with the idea that kids need to pay for their lunches and breakfasts.

And so going back to that, approach, which was in place before, right.

If you were a kid from a poor family who, you know, there was a way to get on a program that you could eat for free.

I think Democrats just think that going back to that system is just inequitable, kind of recreate this bureaucracy that existed and that schools are carrying debt.

No kid was turned away.

If they if they couldn't pay for lunch, they weren't turned away.

So the schools were carrying this debt.

And when I talked to them a couple of years ago, they had we have no, no idea how much it's cost.

We really have no idea.

If someone shows up and they want to get eat the they eat.

Can we talk about another sort of interesting wrinkle with this whole education reform thing?

Because I don't know exactly how this is going to play out, but, you know, you mentioned the school districts going from down over 100 to about five.

Also the control of the curriculum, what students are going to learn is going to change.

Now this goes over to the agency of education.

Kelvin.

Yeah, this is such an interesting point that we really haven't talked a lot about in this hasn't gotten a lot of airtime so far this year.

But as it stands right now in Vermont, your curriculum is made at the local level by your local school board, and the standards are set at the statewide level from the state Board of Education.

And so with consolidate with maybe five school districts, that's going to place a lot of this, the decision making around the curriculum and what your kids are actually learning, in the, in the purview of, of the state, there's going to be a lot of consolidation.

And in this has come up in years past, I mean, state lawmakers have considered bills about Holocaust education, financial literacy, you know, bills that and in programs, I think that, you know, a lot of folks would say, hey, we want our kids knowing, having, having these skills or knowing this history.

But once you have the state creating educational, curriculums, that's, somewhat of a slippery slope.

And many really have concerns about the government telling, you know, local, local schools, here's what you're going to learn.

So that question of local control.

Yeah, it's one thing to sort of figure out a way to fund schools differently.

And not as locally as we currently do.

But I think it's another thing entirely to strip local control over what kids are taught in their schools from local to Montpelier, that those two things combined may very well be a bridge too far for a lot of Democrats and others to support.

Are they talking at all about closing schools?

That was a big topic for a while.

And then, you know, you look at and go, if they close a local elementary school, nobody's going to move there.

And the governor's like, oh, we have to help rural areas.

It's like, oh, there's no elementary school in this town.

I'm not moving there.

That's not clear yet, but I think baked into, what's happening is the assumption that, like, as Calvin said, there's a $186 million less, under the new formula.

And so if there's five districts instead of more than 100, and there's $186 million less to spend, I think the assumption is, and I think Zoe Sanders and others have said very clearly, like, well, one of the ways we can cope with this smaller budget is to, begin conversations about consolidating schools and also, you know, with that dovetailing with that, there's this conversation about school construction, right?

We have some of the oldest schools in the country.

Many are, you know, need millions and millions of dollars in repairs.

We've got the looming PCB problem, which are turning up in schools.

There's actually $10 million in the budget for cleanup and remediation.

But, you know, at the same time, there's this conversation about newer and fewer with school construction.

There's this task force, you know, should the state, you know, take more of a role in helping local districts, create and build schools?

There's been a moratorium on that.

So all of these conversations are interlinked, interwoven.

There's a lot of joint hearings that are happening at the state House this week and last week.

You know, about Ways and Means and education and all these committees of jurisdiction.

It's just, you know, when the rubber meets the road, when we have that text of a bill, what's it going to look like?

Who's going to vote for it?

Right now, all of this is is still kind of bubbling up.

I want to ask another question quickly about education, because this occurred to me, too, in listening to the governor's address, one of the things you said that that sort of leapt out to me was, we're going to increase teacher pay, teachers don't get paid enough, and they do a great job.

And I agree that they really do.

It's a tough job.

But are we going to be looking at because again, something's got to give.

Are there going to be cuts coming?

Our teachers are going to lose their jobs under this.

Obviously that wasn't mentioned in the speech, but what do you guys think?

Well, I mean, when, Phil Berreth was asked about what he thought of the governor's education plan, in addition to talking about his opposition to eliminating universal school there's a lot of things that the governor is doing that that don't add up, right?

Like, how is it that these efforts to reform education in the state are leading to lower costs?

I don't see it.

And he mentioned, you know, teacher pay.

How do you have an increase in teacher pay and be talking about getting property tax increases down to zero?

And so how do you have these tough districts all around the state that are helping, development occur when those TIF districts sort of actually sap, you know, taxes that are used for the education fund.

So he came away from the budget address effectively saying, I don't see how this is actually going to be reducing costs for anyone.

It gets back to what Kevin was saying about when the, you know, the rubber hits the road.

Something has got to give.

When you start seeing the numbers come in very quickly.

Some other things, in this affordability package, $13.5 million tax cut package proposing to fully exempt military pension income.

That's something that's been on the table for a while, expanding Vermont's child tax credit and boosting the earned income tax credit.

And modestly increasing income thresholds for Social Security income tax exemptions as well.

So, again, a lot of moving pieces with all this here.

One of the things I want to get to now of course, is something that has been so contentious and it deals with climate change.

And, you know, the Global Warming Solutions Act.

We have, something here speaking to that issue about, you know, the clean heat standard and what the Global Warming Solutions Act, where that stands now.

We need to make changes to the Global Warming Solutions Act.

If we want to protect Vermonters, we have to remove the provision that allows special interests to sue us, which, by the way, is already happening, and it will slow down progress.

And instead of working towards arbitrary deadlines, we know we can't meet, direct the agency of natural resources to develop a practical plan to figure out what it will actually take to reach the 2050 goals and how much it will cost, so how much it will cost.

That's what the governor is concerned about.

Calvin, Secretary of State Sarah Copeland, Hanzus.

You know, really wanted this global solutions, act meeting those goals is going to be difficult.

The governor does not sound as though he's really, on board with this.

Yeah, this is going to be, I think, a really big point of contention between the governor fresh off of his largest margin of victory yet and the Democratic, Democrats who still hold a majority.

You know, the governor wants to remove the private right of action, you know, to which we are already being sued by the Conservation Law Foundation.

If we, if a judge rules against us, they might say, hey, State of Vermont, you have to implement this carbon fee or this tax or this whatever to try to reduce your carbon emissions per the mandates and the global Warming Solutions Act.

The governor says that it's part of his affordability package that he put forward.

You know, he says that's going to hit low income Vermonters right in the pocketbook in that the state won't be able to afford it.

At the same time, you know, I spoke with Sarah Copeland, hands, Hans's secretary of state, who, was a former House representative.

She was one of the architects of the Global Warming Solutions Act.

And she said that if the state doesn't really hold itself accountable, if we don't have a mechanism in place, you know, if we just have goals, we can keep kicking the can over and over in our, short election cycles.

You know, every two years we elect a legislature or governor.

And she says we need to have these in state law to hold ourselves accountable.

And if we don't have a clean heat standard, it seems like that's not moving forward, she says.

We do have other frameworks in place, like Efficiency Vermont or systems for weatherization that we can put money into to try to to reduce our carbon emissions that way.

But, I do see this as being one of the bigger fights to happen this year.

Can you just eliminate the, the the lawsuit fear out of this bill, or you have to rewrite a whole new bill and go through the whole process.

Does it have any teeth without the lawsuit?

Right.

Yeah.

It doesn't have any teeth.

I think there is a bill that actually gets rid of that, and would not involve a total rewrite of the global warming solutions Act.

But I think one of the most important terms that the governor just used in the speech was that was the term arbitrary.

This notion that he is trying to frame the Global Warming Solutions Act, climate emission goals or laws, as arbitrary, is, is a bit of a it's a bit of a turnaround for him because in 2017, when Trump pulled out of the Paris Agreement, right, Governor Scott said no, we're in it.

We're we are going to continue to work toward, and abide by the Paris Agreement and the goals and the timeframes laid out in there, because that's what scientists tell us are absolutely important for us to hit in order to avoid the worst impacts of climate change.

And now he's just saying, well, those are arbitrary.

And I think that's really riling and angering a lot of environmental.

Of course, going back into the Paris climate agreement with, President Biden, but now out again with President Trump.

We need to move on to this, I guess, good economic news.

Tim, a question about Vermont's tourism industry kind of a record was set for the year 2023.

What can you tell us about those numbers?

So, yeah, we're up to $4 billion one of the interesting things about it is when you look at this bar graph that we have, on it, it's almost the same as 2022.

There's a little bit of a jump in in all the, the major, factors lodging, food and beverage, retail.

But if you go all the way back to 2019.

So before the pandemic and, you know, you're looking at this, bar graph here for those people listening, were way ahead of what it was in in 2019.

So we've made a lot of progress there.

Unfortunately.

It would be really good to know what the 2024 numbers are because we have that.

What was it?

What was what big thing happened last year.

Oh yeah.

Oh that's right.

Eclipse.

Yeah.

There was that thing which was like $50 million of free money really to this day.

On the other hand, tourism has been a little soft this year.

In 2024, it was a little soft.

The numbers show, rooms and meals tax, which is closely tracks tourism was is struggling a little bit.

If you look at the revenue numbers, that's one of the lagging things.

The personal income tax is going bananas.

That's where all that money, Calvin and Kevin were talking about to pay for all this other stuff.

It's coming from the personal income tax is going crazy.

Some of the consumption taxes are going down.

Tourism has been a little soft in 2024, but here we are at $4 billion.

The tourism industry sets a record.

So that's there's no way around that.

The economy right now in Vermont is is very strong whether it'll keep going.

Yeah.

Who knows.

We'll watch for the 2024 numbers.

In the time we have left here, we got to get into, some of the more the bigger national news.

You know, Vermont is joining another multi-state lawsuit against, and this deals with the federal financial assistance freeze that was frozen, that was rescinded, taken back.

I have to tell you, by the time you're watching this or listening, there may have been a new edict coming down from on high from the federal government.

What what is going on here as far as Vermont's local reaction to some of the things that President Trump is doing?

Again, there is the, Afghan, resettlement, issue that has been rescinded by Trump.

But local officials here are pushing back.

Kevin.

Absolutely.

I think what you're seeing is Democratic leaders seeing an opportunity to, to push back against, Trump and in what they have seen as a huge misstep, a just a blatantly illegal series of executive orders that, that are probably going to be reversed by courts.

And so you have you have people like, treasurer Mike Check and Representative Becca Ballen and Charity, Attorney General Charity Clark all sort of holding these press conferences and uniformly saying, absolutely not on our watch.

Are we going to allow the constitutional rights of the of Vermonters be usurped?

By an executive branch inappropriately?

And so it was there's just been a lot of conversation about the impacts of these executive orders, how they're affecting local nonprofits.

And I think Calvin knows a lot about that.

Yeah.

I mean, you just hit the nail on the head.

I think one of the biggest ones, though, that many in the state or especially in our economy, are looking for these potential tariffs.

I mean, as we sit here on Friday afternoon, the president says that, potentially a 25% tariff on Canadian goods will come down on February 1st.

Vermont's economy is very heavily reliant on Canada, from cross-bo hydroelectric you know, to Canadian lumber for our housing crisis.

I mean, it's it's difficult to encapsulate how much of our economy relies on to our neighbors, to the north feed for livestock, corn, things like that.

And you know that one of the biggest complaints in the grocery store is how the expense of eggs, how much those are, I guess where we get our eggs from Canada.

Yeah, we're seeing those in national headlines now.

The cost of eggs is the big story.

Now, that was that was a political, a presidential political, thing.

So that was that was yeah, it's going to hit home.

But go ahead.

I was just going to say, but I mean, the other thing, I guess last point is, you know, we'll just have to wait and see.

You know, many, many folks say like, hey, you know, we've been through a Trump presidency before.

How much is actual real policy that's going to hit the ground or how much is, you know, him using this as a negotiating tactic or bringing people to the bargaining table, to, to talk about immigration or trade or things like that.

So there are folks out there that say, slow your roll a second.

And that's what the governor is also saying will react when it actually comes.

But what's crazy about it is like, what's the date that they're going into, the fact the tariffs are the first when it's tomorrow.

Exactly.

So like that's just nuts.

The notion that we don't know whether there's going to be 25% tariffs on Canadian imports.

And it's the day before they're supposed to take effect.

I mean what's a better example of the of the chaos that this is sowing?

I do we have time to get to Molly Gray, executive director of the Vermont Afghan Alliance, she had this to say about Trump putting a pause on the refugee resettlement program that's already implemented in Vermont.

Everything change for our organization.

Overnight, we went to log in to the federal, payment management system to draw down funds, as we do every month, to support our critical programs.

And we're no longer able to access those funds.

You know, this is one of those things where you have to put this into perspective.

There are a lot of Afghan families who have settled here, but this is also affecting people who helped U.S. troops during the war, you know, in all sorts of capacities who were told you're going to be made whole, you're going to get your families to come here that is no longer on the table.

That's a real effect.

Yeah.

I think Molly Gray, even during the press conference mentioned, I mean, she I think described it as a betrayal or something of it is exactly the word she, of that nature that we're turning our backs on these, these, these people that have helped the United States and also that there's people that are currently seeking asylum or have been approved as refugees.

Tracy Dolan was there, saying, basically we are turning people away.

Very briefly, I want to mention Kevin McCallum's excellent article, in seven days on getting to know Lieutenant Governor John Rogers, really interesting fellow.

He was making the point that he thinks he's the only lieutenant governor who is a cannabis cultivator, and he wants to get more involved in cannabis law and creating that in the state of Vermont.

We'll get that into that.

Another time of Vermont this week.

This flew by.

We have to leave it there today.

So much to talk about.

Thanks to our panel, Tim McCquiston for Vermont Business Magazine, Calvin Cutler from WCAX and Kevin McCallum from Seven Days.

Thanks, everyone for watching, for being here.

I'm Mitch Wertlieb, but I hope you'll join us again next week for Vermont.

This week.