Governor Scott presented his FY2025 budget to state legislators on Tuesday in the annual budget address. They will, of course, toss it out and write their own, but it’s still a purportedly important ritual.

Scott led with a more admonishing tone than normal, telling legislators that Vermonters “want to do their part, but they are being crushed by the burden of property taxes or the higher rents that come with it as well as by increased fees just to renew a license or register a vehicle, or the looming payroll tax, or the unknown in higher fuel and electricity costs, not to mention inflation.” He is of course referring to the 13% budget increase from last year that the legislature overrode his veto to pass. He continued on to tell them that “when we spend beyond our means, it catches up to us… When we fail to address the fundamentals of decades-old problems, they get worse.”

Revisiting numbers from his state of the state address a few weeks ago, he highlighted our declining demographics, citing 14k fewer kids in our schools, 28k fewer workers in their prime working age, and 48K more people over the age of 65. This impacts our systems, he claimed, and strain public resources as more people rely on services but fewer are paying in to support them.

Vermonters can’t afford the coming property tax increases, he warned. “We have to be honest that it’s not something that we can buy down or take from another pocket,” he said, noting that it would take nearly a quarter billion dollars to do so. He believes that changes need to be made before school budgets are formed to address factors that fuel these increases. He mentioned proposals he had offered before the pandemic around “right-sizing” schools, implementing tax caps, making changes to the incentives in the funding formula. He also encouraged legislators to undo “things we’ve done that have added to pressures.”

“I’m not naïve,” he said “any proposal I put on the table will be used to drive divisive attacks and headline clicks and we won’t get anything done. I’m here to work on these ideas, and any of yours, to contain costs and improve outcomes.”

NOTE: While he is probably right that any proposal he put out would likely be tossed aside as his previous ones where, that doesn’t excuse the administration from trying to address the problem. Especially one that will have a $250M impact on Vermonters and drive the average property tax bill up around $1k.

Scott also wants to fund Career and Technical Education centers directly and get to kids earlier to get them exposed regardless of career track. He hopes this will help to address a shortage of professionals in trades.

Moving on to public safety, Scott admitted he (and the Legislature) were wrong about some legislation around raising the age of “criminal accountability.” He pointed to bail reform as another failure point. He cited an example of where these pieces of legislation allowed two St. Johnsbury murders to be carried out by people on “conditions of release.”

He proposed a number of public safety reforms to keep repeat offenders off the street and address the rising drug epidemic, holding drug dealers accountable. He also recommended $1.4M to expand school-based drug prevention services and another $1M in one-time funds for an acute mental health facility.

Shifting to housing, he cited several pieces of legislation currently in front of legislators that would re-invigorate rural areas by offering tax credits to renovate dilapidated houses and by increasing the downtown development tax credit. His budget also provides another $6M for the Vermont Housing Investment Program (VHIP) and another $24M for Vermont Housing and Conservation Board (VHCB). Coupled with Act 250 reforms, he believes these programs will start moving the needle on the lack of housing stock, saying that “without real change to jump-start re-investment, more young professionals will continue to leave.”

He urged the Legislature to maintain his infrastructure investments because of the 4-1 federal match they receive, believing that these direct investments would benefit communities “continually left behind.” This would help, according to Scott, the state weather “financial and physical storms.”

This proposal also includes a study of the Winooski watershed to build out water capacity in order to prevent future flooding. Working with the Treasurer, the Administration has started to identify long-term opportunities that should be included in the climate action plan.

In his closing statement, he urged moderate legislators to break ranks with their party, saying “a middle majority of this Legislature can help Vermont find the sweet spot where we do the hard policy work and find the opportunities to invest in people.”

NOTE: Prior to receiving a modest revenue forecast update last week, the Scott Administration was looking at making cuts to existing programs. As revenues improved, they were able to avoid this, but are still urging the legislature to be careful about creating new programs.

Watch Full Address