Shortly after Speaker of the House Jill Krowinski announced Friday she was abandoning a controversial proposal to reform the state’s pension system, Republican Gov. Phil Scott criticized the Legislature for failing to lead on the issue.
Scott said the $5.7 billion unfunded liability “has to be dealt with” and lamented the about-face by Krowinski and Senate President Pro Tempore Becca Balint, D-Windham, on structural changes to the retirement system.
The House speaker relented to pressure from unions and caved on a plan that would have required higher contribution levels, and cut benefits for teachers and state workers. Krowinski instead opted to form a task force charged with devising solutions to Vermont’s ballooning pension debt.
The governor put the onus squarely on the Legislature. He said he would not support the Democrats’ plan to use $150 million in one-time state funding to help pay down the unfunded liability unless they also advanced “structural changes” to the pension system that would have cost teachers and state workers about $500 million combined.
House Democrats included the $150 million state appropriation in the fiscal year 2022 budget to buy down debt next year and prevent Vermont’s bond rating from falling.
The governor said the taxpayer-funded buy down of the debt and structural reforms to the system need to be “tied together.”
Scott warned that he will not support an appropriations bill that includes the additional state funding. That sets up a battle between the Legislature and the Republican governor over the Big Bill, the only must-pass piece of legislation.
Whether Scott would actually veto a budget which will include vital Covid-19 relief funding programs and other key priorities is an open question — as is whether Democrats will call his bluff and keep the $150 million in the bill.
However, Scott’s gambit ratchets up pressure on leadership in the Legislature, adding another element to the pensions saga this session, which has become a flashpoint.
What is clear is that Krowinski’s decision Friday morning signaled capitulation to the unions representing teachers and state employees, after both groups roundly criticized the House pension proposal.
The Legislature may feel more comfortable fighting the Republican governor than doing battle with labor unions which have long been a bastion of support for the Vermont Democratic Party.
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