With just a week to go before the Vermont Legislature is scheduled to adjourn, state budget writers have a fresh challenge on their hands. The conference committee tasked with reconciling House- and Senate-passed versions of the fiscal year 2022 budget must ensure that it won’t run afoul of new federal guidelines.
On Monday, the U.S. Department of the Treasury issued the first rules governing how states can dole out Covid-19 aid made possible by the federal American Rescue Plan Act.
Gov. Phil Scott and the Legislature have differed on how to allocate the roughly $1 billion in federal assistance the state has the discretion to spend. The governor pitched a plan to allocate all that money this year, while lawmakers have opted for a slower approach. They would prefer to earmark about half of it this year and half next year.
During a meeting of the conference committee Tuesday morning, Sen. Jane Kitchel, D-Caledonia, said the only part of the budget that appears to conflict with the federal guidance is an affordable housing proposal that harnesses around $12 million in federal funds. Kitchel, who chairs the Senate Committee on Appropriations, said that even that analysis might be premature.
Steve Klein, the Legislature’s chief fiscal officer, told the committee that the fluid nature of the federal instructions means that it may take months for the rules to solidify.
Adam Greshin, Scott’s commissioner of Finance & Management, told lawmakers that it appeared that some of the federal money can now be used to replace state revenue — a policy change that would give Vermont enormous spending flexibility.
“I’m hesitant to say anything definitive,” Greshin added.
This new information threw some of the conference committee members.
Rep. Mary Hooper, D-Montpelier, who chairs the House Committee on Appropriations, said lawmakers are now working with an entirely different set of criteria as they finalize the $7 billion state budget in just eight legislative days.
“We have a new set of assumptions that we’re going to need to contemplate and figure out how to plug into this,” she said.
“It is certainly changing our discussion,” Kitchel said.
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