Workforce, tax incentives feature in ‘historic’ state budget proposal

By Keith Whitcomb Jr.
RUTLAND HERALD
MONTPELIER, Vt. — Millions of dollars in tax incentives and workforce development initiatives were among the highlights in Gov. Phil Scott’s annual budget address.

Scott said this is one of the most complicated budgets the state has ever seen, thanks in part to an influx of federal coronavirus relief funds.

“As you know, last year we received over $1 billion from the American Rescue Plan Act, which I proposed splitting into five major initiatives: broadband and cell service; housing; climate change mitigation; water, sewer and storm water infrastructure; and economic recovery,” he said, adding that about half of that has been committed, and he’d like to work with lawmakers on the other half.

Workforce developmentNormally, Vermont would choose between paying down debts and closing deficits at the expense of long-term investments. Not this year, said Scott, who shared some figures regarding the state labor market.

“Since February 2020, we have lost 24,000 people from our workforce,” he said, a figure larger than most Vermont cities besides Burlington, larger than some counties, and larger than the entire workforce in construction and logging industries combined.

“And we all see the ‘now hiring’ signs, reduced hours at local businesses and shortages in health care and public safety,” he said. “Every sector in every region is feeling the pressure. There are 23,000 jobs open in Vermont today. That’s nearly 7% of the jobs in our economy, pre-pandemic.”

To tackle the problem, Scott would put $1 million into the state’s internship program, and another $1 million into Vermont Student Assistance Corporation’s (VSAC) advancement grants,

It would also take a more unified approach to helping Vermonters search for jobs.

“Right now, resources are spread across different partners, opportunities are missed, and positions go unfilled,” Scott said. “That’s why my budget invests $2.7 million to pilot this workforce network in Barre, Bennington, Brattleboro, Burlington, Rutland and St. Johnsbury. And if it works, we should expand it statewide.”

Health care workersThe health care industry is also being impacted by the labor shortage.

Scott is asking lawmakers to put $15 million towards keeping nurses in Vermont, and puts $18 million towards efforts to “train, retain and recruit health care and mental health workers,” he said. This will feature tax credits for nurses as well as child care workers.

“But as I have said before, if we don’t focus on the trades, we won’t have people to maintain our hospitals, transport goods, build homes, pave roads or do the work we need to support our communities,” Scott said. “So, my budget dedicates $10 million to reduce education costs for those working towards jobs in the trades, like CDL drivers, plumbers and welders, as well as a nursing degree.”

There aren’t enough people in Vermont to fill those 23,000 empty positions, Scott said, meaning the state will have to attract new people. His budget would further fund and expand existing programs meant to draw workers. Scott said past versions of these programs left out nurses, police officers, electricians and other high-demand professions.

“This program has paid for itself with tax dollars from those who move here plus the money they spend buying homes and cars, shopping in stores, going to restaurants and more,” said Scott. “This incentive helps, but we need to do more to sell ourselves. So, I am proposing a regional network to help recruit and relocate workers and families to Vermont.”

This part would build upon the Agency of Commerce and Community Development’s “Stay to Stay” effort.

“So, my budget dedicates $8.5 million to this program over the next three years. It will put the horsepower of modern marketing behind it, so we can welcome more new Vermonters across the state to fill our most needed jobs,” Scott said.

A place to liveNew workers need places to live, and so Scott proposed spending $15 million to boost the construction of middle-income homes

“And with another $25 million for (Vermont Housing Improvement Program), we can continue to transform rundown or vacant units into livable homes,” he said. “To see how well this program is working, just ask any of the families who have moved from homelessness into newly renovated apartments across the state, from Brattleboro to Bennington, Springfield to Rutland, Barre to Lyndonville, and beyond.”

His proposal also puts $105 million into affordable and mixed-income housing.

“We need to put this money to work for working families. They are depending on us, and with some creativity, and these historic resources, we can make this happen,” he said.

Tax reliefScott’s budget recommendations include a $50 million tax relief package to help military families, the elderly, and those in certain professions.

“This package will build on the progress we made in 2018 by exempting more retirees from income tax on their social security and further increasing the Earned Income Tax Credit, which helps low-income workers,” he said. “And we can help young workers and families with a student loan interest deduction and an increase to the child and dependent care credit.”

Under his proposal, a retired couple with an adjusted gross income of under $65,000 paying $1,000 in state income tax would now pay nothing. A lone early childhood educator getting $18 an hour would also not pay Vermont income tax.

“And no young worker will pay taxes on their student loan interest,” Scott said.

Education enhancementScott said Vermont will need to attract and train more people in the trades if it wants to complete the large projects it will need done in the coming years. His proposal increased the University of Vermont’s base budget by $10 million, its first increase in 14 years, he said,

“In our last two budgets, we appropriated $183 million to the Vermont State Colleges,” he added. They also received more than $40 million in direct payments from the (federal government). This year, I dedicated another $5 million to their base budget for a total of more than $41 million.”

The proposal also enhances a program that helps low-income people take Community College of Vermont courses.

Mental healthScott’s proposal also has funds for mental health services, which have been strained by the pandemic.

“To do that, we have included $25 million to support hospitals and providers as we continue to respond to the pandemic, helping to stabilize the system and address staffing needs, which will increase in-patient beds at long-term care facilities, freeing up hospital capacity,” he said. “My budget also increases investment for child and social services to help prevent kids from entering this system in the first place, and to better care for them when they do.”

The budget also puts money aside for assigning a mental health professional to every State Police barracks.

Climate changeThe budget asks Vermonters to put $216 million towards climate change and community resilience.

“We will invest in things that reduce emissions and make our communities stronger, like electric vehicle infrastructure and incentives, weatherization, hazard mitigation, and system upgrades to ensure we can better manage and store our clean energy,” he said

Once in a generationScott believes this year to be a one-time chance to set the state up for long-term success.

“We’ve all seen proposals — large and small — that could make a real difference. But they fall by the wayside because we didn’t have the resources to fund them,” he said. “That is just not the case today. It is not an exaggeration to say that the opportunity before us is truly historic. It’s once-in-a-lifetime, and one I never expected to see happen.”

Debt reductionThe budget recommendations Scott has made fully fund the state’s retirement obligations at $394 million.

“To reduce long-term debt, I propose we retire $22 million of transportation borrowing and pay off another $20 million in general obligation bonds for capital projects,” Scott said “This will save taxpayers millions in interest payments in the years to come.”

The budget also contemplates eliminating $10 million in debt from the Property Management Internal Service Fund, a little-known deficit that’s been around for many years, according to Scott.

“We can also reduce our dependency on borrowing by setting up a fund to pay cash for certain capital projects instead of putting it on the public’s credit card. This would free up money that we now pay in interest,” he said.

Democrats respond“We are grateful to see that there are many areas of agreement between the Governor’s proposed budget and our vision for delivering for Vermont’s working families this session,” stated Speaker of the House, Jill Krowinski, D-Burlington, and Senate President Pro Tempore, Becca Balint, D-Winhdam, in a joint release shortly after Scott’s speech concluded. “Our vision for investing in Vermont’s future is a reflection of our values and a belief that we can create more equitable communities for all that live and visit our great state.”

They also announced the release of a report generated from them interviewing 1,400 or so people over the fall of 2021 about where to invest in the state.

“We know that the workforce crisis is impacting all sectors of the economy, but that it is particularly difficult among the professions that keep our families and communities running,” they stated. “In recognition of this, the House Appropriations Committee doubled the governor’s proposal in the Budget Adjustment to ($60 million) for staff retention related payments to shore up critical provider systems for assisted living residences, nursing homes, residential care homes, home health agencies, designated and specialized service agencies, substance use treatment providers, and recovery centers.”

They liked Scott’s tax incentive package as well, and, “look forward to working with the Governor and his administration to deliver a balanced budget that meets the needs of Vermont’s families,” they stated.

GOP respondsDemographic trends and the workforce are Vermont’s biggest challenges, stated House Minority Leader Pattie McCoy, R-Poultney, and Senate Minority Leader Randy Brock, R-Franklin, in a joint release.

They’re pleased with Scott’s focus on those areas as well as his proposed tax breaks and incentives.

“These initiatives complement new efforts by Republicans in the Legislature to waive occupational licensing fees and expand licensing recognition for workers moving to Vermont,” they stated.

Brock stated that the dollars for new housing are welcome as well.

“We are eager to partner with the governor in these areas, including with legislation to modernize housing regulations and ease the burden of Act 250,” he stated.

McCoy praised the focus on financial relief for young Vermonters. Both said they look forward to working with the administration and others on the budget this session.

keith.whitcomb @rutlandherald.com