By Kit Norton and Xander Landen/VTDigger
Once the state cashes the checks it received from Washington, D.C., Vermont’s coffers will have $1.25 billion in funding that can be used to cover costs related to the Covid-19 crisis.
Gov. Phil Scott and lawmakers have until the end of the year to decide how to spend the money granted to Vermont after Congress passed the CARES Act last month.
The total amounts to more than 16% of the state budget and can be used not only to help fund the state’s response to the pandemic, but also to make major investments in state infrastructure, as long as they’re related to Covid-19 expenses.
Already, interest groups, lawmakers, and members of the Scott administration have proposed using the money for purposes that include expanding broadband to every home in the state, bailing out the farmers and the dairy industry, stabilizing the state college system — after its now former chancellor floated closing campuses last month.
Amy Shollenberger, a lobbyist with the firm Action Circles who closely follows the state budget process, called the $1.25 billion a “once in a lifetime opportunity.”
“The crisis shows you all the vulnerabilities that we have because we’ve had an attitude in this state that we don’t have enough money to make these investments,” Schollenberger said.
“And now you can see the results of the lack of investment and there’s a pot of money available.”
As of May 4, the state had already spent, or committed to spending, about $60 million in its immediate response to the pandemic.
But with the full scope of the pandemic unknown, officials are working to understand federal guidelines for spending, and requests only beginning to pile up, it’s unclear how far the funding will actually go.
Speaker of the House Mitzi Johnson, D-South Hero, said federal restrictions that limit how the money can be used — including that it must go towards Covid-related expenditures between March 1 and Dec. 31 — make it difficult for the administration and lawmakers to decide in what ways it should be appropriated.
“Right now, there are a lot of restrictions on the money, so there’s a feeding frenzy, but there’s also caution — what uses are eligible — it’s complicated,” Johnson said.
“When there’s extra money, there’s never enough money. We have 180 legislators and the administration wanting to spend it in different ways. We’ll have to use it carefully and in ways that set us up for a stronger future,” she added.
Senate President Pro Tem Tim Ashe, D/P-Chittenden, said that with limited guidelines so far, it’s still unclear whether using the money to stabilize Vermont’s struggling state college system, or provide additional aid to hospitals would even be possible.
“There is great confusion about what’s eligible for use by the CARES funds,” Ashe said.
Ashe said that the plan in the Senate moving forward is to have various committee chairs work what they see as “priority areas” for rebuilding expenditures to “help us build back out of this thing.”
Preliminary proposals include an emergency plan from the Department of Public Service to connect every home in the state to the internet which currently has a $85 million-$293 million price tag; affordable housing and homelessness solutions worth $106 million; a farmers assistance program with discussions starting off at $9 million; hundreds of millions in relief for state colleges; and others ideas.
Rep. Kitty Toll, D-Danville, chair of the House Appropriations Committee, said “There’s a lot of money there that can be put toward a lot of good things, but we have to stay within the rules.”
“And that’s going to be frustrating for some because the availability of this money could fix some serious problems which are very clear due to the crisis that we’re in. But making them fit the exact rules from the Treasury may prove to be difficult,” Toll said.
Justin Johnson, a lobbyist with the firm MMR and a former secretary of administration for Gov. Peter Shumlin, said he expects Scott administration officials will be “more careful than some people would like them to be” about how the money is spent.
Johnson, who led the Agency of Administration between 2015 and 2016, said that five years after Hurricane Irene, officials in Washington were still looking into how Vermont used federal dollars they awarded the state during the 2011 crisis.
There was always a threat that they would find the state’s spending ineligible, and demand the money back.
“There’s staff folks in the administration that remember that experience and are not going to just start throwing money around before having a long hard think about what we’re able to do with it and what we’re not able to do with it,” Johnson said.
Most of the money will have to be spent with some level of legislative approval.
But under guidelines proposed by lawmakers for spending the dollars, the governor would have the ability to unilaterally spend $60 million to cover the cost of immediate Covid-19 expenses. Additionally, Scott’s administration officials have said they want more flexibility to cover expenses from the pandemic as they arise.
There has already been some disagreement between the governor and the Legislature what the money can be used for.
On Friday the Senate passed an essential worker hazard pay proposal worth $60 million — funded by the CARES Act — despite the governor signaling he does not believe the legislation meets the stipulations attached to the federal money.
“The governor had indicated he wasn’t sure that the CARES funds can be used for hazard pay,” Ashe said. “Legislative attorneys believe it is.”
“So many states are in the same league as us right now,” Ashe added. “We’re all in desperate need of federal resources to get things moving again.”
In particular, lawmakers are hoping the U.S. Congress and the Trump administration will give states the ability to use the funding to fill revenue holes in their budgets — which the current guidelines explicitly say states cannot do — that have been depleted by plummeting tax revenues.
The latest forecast from state economists projects that Vermont will lose $430 million in revenues next fiscal year.
While lawmakers and the administration try to figure what is eligible and what is not, special interests are busy advocating for how portions of the money should be spent.
This includes a request from Migrant Justice, an advocacy group that represents immigrant farmworkers, to the Senate agriculture panel to use some of the $1.25 billion to set up a Covid-19 relief fund for the state’s undocumented farmworkers, similar to a $75 million California measure, and plans to create a grant for Vermont manufacturers to allow businesses to set up production of medical personal protective equipment (PPE).
Austin Davis, a lobbyist for the Lake Champlain Regional Chamber of Commerce which was a quick advocate for a frontline workers assistance plan, said he has been in contact with lawmakers to discuss possible ways some of the money can be used to assist tourism marketing to attract more people to the state during a summer that is expected to be dominated by social distancing measures.
But Davis also said the money should be used with caution, adding there are still many unknowns about the long-term economic impacts on the state.
“Before we start thinking how to spend it, it would be nice to hold some in reserve. We have until December,” he said. “We don’t know what we don’t know yet.”
John Walters contributed reporting.
