What Can We Do to Stop the "Credit Card" Spending Nature of the Vermont Legislature?

Sep 4

5 min read

Updated: Sep 18

Considering this question led me to take a deeper look at what laws could be enacted to stop Vermont from spending like a teenager just learning how to use a credit card. Here are five ways we could establish spending caps and limits while keeping more of Vermonters’ hard-earned money in their own wallets.

Here’s what each one would do.

First, legislators elected in November need to write a real rule: “Don’t spend more than you take in.”

Right now Vermont balances the budget because people choose to, not because the law forces it. A statute would say: you may only spend the Emergency Board’s official number, and you cannot leave an unpaid bill for next year.

What is the Emergency Board, and how does it work?

Five people sit on it: the Governor plus the chairs of House Appropriations, House Ways & Means, Senate Appropriations, and Senate Finance. Twice a year (mid-January and late July) the Governor’s economist and the Legislature’s economist each give their best guess of how much tax money is coming in.

The Board then votes on one official number for the General Fund, most of the Transportation Fund, and the non-property-tax part of the Education Fund. That number is the ceiling the budget is written against. If money comes in short while the Legislature is not meeting, other rules let the Administration propose cuts and let the Board move a limited amount of money for true emergencies. The Board does not require a balanced budget by law; it only sets the revenue estimate.

This is where the law needs to change!

Does Phil Scot enforce a balanced budget? Not by law. In practice, he tries to.

Vermont still has no statute or constitutional rule that forces a balanced budget. The Governor must base his recommended budget on the Emergency Board’s official revenue number, but neither he nor the Legislature is legally required to keep spending at or below that number.

What Scott actually does:

He regularly submits a budget he describes as balanced—built on the consensus forecast and, in recent years, without new statewide taxes or fees.
He has vetoed budgets and budget-adjustment bills when he judged them too large, too dependent on one-time money for ongoing programs, or likely to drive property-tax increases. The Legislature can override those vetoes.
He has also signed spending bills that went above his proposal after negotiations, while warning that one-time dollars and new base costs would squeeze later years.

So he advocates and pressures for a balanced operating budget. He does not have a legal tool that lets him force one if the General Assembly writes a different bill and has the votes.

Second, Legislators need to cap how fast spending can grow.

Pick a simple formula—roughly inflation plus population growth. Spending can rise that much automatically. Anything extra needs a two-thirds vote so everyday programs do not quietly outrun the paycheck that pays for them.

Our Education property-tax bill is an example where overspending has not kept pace with growth. From roughly 2019–2025, statewide education spending rose about 47 percent. Education property-tax bills rose about 41 percent over five years. Inflation over a similar stretch was in the mid-20s. Vermont’s population barely moved—about 0.2 percent from 2020 to 2025—and student enrollment kept falling.

Another example is the Same pattern in the whole state budget: FY21 appropriations were about $6.1 billion. FY26 is about $9.1 billion—a 49 percent increase while inflation was about 28 percent. Federal dollars explain part of it; state-side spending still grew faster than prices and people.

Third, we cannot treat windfalls as recurring money.

A good year or a federal grant is like a bonus check. Vermont shold only use it to fill the savings account, fix a building, or give a one-year tax break—not to hire staff or start a program that will need money every year after the bonus is gone.

An example of the Vermont legislature repeatedly using one-time money to “buy down” education property taxes: about $20 million in FY23, $40 million in FY24, $69 million in FY25, and about $118 million in FY26 ($77 million from the General Fund plus Education Fund surplus). Lawmakers did it again for FY27 with roughly $100 million. Each buy-down lowers this year’s tax bill. When the extra cash is gone, the next year’s starting hole is bigger—the Vermont Joint Fiscal Office (JFO) has said last year’s buy-down itself explains a large share of the following year’s projected increase. That is windfall cash used to paper over an ongoing cost.

The same spend one-time money like it is recurring happened with the hotel-motel program: FEMA covered about $115 million during COVID. After that money ended, the expanded program stayed on the state books (on the order of $45 million a year versus under $5 million before the pandemic). Temporary federal dollars became a lasting state obligation. Why have legislators not canned this program?

Fourth, we need to make the rainy-day fund bigger and harder to raid.

Vermont maintains several fiscal reserves, including the General Fund Budget Stabilization Reserve and a separate General Fund Balance Reserve, commonly called the Rainy Day Reserve. The Budget Stabilization Reserve is generally maintained at 5 percent of the previous year’s General Fund appropriations. Under current law, the Rainy Day Reserve can grow to 10 percent of the previous year’s appropriations without additional legislative authorization. Vermont General Assembly

The question is not simply whether Vermont has reserves, but whether we are setting aside enough during stronger financial years and protecting those funds for genuine emergencies and significant revenue shortfalls.

I would like Vermont to build stronger reserves and establish clear safeguards governing when those funds can be used. A rainy-day fund should be there when Vermont truly faces a rainy day, not become another source of money for routine spending.

And finally fifth, we need to pay for new stuff by cutting old stuff.

New spending needs a cut elsewhere or a real new source of funds! An example of a new souce is The child care expansion (Act 76) created a large ongoing subsidy and paid for it with a new payroll tax, not by shrinking another program. That is a dedicated tax, but it is still adding to the base rather than swapping one dollar for another.

A clearer miss is emergency housing: after federal COVID money stopped, the General Assembly kept a much larger hotel-motel program on General Fund dollars without a matching reduction elsewhere. The Governor has tried the opposite approach—telling agencies their FY27 General Fund request could rise no more than 3 percent and that they had to absorb higher health-insurance costs inside that cap, which forces program cuts. The Legislature clearly does not apply that offset rule to its own new items.