On Thursday Governor Phil Scott delivered his budget address to a joint assembly of the Vermont legislature and for the first time since taking office in 2016, the governor proposed a new tax. His proposal calls for a 92 percent wholesale tax on all e-cigarette products including the devices. If adopted, this would tax e-cigarettes at the same rate as other tobacco products like chewing tobacco. The governor also proposed numerous fee increases primarily in areas that have not seen increases in several years.
Click here to view an overview of the governor's proposed budget.
The governor's budget also includes several proposals that are likely to garner support from members of all parties, specifically in regard to unfunded liabilities. However, Democratic leaders in the House and Senate did respond with some questions and concerns of their own following the speech. It seems clear they have a shared goal but may have a different vision on how to achieve that goal.
The governor is also working to ensure that taxes from the new economy are collected in full. He wants to ensure that sales completed online are properly collecting and remitting sales tax in Vermont. The Scott administration also suggested that online bookings sites for hotels, which are popular with travelers, are not charging the full amount for rooms and meals taxes when they book hotel rooms online. This would mean that tourists pay more when they come to Vermont if they book a room online than through an online travel company.
Perhaps the most notable take away from Governor Scott’s speech is the dramatic change in rhetoric. The past two years bore witness to a rocky relationship between the governor and the legislature. The Governor’s budget address clearly struck a more diplomatic tone. In part this shift can be attributed to the fact that the dynamics between the administration and the legislature altered as a result of the outcome of 2018 elections.
During the 2017-2018 biennium Republicans held 53 seats in the House, giving them the ability to sustain a veto by the governor. Now they hold just 42 seats (with one vacant seat likely to be filled by a Republican) This means that the combination of Democrats, Progressives and Independents will make it more difficult for the governor to withstand an effort to override his veto.
The change in tone and approach from Governor Scott was a major topic of discussion in the state house. Some insiders speculate it is the result of the Democrats securing a super majority and others suggest the governor is simply offering an olive branch after a difficult first two years. Regardless of the reason for the change in approach it will be interesting to see if the Democrats reciprocate and if the governor maintains his diplomatic tone throughout the entire legislative session.