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Vermont House to debate state budget amid virus uncertainty

September 7, 2020 GMT

The Vermont of Representatives is expected to continue debating the 2021 budget this week without knowing whether the federal government will help state and local governments make up budget losses caused by the coronavirus pandemic.

One of the reasons the Vermont Legislature decided to split its 2020 session into two parts was so lawmakers could make final budget decisions knowing whether — or how much — federal help would be coming.

Lawmakers returned to session late last month to finalize the budget and deal with other issues that hadn’t been completed by the time the first session ended in late June, but it’s unclear if more federal money will become available.

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Vermont did receive $1.25 billion in federal assistance to respond to the pandemic, but the money could not be used to directly prop up government budgets hurt by the pandemic.

In mid-May, the Democratic-led U.S. House voted to provide nearly $1 trillion of additional aid to states and local governments. But the legislation has been stalled in the Senate where Republican leaders and Democrats have not been able to agree on the size, scope and necessity of another relief package. In general, Republicans want a smaller, less costly version.

The prospects for a pre-election pandemic relief measure appear to be dimming, with aid to states and local governments one of the key areas of conflict.

That means Vermont leaders are having to plan without knowing whether more federal aid will become available.

There was a bit of good news for the state and local governments because Vermont’s outlook for the current fiscal year ended up not being as dire as once feared.

Greater than expected state revenues, federal virus assistance that helped meet some state expenses, savings in state government costs during the pandemic and budget tightening reduced Vermont’s budget shortfall to a manageable $50 million or so. Last spring some estimates said Vermont could be short more than $400 million.

“The net of it was Vermonters will have a budget that looks substantially like it did in the budget that the governor submitted in January,” said Adam Greshin, the commissioner of the Department of Finance and Management.

“The funding sources will be different,“he said. “We’ll be using more federal money, we’ll be using more one-time surplus money, and the like, but we were able to carry out substantially what we said we would do in January.”

But looking ahead to 2022, the funds the state used to close the budget gap won’t be available.

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“It will, I think, be a challenging year,” Greshin said. “The unknown, of course, is whether the federal government once again is going to step up and help states out with more coronavirus fund money.”

Local governments across Vermont are facing a similar challenge, said Karen Horn, of the Vermont League of Cities and Towns. Many Vermont towns had good financial years in 2019, but over the next year circumstances will reflect the hit to the economy caused by the pandemic.

“The chickens will really come home to roost in the next year,” Horn said.