With federal cuts on the horizon, Democratic lawmakers agree on a state budget that reserves more than $100 million in anticipated revenue surpluses.

Plus, as education reform efforts continue at the state, as rural families question if their voices will be heard and regulators look for ways to improve Vermont's cannabis market.

All that and more ahead on Vermont this week.

From the Vermont Public studio in Winooski.

This is Vermont this Week.

Made possible in part by the Lintilhac Foundation and Milne Travel.

Good evening.

I'm Mark Johnson sitting in tonight for Mitch Wertlieb.

It's Friday, May 16th.

Joining us on the panel this week is Peter Hirschfeld, statehouse reporter with Vermont Public.

Sasha Goldstein is deputy news editor for Seven Days.

And Alison Novak is the education reporter at Seven Days.

Thank you all for joining us.

Let's start with you.

With the state budget, a $9 billion state budget has now passed with seemingly less confronting than in past years.

Yeah.

There has have been some, contentious moments along the way that lawmakers had to resolve with Republican Governor Phil Scott.

He had some ideas about how to spend some of the limited housing investments that are in this budget, but they seem to have arrived at a place where the governor doesn't love the bill.

Frankly, it spends a little bit more than he wanted to spend, but appears to be something that he can sign.

And they've put a ton of money away.

Yeah.

You know, when the governor puts together his budget and then when the legislature refines that budget, they, they reverse engineer that spending plan around the revenues that they expect to come into this state.

Right.

That's that's the starting point.

The dilemma they have right now is that one third of the revenues that are supporting Vermont state budget come from the federal government, and they frankly have no idea, if they're going to be cuts and if so, to what extent those cuts, are going to cut and what they've done in response is, hold back about $100 million in anticipated revenue surpluses that they expect to come in.

Now, customarily, those surpluses would be reallocated to line items that did not make it into the base budget.

This year, they're saying no.

If you didn't make it in, you're out.

That means things like farm security funds for for farmers are having a really rough go of it will not get money that that they had been seeking means there aren't going to be some key positions that they had wanted to fund get funded.

And, all of this is in response to what's going on in Congress in D.C. right now, as Congress marks up a bucket budget reconciliation package that could result in some some pretty steep cuts to some pretty important programs here.

This surprises Sasha.

I mean, it makes a lot of sense, obviously, with this, like you said, the the uncertainty at the federal level.

And, I, we heard today that some Republicans rebelled in Congress against, the budget that's been presented.

So, you know, every, every day we're getting, conflicting messages.

We're hearing from different organizations that are saying they're they're concerned about their funding.

Whether, you know, big ones, small ones, it's it's everywhere.

So nonprofits as well.

So it's, the uncertainty, I think, is what rules the day at this point.

And better safe than sorry on the state level.

Well, and one of the big areas of spending is Medicaid, which is about one out of every $4 in the state budget.

And the talk down in Washington is there's going to be some serious cuts to that.

Yeah.

And, you know, in this exact moment, there is a bit of a blow up going on in D.C. over this bill.

We see conservative Republicans, fighting back against it.

We see moderate Republicans.

We see Democrats, of course, almost universally aligned against it.

But I don't hear any Republican saying, I don't want any cuts to Medicaid.

And, when you chip away at Medicaid, that means big dollars for states like Vermont and not just to Vermont base budget.

Look at an organization like Planned Parenthood, right?

We see Congress talking about defunding Medicaid, reimbursement for organizations that provide abortion care.

Well, guess what?

About 33% of patients that Planned Parenthood serves are on Medicaid if they're not able to get reimbursement for those patients, that means 33% of their revenue goes away.

We already saw the closure of a clinic in Saint Johnsbury.

A lot of concern about what this scale of revenue cut would mean for them.

And we see lawmakers in Montpelier right now not yet doing anything, but already already asking the question, okay, what's the game plan if we see this go through?

Yeah.

And I mean, the rural hospitals are already in deep trouble as it is usually the budget means that we're kind of near the end, but that's certainly not the case.

Alison.

Education reform is still on the table.

It sure is.

Yeah.

And so yesterday the Senate Finance Committee passed out this big ed reform bill aged 454, on A52 vote.

It's in Senate appropriations this afternoon.

And then we'll go to the floor next week.

You know, this is the centerpiece.

This has been the centerpiece of this legislative session.

And I was there in Senate Finance yesterday when they took the vote.

And it was interesting.

So, you know, the House passed their version of the bill, and then it went to Senate education.

They did a number of pretty big changes to the bill, including taking out class size minimums, kind of shortening the timeline for which this new funding formula that they're, contemplating would go into effect.

And so the Senate has kind of changed the bill pretty substantially.

And it was clear that when, before the vote, even even the people who voted yes, like, really didn't have a lot of confidence that this bill was going to do what it's supposed to do, which is, you know, provide property tax relief as well as strengthening the education system in Vermont.

And so, you know, there was a lot of comments to the effect before the vote of, you know, this isn't a great bill, but better to vote it out than to do nothing.

It's a pretty aggressive timeline.

Do you think that they will actually pass something this year?

I think that remains to be seen.

The House version of the bill, the timeline would be that the, foundation formula would go into effect in 2029.

That's the new funding formula in the Senate version.

It's 2027.

And there was some talk yesterday about the fact that there might be a compromise in the middle of a bill does go through of 2028.

I think everyone seem to think that 2027 to have a new foundation formula go into effect was pretty aggressive and could actually spell disaster for schools who would be losing.

Some schools would be losing a lot of money under the foundation formula, and to kind of like make them lose all this money all at once, would be kind of could be disastrous for people in a sentence.

What's the foundation formula?

What's the.

So right now, local voters vote, on school budgets.

And so they kind of get to decide how much is spent per student.

But a foundation formula would be the state actually determines a base amount for every student.

And so, under the house bill is around 15,000.

It's a little lower under the Senate version.

And then there was like, added money for students who are learning English or students living in poverty.

And so it's actually takes a lot of control away from local voters in terms of determining how much money their school districts cannot receive.

You had a really interesting story this week talking about some of the pushback that's coming from smaller rural communities.

Yeah.

So I think we're seeing, these small schools, so there's more than 50, schools with under 100 students in Vermont.

So we have a lot of little schools.

And I think right now a lot of these schools are feeling under attack.

And there's a couple of specific examples that I, brought up in my story.

So Roxbury Village School closed last year, and I kind of did a follow up to talk to some of those residents about how it's gone.

And, you know, I think they're still very concerned that they don't have a community hub in their community.

And, you know, our young family is going to want to move into their community without a school.

And then in Worcester, there is a plan on the table to have a child care center move into their elementary school, which would then make the fifth and sixth graders at that school have to be bused to Middlesex next year in Westford, which is part of the Essex Westford district.

The plan is to bus the middle schoolers there to Essex Middle School.

So all these little examples of schools that feel like they're kind of being chipped away little by little.

And I think what it really comes down to is with, communities where there's going to be a big decision that affects their students.

They want to feel like they have a seat at the table.

They want to feel like they have a say in what happens to their students.

They don't want to feel like something is being foisted upon them.

And I think in these cases, that's how they feel.

And so, you know, some people might say, oh, they're just kind of like holding tight to like, their past and not willing to kind of like, you know, move toward a better solution.

But I think, many of these, rural residents would say, you know, we just want what's best for our students, and we want to have a say in that.

What are you hearing on this?

You know, the genesis for this debate that's playing out in the legislature right now and Senate Finance on Thursday, which was a remarkable committee hearing to watch.

One of the more remarkable hearings I've seen, just in terms of the severity of the language that lawmakers were using to describe this monumentally important education reform bill.

The genesis of this was the great property tax spike of 2025, right.

And I think what a lot of lawmakers are wrestling with is this legislation, even if it gets through, won't do a thing to address property tax increases next year.

And one of the great ironies of this bill is that in a lot of communities, the legislation as it stands right now would have the effect of, in some cases, drastically increasing property tax obligations in communities.

Instead of different schools spending different amounts based on what local voters want to support, this legislation says, hey, all schools are going to get the same amount of money based on the number of pupils that they have, plus some weighting factors.

That means that, high spending districts are going to see their spending go down low spending districts are going to see their spending go up.

But because you're going to have a uniform statewide tax rate, those lower spending, traditionally lower spending communities are going to have higher tax rates in order to support that spending, the higher spending communities.

Are going to have lower tax rates.

And so you have all these, communities that are tax averse, right?

Tend to be more conservative and are more economically marginalized.

That would actually see, a hit on their property tax bills.

And that's a rough thing for a lot of lawmakers to reconcile in a bill that nominally aims to solve the property tax crisis, as Phil Scott characterizes it.

Given that education is statewide funding, what's the motivation for a community to get rid of their school?

Well, I mean, I think what we're seeing right now is school districts that are really trying their budgets are going up because of health insurance for one.

And so they're really trying to figure out like how to cut so that the property taxes this year, like, wouldn't, wouldn't go up.

And so one of the only things you can cut is staff and that might mean closing a small school so that you can kind of consolidate the kids into another school.

Yeah.

Speaking of property taxes, let's talk a little bit about Burlington's issue.

We had some information last week about cuts being made by the administration, more than any static.

But we got we got some more information.

This week, particularly some blowback from some of those affected employees and also the city council.

Yeah, absolutely.

There's, a total of 25 positions that are going to be lost in Burlington.

And 18 of those are actually layoffs, which have mostly been carried out already.

Now, some of the employees who were laid off, some in the parks department in particular, were pretty upset with how those layoffs were carried out.

There was one employee who was approaching 43 years at the department.

She was closing in on retirement this summer and was shown the door with, very little ceremony.

I mean, the opposite kind of.

And there was discussion about this at the city council meeting.

Some of the Democratic city councilors were upset with what they knew and when they knew it.

So, there's a particular this is in particularly at a at a time when we have a mayor, Emma mulvaney.

Stan, who's, who's pro-labor, that's sort of the thing she's, she's run on.

So these people who are union employees, in many cases, I think are feeling, left behind.

And, they just feel like it's disrespectful.

One of the biggest, announcements was, a change at the Community and Economic Development Office, which was an office created by, then Mayor Bernie Sanders in 1983.

And that's been sort of, affordable housing, development, different programs like that.

The guy who's run it for a few years has been Brian Pine, who's been in city government forever.

You know, Mark, 23 years, 23 years at the department and the last for actually running it.

He was a former city councilor.

He's a former mayoral candidate, former progressive mayoral candidate.

He's out.

And we have a new, head of that department.

Her name is Kara.

I'll.

I'll call Misuari.

Excuse me.

And, that was, something that surprised many people because of Brian's background in housing and and, his experience there.

So, it's an interesting time.

I know I think people expected new.

The layoffs had to happen.

We wrote a big cover story that that was basically the answer to some of these budget woes in Burlington.

I think what's really, sort of offended people is how they were carried out.

You know, a lot of Sito is funded with grant money coming from HUD, the housing and urban development.

So where's the savings?

Sure.

And a lot of these positions were made, with one time money.

So we're talking about, Covid relief money when, Merle Weinberger was, was mayor.

So essentially the city has kind of decided some of those positions were actually worth keeping, and they've done that and kept some of those, those positions on which is meant.

Well, we got to find cuts in parks and Sito, some of these, unarmed police officers named as community service officers and community liaisons.

The public information officer in the police department was, laid off, though there were no, layoffs of police officers, of course, as the city is still trying to rebuild that department, which has sort of lost, officers in a big way since about 2020.

So, that has sort of the the crux of this problem.

I think it was 37 of 100 positions made in the last several years, were made with one time money.

So, they had to come from somewhere.

Yeah.

I mean, the cost of government just seems to be growing and growing.

You mentioned that the growth in the state budget tell our listeners.

Yeah, I believe in, fiscal year 2018, Vermont's state budget, annual state budget was about $5.5 billion.

And we've got, the legislature sending a budget to Governor Phil Scott's desk this year.

That's that's going to total about $9 billion.

And, of course, one of the big drivers of that is health insurance.

We got some more information this week of another pretty substantial increase coming our way.

It's almost hard to believe, for the last three years running, Vermonters who buy their private health insurance through the state's largest private health insurer on Vermont Health Connect have seen double digit percent increases in their premiums.

And this week, last week, I guess we saw Blue Cross Blue Shield go to the Green Mountain Care Board asking for a 23.3% increase in individual insurance premiums starting next year.

They want a 13.7% increase for, small groups.

MVP, another insurer much smaller has has lesser increases that it's seeking but symptomatic of a health care situation in Vermont that is dire to say the least, that is suffering from real existential threats.

If you talk to Owen Foster, the care of the Green Mountain Care Board, Vermont is already an outlier when it comes to the amount that residents are paying for insurance.

And this would send us into into another stratosphere.

Really?

Well, as you mentioned, I mean, this is not the first year that this is happening.

No, and unclear what sort of relief is in sight.

I mean, the legislature is kicking around a few bills this year that look at governance, that look at some, you know, regulatory tools that you could use.

But a lot of those are to avoid, things like Blue Cross Blue Shield of Vermont going into receivership.

Right, right.

We're not talking about core reforms that are going to turn this thing around and solve the cost question in Vermont, it's how do we do, acute triage on aspects of the system that would cause health care in Vermont as we know it to collapse if they fall down?

Well, how has Blue Cross Blue Shield gotten into this situation?

If you ask them, they'll say it's the amount of money that they have to pay to settle these claims.

Department of Financial Regulation is the entity that oversees Blue Cross Blue Shield of Vermont.

And even according to its regulators, the Green Mountain Care Board included, it's not that Blue Cross Blue Shield is making a bunch of money by by increasing rates like this.

And in fact, a lot of people are worried that they're on the brink of insolvency themselves.

And that but for some sort of, government intervention, there's a very real possibility that you could say, see the state's largest insurer go into receivership and the green Bank board can't do a darn thing about it.

Right.

Well, the Green Mountain Care Board has more regulatory authority over Vermont's health care system than I think just about any other regulatory entity in the state.

So there are things that they could do.

I think there are policy lovers that they've not pulled yet for, for probably very good reasons.

But no, if they could have solved this, they would have, but it's a closed loop system, right?

There's money going in and there's money going.

Coming in, money going out.

And nobody and there are a lot of smart people working on this.

Nobody seemed to figure out how to how to reconfigure the system in ways that are going to, to get at the issues that are plaguing it right now.

Well, the hospitals are saying the same thing.

I mean, they, they've been asked to find $200 million in cuts to, to help this problem.

And they're like, where are we going to do that?

So this closed loop system, it's just it's not working for anyone.

And one other huge thing hanging out there is the expiration of these Obama era tax credits that have allowed people to be able to afford exchange policies, notwithstanding these rate increases.

Right.

A lot of Vermonters are insulated against the effect of these full rate impacts, because we've had these premium tax credits that have been available to folks.

Those are set to sunset this year.

It doesn't look like Congress or the president has an appetite to renew them.

Right.

And there are a lot of people in Vermont's health care community that are really, really scared about what's going to happen to Vermont's uninsured rate if and when those tax credits go away.

Speaking of economics, the cannabis market in Vermont, too many producers, too many stores, not enough buyers.

That's kind of what regulators want to figure out right now.

We're in October.

It'll be three years since the market began.

And keep in mind, this is a market that has to operate just in Vermont.

So it's built from the ground up in Vermont, within Vermont State line.

So you're not selling to Massachusetts or anywhere else.

So, regulating that is a tricky business, where you want to have thriving businesses, you want to keep prices down.

And right now we've kind of seen the maturity of that market where we have a lot of retailers, about 110 stores open throughout the state, and about 408 growers licensed by the state.

So regulators have decided that's enough for now.

We need to figure out what the supply and demand needs actually are for this market, because if we don't and keep letting people in, there could be a serious crash.

Now, Vermont is lucky in a way that we have other states, experienced to look at.

And so, in many cases, some failures.

And that's helped regulators figure out what might work here.

So there is a study underway that we're expecting later this year that's really going to assess how much weed needs to be grown, how much is selling and at what prices, is the other thing and what the market can handle.

And at that point, they're talking about potentially reopening, the market again to new entrants.

But that, we'll have to see.

It'll be later this year.

15 retailers in Burlington, you can almost understand that, but three in Bradford, a town of 4000 people.

Yeah, there's it's the legislature right now is actually there's a bill there where they are essentially directing the control board to make up new rules that would hopefully ease this saturation issue and not necessarily incentivize, but encourage people to go to areas that don't have shops rather than opening from one next right next door to one, which we've seen in a couple instances.

Another interesting thing in that bill is a proposal to slash, the fees for outdoor cannabis growers.

And a big proponent of that has been our lieutenant governor, John Rogers, who has sort of raised the eyebrows of some of his former colleagues in the Senate because he's actually been advocating quite vociferously for this bill that would, in effect, benefit his bottom dollar.

So it's raised, his bottom line rather.

So it's raised some ethical questions for him as a statewide office holder.

You know, we're a small state and everyone kind of runs into these conflicts.

But, this one I think has been, particular note this week.

What are you hearing about the John Rogers connection here?

You know, if there's not a ton of noise in the state House about it, to be honest, day to day in the halls.

But but certainly there are people that think it's untoward.

They think that, sitting statewide office holder should not be, lobbying so heavily.

Committee members that he presides over when he's, in the Senate.

I've heard other people say, hey, the duty is to disclose.

And he's done that.

He doesn't he doesn't necessarily have to recuse himself from these conversations.

He's let people know what his financial interests are.

That was his duty.

And he's he's free to continue.

What's so fascinating to me about Vermont's cannabis market is that it was constructed very intentionally in a way that thousands of people hopefully could make comfortable, livable wages in the cannabis industry instead of a small handful of people making out like bandits and getting rich.

And I think to a degree it's played out as designed.

But we are seen as in any sort of free market, capitalist based industry.

There are winners and there are losers.

And there are people who are concerned about the, the mechanisms people are using to become winners.

Exclusive arrangements and retail outlets, for example.

Don't say that I won't buy from you if you sell to them.

You got you got it.

And so, it's just fascinating to see how much work it takes to keep a regulated industry on the right track.

Yeah, absolutely.

And back to Roger's.

You know, he has defended himself.

Obviously, he's been a big proponent of legalize cannabis from the start.

So he's been, you know, on this.

He says, I've been doing this for years and it's nothing new.

We're going to end on some good news tonight.

There's a Vermont student that's done well in a neuroscience competition.

What's that all about?

Yeah.

So one of my favorite parts of being an education reporter is getting to talk to cool teenagers and Letterman with Carr, who's a, South Burlington High School sophomore.

He came in second in the National, Brain Beat, which was held at Rutgers University in New Jersey earlier this month.

He's a member of his high school's neuroscience club, where they do kind of cool things like dissect cows eyes.

And he is can't compete next year because you can only compete once in the national competition.

But he's trying to spread the word and create more neuroscience clubs in high schools all over Vermont.

Is that he have any interest in working on state budget?

And, his plan is to go to med school.

Wow.

Yeah.

Well, that's it's always encourage you to hear those kinds of stories.

Thank you.

All of you, for joining us here on the panel tonight, Peter Hirschfeld with Vermont Public, Sasha Goldstein and Alison Novak, both with Seven Days.

And, of course, thank you all for joining us as well.

Have a great weekend.

March and Mitch will be back next week.

Have a great night.