Gov. Phil Scott is directing his agency heads to develop the leanest state budget proposal in almost a decade.
In an Aug. 21 memorandum to secretaries and commissioners across state government, Commissioner of Finance Adam Greshin said the governor’s fiscal year 2028 budget will be shaped by “constrained revenue” and “the pressing need to provide room for tax relief.”
In order to stay within the 2% revenue growth forecast for the general fund next year, and to leave money on the bottom line to pay for Scott’s forthcoming tax relief package, Greshin said agencies and departments will have to deliver budgets that rise on average by a little more than 1%.
"We must alter the way we deliver state government services.”Finance Commissioner Adam Greshin
In recent years, Scott has directed budget writers to cap spending at 3%.
“The Governor has directed us to lower our tax burden,” Greshin wrote. “In a time when we’ve asked our health care and education systems to transform and reduce their costs, we must alter the way we deliver state government services.”
Scott last week teased his plan for tax cuts but said he won’t unveil specific proposals until later this year. The five-term incumbent is in the midst of a reelection campaign against Democrat Amanda Janoo. His pledge to deliver tax relief is part of a broader political strategy to boost support for him as well as Republican candidates for House and Senate.
Scott said at a media briefing that Democratic majorities in the Legislature have thwarted past efforts to cut taxes.
“We still need more balance, more moderation, more common sense and less ideology in the Legislature,” he said. “This makes the decision Vermonters make this fall in the voting booth very, very important.”
Washington County Sen. Andrew Perchlik, the chair of the Senate Appropriations Committee, said Scott’s budget guidance allows for enough new spending only to cover wage and benefit increases for state employees. (Those costs account for about 25% of all state government spending.)
“There’s no inflation for any other expenses. ... That’s more like a budget cut,” he said.
Perchlik, a potential successor to outgoing Senate President Pro Tem Phil Baruth, said “the goal of providing tax relief is a good one.”
“So I’m not disagreeing with the governor on that, we’ve just got to find the money for that,” he said.
One potential source for that revenue, according to Perchlik, is a tax hike on personal income more than $500,000 a year.
“That’s something people are definitely interested in on my side that the governor is pretty clear that he’s not interested in,” he said. “We don’t know where that’s going to end up because we still have to have an election.”
Janoo has made tax increases on high earners one of the touchstones of her campaign for governor. She said this week that Vermont can also boost revenues by imposing new taxes on digital advertisement platforms and “dominant online marketplaces.”
“We do want to be reducing the burden on working class Vermonters, by asking more from … concentrated wealth,” Janoo said.
Janoo said Scott is right that Vermont is unaffordable. But she said government investments in housing and healthcare can do far more to lower the cost of living than tax cuts.
“To me, fiscal responsibility isn’t about how much you cut. It’s about how do you get the biggest bang for your buck — how you’re bringing down costs, preventing bigger costs down the road and actually solving the problems Vermonters are asking you to pay for,” she said. “Scott’s sort of approach wants to just say, ‘We need to … accept the existing tax structure.’ And I don’t think we should assume that the existing tax structure is untouchable.”
