Gov. Phil Scott delivering his second budget address
During his January 23 budget address, Gov. Phil Scott claimed he was devoting $20 million "more than required" to shore up Vermont's retirement funds for state employees and teachers.
The proposal earned him praise from liberals and conservatives; a Rutland Heraldeditorial hailed it as an example of Scott’s fiscal discipline.
The only catch? It’s not true.
Each year, the state's independent actuary determines how much money is required for the state to fulfill its pension obligations, but the governor can decide whether to follow that guidance. Scott’s budget this year sets aside precisely the required amount.
Secretary of Administration Susanne Young was quick to take the blame when Seven Days asked about the error.
“It was something that I did not catch and I should have caught,” she said. “To the extent that anyone was misled or confused by that, it was not intentional, and my apologies.”
According to Young, it was, essentially, an editing oversight. The line in Scott’s speech that read “my budget devotes $20 million more than required to pay down these liabilities,” should have read “... more than required last year.”
Senate Appropriations chair Jane Kitchel (D-Caledonia) was surprised when she heard Scott make the incorrect assertion.
"I was really quite struck as to how an additional $20 million could be extracted since I knew that, just as a matter of course, our payment would have to go up by about that amount,” she said. When Kitchel asked about it during a recent committee hearing, Commissioner of Finance and Management Adam Greshin corrected the record.
Young said the line was intended "to bring home the point that pension liabilities are becoming very, very steep."
In his budget speech, Scott highlighted the fact that “the difference between the money we set aside to pay benefits is hundreds of millions of dollars less than it should be. And if we do nothing, these unfunded liabilities will be more than we raise in annual revenue.”
But then he went on to declare that, “It’s time to deal with this issue, head on” — and made his $20 million claim.
If true, it would have been unprecedented. Until 2007, the state had underfunded the teachers' pension fund, in particular, for years.*
*Correction, January 30, 2018: An earlier version of this story misstated when the state stopped underfunding the teachers' retirement fund.