By a nearly unanimous vote Friday morning, the Vermont House advanced a mid-year budget bill to address steep revenue declines brought on by the coronavirus outbreak. The legislation won approval after a brief debate during a remote meeting of the House; a final vote is expected next week, after which the bill would move to the Senate for consideration.

The legislation aims to fill a $195 million hole in the current state budget, which expires at the end of next month. Much of the revenue shortfall is due to the federal government's decision to delay the income tax due date by three months and the state's decision to waive penalties on late payments of rooms, meals, sales and use taxes. Vermont still expects to collect $143 million of the money next fiscal year, but $52 million is gone for good.

The House plan largely mirrors a proposal put forward last week by Gov. Phil Scott to borrow from the state's cash reserves to cover the deferred revenue and then refill those reserves when the money comes in this summer.
It also counts on nearly $62 million worth of newfound money and unexpected savings. Those include $38 million in additional Medicaid funding from the federal government and $8.7 million in Medicaid savings due to a reduction in standard medical services during the outbreak. It also includes an unexpected $4.6 million uptick in state liquor revenue, partially driven by an increased demand for alcohol in recent months.

The House bill also appropriates a small portion of the $1.25 billion that the state received from the federal Coronavirus Relief Fund. It directs more than $5 million each to the Vermont State Colleges System, the University of Vermont and the Vermont Student Assistance Corporation. It provides another $4.9 million to the state judiciary to enable remote operations and $1.25 million to the legislature to account for a longer session and increased staff expenses.

A far larger portion of the federal funding that Vermont received is being appropriated through a separate process, which allows the Scott administration to unilaterally spend $75 million on emergency needs. The executive branch can spend another $150 million with approval from the legislative Joint Fiscal Committee.

As of last week, nearly $49 million had been spent through that process and another $118 million had been allocated, according to an accounting by the Department of Finance and Management.

Meanwhile, the administration and the legislature are preparing two additional budget bills: one so-called "skinny" budget to govern the first quarter of the next fiscal year, which starts in July, and a fatter one to control the remaining three quarters of the year.