- Tim Newcomb
Like many primary care providers, Stowe Family Practice was barely hanging on before the coronavirus arrived. When it did, the office lost half the appointments that typically pay its bills and saw a 400 percent increase in phone inquiries, which don't generate much income. Support staff were furloughed, doctors took pay cuts, and the practice's future appeared uncertain — but the work continued.
"We never closed our doors," said Dr. Katherine Marvin, who helps run the office, a branch of Community Health Services of Lamoille Valley. "We were open every single day, and we were seeing patients every single day. Our nurses were out front — brave and resilient."
Now, Marvin is hoping that the state will reciprocate by rescuing the beleaguered health care industry — and soon.
"We're in a position where we can get through this, but we need the support," she said. "We're nowhere near to getting out of the red."
Marvin is hardly alone. In nearly every sector of Vermont's economy, business and nonprofit leaders are eagerly awaiting word on how much federal coronavirus funding the state will dole out, what organizations will receive it and when the money will arrive. In recent weeks, Gov. Phil Scott and the state legislature have grown increasingly at odds over the answers to each of those questions.
Ironically, the Republican governor has taken the traditionally liberal point of view that the state should spend every federal dollar it can — as soon as it can — to prime the economic pump and save businesses on the brink of collapse. The Democrat-dominated legislature, meanwhile, has taken the conservative view that the state should sock away a portion of the funding to grapple with a projected budget deficit this fall and prepare for a second wave of the pandemic.
Both sides, meanwhile, are accusing the other of moving too slowly and imperiling Vermont's economic recovery.
At a press conference last week, Scott lamented the fact that lawmakers hadn't swiftly approved a $400 million economic recovery package he had outlined weeks earlier. "We were inclusive in this work in hopes that it would move though the legislature quickly and fully intact. Unfortunately, it doesn't appear that it's going to be the case," he said, adding that he hoped lawmakers would "get back to work."
"What would help in getting money out the door quickly is had we gotten proposals from the administration more than two weeks ago," countered House Speaker Mitzi Johnson (D-South Hero). Many of the Scott administration's proposals "were not well thought-out," she continued, while others "are still nonexistent."
At issue is how to spend the $1.25 billion in Coronavirus Relief Fund money that Vermont received as part of the federal CARES Act. According to the latest estimates by the legislature's Joint Fiscal Office, the state has already spent or obligated nearly $280 million of that — much of it on the initial public health response and support for imperiled institutions, such as the Brattleboro Retreat and Springfield Hospital — leaving a little less than $1 billion up for grabs.
The Scott administration has proposed spending $400 million on his sweeping economic recovery package, as well as $375 million to bolster the health care industry and $200 million to reopen K-12 schools, according to Administration Secretary Susanne Young. That would eat up nearly all the remaining slices of the pie.
Legislative leaders say they support all those priorities but intend to appropriate less money for each. That's because, with state economists projecting a $332 million decline in anticipated tax revenues next year, lawmakers want to reserve roughly that amount to balance the state budget — or to spend on unanticipated crises that emerge in the coming months.
"It does seem prudent to have the option to use some of these funds to get us through the next year," said Senate President Pro Tempore Tim Ashe (D/P-Chittenden). "If the money's all spent ... then we find ourselves with a series of choices, none of which is very pretty." Those choices, he added, include dramatic tax increases, dramatic spending cuts or a mix of both.
The governor sees it differently, calling the legislature's approach "shortsighted."
"If we don't act now to save our businesses and these jobs, the budget gaps we're facing today will just be the tip of the iceberg," he said at last week's press conference. "And we'll face systemic losses in revenue for years to come."
The administration also questions whether the state will be allowed to use the federal aid to balance next year's budget. Current guidance from the U.S. Department of the Treasury prohibits the practice, though legislators are holding out hope that Congress will intervene at the behest of other states facing similar budget crises.
The standoff between Scott and the legislature may soon come to a head. Last week, Johnson and Ashe agreed that the legislature would aim to adjourn by June 26 and then return in late August to finalize next year's budget. That leaves less than a week and a half to finish work on roughly 20 priority policy bills and determine how much of the $1 billion in Coronavirus Relief Fund money to spend before the end of the summer.
The appropriations process has grown exceedingly complex because different committees in different chambers have been working simultaneously to dole out the money in different ways. In the House, Johnson and her leadership team divvied up nearly half a billion dollars between 13 policy committees and asked each to make spending recommendations to the Appropriations Committee, which has been making final decisions this week.
"It was a little bit of a chicken-and-an-egg problem, because committees don't know how big of a project they can take on if they don't know what money they have to work with," the speaker said. "But we don't know how much money to give them if we don't know what the issues in their [jurisdiction] are."
The Senate, meanwhile, last week sent the House a $93 million economic recovery and homelessness mitigation plan and a $30 million bailout of the state's agriculture system. The House quickly approved the former and sent it to the governor; it's expected to sign off on the latter soon. Other appropriations of the federal aid have been tucked into separate budget bills, which have been working their way through both chambers.
Legislative leaders consider the $93 million bill a down payment on their full spending plan, but at last week's press conference Scott and his deputies characterized it as too little, too late. "This fractioned approach is taking much longer and will initially deliver less than half of the financial support that was originally proposed," Commerce Secretary Lindsay Kurrle said. "We really can't afford to wait," Economic Development Commissioner Joan Goldstein added.
Legislators bristle at the notion that they've been twiddling their thumbs. "It took seven weeks or more for them to get us the proposal," Sen. Michael Sirotkin (D-Chittenden) said of the governor's $400 million economic recovery plan.
Though Scott outlined that plan to the public on May 20, his administration didn't deliver its details to the legislature until May 27. Within a week and a half of that, the Senate Committee on Economic Development, Housing and General Affairs, which Sirotkin chairs, signed off on the $93 million down payment. "There's no way I could've moved it any faster," he said. "And to do it fast, I had to, in essence, give the administration a lot of discretion on many of the details."
Sirotkin maintains that his committee improved the governor's plan by replacing proposed loans with direct grants. "It was very clear to us that the business community did not want loans," he said. "They wanted grants because they didn't want to be saddled with more debt at this particular time."
The governor's team was also slow to deliver other proposals to the legislature. The administration didn't brief the legislature on its $375 million health care bailout until June 3, and it still hasn't provided details of its $200 million education plan. "So our committees have had to start from scratch in a lot of cases," Johnson said.
Meanwhile, industry groups have seized on the administration's top-line numbers to goad the legislature into providing more money. After Johnson asked the House Health Care Committee to come up with an initial $150 million relief package, a coalition of hospitals, independent doctors, long-term-care organizations and other health care groups called for the full $375 million that Scott had proposed.
"We cannot restore our capacity to care for Vermonters with the approximately $150 million currently under consideration" for the industry, they wrote, arguing that their projected losses through the end of the year well exceed $400 million.
"Our need is now," said VNAs of Vermont executive director Jill Mazza Olson, pointing to the possibility of a second wave of the pandemic this fall. "We don't know when that's coming or even if it's coming, so we need to prepare now and strengthen our organizations now."
Marvin, the Stowe Family Practice physician, agrees. The best way to save lives and money, she said, is to address the chronic conditions and deferred care that exacerbate COVID-19. "Why wouldn't we spend this time right now to really, really prepare our medical system?" she asked. "Why wouldn't we use the time to be as strong as possible for the next wave?"
Rep. Bill Lippert (D-Hinesburg), who chairs the House Health Care Committee, conceded that the industry's immediate needs "far exceed" the initial $150 million he was allowed to spend, and he called on the House Appropriations Committee to allocate more money. The committee did so on Tuesday, agreeing to provide health care institutions more than $251 million in aid.
But Lippert believes that Scott's plan to dole out every dollar of Vermont's $1.25 billion in Coronavirus Relief Fund money now is irresponsible because it could lead to a budget crisis this fall.
"The legislature will be faced with drastic, absolutely drastic cuts to the very programs that the health care providers are asking money for," he said, noting that Medicaid payments could be slashed and mental health, disability and substance use disorder programs could be severely affected. "So it's a false choice."
It's unclear precisely how the governor plans to balance the budget without the Coronavirus Relief Fund money. His administration initially pitched an 8 percent, across-the-board cut for the first quarter of the next fiscal year, which starts in July, but the legislature rejected it. That leaves only nine months to plug the projected $332 million hole.
Young, the administration secretary, seems to be banking on a quicker-than-expected economic recovery, which presumably would generate more tax revenue and decrease the shortfall. She noted that tax receipts outpaced expectations in May and could continue to do so. "Coming into the summer, we should be seeing an uptick in revenues and a downtick in that gap," she said.
If such a recovery doesn't materialize, Young said, the governor would not be inclined to balance the budget by raising taxes. That would seem to leave one option.
"We'll have to wait and see whether we'll need spending cuts," she said.
Disclosure: Tim Ashe is the domestic partner of Seven Days publisher and coeditor Paula Routly. Find our conflict-of-interest policy at sevendaysvt.com/disclosure.