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Tradin’ Paint: Days and Nights of Budget Brinksmanship

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Fair Game is Seven Days’ weekly political column.
Legislators eating pizza during Friday's late night session. - JOHN WALTERS
  • John Walters
  • Legislators eating pizza during Friday's late night session.

Sometimes you need a really strong thunderstorm to clear the air. 

So it seems, now that last Friday's episode of Disasterpiece Theatre has been followed by the end of Vermont's long budget stalemate — quickly, quietly and with a complete absence of drama. The House and Senate agreed Monday on their third budget bill, and Gov. Phil Scott let it become law without his signature. 

That outcome would have seemed impossible less than 72 hours earlier, when a marathon session ended in late-night uproar. Minority Republicans rushed the podium, surrounding House Speaker Mitzi Johnson (D-South Hero) and hectoring her for, in their minds, pulling a parliamentary fast one. 

And that, in turn, was just the capper to a roller-coaster ride of frustration, miscommunication, and accusations of perfidy and betrayal. 

The final act of the 2018 session began on June 14, when Scott vetoed the legislature's second budget, H.13, because it did nothing to prevent a statutory increase in nonresidential property tax rates. Lawmakers had agreed to use onetime money to keep homestead property tax rates level but balked at using even more to buy down nonresidential rates. 

Time to write Budget 3.0. On June 20, three Senate committees reached agreement on a revised version of H.13, which was dubbed H.16. Senators moved slightly toward Scott on taxes, trimming the nonresidential rate by one penny. They also included a provision to establish statewide teacher health care negotiations — a top priority for Team Scott.

The following day, the Senate approved H.16 on a 27-0 vote. Senate leadership left the floor with a sense of confidence. "We thought we were in full agreement with the House" on the new budget, said Sen. Ann Cummings (D-Washington), chair of the Finance Committee.

"We felt good after Thursday," said Senate Majority Leader Becca Balint (D-Windham). Leadership had gotten a unanimous vote. And even better, three Republicans — Joe Benning (R-Caledonia), Randy Brock (R-Franklin) and Peg Flory (R-Rutland) — publicly endorsed the budget and urged the governor to sign it.

But House leaders were not on board. While Senate leaders were confident that Scott would bend, Johnson was deeply concerned about another veto. So she struck out on her own, holding a one-on-one meeting with the governor. Scott offered a variation on his no-tax theme: using any extra revenue from this month to close the gap between the two sides. Johnson floated the idea that the governor might let H.16 pass into law without his signature. Which is exactly what happened in the end; but at the time, Scott's idea took center stage.

Was Johnson being played by the governor? Perhaps. He clearly drove a wedge between House and Senate.

Later last Thursday, Johnson met with Finance Commissioner Adam Greshin and fiscal analysts for the legislature and administration. They worked out a rough agreement: Any extra June revenue would be split. Half would go to the underfunded teacher pension fund, a legislative priority, and the rest would go to the education fund to help lower property tax rates. 

"There was a meeting Friday morning at 7:30 with all parties to cement the deal," said Greshin. By "all parties," he meant the House and administration. No one from the Senate was there.

And, less than 24 hours after the Senate had unanimously approved H.16, fully expecting the House to concur, Johnson and Scott reached a different agreement.

This is where recollections diverge. Scott believed he had a deal to resolve the budget standoff. 

Johnson demurred. "I was clear with him that the Senate had not been involved," she said.

And that's kind of important.

Crucially, the Senate was not even in the building. It had adjourned on Thursday after voting out H.16. Peter Sterling, aide to Senate President Pro Tempore Tim Ashe (D/P-Chittenden)* was there, but he was pretty much by himself.

At midmorning Friday, Johnson was briefing her leadership team. Scott was telling his people that a deal was in place. Senate leaders say they were still out of the loop.

Johnson and Scott sought support for their agreement from the Republican House caucus. "It got mixed reviews in caucus, but all agreed it was a deal," said Scott's chief of staff, Jason Gibbs. At least some Republicans agreed to sign on. 

Key senators say they learned of the "deal" around midday Friday. "We were a little shocked," said Cummings. "Tim, Jane [Kitchel (D-Caledonia), chair of the Senate Appropriations Committee] and I met with the speaker for almost two hours, telling her our position and our surprise at the new agreement."

By the end of that meeting, the 50/50 deal was practically dead. Or, as Gibbs put it, legislative leaders "reneged" on a deal. And he blamed the Senate. 

"Ashe was aware of the framework of this agreement on Thursday before the Senate voted," Gibbs asserted. "He allowed the speaker to seek support and ask for cosponsors. After all that, he intervened and demanded that she take the agreement off the table."

Gibbs characterized it as a power play by Ashe that left the House in a subservient position to the Senate. 

"They are welcome to their perspective," Johnson responded. "But I was very clear with the governor that I was negotiating on behalf of the House, that we had to get the Senate on board." 

In retrospect, Johnson got out over her skis. She should have consulted with Senate leaders much earlier. But events were moving very quickly, and again, senators were not in the building. That was a mistake by Senate leadership. 

It's also clear administration officials were trying to exploit the House-Senate divergence. It's touching that Gibbs cares so deeply about the prestige of the House, but it's also hard to believe. More likely, he's slamming the chamber that took a hard line, while praising the body that offered a compromise acceptable to his boss. 

Meanwhile, House leaders were scrambling to find a new compromise. Rep. Kitty Toll (D-Danville), chair of the House Appropriations Committee, devised a three-way split in place of the 50/50 idea. The third recipient would be the General Fund; it was Toll's effort to assuage key senators, who wanted more spending flexibility for the onetime money.

The recess dragged on. At 6 p.m., Johnson ordered pizzas for House members and staff. It was a brief politics-free moment in a long, difficult day.

After the pizza break, the House finally took the floor and Toll presented her plan. The House then recessed for party caucuses. Toll made the rounds, explaining the concept to Democrats and Republicans alike. After her meeting with Republicans, she encountered Scott in the hallway. 

"I don't love, it, I don't hate it, but at this point, I don't care," she told the governor, 

The House remained in recess as leadership tried to gin up support. 

"I thought I had something," said Johnson. "We had some Republicans who were supportive." But, she added, Republican leadership was "giving really mixed messages." 

The administration was laying low. Scott said he would wait to see how it all worked out before making a commitment.

Sometime close to 10 p.m., House leadership gave up on Johnson's effort to find a compromise. 

"We were not building coalitions; we were fracturing them," Johnson said. "It was clear that the plan was not viable."

Gibbs insisted on Monday that the administration "would have accepted" Toll's three-way split. Perhaps, but Team Scott should have made that clear Friday evening.

The House returned to the floor, and Toll introduced a version of H.16 with only modest changes to the Senate bill. Debate began; a couple of amendments were proposed and defeated. More amendments were on the calendar, and Republicans were expecting that all of them would be considered. 

Then Johnson called for a vote on Toll's proposal. Republicans were apparently not paying attention. And on a voice vote with little dissent, the House approved H.16.

Those who had been diligently following the action were aware of what had happened. Republicans blew their tops. They rushed to the front of the chamber and demanded that Johnson take it all back. After consulting with House Clerk Bill MaGill, the chamber's parliamentary expert, Johnson told Republicans that she had followed procedure and that nothing could be done.

Republicans pressed their case. Johnson and Minority Leader Don Turner (R-Milton) left the floor to work things out.

When they emerged, Johnson announced that the House would return on Monday for debate and a revote on H.16. 

This being Vermont, Johnson and Turner reestablished diplomatic relations during a Sunday afternoon meeting over fries and shakes. 

It seemed as though Friday's turmoil sharpened everyone's resolve to get this thing done and get out of town.

A few hours before Scott announced his intention to allow H.16 to become law, Gibbs offered a bit of oblique foreshadowing. "There will be some type of budget in place," he said, adding, "The administration will continue to advocate for rate relief."

So, did Scott capitulate? Did he "lose"? It's plausible that he'd accepted this outcome last week, as Senate leadership had inferred. In last week's column, I speculated that Scott might actually win by losing; he could get out of the budget mess and blame the Dems for raising taxes. This could be a simple variation on that theme.

Scott certainly wasted no time turning his "defeat" into political capital.

"By abandoning two agreed-upon compromises and rejecting multiple proposals to fund government beyond July 1, legislative leaders have now pushed us to the brink of a shutdown," Scott wrote in a Monday night press release announcing his budget decision. 

Coming from a guy who made his bones as a conciliator, that's a remarkably partisan statement. 

First, there were no agreed-upon compromises. There was one that didn't include the Senate; the other was dropped after Republicans refused to sign on.

Second, the legislature rejected proposals to fund government beyond July 1 out of principle: Lawmakers believe it's bad policy not to have a budget in place. 

And third, it was Scott himself who set the stage for all this drama when, for a second year in a row, he introduced a major reform package late in the session.

Maybe Scott is used to this from his days on the stock car circuit. Passing in tight quarters, drafting on the lead car's bumper, tradin' a little paint in the corners. It's all part of the deal. 

It's a great way to race. It's a lousy way to make policy.

*Correction: June 28, 2018: A previous version of this column reported inaccurately that Senate President Pro Tempore Tim Ashe (D/P-Chittenden) repeatedly declined to be interviewed for it.

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