Governor Scott exits the House Chamber after giving his Inauguration Address January 9, 2025.
Governor Phil Scott began his fifth term this month after an overwhelming victory last November. The Republican former contractor turned 66 last summer and ran for another term because he felt there was “unfinished business.” With significant, though not majority, gains in the election in both the House and Senate, Scott will have a greater ability to push his agenda and moderate the legislative process. In case you missed the political ads, ribbon cuttings, events and press conferences over the last several years, he remains focused on housing and affordability. For this interview, which he does annually in December with correspondent James Dwinell and Vermont Business Magazine Editor Timothy McQuiston, everyone was remote. The governor was recovering from COVID, which he contracted mid-month. He said he wasn’t feeling too badly, but he sounded like he had a head cold and acknowledged some fatigue. Nearly five years after the pandemic began, this was his first bout with the SARS CoV2 virus.
This interview has been edited for clarity and length.
VB: People are saying that since there’s no more supermajority, the governor has no more excuses. What’s your response to that?
Scott: Yeah, yeah, yeah.
They still have the majority, and sadly, we don’t set the agenda, they do. I don’t think any of us have any excuse to neglect what the voters told all of us, that we can’t afford what you’re doing anymore.
Whether it’s healthcare, how do we handle education funding, inflation? Voters just want us to be aware of how they’re feeling.
There is no doubt that we have an obligation and expectation of the voters that we promise to work together. There’s more balance as there is now, at least we’ll have a seat at the table.
I think that’s encouraging from my standpoint, just having the ability to at least present our ideas and for them to have to at least consider them, and the power of the veto is back. That’s what we had during the first six years, and though it was messy at times, in the end we didn’t raise taxes and fees during the first six years. So the veto must have been effective.
Photo: Gov. Scott cuts a Christmas tree for the state capital in Montpelier. Courtesy photo.
VB: You’re obviously a successful politician; do you see the new dynamic as an opportunity, maybe as Governor Dean used the Blue Dog Democrats in the 1990s?
Scott: I think there is opportunity. With dozens of new legislators, they’re not jaded by the politics so it’s a clean slate. There is an opportunity with all the new legislators to start out on a new path.
VB: At the recent Associated General Contractors annual meeting Vermont Public’s Peter Hirschfeld and I were on a panel. There was much discussion about property taxes, as you can imagine. Will there at least be some sort of Band-Aid for the property tax, some short term fix at least? You’ve talked about even having a zero percent property tax increase?
Scott: We’ve been presenting ideas over the last eight years. This is nothing new and the Legislature hasn’t been very receptive about implementing or even considering some of them. But it’s a new day and I think that it gives us, again, the opportunity with a clean slate to at least consider some of these ideas. There is not going to be any real surprises because we actually presented a lot of ideas that should have been considered. And they have some ideas themselves as well.
And as you remember, we worked behind the scenes with them last year and we came up with some proposals that could work. In fact, they introduced them for about 24 or 48 hours, as you might remember.
Then under special interest pressure, they called them back. There’s a way to look at this, I think: short term, medium term, long term.
I’d love to be able to present no increase with some Band-Aid while working on some other medium term initial alternatives that would save us a few bucks. And at the same time working on a long term structural reform. But we need big, big changes.
I had heard through the media that the Senate Pro Tem has cleared the first week of his schedule for us to present all of our ideas, but that’s not in the cards for us. We’re still working through all of this and we’re not gonna get ahead of ourselves.
Still, we will have a comprehensive plan ready to put forward either through the budget process, which we will lay out at the end of January, or in the inaugural address. There won’t be any big surprises, but it’ll be a comprehensive package that will hopefully accomplish both short term and long term goals.
VB: You heard about this from (WCAX reporter) Calvin Cutler instead of the someone from the Pro Tem’s office?
Scott: I heard it from, I think, Calvin during a press conference. I appreciate the opportunity. We’ll take the opportunity to go over our position on some of these tough decisions. I would be happy to talk about that. If they have ideas as well, it’s a good time for them to lay those out for us. We could use the first week if that is available.
We would have to lay out for the new members exactly how the funding formula works or doesn’t work in this case. And why we’re in the situation we find ourselves in.
VB: Tell us about that.
Scott: I mean it’s, it’s all based on demographics. The student population declining and working class declining causing the challenges we face leading to the housing crisis and workforce crisis. I have a number of crises on our plate right now, but demographics is our underlying problem.
VB: Is anything off the table?
Scott: Not from my perspective.
VB: Another issue that was discussed at the General Contractors’ meeting was how to reduce the cost of education without closing schools. If you take elementary schools out of our rural areas, no young families will move there. For the high schools there’s a lot of overlap. School buses are driving past Montpelier High School to get to U 32 . Barre’s Spaulding High School, Northfield High School, and Harwood are each ten minutes away from Montpelier. Do you see high school consolidation as an opportunity?
Scott: I don’t think it’s necessarily about closing, especially, elementary schools. We can’t have elementary schools that are built for 100 students when there’s only 40 students now. We have the right-size them and think what the existing structures could be used for.
I visited Richmond’s elementary school, Camel’s Hump, they had like a whole wing that wasn’t being utilized. I went to another school in Burlington’s North End and they had school kids in one wing and another wing was used for adult daycare and it was a good mix. There’s all kinds of enterprising things that I think we can do to make these buildings more cost effective.
The opportunity for high school reimagining is here. There are economies of scale where we could have a more unified approach, while delivering better education more cost effectively. I fear the closing of elementary schools as they are somewhat the hub of your community. We have to be careful about that, whether it’s a hospital or whether it’s a school. We must consider the economic vitality of the community.
Everyone’s focused on property taxes when we should be looking at the overall cost. The NEA came out with a statement suggesting that we go to an income based approach. That doesn’t fix the problem. The problem is that we are still spending too much. It has to come out of one pocket or another.
Vermont has the highest per pupil cost state in the country. That’s not good, especially with the academic outcomes that we’re seeing. We’re in the middle of the pack in terms of reading and writing at a third grade level. Whether it’s health care or education, we have to lower the costs by creating these efficiencies.
We need to be aware of the unintended consequences of our high property taxes. Because when we talk about property taxes, many just consider their own property taxes, which is obviously something that gets everyone’s attention, especially with this year’s dramatic increases (2024 13.9% average increase).
But let’s not forget the non-residential side. Maybe you have a camp, deer camp or summer camp on Joe’s Pond or Lake Elmore. These folks are just hard working middle class families. This is the thing they do with their families. This also impacts the business community. Property tax is a huge portion of the cost to business that just gets passed on to the consumer. So what are we really saving at that point? I want to advocate for looking at the overall cost.
Second homeowners are always an easy target for higher property taxes but they’re paying a whole lot right now. Some are paying $40,000 or $50,000 a year for property taxes. Is there more we could put on them? I’m not sure. At some point are we saying that we don’t want them to be here anymore? Will they choose another second home in a lower tax state? They pay into the system and are often good community members who don’t cost us the education and health money that we just discussed.
We all hear the same mantra about, let’s just tax the rich? We don’t have that many rich people here in Vermont. I think there’s about 3,500 people with income over $500,000 in Vermont right now. That’s not a huge number. And there’s about 1,000 who have an income of over one million. If we push them too far, it forces them to make decisions about where they live. They can still have their home here, but not be Vermonters anymore, declaring residence in Florida or some other income tax free state.
We want to make sure that we look at the costs first and then how we fund it second. I think that we can build a structure that fixes the expense side. There has to be some parameters around how much we spend and that’s there’s no disconnect.
It’s also very complicated and we need to simplify that so that people can understand. I think people in our communities who are trying to do the right thing and cut their costs in their towns. Yet, they were still charged more for their property than they were last year.
And then there are parts of the state that they’re doing pretty well. When you look at Franklin and Chittenden counties in particular, they’re over performing in demographics. They’re seeing a net migration increase. The other 12 counties are seeing a decline.
Look at those demographics. Overall we’ve lost 14,000 people under the age of 18, we’ve lost 20,000 people from the age group 40 to 54, which is the backbone of our workforce and we’ve seen an increase of 48,000 folks over 65. And that’s not healthy for Vermont. It’s not good for the education system. It’s not good for workforce. It’s not good for our health care system either. It all combines to create our financial crisis.
VB: The Green Mountain Care Board issued its now famous or infamous health care report last summer to fix the healthcare system and make it more affordable while making access better. It also suggested that there are too many redundancies in the hospitals and perhaps some of them should even close. The focus is now on the administration to come up with a plan. What is your reaction?
Scott: First of all, it’s just a report. We have the Green Mountain Care Board that’s an independent body with regulatory oversight of the healthcare system. Again, our demographics are working against us. A younger, healthier workforce would actually offset the cost for those who are older. We’re moving in the wrong direction.
It’s not about closing all these hospitals. That’s not going to solve the problem. We need to right-size these entities and make sure that we still take care of the health needs of that area.
The economy has an effect on everything. And when the economy starts to unwind and decline, so do all the other benefits, the social benefits. Major industries over the years have failed or moved on, for example in Putney, Brattleboro, Springfield, Windsor, Saint Johnsbury, Barre, Proctor and so forth. We have to deal with the consequences.
VB: It appears the clean heat standard plan as advocated for in the Legislature will not move forward this year, but you’re still going to have to do with deal with it in some form, even if it might not be the grand clean heat standard plan that some of the advocates had hoped for. Do think the Legislature will move forward with some sort of clean heat standard law?
Scott: They have to decide whether they’re going to vote to continue or what they’re going to do. I’ve been pretty clear on my views on a carbon tax and I certainly won’t support any bill that cost $10 billion or anything close that.
VB: Is there anything else you’d like to say to the VermontBiz audience?
Scott: I think public safety is another area we’re going to continue to work on. We made some gains there, trying to get our arms around public safety. Burlington certainly is feeling this as well, which has to do with workforce challenges. And we’re facing the same thing, whether it’s the State Police or state government. We have a 10% vacancy rate that we can’t fill because we don’t have enough people.
Whether it’s education and the teachers we need, or it’s nurses, we don’t have that working age population here. We don’t have the housing. So again, I think demographics is key to everything, all our challenges and part of the solution is this: How do we attract more people into the state?
I think housing is a is a good start.
Photo: At a September press conference, Gov. Scott listens as Secretary of Commerce and Community Development Lindsay Kurrle discusses the housing situation in Vermont. ACCD photo.
VB: A lot of people latch onto Act 250 (land use law) when it comes to the housing issue.
Scott: I think we need to do more. In this crisis Act 250 is the barrier to bringing in more people. We need more of what was done last year in making Act 250 changes. We need to extend some of those exemptions. Two years is not long enough; it needs to be a minimum 10 years. I think we have to work our way through this.
VB: Did you did you have a chance to watch the UVM soccer game?
Scott: I did. Pretty exciting, it’s an interesting game, right? It gets very exciting, then you’re into a slow game. Then all of a sudden it takes off. UVM is well coached, and the team members have a lot of chemistry there. It’s pretty exciting for Vermont.
VB: Brady Farkas, the sports editor WDEV, asked me, how does this D1 National Championship help the college and the state? Those little things, do they add up in attracting more of these people and helping them stay here?
Scott: It all helps. I don’t underestimate the value of higher education in Vermont it. There are so many UVM grads and Saint Michael’s grads and Champlain College grads, Norwich University grads and so forth, who stay here and find opportunities, fall in love and want to stay. That’s part of our strategy as well.
It’s this type of thing that helps create more community. I think it’s good, it’s all positive. Charlie Baker (former Massachusetts governor and now NCAA commissioner) called me to congratulate us. (Phil Scott is also a UVM grad).
VB: Any thoughts about creating an incentive, a real financial incentive plan like St. Michael’s College recently did? Such as medical students getting federal aid, then are required to go someplace and stay for five years.
Scott: I think that’s all good stuff and we should consider incentives to bring more people in.
VB: The rooms and meals tax has been very soft this fiscal year.
Scott: It’s expensive to go out to dinner. I think people are making choices about what they do. They have to pay their property taxes. How much disposable income is left over? So it does have a ripple effect.
VB: Are there fewer tourists coming in?
Scott: I don’t think so. The amount of traffic we saw on the highways is about the same. Seems to be normal for those times of year.
VB: The money Vermont has in the bank is going to produce less interest, is that concerning?
Scott: We certainly have benefited from having all that federal money sitting in the bank all this time, collecting interest at a high rate. But we have it all committed, so it will reduce the interest payments going forward.
VB: There are many new representatives, maybe more than 60, have you’ve met with those people?
Scott: That’s right, I’ve met with a number of them. During the election cycle as well.
VB: You have 56 GOP legislations now. Can you control those votes?
Scott: I think that I can convince them, if it’s important enough, to stick together. When I was in the in the Senate, I remember John Bloomberg, the Minority Leader, never twisted my arm for a vote. He just wanted to know how I was going to vote. And I think that’s a good strategy. We’re all independent, but I think I can convince at least the Republicans and maybe a few moderate/centrist Democrats and independents to support our positions
VB: Do you have a Speaker of the House candidate? (Speaker Jill Krowinski is being challenged by independent Laura Sibilia).
Scott: I don’t try to influence. I stay out of all that. Whomever they choose, I’ll work with him or her.
House minority leaders and Senate minority leaders have made some gains. They have something to bring to the table. And so I think they ought to use it to their advantage.
VB: Your Secretary of Education Zoie Saunders went around the state asking questions. Did she have conclusions or suggestions that are different or helpful?
Scott: I think what she’s learned has been extremely valuable. I think that it also verifies what we’ve been thinking in some cases. I think she has gotten some really good feedback from superintendents and others she’s met. I think it’s been all positive. We’ve learned a few things that maybe we hadn’t considered before from the superintendents.
I think it’s good feedback and I think she was well received. The more people get to know her, the more who feel she’s the logical choice, and that she’s what we need right now.
VB: Why did you want to try to do this another two years?
Scott: That’s a great question. It’s not all fun and games. I fully realized that. It was unfinished business. I’d said, like everyone else, that you would like to leave office where things are in better shape than they were where you found them. I think had I left after six years, that could have been true. But after the last two years, I don’t believe that to be the case.
I felt a responsibility to see this through and I saw a path forward where we could get some balance in the Legislature. And so I decided to run again and hopefully have more moderate and centrist legislators who would be willing to do the right thing regardless of party. I think we have a better opportunity now than we have in years.
VB: Does this mean that you are a lame duck?
Scott: No.
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