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The Vermont Legislature avoided its first veto of the session when Gov. Phil Scott allowed a COVID relief bill including $10.5 million in business relief funds to pass into law without his signature.

But the governor didn’t hold back on what he said was wrong with the bill. And his statement, issued Sunday, sets the stage for future disagreements between the executive and legislative branches over how federal relief dollars should be allocated.

The relief bill, H. 315, quickly grew from $10 million in relief to businesses which hadn’t previously qualified for aid into nearly $100 million of mostly federal spending. “It’s been a bit of a Christmas tree,” Scott noted Friday.

Where Scott is most annoyed is the addition of a tax on federal Payroll Protection Plan (PPP) loans, calling it “punitive.”

“These forgivable loans were issued to help employers survive this pandemic and preserve jobs. And our businesses have applied for these loans with the understanding they would not be taxed,” Scott said Sunday. “In addition, Senator Leahy’s office has confirmed that these resources were never intended to be taxed. The Legislature should be at their side, helping them up. Not on their back, trying to raise yet more in taxes.”

Scott is also unhappy with the bill’s reliance upon $49 million in American Rescue Plan Act (ARPA) dollars and $4 million in Elementary and Secondary School Emergency Relief (ESSER) funds.

“The initiatives in H.315 are not bad investments, but they should not be funded with ARPA money. Again, we owe it to Vermonters to spend the ARPA funds in a transparent way, preferably through a single spending bill, so Vermonters can easily understand the investments and can verify that the Legislature is maximizing the value of every penny to strengthen the economy in every county and every community,” Scott said.

So how will Scott react to the Legislature’s budget proposal, which, as it passed the House, allocated $650 million in ARPA funds?

The governor dropped a strong hint about that on Sunday.

“I want to underscore how strongly I feel about the need for an agreement between the House, Senate, and the Administration on how to spend ARPA funds. This should come before any additional funds are expended,” Scott said “I also want to reiterate that I do not support deploying these funds in a piecemeal fashion across a hodgepodge of bills and programs. These funds are meant to expedite recovery, revitalize our economy, and make a difference in the lives of Vermonters well into the future. They are not to provide short-term, unsustainable band aids for complicated issues or plug ongoing budget holes.”

“The Legislature should take note that I will not support any additional, unnecessary, or unwise use of ARPA or ESSER funding,” Scott added. “I urge the Legislature to work with me to take a more collaborative, transparent, and strategic approach to allocating the remaining ARPA funds and maximizing the transformative economic benefits of these once-in-a-lifetime funds for Vermonters,” he said.

The takeaway? A summer veto override session may be in the forecast.

Speaking of bills Scott doesn’t like, on Friday the governor was matter of fact when asked about provisions the House added to S. 53, a bill previously focused on exempting feminine hygiene products from the state sales tax. The additions include a tax on cloud computing, which the state has exempted since 2015; a change in the corporate tax code to base taxation on gross receipts rather than property and payroll; and an exemption for the first $10,000 of military pensions.

“I’m opposed to a cloud tax,” Scott said. “I don’t think a $10,000 exemption for military pensions is enough ... I think there should be a full exemption.”

Two interesting votes were taken during that lengthy debate on Thursday.

The first was an amendment offered by Rep. Laura Sibilia, I-Windham-Bennington, that would have increased the $10,000 military exemption to $30,000. The House turned that down 79-55, with Sibilia, fellow independent Kelly Pajala, and Republicans Mary Morrissey and Sally Achey in voting yes, and the rest of the Bennington and Windham delegations voting no.

One wonders if a $30,000 exemption, had it passed, would have made it more difficult for Scott to oppose the entire bill (if it passes the Senate as amended). No one has said the $10,000 exemption was attached to this bill for political reasons, but it’s hard to imagine plausible deniability on that score.

Then there was the insistence by House Progressives that the change in corporate tax structure be decided by roll call vote. While proponents said the change will make taxes more fair by collecting a larger minimum tax from corporations, Progressives, notably caucus leader Rep. Selene Colburn, called the proposal a tax break for the wealthy.

That section passed 129-6. And because it was a roll call, that fact is now part of the House’s journal of its proceedings in perpetuity.

S. 53 is now headed back to the Senate along with H. 175, an expansion of the bottle bill to include drinking water, sports drinks and wine. That proposal heads to the Senate without doubling the per-container deposit to 10 cents from its current 5 cents, a provision removed by amendment.

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Despite hours (not an exaggeration) of sometimes repetitive and granular questions from Republicans, it passed 99-46. Rep. Linda Joy Sullivan, D-Bennington-Rutland, joined Morrissey and Achey in opposition among local lawmakers; the remainder voted yes.

Because the bill passed after crossover, the Senate Rules Committee must decide if the Senate will take it up this session.

MONDAY

Monday committee meetings are rare, but the state budget is a heavy lift. Discussion and mark-up of the Senate Appropriations Committee’s take on the fiscal 2022 budget starts at 1 p.m. and continues all week.

TUESDAY

The Government Operations Committee’s work on the state’s unfunded pension liability is now H. 449, and it went to the House Appropriations Committee on Friday. House Appropriations had yet to post its agenda by press time, but the bill is expected to be reported out Tuesday and then head to the House floor for a vote later this week, Rep. John Gannon, D-Windham 6, told us Sunday.

Meanwhile, in anticipation of House action on the bill, the Senate Government Operations Committee will be discussing it with legislative counsel at 1:30 p.m.

• At 1:30 p.m., the Senate Education Committee addresses H. 426, which proposes re-instating the state’s school building assistance program and studies to determine how much facilities need the state faces. It passed the House on March 19.

WEDNESDAY

Should racism be considered a public health emergency? The House Human Services Committee begins discussion of JHR 6. In that resolution, the Legislature “commits to the sustained and deep work of eradicating systemic racism throughout the State,” and commits to “coordinating work and participating in ongoing action, grounded in science and data, to eliminate race-based health disparities and eradicate systemic racism.”

Bor Yang, executive director of the Vermont Human Rights Commission, is set to testify on the resolution at 9 a.m.

• Remember how the Senate struggled with S. 10, a bill delaying increases in unemployment insurance taxes for business while adding a benefit for claimants with dependent children? It’s arrived in the House Commerce and Economic Development Committee and will be taken up at 9 a.m.

THURSDAY

The House and Senate Judiciary committees hold a joint hearing on S. 108, a bill that would establish a Bureau of Racial Justice Statistics. Rep. Kevin “Coach” Christie, a co-sponsor of H. 317, the House version of the proposal, is expected to testify.

TUNE IN

You can watch any House or Senate proceeding, either streaming live or archived whenever you like, by going to the committee’s page and clicking on the livestream link, or the agenda. You can find listings of committees and their agendas here.

You can access audio and video links for the House and Senate chambers, and look up any bill or committee, on the Legislature’s home page.

The House convenes at 10 a.m. Tuesday, 1:15 p.m. Wednesday and Thursday, and 9:30 a.m. Friday.

The Senate convenes at 9:30 a.m. Tuesday, 1 p.m. Wednesday and Thursday, and 11:30 a.m. Friday.

Greg Sukiennik covers Vermont government and politics for New England Newspapers. Reach him at gsukiennik@reformer.com.

Greg Sukiennik joined New England Newspapers as a reporter at The Berkshire Eagle in 1995. He worked for The AP in Boston, and at ESPN.com, before rejoining NENI in 2016. He was managing editor of all three NENI Vermont newspapers from 2017-19.