House overrides Scott's pension reform veto, enacting it into law

Updated at 6:29 p.m.

With no discussion or debate, the Vermont House moved swiftly Friday morning to unanimously override Gov. Phil Scott’s veto of S.286, a pension reform bill brokered between public sector unions and lawmakers.

Republicans joined independents, Democrats and Progressives to sign off on the bill by a vote of 148-0. The Senate voted to override the governor’s veto — also unanimously — on Wednesday. The bill will become law July 1.

“Months of hard work and negotiation led to this historic pension stability package,” House Speaker Jill Krowinski, D-Burlington, said in a statement after the vote. “Legislators, unions and administration representatives all came to the table. Through that collaboration, we won unequivocal tripartisan support and got a deal across the finish line.”

This is the first veto to be unanimously overridden in both chambers in state history, according to Krowinski’s office.

Despite vetoing the bill, which passed through all committees and both chambers without a single ‘no’ vote, the Republican governor did not appear intent on changing the legislative outcome. Scott predicted in his veto letter that his decision would be overridden, and his administration never attempted to convince GOP lawmakers to change their votes.

“The public should know that the bill simply kicks this multibillion-dollar can down the road,” Jason Maulucci, Scott’s press secretary, wrote in an email. “In several years, when the State is forced to confront this again, the fixes will be tougher for both taxpayers and public employees because of the Legislature’s unwillingness to take necessary action this year.”

The only person to comment on the floor Friday was House Minority Leader Pattie McCoy, R-Poultney, who echoed Scott’s talking points — though she, too, voted to support the bill. Lawmakers were failing to address the pension system’s “systemic problems,” she argued, and should have included a 401(k)-style option for employees as well as a risk-sharing provision to adjust employee contributions based on pension fund performance.

“The General Assembly will be back in four or five years addressing the pension problems we think we’ve fixed. Unfortunately, the amounts of money used to shore up these pensions today will not be available tomorrow,” she said.

Friday’s vote caps more than a year of often tense debate about what to do about the state’s $5.7 billion unfunded retirement system liabilities. 

The pension system has for years been a burden to the state’s coffers, as lawmakers have plunged ever-growing shares of the general fund into the system to plug shortfalls created by years of underfunding, demographic problems and poor investment returns.

But the debate took on renewed urgency last year, after State Treasurer Beth Pearce proposed a series of cuts to address after a reevaluation projected liabilities had grown by some $600 million.

House lawmakers last year put forward their own proposal, which reflected many of Pearce’s suggestions, but shelved it almost immediately amid labor backlash. A special task force was then created and tasked with finding a path forward. It presented its unanimous recommendations this January.

S.286 was the result. Unions agreed to cost-of-living adjustments and higher employee contributions, and lawmakers, in exchange, promised a $200 million lump-sum payment. The Legislature also agreed to begin pre-funding retiree health benefits — a long-sought goal for Pearce — and pledged to reinvest returns on investment from the reforms into more aggressively paying off the system’s debts.

The reforms are expected to trim about $2 billion in unfunded retirement system liabilities from the state’s bottom line.

Scott let lawmakers take the lead on the pension problem and did not weigh in until March. Pearce and the unions vigorously opposed his idea of offering new employees a 401(k)-style plan, arguing it would both provide workers with poor retirement security and erode the pension’s health.

Democratic leaders in the Legislature, meanwhile, said it was far too late in the process for the governor to be making demands for major changes.

Unions representing teachers and state employees immediately celebrated the outcome of Friday’s vote.

“When debate over the future of our public pension systems began more than a year ago, we asked a simple question of lawmakers and statewide elected officials: ‘Whose side are you on?’” said Don Tinney, president of the Vermont-National Education Association, in a written statement. “Well, this week, lawmakers told us loud and clear that they are on the side of hard-working teachers, state employees, and troopers by unanimously voting to override the governor’s misguided and cynical veto of a pension reform package devised after months of work.”