Vermont agencies are being told to build fiscal 2028 budgets with almost no room for expansion, as Gov. Phil Scott’s administration seeks to reserve money for tax relief. Finance Commissioner Adam Greshin’s instructions generally limit agency growth to roughly 1%, enough to cover already-negotiated salary and benefit changes but little else.
The directive is an early planning constraint, not an enacted budget. The administration’s August 21 budget overview tells departments to prioritize affordability and programs with measurable benefits while identifying savings or offsets for other proposals. The next budget covers the fiscal year beginning July 1, 2027, and the governor’s formal recommendation would go to lawmakers in January.
Why the cap matters
The target is tighter than the approximately 3% ceiling agencies faced in the previous budget cycle. The administration says recurring costs are rising faster than recurring revenue, making a near-flat request necessary if Scott, a Republican seeking reelection, follows through on promised tax reductions. Greshin has not specified which taxes the governor would seek to cut or how large the package would be.
For agency managers, the practical consequence is that requests above the limit will need a clear tradeoff. New programs, expanded grants and staffing additions would generally have to be financed by reductions elsewhere. The instructions do not themselves order layoffs or program closures, but Democratic legislative budget leaders told VTDigger that a 1% overall increase could force difficult choices because labor, health care and other operating expenses continue to climb.
January begins the public phase
Vermont’s budget process gives the governor the opening proposal and the Legislature the final appropriations decision. The Department of Finance and Management says agencies develop requests in the fall, after which the administration assembles a statewide plan for lawmakers. Legislative committees can then revise spending and revenue assumptions before sending a bill back to the governor.
The baseline is substantial. Lawmakers approved a roughly $9.38 billion fiscal 2027 budget, using about $101 million in one-time surplus revenue to soften the statewide property-tax increase. That maneuver reduced immediate pressure but did not permanently enlarge the revenue base. State economists later reported that fiscal 2026 receipts finished only modestly above forecast, reinforcing the distinction between a one-year surplus and sustainable growth.
The budget guidance therefore sets up a clear policy choice for the 2027 legislative session: whether to accept a slower spending path to create room for tax cuts, raise or redirect revenue, or allow larger agency budgets. Agencies must now translate that statewide target into individual program requests during the fall budget-building process. Voters will first decide in November whether Scott remains in office to present the plan. Until then, the 1% figure is best understood as the administration’s planning assumption rather than a final limit on state services.
