MONTPELIER — As they near the halfway point of the 2013 legislative session, lawmakers and the Shumlin administration appear to be as far apart as ever on the issue of how to generate new revenues.
While Gov. Peter Shumlin said Monday that he’s confident a compromise is in the cards, House committees are putting the final touches on a budget that might not include some of the administration’s highest-profile policy initiatives.
“We only have a certain amount of capacity, so all of the new spending that’s in the (administration’s) budget is under scrutiny,” House Speaker Shap Smith said Monday.
Smith aims to have a budget voted out of the appropriations committee in two weeks, but said it’s still too early to say which of Shumlin’s new programs will get axed from his chamber’s version of the fiscal year 2014 spending plan. The potential casualties include line items championed vigorously by the second-term governor, such as a proposal for $17 million in childcare subsidies for low-income parents.
Shumlin last month also laid out plans for $6 million in low-income heating assistance, $6 million for home weatherization programs, and $5 million for renewable energy subsidies. Each of those proposals could fall victim in coming days to the House budget scissors.
That’s because lawmakers have by and large rejected the funding mechanisms Shumlin wants to use to pay for them. Most controversially, the governor would fund his childcare appropriations by cutting $17 million from an “earned income tax credit” that provides cash benefits to 45,000 of the lowest-wage workers in Vermont.
Smith said Monday the reductions to the EITC are a nonstarter. And Shumlin’s plan to fund his energy initiatives — he wants a 10-cent per-ticket tax on “break open” tickets — hasn’t gone over much better. Even if lawmakers do go along with the new surcharge on the tickets, which have been a popular fundraising tool for service clubs, they say the tax would raise only about a third of the $17 million Shumlin has booked in his budget.
So far at least, the House hasn’t found any solid replacements for the Shumlin proposals to which they’ll soon give the boot. The House Committee on Health Care two weeks ago approved an excise tax on sugar-sweetened beverages, but that funding stream likely won’t survive a vote in the House Committee on Ways and Means.
So where will the new money come from? Over the next two weeks, House lawmakers will consider a number of alternative revenue options, including the elimination of certain tax loopholes. Smith last week said he’s interested in looking at whether certain capital gains should continue to be excluded from the income tax — a proposal first floated by Progressives. He may also target research and development tax credits for businesses.
The House Committee on Ways and Means will consider revoking the sales tax exemption that now insulates purchases of soda and candy from the 6-percent assessment. It wouldn’t yield the $24 million that the soda tax is forecast to generate annually, but it would get the Legislature $6 million in new revenue for next year’s budget.
Downstairs, meanwhile, the Senate Committee on Finance this week will be exploring the merits of a tax on groundwater extraction.
Asked Monday about some of the Legislature’s emerging proposals, Shumlin said he’s “not going to respond to every idea they have.”
“We’ve put forward a package that we feel very strongly should pass, and that’s what we’re going to work toward,” Shumlin said.
But the former Senate president pro tem said the final budget will no doubt prove a hybrid of things he wants and things lawmakers are pushing for. While the financial impacts of sequestration will only complicate budget matters, Shumlin said they also offer new urgency for new programs designed to stimulate local economies.
“My job now is to fight for what I believe, and it’s the Legislature’s job to think creatively about other solutions,” Shumlin said. “And in the end we’ll come together with a package that doesn’t allow the sequester to paralyze us.”
Just because some programs lack a funding source now doesn’t mean they won’t survive the legislative process. Rep. Tony Klein, an East Montpelier Democrat and chairman of the House Committee on Natural Resources and Energy, said Monday that his committee hasn’t found a way to pay for the heating assistance, thermal efficiency and renewable energy programs put forth by Shumlin.
But he said the policies are too important to let die so early in the session. Klein said his committee might consider a so-called “placeholder” revenue source, even if they know it won’t survive in the long run. So long as the programs are kept alive now, Klein said, the Legislature and administration will have until early May to find ways to pay for them.
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