Shumlin administration offers revised tax and spending proposals to ...

It was as if the Shumlin administration dumped several dozen more puzzle pieces on the table where the Senate Appropriations and Finance committee were hunched over assembling the pieces of their spending and tax puzzle.

The two panels are supposed to wrap up work on the Senate?s versions of the budget and tax bills by the end of this week or early next week if the Legislature is going to keep to its schedule and adjourn by May 11.

Now Secretary of Administration Jeb Spaulding and Finance Commissioner Jim Reardon have given them more options to consider. The pair delivered two letters Monday afternoon that made some big picture revisions to the spending and tax plans Gov. Peter Shumlin recommended, and detailed some specific improvements the administration hopes to see in the Senate bills compared to the House.

?It seemed like it would be helpful to show them how they could pass a workable budget without raising any broad-based taxes,? Spaulding explained after making a presentation to the Senate Appropriations Committee. He said he hoped to make a similar presentation to the Senate Finance Committee.

Gov. Peter Shumlin has criticized the House for proposing broad-based taxes such changes to the income tax, 12-month increase in the meals tax, expansion of the sales tax to candy, soft drinks, bottled water, dietary supplements and clothing items priced higher than $110, and a 50-cent increase in the tax on a pack of cigarettes.

Senators generally reserved judgment on the administration?s new plan, although Senate Finance Committee Chairman Tim Ashe, D/P-Chittenden, rejected the administration?s revised plan to use the earned income tax credit to pay for increased spending for child care.

?I have not heard one good reason to solve a budget problem by going after low-income working people,? Ashe said.

Lobbyists for low-income Vermonters bashed the revised revenue plan that continues to tap the earned income tax credit. ?This is fracking the poor instead of drilling them directly,? said Christopher Curtis, a lawyer with Legal Aid. ?It is just wrong.?

The Shumlin administration proposed raising $17 million by shrinking the amount that the state offers through the earned income tax credit program and investing it in child care subsidies for parents and payments for providers. The House scaled back the child care investment to $3.3 million because it disagreed with funding it from the earned income tax credit.

Monday, Spaulding revised the administration?s proposal by suggesting that $12 million could be raised from the earned income tax credit by setting up tiers under which the cutbacks would be based on the number of dependents. Those with three or more dependents would see no reduction.

He argued more money was needed because a $3.3 million investment in child care wasn?t ?adequate to accomplish the goal of making child care affordable for low income parents.?

Lawmakers share the governor?s desire to invest in child care, House Speaker Shap Smith, D-Morristown said, but many remained troubled with the suggested use of a tax credit that goes to working Vermonters.

Spaulding also offered a revised revenue estimate from taxing break-open tickets and suggested imposing a smaller surcharge ? 6 percent rather than 10 percent ? on the value of a box of tickets. This would raise $6.2 million, which Spaulding said the administration would earmark for the Low Income Heating Assistance Program.

Lawmakers with help from their financial analysts had questioned the original revenue estimates put forth by the administration from this new tax. Spaulding asserted Monday that the new estimate was solid. ?We have done our homework.?

Spaulding asked senators to reconsider keeping an assessment on employers who don?t offer health insurance. He also proposed a tier in the bank franchise tax that would increase the assessment for banks with deposits greater than $750 million. He said that would hit five banks and raise $2.4 million.

ncreasing the bank franchise tax would alleviate the need to tax prewritten software, often called the cloud computing tax, and allow the state to maintain a tax credit for wood manufacturers, the administration also argued.

Spaulding stressed the governor?s opposition to raising taxes in order to put money into reserve accounts. He noted a new requirement that half of any surplus at the end of this budget year would be dedicated to reserves. The yet-to-be answered question, however, is whether there will be any surplus on June 30.

The administration?s letters won?t be the only advice the Senate Appropriations and Finance committees receive this week. The Senate Health and Welfare Committee worked Monday on a letter with its recommendations on social service spending and its views on taxes.

The panel wasn?t keen on imposing a five-year limit on Reach Up benefits, wanted to provide more financial protection to low and moderate-income Vermonters who will have to buy their health insurance through a new online health insurance market and will likely support at least a dollar increase in the tax on cigarettes in order to reap the health benefits.

Senate President Pro Tempore John Campbell remained optimistic the two money committees could sift through all the conflicting recommendations and come up with the tax and spending plans the full Senate could endorse ? soon.

Nancy Remsen covers state government, including the legislative session, and politics. She is a 1972 graduate of Middlebury College and has a masters in journalism from the University of Missouri. She worked briefly for the Associated Press, spent 20 years at the Bangor Daily News in Maine as a reporter and editor before moving to Vermont in 1995.

Source: http://blogs.burlingtonfreepress.com/politics/2013/04/16/shumlin-administration-offers-revised-tax-and-spending-proposals-to-senate-committees/

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