Legislative Report from Rep. Dennis Devereux for Ludlow, Mount Holly, and Shrewsbury
The revenue sources proposed by the Governor in early January raised many eyebrows. His ideas to change the earned income tax credit (EITC) that helps families with children, and place a tax on break-open tickets were troubling. The amount to be raised by taxes is a moving target as the spending proposals in the budget come into focus. The Vermont House passed, without my support, the Miscellaneous Tax Bill that was seeking to raise $27 million by taxing soft drinks, bottled water, and candy, and also increasing taxes on cigarettes, meals, and income. It raised the income tax by collapsing the highest two income tax brackets, so that people now in the second highest bracket would end up paying the highest rate. There was little support to change the EITC program or tax break-open tickets as the Governor wanted.
The senate version only raises $10.2 million because they had the luxury of a later look and received news that there would be about $16.8 million more than anticipated from the state income tax. They were looking at taxing satellite TV service, break-open tickets, bottled water, and then increasing taxes on liquor, and limiting itemized deductions for mortgage interest. There was little in common between the two bodies, so a compromise was needed to work out the differences in this must pass bill.
The Governor has been adamant that there would not be any broad-based taxes passed.
Both versions included increases in income and sales taxes, so he continued to voice his dissatisfaction with the legislature. He feels this is “not the time” to raise taxes, but we do know that the time will come when more than $1.6 billion will be needed to pay for the Governor’s health care reform program.
My position has been that you do not need new revenue if you control spending as each of us does with our own pocketbook. What is concerning for me is that some of these proposals this year will use one-time money, leaving us with a large gap to fill next year. We are already hearing about a projected shortfall when the same tax ideas will again find a new life. We will also see if the income tax code adjustments talked about will indeed help most Vermonters. For me, it came down to the fact that the Misc. Tax and the Appropriation Bills did not raise new taxes, create any new programs, and lowered the growth of spending. I was also glad to see there is an $8.2 million buffer created against the impact of the federal sequestration. In the end, this was a responsible budget.
I look forward to discussing the issues with each of you as we await the start of the second year of our session next January. Please contact me with your questions or concerns at email@example.com or 802-259-2460.