MONTPELIER — To the more liberal members of the House Democratic caucus, Gov. Peter Shumlin delivered a message on Saturday: I need your fiscal conservatism now if you want progressive health care reform in 2017.
In his first two years as governor, the Democratic incumbent has beaten back tax-the-rich uprisings fomented by progressive members of his own party.
With a $70 million shortfall projected for the fiscal year 2014 general fund, liberal Democrats may once again seek rate hikes on high-income earners as a means of closing the fiscal gap without eroding services for the poor, elderly and infirm.
But Shumlin told Democrats on Saturday that increasing broad-based taxes — defined by the governor as income, sales, and rooms and meals levies— would be a mistake.
“We know we’ve got the budget deficit. That isn’t the fun part, but it matters,” Shumlin said. “When we balance budgets without spending money that we don’t have, we depart from many other states... who don’t know how to manage their finances.”
Balancing the budget without broad-based tax increases, he said, will maintain the solid bond rating that has allowed the state to borrow at more favorable rates. His brand of fiscal responsibility, he said, also strengthens the foundation on which government services rest, allowing the state “to keep the promises to the most vulnerable Vermonters without throwing them off the train.”
If Democrats can abide his no-new-taxes pledge now, Shumlin said, then they’ll earn the electoral trust they’ll need to proceed with single-payer health care in 2017.
“That sets the foundation, builds the confidence and gives us the support of Vermonters that allows us to do the others things that I say other states don’t dare do,” Shumlin said.
While the first installment of the Affordable Care Act — an online insurance marketplace called the “exchange” — will improve access to health care beginning next year, Shumlin said, the real prize comes in 2017.
“We must focus like a laser on delivering on the promise of a single-payer, universal access, publicly financed health care system in Vermont where health care is a right and not a privilege,” he said.
Democrats will face some difficult decisions next year as they seek to balance the needs of low- and working-class Vermonters against the governor’s opposition to broad-based tax increases.
Rep. Mike Fisher, a Lincoln Democrat and chairman of the House Committee on Health Care, briefed the caucus Saturday on one looming pressure point. Nearly 20,000 Vermonters currently receiving state health care subsidies will face potentially significant increases in out-of-pocket expenses when they’re folded into the exchange in 2014.
Shumlin has said that Vermont taxpayers can’t afford the $18 million per year it will cost to hold that population harmless. And it will largely be up to House Democrats to decide whether the governor’s plan to mitigate the impact is sufficient, or if government should raise additional revenue to offset the adverse effects on lower-income residents.
“It’s an issue of great concern to me and we’re going to be looking closely at it to see what action we can take and what action we can afford to take,” Fisher said. “It’s about money, frankly.”
While he voiced a preference for avoiding broad-based tax increases, House Speaker Shap Smith wouldn’t commit to anything Saturday.
“I always think that you should look to close the hole in the first instance within the contours of your current revenue,” Smith said. “I’d like to see if we can do that; if we think we can’t, then I think we visit the issue of whether we’re going to raise revenue or not.”
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