MONTPELIER — The Democrats who control the House, the Senate and the governor’s office have chosen budget reductions over tax increases.
They will lop $10 million off next year’s spending plan in order to scrap revenue bills that would have upped taxes on everything from the incomes of the rich to the sales of bottled water.
A three-way negotiation between Gov. Peter Shumlin, House Speaker Shap Smith and Senate President John Campbell yielded a deal Tuesday that forsakes a menu of revenue options — tax increases on meals and satellite television were also on the table — as well as the programs and services they would have funded.
In light of the gas tax increase of 6 cents per gallon signed into law by Shumlin earlier this year, the second-term governor has said in recent days, elected officials ought not proceed with additional tax hikes.
“We’ve been having conversations over the last several days about the best way to bring closure to this session, while accomplishing the greater goals we set out at the beginning, which is to do everything in our power to find ways to create jobs and raise incomes for Vermonters that have jobs,” Shumlin said.
“And we have come to an agreement on revenue and the budget that will allow us to leave this session without raising additional taxes.”
After an election cycle in which the Republican opposition warned against the ills of one-party rule, the deal will burnish the conservative credentials that all three men have sought cultivate this session.
House and Senate Republicans convened a press conference two hours prior to the announcement of the deal, in which they urged the precise course of action Democrats would ultimately undertake.
House Minority Leader Don Turner said. “I commend the governor and the speaker.”
“This is what we’ve been pushing for all session,” Turner said. “I give them credit for listening to Vermonters who have told us they don’t want new taxes.”
But in rejecting revenue packages proposed by the House and Senate, Shumlin necessarily axes the bulk of the $34 million in new spending he’d proposed in January for childcare subsidies, home weatherization and renewable energy subsidies.
And while leaders in Montpelier have cemented a deal over the parameters of a $5.3 billion budget, they have yet to identify which line items will absorb the blow.
Shumlin said new revenue projections that arrived last Friday — they forecast a surplus of about $16 million at the end of the this year — will temper the impact. And improving prospects for federal legislation that could generate about $20 million from taxes on online sales, Shumlin said, also “could help us.”
Half of the $16 million surplus will, as per statute, be deposited directly into the education fund. But the remainder would backfill all but $2 million of the gap between the Senate version of the budget and the revenues available to pay for it.
Sen. Jane Kitchel, chairwoman of the Senate Committee on Appropriations, said that surplus will allow lawmakers to plug the hole “in a way that you’re not going to see any destruction.”
“Our feeling is we can come up with strategies to reduce or close the gap that will not translate into benefit impacts at all,” Kitchel said.
Rep. Chris Pearson, a Burlington Progressive, said his concerns aren’t entirely assuaged. He said he’s still holding out hope for heightened financial assistance for the lower-income Vermonters facing increases in health insurance costs next year when they head into the new online exchange.
“I’m left wondering what it’s going to mean for our budget and some of the priorities some of us advocated for,” Pearson said. “Now the question for me becomes what is the implication to the budget.”
The answers to those outstanding budget pictures will come soon. The arrival of a budget deal makes it all but certain that lawmakers will adjourn for the year on Saturday, and Kitchel said she hopes to have the final budget to the printers by Friday.
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