Legislation To Raise Revenue Gets Cold Reception In House. Content To Cut.

"Democrats who voted against Poirier’s amendment Tuesday made it clear that they intend to support a version of that proposal in the near future. ‘In my mind, it’s not a question of if we raise income taxes, but when and by how much,’ said Rep. Mary Hooper, a Montpelier Democrat."

VTDigger Story

Article published Mar 23, 2011
Lawmakers mull tax targets
By Peter Hirschfeld
Vermont Press Bureau
MONTPELIER — A tax bill sparked a debate between dueling ideologies Tuesday as lawmakers from opposite ends of the political spectrum attacked the same piece of legislation for very different reasons. The so-called miscellaneous tax bill raises about $24 million in new revenue through tax increases on hospitals, nursing homes, private insurers and cigarette sales.

House Republicans called it a misguided proposal from a tax-and-spend supermajority that will raise the insurance premiums of middle-class Vermonters.

Liberal Democrats and Progressives, meanwhile, said the package doesn’t do enough to offset a $170 million budget gap that could otherwise force cuts to services for the state’s most vulnerable residents.

“There are times when a legislative body has to step up to the plate and become the social conscience of the people,” said Rep. Paul Poirier, a Barre City independent who proposed an amendment that sought to raise income taxes on the upper-middle class and wealthy by nearly $30 million.

Poirier’s amendment failed by an overwhelming margin, 117-23; the tax bill went on to win preliminary approval from the full House by a nearly 2-to-1 margin.

But proponents of the income-tax surcharge said they’ll galvanize support for a revenue-generating plan to which House leadership has thus far been unreceptive. And Republicans said they’ll attempt to eliminate tax increases altogether by exposing the fiscal “myths” propagated by Democrats in recent years.

“The myth that the Legislature has been cutting and reducing spending during this period is not true,” House Minority Leader Don Turner said at a Republican press conference.

Democrats say that during the last three fiscal years they’ve cut more than $260 million from government programs, many of them at the Agency of Human Services. Turner said the Legislature’s own budget numbers fly in the face of that claim. Between fiscal years 2008 and 2011, overall government spending shot up by 18 percent, from $4.1 billion to $4.85 billion. “When you hear those cries about cutting, and we can’t afford to cut anymore, they’re actually myth,” Turner said.

Rep. Martha Heath, chairwoman of the House Committee on Appropriations, said that just because spending levels rise from year to year does not mean that programs aren’t subject to cuts. Rising costs, she said, means government has to spend more every year just to maintain the same level of services.

Rep. Chris Pearson, a Burlington Progressive and architect of the Poirier amendment, said testimony from human-services advocates confirm the ill effects of proposed cuts in next year’s human-services budget. He said the income tax surcharge would have won broader support had it not been for the “strong arm” of House Speaker Shap Smith, who urged rejecting the proposal, in a caucus meeting Tuesday.

House leadership’s efforts to “lock down their members,” Pearson said, reflects an attempt to “protect the governor,” who has voiced consistent opposition to any increase in broad-based taxes.

Turner said his caucus will introduce amendments to eliminate tax increases on health-care providers, which amount to $17.4 million for hospitals alone (though $10 million of that, key lawmakers said, will be returned to hospitals in the form of higher Medicaid reimbursements). Nursing homes would pay an additional $2.8 million under the plan approved Tuesday; the 27-cent per pack increase on cigarettes would raise an estimated $3.6 million.

The lawmakers’ version of the tax bill actually raises $6 million less than the proposal from Gov. Peter Shumlin. Turner said he’s identified additional cuts in next year’s budget to compensate for the lost revenue. He dangled a spreadsheet detailing those cuts before reporters Tuesday, but refused to disclose specifics until later in the week.

Smith said he hasn’t rejected out-of-hand prospects for an income-tax surcharge. However, he said Vermont needs to wait until Congress cements next year’s federal budget, which could contain drastic cuts to human-services programs here. Democrats who voted against Poirier’s amendment Tuesday made it clear that they intend to support a version of that proposal in the near future. “In my mind, it’s not a question of if we raise income taxes, but when and by how much,” said Rep. Mary Hooper, a Montpelier Democrat. “I want to make sure we’re raising enough next year to support those who are going to be in even greater need next year.” The tax bill goes back to the floor for a final vote later this week.