Sen. President Pro Tempore John Campbell. VTD file photo by Josh Larkin.
Budget triage mode isn’t over yet — and won’t be in the foreseeable future, according to Senate President Pro Tem John Campbell. Today, at 10 a.m. in Room 11, state officials will brief lawmakers about the federal cuts identified in the fiscal year 2011 round, and potential reductions as a result of proposed 2012 budget proposals from Tea Party Republicans in Congress.
That’s why, like House Speaker Shap Smith and Gov. Peter Shumlin, Campbell is reluctant to raise broad-based taxes. The Democratic leadership maintains that the state must ensure there is tax capacity in fiscal year 2012 to allay what it anticipates will be substantial reductions in federal funding in key human services programs. The congressional budget for fiscal year 2011 is not anticipated to have a direct impact on the state’s fiscal year 2012 budget — for now. The federal fiscal year runs from October through September, so there is some potential overlap.
Jim Reardon, commissioner of the Department of Finance and Management, and Steve Klein, the head of the Joint Fiscal Office, will give lawmakers a preview of the federal cuts at 10 a.m. in Room 11 at the Statehouse.
Reardon estimates that Vermont’s budget gap in fiscal year 2013 will be about $60 million.
Campbell found a way on Friday to wrap his head around a tax that until now has been unpalatable for the senator from Windsor County: the cigarette tax. Campbell has said he opposed an increase in the per-pack tax, but at the end of last week, he was persuaded otherwise by the “ladies” in charge – Sen. Claire Ayer, D-Addison, chair of Senate Health and Welfare, and Sen. Ann Cummings, D-Washington, chair of Senate Finance.
Download a PDF of the spreadsheet: H.436 Fiscal Estimates for miscellaneous tax bill
Both senators recommended a $1 per pack tax hike as a “twofer” — a money maker for the state and an instant health booster (Ayer said sticker shock has a way of enticing smokers to go cold turkey).
The increase was necessary, Campbell said, to counteract a $4 million to $5 million decrease in available revenue from the hospital provider tax. Campbell never has liked the “tooth tax,” an assessment on revenue from dentists. Instead, Senate Finance came up with a new tax on dental insurance claims of 0.65 percent that will be used to generate about $400,000 for substance abuse counselors at local high schools.
The Senate President Pro Tem also says he has found a way to fully fund the missing $1 million for two key services for the elderly — the personal assistants and respite care — though he won’t say how, exactly.
The Senate Appropriations Committee wrestled with the budget on Monday and is expected to vote the bill out on Tuesday afternoon.
All of the money bills at that point will be on a fast track for passage on the Senate floor. The capital and transportation bills are expected to be voted on in the Senate on Tuesday and Wednesday, according to Campbell. The health care legislation is slated for Thursday, after its comb-through in Senate Finance. Miscellaneous tax and appropriations are scheduled for Friday.
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“The Democratic leadership maintains that the state must ensure there is tax capacity in fiscal year 2012 to allay what it anticipates will be substantial reductions in federal funding in key human services programs.”
I have heard this repeatedly but still have no idea what it means.
If the legislature raises taxes on the wealthy now, it would produce revenue for as long as the tax was in effect. But the statement seems to say that taxing the wealthy today would somehow reduce their incomes next year and result in less revenue.
The incomes of the wealthiest Vermonters are not determined by our tax policies. For the most part, they reflect the nation’s financial health since most of their income is from investments. That income is the “capacity” at issue.
If there is more to this, I would be grateful for an explanation. For now, I’m not buying it.
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As usual Doug Hoffer is right on, but we needed to hear HIM say this, since non-economist or non-accountant types like me read the same thing in this same way and then wonder if somehow we must be wrong? The logic is simple. Recoup money from the higher-income tax folks this year AND next year.
John Campbell deserves lots of credit for working on the single payer system bill through the H&W Committee, and he deserves credit for listening to Ayer and Cummings on the cigarette tax — good for them! However, his logic falls apart on this surtax issue. And why is Peter Shumlin so defensive on this issue, too?
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Well put, Doug Hoffer!
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Yes! – Doug Hoffer has put his finger on the phony obfuscation by Shumlin and his minions. And, in response as to why Shumlin and other so-called Democrats refuse to budge in the interest of fairness, they have been bamboozled into believing in the gospel according to Saint Ronald – against overwhelming evidence to the contrary! Please read Joseph Stiglitz’s article in Vanity Fair – “Of The 1%, For The 1%, and By The 1%!” Shumlin is among that 1% or at least the wealthiest 5%. Why do we expect him to propose legislation to jeopardize his wealth? As our Senator Bernie Sanders has pointed out the extreme discrepancy between the rich and the rest of us puts the USA in the category of a banana republic.