The Senate is one day closer to finalizing the all-important money bills that are crucial to government spending — and adjournment.
The $5 billion state budget has been finalized, and the miscellaneous tax bill is nearly complete.
The Senate Finance Committee had not yet voted out the miscellaneous tax bill Tuesday evening, but earlier in the day, lawmakers had agreed to a number of crucial items in the soup-to-nuts legislation that resets tax priorities for the state each year.
The panel is considering a 2 cent increase to the statewide property tax to cover a decline in the grand list value of real estate and a slight increase in school spending.
Here’s what the Senate Finance Committee agreed to:
- A one-year moratorium on the cloud computing tax. Companies that use software as a service, or remotely hosted software, will get a reprieve from the 6 percent sales tax on the service until the next legislative session. In addition, businesses that paid the tax from 2006 through 2011 will receive a refund. The cost of returning money to taxpayers is roughly $1.9 million.
- A $5 million “generation” tax on Vermont Yankee. The state would put $2.9 million toward the Education Fund and $2.1 million in the Clean Energy Development Fund, a grant, loan and tax subsidy program for renewable energy which is nearly depleted.
- A $3,000 cap on the renter rebate program.
Expect to see an amendment from Sen. Dick McCormack, D-Windsor, that would allow child-care providers to unionize. The senator from Bethel, believes the right to collective bargaining is fundamental, and he has put together a one-page provision that he hopes to tack onto the miscellaneous tax bill.
The Senate Appropriations Committee is poised to adopt a $1.3 billion General Fund Budget and total government expenditures of $5 billion for fiscal year 2013. Last year’s budget was $1.233 billion in General Fund spending and $4.71 billion total. The growth rate year over year is 5.4 percent for the General Fund and 6.3 percent for the overall expenditure.
Sen. Jane Kitchel compared the budgeting process, especially federal cuts, to “sitting on a cactus and trying to figure out which spine is hurting you the most.”
She explained in a caucus on Tuesday that the percentage increases can be attributed to four main factors:
- A loss of $20.5 million in federal Medicaid matching funds, as a result of Vermont’s strong employment and other good economic indicators.
- A $14 million increase in retirement costs for teachers and state employees.
- The 3 percent to 5 percent salary increases for state employees, or about $13.6 million
- The loss of the Tobacco Fund money, which would have contributed $6 million to the bottom line.
The main takeaway, however, has to do with future General Fund surpluses. The Senate Appropriations Committee is proposing to send back half of any General Fund surplus monies to homestead property taxpayers in a refund.
The House had set aside that same pot of money to rebase the Education Fund, which permanently lost $27.5 million when the Legislature reduced the General Fund transfer to the Education Fund.
Kitchel said “just putting the money in the Ed Fund doesn’t guarantee any relief to Vermont property taxpayers,” and she advocated for the refund.
Several senators, including Sen. Bob Hartwell, D-Bennington, object to the refund.
“This is a short-term feel good fix,” Hartwell said. “I disagree that putting more money in Education Fund won’t help property taxpayers.”
The question, Sen. Mark McDonald, said is which taxpayers would an increase in the General Fund transfer to the Ed Fund help. He believes that more money would go to second homeowners and businesses as a result.
The Appropriations bill also includes:
- $300,000 in legal assistance for homeowners facing foreclosure from the Vermont Attorney General’s national mortgage settlement;
- $1.1 million in carryforward money for the Choices for Care program, which helps elderly Vermonters stay in their homes and prevents them from going to nursing homes;
- Sets aside an additional $350,000 for substance abuse programs;
- Invests $175,000 in youth services, including the guardian ad litem program ($50,000) and Boys and Girls State ($10,000)
- $5.1 million for a total of $7 million to cover costs associated with cuts to federal programs;
- $500,000 for the working landscape bill (the House budgeted substantially more)
- $650,000 for an affordable mobile home owner program.
The Big Bill has $68 million in budget reserves, not including $16 million in human services caseload reserve monies.
The budget gap projection for fiscal year 2014 is between $5 million and $44 million. During the Great Recession, the gap was hundreds of millions of dollars each year, and most of the difference was made up by federal stimulus funds and reductions to state spending.