No budget and tax deal had been formally reached as of Thursday and there was a late-night scuffle in the House over a minimum wage bill, but legislative leadership in the House and Senate say the legislative session still could end Saturday.
The conferees of the Senate and House budget and tax committees were engrossed in closed-door negotiations late last night and they are expected to announce a deal this morning.
House Speaker Shap Smith says if the budget and tax conferees can resolve an outstanding $2.2 million gap, the path could be clear for Saturday adjournment.
Another glitch, however, and pending changes to the jobs bill, could also throw a wrench into the works. There was a snafu with the minimum wage bill Thursday night — the wrong version was put in the calendar — so the House must wait another day to take up the bill. Passage of S.220, the economic development bill, is also in question because it’s not clear whether the House GOP will suspend rules that require 24-hour notice on the House calendar.
The budget gap appeared last week when the Shumlin administration settled with a newly created a home health care union. Workers, many of whom were paid the federal or state minimum wage rate, will get base pay of $10.80 per hour. The deal costs $4 million, with a $2.2 million hit to the General Fund.
In addition, there is an overall discrepancy between the House and Senate appropriations proposals. The House proposal came in about $6 million less. Ups and downs in the estimates bring the figure to a $7.5 million difference.
In dispute is whether the budget conference committees can find more money to cut, or whether the state will raise additional revenues to cover the cost.
Senate and House appropriations conferees were having difficulty finding places to reduce spending on Thursday.
Meanwhile, the goalposts, as Rep. Janet Ancel, chair of the House Ways and Means Committee, put it on Thursday, were moving and she said she needed a firm target figure for the revenues they needed to raise. Was the total needed $7.5 million? Or $5.3 million? As of early afternoon yesterday, it wasn’t clear.
But by late in the afternoon, the number was $7.5 million.
The Senate tax conferees, led by Sen. Tim Ashe, D/P-Chittenden, want to raise the $2 million difference through a slight increase on the quarterly employer assessment for large companies (with 51 or more workers) that do not offer health insurance.
The House tax conferees were not enthusiastic about the employer assessment proposal on Thursday. Ancel said the House had already compromised by allowing a provision that requires businesses who offer health insurance but whose workers qualify for Medicaid to also pay the employer assessment.
The House instead has proposed a tax on e-cigarettes that would raise $500,000, a 30 cent tax increase on cigarettes that would raise $2.5 million. (The American Lung Association and American Heart Association oppose the cigarette tax increase because representatives say it isn’t a big enough hike to deter people from smoking.)
The House and Senate tax conferees also need to settle their differences on the property tax rate and associated language.
The House property tax rate was 98 cents for homestead taxpayers and $1.515 for non-residential property. The Senate went with $1 for homestead and $1.51 for non-residential. On Thursday, Ashe suggested they might be willing to accept 0.995 for the homestead rate.
The Senate proposal removes the House phaseout of the $7.7 million small school grant over a six-year period.
In addition, the Senate wants to create an Education Financing Reform Commission, which would consist of the commissioner of the Vermont Department of Taxes and members of the House and Senate. The commission would be charged with holding six public meetings to consider “how Vermont could transition to a tax system for financing education that better incorporates a taxpayers’ ability to pay” that better connects voters to the cost of education.
The commission would consider a new education financing system that would have a “much lower homestead property tax rate” and would rely on income taxes indexed to a taxpayer’s federal adjusted gross income. Income sensitivity adjustments would be eliminated under the proposal.