Gov. Peter Shumlin proposed a 5 percent budget increase in January, which included $14 million in new revenues and an array of spending initiatives. As the deadline for the Big Bill in the House approaches, it has become clear that lawmakers have no interest in raising taxes for new spending.
Last week the House Ways and Means Committee rejected the governor’s $14 million claims assessment proposal, which would have taxed every medical care transaction filed with a health insurance company. Rep. Janet Ancel, D-Calais and chair of the committee, said the Shumlin administration has not made it clear what the money is to be used for. Last year the House rejected a similar proposal.
Lawmakers are determined to balance the budget without the new revenue.
The House Appropriations Committee has been figuring out how to fill the $14 million hole. For starters, they are not including the governor’s budget increases in the appropriations bill.
Mitzi Johnson, D-South Hero, vice chair of House Appropriations, said: “One of the first places we’ll look to cut are places where the governor proposed an increase, and that includes the Medicaid reimbursement rate increase.”
Shumlin’s priorities are being put on what is known as “the wish list.” At the end of next week, lawmakers will decide what to jettison and what to save. The wish list will likely be longer than usual this year.
Rep. Martha Heath, D-Westford and chair of House Appropriations, told the Democratic caucus on Tuesday that “it’s unpleasant because it’s all the things we care about, but it’s a question of what we can afford to do.”
Half of the members of the House Appropriations Committee were seasoned in the bad old days of the Great Recession. Several have said this year is worse than 2009 and 2010 when state revenues fell precipitously. Four years ago the federal government stepped in to help resuscitate the economy. Now the federal government is cutting back on social service programs many Vermonters depend on.
Lawmakers are concerned about the specter of large budget gaps over the next three years — on top of the one they’re trying to resolve for fiscal year 2015. A Joint Fiscal Office report shows that next year the Medicaid program, which includes disability, mental health and medical services, could be $46.5 million short. In 2016 and 2017, the Medicaid gap is projected to be between $36 million and $38 million each year.
Rep. Martha Heath, D-Westford and chair of House Appropriations, said, “We have yet another challenge in 2016, maybe even a bigger one than this year.”
The appetite for raising taxes of any kind, including the claims assessment, meanwhile, is nil — in part because of last year’s drama over the governor’s proposal to raise $34 million in new revenues from break open tickets and a raid on the Earned Income Tax Credit. Lawmakers spent months carefully preparing alternative revenue proposals, including a change in the income tax base from taxable income to adjusted gross income. The Senate, too, approved $10-plus million in revenues. As the House and Senate began negotiating a compromise at the end of the last session, Shumlin said no new taxes were necessary and proceeded to jettison their plans. “We were told, gee we don’t need revenues at all,” Rep. Janet Ancel, D-Calais, chair of House Ways and Means, said in remarks to the House Democratic caucus.
As Ancel put it, in remarks to the House Democratic caucus: “Raising revenue is harder than it sounds. We don’t want to do it unless we need to.”
So cutting it is. $14 million worth.
Lawmakers agonized Thursday about relegating programs to the list which will get whittled at the end of next week as they prepare the budget for a vote on the House floor.
Here’s a small sampling of what’s on the list so far:
- 2 percent increases for Medicaid providers.
- 2 percent increases for the University of Vermont, the Vermont State Colleges, Vermont Student Assistance Corp.
- A 2 percent increase in the annual appropriation for Vermont Public Television
- 6 percent of a 9 percent increase for the Regional Development Commissions and the Regional Planning Commissions
- $50,000 to maintain the Lois McClure, a replica of a 19th century Lake Champlain ship
The latter was the subject of a back and forth discussion over the committee’s approach.
Rep. Kitty Toll, D-Danville, said she couldn’t justify pitting an appropriation for the ship against funding for Prevent Child Abuse Vermont. “I don’t know how we can compare the need when we’re talk about cuts to children and elderly,” Toll said.
None of the cuts to items in the Agency of Commerce Community Development, including the McClure, were warranted in Rep. Kathy Keenan’s view. “I’d like to see it all restored because this is our economic engine,” Keenan said.
CORRECTION: House Appropriations has put a 2 percent increase in Vermont Public Television’s appropriation — not the full request — on the wish list.
