[T]he stars (and the politics) are aligning in the House and Senate on the all-important, must-pass money bills, clearing the way for timely adjournment (i.e. May 15).
And adjournment can’t come soon enough for lawmakers this session. No one likes the budget cuts. The education restructuring is politically odious. And health care reform plans fizzled.
Worst of all, legislators have to raise taxes. Which means they will incur the wrath of the business community and the taxpaying populace at large. Not a happy summertime prospect.
There is a reason why disagreements over the tax bill have led to contentious fights between the governor’s office, Senate Finance Committee and the House Ways and Means Committee. Everyone hates to raise taxes. Even when it’s necessary and might even make sense.
This year, however, the fight has gone out of the debate on who gets taxed for what. The Senate Finance Committee and the House Ways and Means Committee are in agreement on key components of revenue legislation. Both committees are moving toward an income tax based on adjusted gross income tax, as opposed to taxable income (after deductions). And both committees have proposed an expansion of the sales tax to include candy and soda.
Both committees have been here before. They’ve considered all the angles, and now, after five years of consideration, in-fighting and discussion, they are implementing a few of the Vermont Blue Ribbon Tax Structure Commission’s 2010 recommendations.
The outlier issues to be resolved include the details of the cap on income tax deductions. The Senate is going for a mortgage deduction limit and a credit for charitable donations, while the House has proposed a limit of 2.5 times the standard deduction.
The House puts the meals tax on vending machine foods; the Senate extends the sales tax to bottled water. Minor differences in the world of tax reform.
Senate Finance saved the rollout of the most controversial proposal for last: A sales tax on services, softened with an overall reduction in the tax rate from 6 percent to 4.75 percent. A hearing on the Senate tax bill drew little interest on Monday, but businesses will attend a second hearing today in force.
The two committees have carefully orchestrated the tax changes to avoid the one, two punch. Punch No. 1: The governor’s displeasure. Punch No. 2: the Sturm and Drang of the business community.
Both are inevitable and could still turn the tide. But time, as experienced lawmakers know, is on their side. The clock is ticking ever louder as May 15 approaches. The tax bill must pass before the budget is taken up. A vote in Senate Finance is scheduled tonight, there will be a floor vote on Thursday, and a conference committee between the House and Senate committees next week.
So far, Gov. Peter Shumlin and his staff have been working to persuade lawmakers that the 0.7 percent payroll tax to pay for health care subsidies is preferable to soda and candy taxes. But the payroll tax has been dead for weeks in the Legislature, and the synchronicity between the House and Senate on sales and income tax changes means the governor would have to threaten a veto, probably today at his weekly press conference, to get his way.
The budget bill can’t go forward without the tax bill, but the appropriations side of the equation has not been fraught with the kind of political wrangling that can delay adjournment. The bill in the Senate is a mirror image of the House proposal, with the same pain meted out in budget reductions, tax hikes and one-time spending. So far, there are few standout issues that would block passage.
The Senate calendar is fairly empty today, but on Wednesday, senators will take up the capital bill, and Thursday will likely be a long day of debate over the tax and budget bills. Third reading for both is scheduled for Friday.
As per usual this time of year, the House is pretty much done with the bulk of its work and so has, perhaps, too much time on its hands. Little is happening in committee, and the floor drama factor is unpredictable.
Long floor times are expected for three bills on the House floor this week. Lawmakers will take up a much-diminished health care package that boosts reimbursements for primary doctors and maintains premium subsidies for low-income Vermonters. The House version of the child protection bill will get an airing. And the House will vote on whether to extend or eliminate a sunset provision for the death with dignity/physician assisted suicide law.
As one staffer put it, there will likely be nighttime cafeteria service this week.
End of session specials anyone?
