[G]ov. Peter Shumlin threw down the gauntlet Friday morning and then shunned discussion with legislative leadership.
The governor told Mark Johnson of WDEV there was “no path to adjournment” unless lawmakers agreed to give up on plans to eliminate any deductions for wealthy Vermont households.
Friday night the Legislature moved ahead with a tax plan they know the governor won’t like and possibly will veto.
The House and Senate have agreed to a cap on income tax deductions of two times the standard rate, or $25,000 for a household. The cap exempts medical expenses and charitable donations.
Click here to read a detailed report on the tax deal.
Shumlin has insisted for the past two weeks that lawmakers find more cuts to state spending before raising taxes to close a $113 million budget gap.
To appease the governor, House and Senate budget-writers redoubled their efforts and brought the total needed in revenue down from $35 million to $30 million Thursday. Lawmakers also gave up on caps for charitable giving and medical expenses.
Shumlin, meanwhile, hasn’t budged, and after his morning declaration on WDEV he didn’t meet with lawmakers until late afternoon, sources say.
House Speaker Shap Smith said he wouldn’t “call what we have been doing negotiating.”
“I’d call it continuing to stake out positions,” Smith said. “We haven’t been negotiating with the governor, quite frankly.”
The only item Shumlin and legislative leaders have agreed on is the elimination of a $15 million state and local income tax deduction. The changes the House and Senate have agreed to raises another $15 million to close the gap.
The Senate has proposed capping homestead mortgage deductions at two times the standard deduction. At one point, the House proposed raising the top marginal tax rate by 0.4 percentage points, from 8.95 percent to 8.99 percent, to raise the $15 million. The administration immediately rejected that notion, which would have affected the state’s top earners.
Revenue to fund the health care reform bill is expected to be between $7 million and $10 million, as of 11 p.m. Friday the House and Senate had not agreed on what taxes will pay for the new spending or how the money will be spent.
Shumlin told Johnson on WDEV that he would have to look “very carefully at the small health care bill spending, because that bill, whether it’s $10 million, $8 million currently, it’s using the revenue that you need to balance the budget.”
“OK, so what does that mean?” Johnson asked.
“It means that you can’t have everything,” the governor said.
The House and Senate agreements on tax and budget bills Friday night means Saturday adjournment is doable. House Republicans will have 24 hours to review the budget, which was the stipulation they put in place before they will be willing to suspend the rules to take up the the big bill.
Listen to Mark Johnson’s interviews with Gov. Peter Shumlin, House Speaker Shap Smith and Senate President Pro Tem John Campbell.
