The House Ways and Means Committee gave preliminary approval on Friday to a bill that is likely to further frustrate the governor’s promise that there will be no tax rate increase on Vermonters this year.
Democrats on the committee approved the proposal, which would increase both residential and non-residential rates, despite the objections of Rep. Kurt Wright, R-Burlington, who said it would only continue the “spin cycle” of the political gridlock in Montpelier.
The Senate on Thursday passed H.13, a spending bill that left out a few crucial points of contention to be hammered out in H.4, which is meant to settle tax rates and the use of $35 million to $45 million in one-time money available this year because of unexpected surplus revenues.
Though H.4 is the main vehicle for a compromise between Democratic legislative leaders and the Republican Gov. Phil Scott, the House Ways and Means Committee gave preliminary approval Friday afternoon to a bill that many said they knew the administration would not support.
While the proposal moved further away from the governor’s stance on keeping property taxes at the same level as last year, it moved toward him on the use of one-time money, by allocating an additional $30 million to the education fund over the next two years to hold down taxes.
The proposal, put forward by Rep. Cynthia Browning, D-Arlington, would take $45 million in surplus revenue and divide it among the priorities of the two sides: $15 million into the education fund to buy down taxes this year, $15 million into the education fund to buy down taxes next year, and $15 million toward paying down state employee pension liabilities.
According to a projection put together by the Legislature’s Joint Fiscal Office on Friday afternoon, that allocation of one-time funds would increase non-residential rates (on properties that are not people’s main homes) by about 4 cents per $100 in assessed value and residential rates by about 2 cents.
The previous proposals would have raised non-residential rates by 5 cents and kept residential rates steady. Altogether, the latest proposal would increase property tax rates by about 6 cents, up from 5 cents in the previous proposals.
The major sticking point between the two sides in H.13 is the fact that if the bill were to be passed without a second, the non-residential rate would default to $1.59 per $100 in assessed value, an increase on the $1.53 rate last year.
Although the governor said he would not sign the bill without language guaranteeing that the non-residential rate remain stable, it was passed in both the House and Senate and arrived on his desk Friday without that change, in part so that Democrats could maintain leverage in negotiations on H.4.
Wright said that he was willing to sign onto a tax proposal that did not meet the governor entirely on his terms, but did not feel that Friday’s proposal showed a sincere effort to break the political impasse with a budget deadline coming at the end of the month.
“I’d be willing to send him something that wasn’t 100 percent of what he wanted but certainly not where we’ve gone up 2 cents on the residential side and still have a 4 cent nonresidential rate increase,” Wright said in an interview after the proposal was approved.
“I think we should have stayed in here, worked more, harder, longer and came to something with more of a compromise,” he said.
Wright said the Democratic majority in the Statehouse seemed to be inviting continued gridlock.
“We are mostly ignoring the governor’s veto of the previous bills and really are just frankly heading for a showdown — apparently that’s what the majority party wants,” he said.
Tax Commissioner Kaj Samsom spent the day listening in on the committee’s conversation. He said afterward that the administration would have to read the final bill before weighing in.
“I would let the committee comments speak for themselves,” he said. “I think I agree with all of them at some level, some folks saying this really doesn’t get us much closer and others saying well, we need to move something.”
Samsom said that longer term proposals to control spending on schools were missing from the proposal.
Rep. Janet Ancel, D-Calais, said she views the bill as a compromise because it would set property taxes at lower rates than Vermonters would have seen under the tax bill that the Legislature passed — and the governor vetoed — in May.
The Scott administration hasn’t shown the same willingness to meet in the middle on the issue of property tax rates, she said.
“When you negotiate, you move,” she said.
Some of Ancel’s Democratic colleagues have said that the only way that Scott would not veto H.13 is if her committee showed progress in making a deal with the governor in H.4. Ancel rejected that notion.
“The idea that this committee ought to worry about a government shutdown actually really offends me because we have passed a bill that would stop a government shutdown and it’s on the governor’s desk, or it will be shortly, and he can sign it,” she said.
Samsom said that if the Democraic leadership had wanted the governor to sign the bill, they would have taken out the possibility of a property tax rate increase.
“When we look at H.13 I do feel strongly that if that was a genuine attempt to avoid a government shutdown I definitely agree it would have excluded the default rate for non-res altogether or it would have set it at a level rate to the current,” he said.
Although there was still plenty of work to do, Browning said the Legislature had taken an step in the right direction with the new proposal.
“The previous position of the Democratic majority … was that it all had to go to teachers’ retirement. So we are now in a position where instead of all of it going to teachers’ retirement, two-thirds of it is going to the ed fund to mitigate property rate increases,” Browning said.
“It’s not doing everything the governor would want or what I would want but I think that’s actually a big accomplishment,” she added.
The committee still needs to reconvene to vote out the bill once it has been drafted. Browning said she would introduce further amendments to H.4 once it gets to the House floor, though it still might not be enough to satisfy both sides.
“I don’t know if any of the parties involved actually wants a government shutdown so that they can blame the other party,” she said. “In my opinion if we have a government shutdown it will be because of irresponsibility on both sides.”
