[G]ov. Phil Scott sought to reassure the business community on Monday that his stance on taxes and fees has not fundamentally changed.
Following the governor’s budget address Thursday, media outlets including VTDigger and Seven Days highlighted the fact that Scott — whose first two years in office were defined by his pledge not to raise new taxes or fees — had proposed new taxes.
“Scott changes course on taxes and fees in budget address,” was the VTDigger headline. “In Break From Past Pledges, Scott Pitches New Taxes and Fees,” was how Seven Days put it.
“You’ve all seen the headlines,” Scott told Burlington-area business leaders Monday morning. “Let me be clear: my budget doesn’t contain any increases on broad-based taxes like income, sales, meals and rooms. Adding a tax continues to be my last resort.”
The governor’s budget address includes a proposal for a 92 percent tax on electronic cigarettes, increased fees on mortgage brokers and the enforcement of a “marketplace” tax on purchases made through online retailers such as Amazon and eBay. Taken together, the changes could generate upwards of $15 million-$20 million in revenue.
“Put simply,” Scott said Monday, “the revenue changes I am proposing this year are small and specific to areas that need to be addressed.”
Scott also complained that his proposed tax cuts didn’t get the same attention.
“What wasn’t reported as much was my budget also includes tax relief that also makes Vermont more affordable,” he said, noting his plan to phase out a tax on military retirement, raise the estate tax exemption, eliminate the land gains tax and increase downtown tax credits.
Rep. Jim Harrison, R-Chittenden, warned against reading too much into the taxes and fees in the governor’s budget proposal, but added: “Once you open that door a little you’re open to that being the message.”
Harrison, former head of the Vermont Retail & Grocers Association, said that taking a slight step back from the hard line against new taxes and fees was all but inevitable for a second-term governor.
“Unless they are going to do some serious cutting, he isn’t going to be able to keep that pledge indefinitely,” he said.
But that doesn’t mean that Scott will be open to generating new revenue to fund legislative initiatives, Harrison said, warning that the governor could very well attempt to derail bills with new taxes and fees — as he did last year.
The difference this year is that Democrats have the numbers to attempt to override vetoes if the governor says no.
Rep. Johannah Donovan, D-Burlington, a member of the House Ways and Means Committee, said she came away from the governor’s address hopeful that his administration would be more open-minded when it comes to raising new revenue.
“I think we have some huge issues and we need new money to do some of it,” she said, adding that administration officials had been unable to have serious discussions about potential solutions in the past because of the governor’s hard line on taxes and fees.
“At least he’s not stuck in the old Phil, having some of his people come in and just have that invisible tape on their mouths,” Donovan said of committee discussions this biennium compared to this year.
“I hope we don’t get into this craziness again about no new fees,” she added.
Anne Wallace Allen contributed reporting
