Lawmakers forseee tax and spending challenges
By Peter Hirschfeld
Vermont Press Bureau | November 21,2013
Toby Talbot / AP Photo
Senate Minority Leader Joe Benning, left, listens during a legislative briefing Wednesday at the State House in Montpelier. Legislators heard about a projected $72 million shortfall for the 2015 satte budget.
MONTPELIER — As the Legislature prepares to reconvene in January, Gov. Peter Shumlin in recent weeks has issued his customary pre-session dictate to lawmakers: No increases in broad-based taxes.
House Speaker Shap Smith, however, is calling for an even harder fiscal line in 2014, and says that lawmakers will have to resist the urge to increase any revenues, “broad-based” or not.
“I don’t think the distinction between broad-based taxes and other … sources of revenues matters. You’re either for new revenue or you’re not,” Smith said Wednesday. “And I think we have to figure out some way to resolve this gap without raising revenue.”
The “gap” to which Smith referred was one of the subjects of a daylong legislative briefing Wednesday in Montpelier, when lawmakers gathered in the State House to learn more about the $72 million shortfall projected for the fiscal year 2015 general fund budget.
The so-called budget gap represents the difference between the amount of revenue projected to come into state coffers in fiscal year 2015, and the estimated cost to keep government running at current levels.
“I think that we have to try to solve the problem within the current revenue structure that we have,” Smith said.
It’s unclear still what balancing the budget under the current revenue scheme would mean for the areas of government — corrections, human services, public education, health care for the poor — most reliant on general fund revenues.
But eliminating the prospect of raising additional revenues via the “splinter” taxes to which lawmakers have turned in the past to make up shortfalls will make balancing the budget a more difficult task. And it could result in the reduction, or elimination, of line items currently funded by taxpayer dollars.
The Legislature during the last session considered taxes on items including tobacco, soda, satellite television and bottled water. Shumlin, whose definition of “broad-based” includes taxes on income, sales, and rooms and meals, proposed new or increased taxes last session on break-open tickets, bank franchises and health insurance claims.
Smith said he thinks lawmakers can find “ingenious” solutions to the $72 million budget problem next year without resorting to the kinds of revenue packages passed by his chamber’s top tax committee during the last session.
“I think we have to be better at identifying the programming that we’re getting good results from, and I think that to the extent we’re not getting good results, we need to ask, do we need to be spending money there?” Smith said
Smith said he has yet to identify the areas of government from which the Legislature can shave allocations without impacting the flow of commerce or the receipt of needed services.
Senate President Pro Tem John Campbell said he heads into the 2014 legislative session with a mind toward holding the line on revenues, though he included some caveats. In years past, he said, the state has been able to find one-time funding sources to fill the budget gap, a luxury he said the Legislature won’t enjoy this year.
“The cupboards are dry,” Campbell said. “But rather than just looking at revenue to solve the problem, I’m going to look to see if there are places that we can consolidate or cut.”
He added, “If that’s impossible to do while still maintaining the level of services needed to protect the most vulnerable, then you have to look at some kind of new revenue. But right now that’s pretty far from the track that I’m on.”
The majority of House representatives and a handful of senators attended a daylong gathering Wednesday that included presentations from administration officials and analysts on the budget, federal revenues, progress on the health care reform rollout, and the condition of the teachers pension fund.
Administration Secretary Jeb Spaulding didn’t offer any previews of the governor’s fiscal year 2015 budget plan, which he’ll deliver to the Legislature in an address scheduled for Jan. 15.
But he said lawmakers should expect a spending plan that reflects Shumlin’s belief “that living within our means is an important priority and a value that Vermonters have.”
“We want government to do more, and we want to do it with the same or less,” Spaulding said. “And that is the challenge.”
Senate Minority Leader Joe Benning said he’s glad to see the Democrats who control the governor’s office and both chambers of the Legislature “acknowledging the fact that government is living beyond its means.”
“We have serious problems in front of us,” Benning said. “And getting to the bottom of those problems is going to require serious discipline.”
Benning, however, said he worries about whether Democrats’ talk Wednesday will be reflected in their walk next May.
“When the political winds blow through this building, funny things happen here,” Benning said.
Lawmakers will contend with a host of hot-button issues in 2014, from a GOP effort to undo a mandate that will force about 100,000 Vermonters into the new health insurance exchange, to what will be a heavy push to require employers to provide paid sick days to employees.
Property tax reform and overhauls to a retired teacher health care plan that, according to many elected officials, has fallen severely out of balance, will also get significant legislative attention in 2014.