MONTPELIER — The House tax writing committee has advanced a revenue bill that raises $14.1 in new money for the general fund and other special funds, but some lawmakers say it is just a fraction of the $48 million in new revenue the committee is expected to raise in total.
The House Ways and Means Committee voted Wednesday night 7 to 4 to approve a miscellaneous tax bill — before the House Appropriations Committee has completed work on its budget. That has some members of Ways and Means complaining that budget writers have little incentive to make cuts to state spending.
Rep. Janet Ancel, D-Calais, the committee’s chairwoman, said she took the unusual step of voting on a revenue package before the budget is finalized because some members of the committee will be out for an extended period.
“I have two members of the committee who aren’t going to be here,” she said. “I’ve been trying to make sure that people feel, maybe not comfortable with the outcome, but comfortable with the process.”
Some members are not comfortable with the process, including Rep. Adam Greshin, an independent from Warren and co-owner of the Sugarbush ski resort.
“We’re raising revenue as we do every year, but we’re raising it without a firm knowledge of what the budget will look like,” he said. “It seems to get the process backwards.”
“It’s like giving your kid $100 and saying, ‘Hey, bring back some change if you can,’” he added.
House Speaker Shap Smith, D-Morrisville, dismissed criticism Wednesday of the process used to pass the tax bill.
“This is always a difficult process and bills do move in tandem, typically. It’s not unusual for one to be ahead by one day of another. I think it’s sort of much ado about nothing, personally,” Smith said. “I’m comfortable with that because my view is that if the Appropriations Committee comes in with a number that’s lower than the money that has been raised, I think we could reduce the amount of money to be raised. We have spent time with both Janet [Ancel] and [House Appropriations Committee Chairwoman] Mitzi [Johnson] to identify what we thought the box would be for the general fund.”
Included in the tax package is an expansion of what’s called the employer assessment — a fee that employers pay to the state for workers they do not offer health insurance coverage to. Under the bill, employers with one to 19 workers will pay a fee of $151.12 for each full-time equivalent they do not offer health insurance to, with an exemption for the first three. The tax bill raises the amount to $210 for employers with between 20 and 99 workers, and $249 for employers with 100 or more workers.
Greshin said he opposes the employer assessment because it penalizes employers with part-time workers because the hours of part-time workers are calculated in a cumulative manner to factor a full-time equivalent worker. He argued that many employers supplement their full-time staff with part-time workers to operate their business.
“What could we as an employer provide to those one-day-a-week employees?” he said. “What is out there that could absolve us of this guilt of uncovered workers? What could we provide for them? We cover our full-time employees. We even cover some seasonal employees.”
Greshin said the employer assessment creates a disincentive for employers to hire part-time workers who do not have health coverage elsewhere or who have coverage through Medicaid.
“This is just a bald money grab,” he said. “I think it’s very, very bad public policy.”
The bill also requires some taxes to change from being paid quarterly to monthly. The change means that the state will see a one-time increase in the 2017 fiscal year budget because of the change, netting $2.8 million more for the general fund and $900,000 for a special fund. An extra two to three months of taxes will be paid by fuel dealers, telephone companies and banks.
Meanwhile, two of the taxes switching to monthly payments — on gross fuel receipts and bank franchise fees — will also be raised. The tax paid by dealers on gross fuel receipts, including heating oil, coal, natural gas, propane, diesel and kerosene, will rise from 0.5 percent to 0.75 percent, raising an additional $1.3 million for a special fund.
The fuel tax on gross receipts was set to expire and needed to be reauthorized. Although the committee is raising the tax, it also voted to allow fuel dealers to itemize the cost to show consumers why costs may be rising.
Some banks in Vermont will also face higher franchise fees. Banks with $750 million or less of average monthly deposits will continue to pay a monthly fee of 0.00009 percent. But banks with more than $750 million in average monthly deposits will now pay a rate of 0.000121 percent. That raises an additional $2.1 million for the general fund.
Imposing the state’s rooms tax on companies that offer private rentals, such as AirBNB, will raise an additional $1 million. That tax saw broader support among committee members, including Greshin, who said companies like AirBNB are “a direct threat” to traditional bed and breakfast establishments operating in Vermont.
“I get that the world is changing, but they should be paying,” Greshin said.
Rep. Patti Komline, R-Dorset, a member of the House Ways and Means Committee, said the tax bill only accounts for a portion of the new money the committee is raising. She said the Appropriations Committee has indicated that it only needs about $35 million to balance the state budget, but the committee has approved more than $48 million in new revenue.
She noted that a separate fee bill raises $20 million alone for the general fund by raising the fee for registering a mutual fund. Gov. Peter Shumlin proposed doubling the fee on financial institutions for registering a mutual fund in the state from $600 to $1,200, but the committee opted to raise it to $1,500. It also raised an initial filing fee to $2,000. The fee bill also includes another $3.3 million in various increases for special funds.
“We’re insatiable,” Komline said.
The Appropriations Committee will have a harder time making cuts to state spending now that they have more money to work with, Komline said.
“We heard from the chair of Appropriations that they are not getting support from the committees and it’s just really tough finding these cuts, and now we’re just handing them more money than they’ve actually thought they needed,” she said. “That makes it that much more difficult for that committee to find cuts. They don’t have our support in constraining their spending.”
Smith said the governor’s proposed budget called for about $35 million in new revenue.
“I think the committee chairs had agreed that $35 million was the target,” he said. “We raised for the general fund less than the governor actually proposed and it’s less than $35 million.”
The House, Smith said, has filled in funding gaps that were built into Gov. Peter Shumlin’s proposed budget. “We also haven’t spent as much new money as the governor wanted,” he said.
Greshin, Komline and Reps. Carolyn Branagan, R-Georgia, and Bill Canfield, R-Fair Haven, voted against the tax bill.