Senate advances budget and tax bills unanimously

MONTPELIER — The Senate advanced its version of the 2018 fiscal year state budget and a corresponding tax bill Wednesday on unanimous votes.

The Senate’s spending plan, passed on a 30 to 0 vote, includes a $1.56 billion General Fund, which is 1.7 percent higher than the current 2017 fiscal year budget. It is slightly lower than the House-passed version, however, which grew 1.8 percent over the current year. Overall, the Senate’s total state budget including all state and federal funds totals $5.83 billion — slight more than the House’s $5.815 billion in total spending.

Sen. Jane Kitchel

The Senate version spends more than $13 million in ways that differ from the House proposal, which cleared the House on a 143 to 1 vote. One major change includes shifting the cost of retirement benefits for current teachers from the Education Fund to the General Fund. The move frees up $7.9 million in the General Fund, but will lead to a slight increase in the statewide property tax that is the major funding source for the Education Fund.

Senate Appropriations Committee Chairwoman Jane Kitchel, D-Caledonia, defended the move, saying about 30 percent of all General Fund spending goes to support Education Fund costs.

“It’s an anomaly in the sense that local schools are hiring teachers, they’re determining the salary of teachers, the number of teachers, and those decisions that are made are creating … general fund obligations,” she said. “I know that the emphasis is always on the Education Fund and people equate the Education Fund with property taxes, but I have to say that it’s more than that.”

The Senate Finance Committee has completed work on and passed an education finance bill that would raise property taxes to accommodate the $7.9 million shift the Senate Appropriations Committee included in the budget from the General Fund to the Education Fund.

That sets the Senate on a collision course with the House and Republican Gov. Phil Scott, who has said he will not sign legislation that increases property taxes. Scott has advocated requiring all teachers to negotiate their health care benefits with his administration, which he said could save up to $26 million that could be used to offset property tax increases.

While the House does not support Scott’s proposal, House Speaker Mitzi Johnson, D-South Hero, does not support the Senate’s transfer from the General Fund to the Education Fund, either.

House Speaker Mitzi Johnson

“When you put costs into the Ed Fund you raise property taxes. The House didn’t,” she said. “The end of session is a lot of moving pieces. Everybody needs to come out with something. The House position all along has been don’t shift to the property tax.”

Kitchel said the new health care plans that will be offered to teachers in January will provide some savings to the Education Fund, and the collection and remittance of the state’s 6 percent sales tax by Amazon and potentially other online retailers will provide more revenue for the Education Fund to help offset the $7.9 million transfer.

Additionally, the Senate’s budget plan also reverses a decision by the House to let the Agency of Human Services secretary cut grants to designated agencies that help AHS carry out its mission by $1.25 million. It also reverses the House’s plan to eliminate funding for motel vouchers for the homeless in special inclement weather situations and provide additional funding for homeless shelters.

“There was great concern that the sequence was not right,” Kitchel said. “To terminate the policy in advance of knowing that you had that capacity seemed to be a little out of sequence.”

Republican Gov. Phil Scott’s budget proposal included closing the Southeast State Correctional Facility in Windsor for a $3 million savings. The House plan would keep the prison open, while the Senate budget seeks to close the prison temporarily and turn it into a re-entry program for offenders.

The Senate budget also includes:

— $9.8 million for increased salaries for the workforce at designated agencies, up from $3.1 million in the House plan.
— $3 million for grants to child care providers with high subsidy enrollment, increased payments for infant care, and an increase to the income level for family eligibility.
— $600,000 in one-time funds to develop shelter capacity in Rutland and Central Vermont to reduce the need for motel vouchers, up from $150,000 passed by the House.
— $1.8 million in one-time funds for police camera equipment, which the House did not fund.
— $4 million for the Vermont State Colleges for operations, which are currently being funded from reserves, as well as $880,000 in one-time funds for the consolidation of Lyndon and Johnson State Colleges. The House provided one-time funds of $2 million by taking funds from the Higher Education Endowment Trust Fund.

Sen. Anthony Pollina, P-Washington, was the only senator to speak about the budget plan before the vote. He credited Kitchel’s leadership of the Appropriations committee, saying she is “pretty capable of taking a bunch of lemons and turning it into something more tasty — maybe lemon squares or lemon pie.”

Sen. Anthony Pollina

But Pollina also urged his colleagues to consider raising revenue in the future to protect the state’s low- and middle-income residents.

“There’s plenty of resources in the state of Vermont. I think the problem is that the resources are going to the top and not being allocated as they used to,” he said.

The miscellaneous tax bill, H.516, passed on a 30 to 0 vote. It does not include any new taxes or fees, but like the House version, relies on about $5 million in new revenue from enhanced compliance with existing taxes.

The Senate also advanced the capital bill, H.519, Wednesday on a 30 to 0 vote. The bill will spend about $147 million over a two-year period on the state’s capital expenses, including $73.8 million in the first year. About one-third of the funds are dedicated to clean water efforts, and $2 million is allocated to repair the dome atop the Vermont State House.

Senate Institutions Committee Chairwoman Peg Flory, R-Rutland, said the office of Treasurer Beth Pearce has reviewed the capital bill to ensure that all expenditures meet the state’s requirements for bonding.

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