Gov. Peter Shumlin chats with Vermont Press Bureau chief Neal P. Goswami about the health care package in play in the House, new unemployment numbers and gun legislation that cleared the Senate this week.
Gov. Peter Shumlin chats with Vermont Press Bureau chief Neal P. Goswami about the health care package in play in the House, new unemployment numbers and gun legislation that cleared the Senate this week.
MONTPELIER — An ad hoc economic development group created by House Speaker Shap Smith earlier this year presented an economic development plan to lawmakers Tuesday, some of which could be acted upon this year, according to Smith.
The Economic Development Proposal Review Group, comprised of people from across the political spectrum, was created by Smith to help review ideas submitted by the public. Smith called on the public to submit economic development proposals early in the legislative session. The group reviewed about 90 proposals and crafted a report for lawmakers based on those ideas.
Vermont Coffee founder and former Democratic lawmaker Paul Ralston served as the group’s leader, facilitating meetings over a three week period. He told the House Commerce and Economic Development Committee Tuesday that economic development in the state will require changing the conversation.
“It’s time for our government to stop talking about huge programs that cost a lot of money that don’t work. It’s time for our government to stop talking how old we’re getting in Vermont and how young people don’t want to live here in Vermont. It’s time to change that story and the story can be changed by taking action,” he said.
Ralston said several ideas could be acted on this session, including passing legislation to clarify that the state’s sales tax does not apply to remotely accessed software, commonly referred to as the cloud tax. In addition, lawmakers this year could:
— Enact an employee relocation income tax credit
— Restore a research and development tax credit
— Repeal or “substantially” reform the licensed lender law
— Develop a process to simplify and strengthen the Vermont Economic Growth Incentive program to work for more employers
Other ideas in the report the group believes could be passed this biennium include examining benefit cliffs in the state’s social assistance programs and reforming the Earned Income Tax Credit to “mitigate financial penalties from work.” The group also suggested mapping all workforce development programs across state government and creating a single budget for them.
The group also wants to increase access to capital by creating a regulatory framework that encourages crowd funding. The state could also offer loan guarantees to support private sector funding for “essential business infrastructure” like telecom projects.
The group recommended permit reforms that “constructively reduce cost and time.” Some reforms could also speed up construction of workforce housing through downtown construction tax credits and faster permitting for housing projects.
Long-term ideas the Legislature should consider include revisiting recommendations made by a Blue Ribbon Tax Commission in 2010. The group suggested a carbon-based tax that is revenue neutral by using it to replace the corporate income tax, creating a seed capital fund, targeting tax incentives for young entrepreneurs, creating a “Vermont embassy” in area cities like Montreal, New York and Boston and enhancing the state’s public transportation system.
Ralston said the group’s recommendations “disproportionately landed on tax credits” because members were concerned that lawmakers would not be willing to appropriate funds in a tough budget year.
Smith made a rare appearance before a legislative committee Tuesday to tout the report and encourage lawmakers to act.
“Not surprisingly, a number of them cost money and involve tax credits and direct investments. But there are a number of them that don’t cost money and I think we could move forward with them this year,” Smith told the Commerce and Economic Development Committee.
The speaker cited the employee relocation tax credit as a way to attract younger workers to the state for jobs that employers have had difficulty filling.
“I’ve never been a huge fan of tax credits, but I think the employee relocation tax credit that they’ve identified is a very intriguing idea and could be a tool that could be used by businesses,” he said.
Smith said he believes Vermont is an attractive place for business, but the recommendations in the group’s report could improve the business climate.
“I think that we can make it an even better place,” he said. “I’m hopeful that there will be some ideas here that you can work with and will be put into law by the end of the year.”
Read the group’s report below:
Read the economic development ideas submitted by the public to House Speaker Shap Smith below:
MONTPELIER — The House’s path to closing the state’s $113 million budget gap is becoming more clear after a new framework was revealed Friday by House Appropriations Committee Chairwoman Mitzi Johnson.
Johnson, D-South Hero, in her first year leading Appropriations, unveiled her own budget proposal the committee will use to finalize its 2016 fiscal year spending plan. It incorporates many of Gov. Peter Shumlin’s ideas to close the original $94 million hole the state faced in January, and incorporates new ideas for the additional $18.6 million needed after a revenue downgrade in late January.
Some of Johnson’s ideas are taken from a list of potential cuts totaling $29 million that lawmakers crafted with the Shumlin administration. House Speaker Shap Smith, D-Morrisville, said Monday that list of potential cuts “is appropriate to use” to close the gap.
Among the cuts used by Johnson in her budget proposal are:
— $5 million reduction for Vermont Health Connect, including subsidies
— Eliminating a $6 million state contribution to the Low Income Home Energy Assistance Program
— Closing the Southeast State Correctional Facility in Windsor, for a $820,000 savings in both the 2016 and 2017 fiscal years
— A $1 million reduction in funding for the Vermont Veterans Home
— A $1 million reduction in funding for the Department of Information and Innovation
— A $560,000 reduction in funding for Vermont PBS split over the next two years
In total, Johnson’s proposal makes about $57 million in general fund cuts. It would incorporate $10.8 million labor savings the administration is seeking from state employees and also consolidate four emergency dispatch centers down to two.
Johnson’s proposal would utilize more than $20 million one-time or short-term funding sources. About $5 million in reserve funds would be tapped to help close the gap. It also would shift $4.8 million in spending for the Vermont Housing and Conservation Board to the capital bill to be raised through bonds. Another $1.7 million would be generated by leasing prison beds to the U.S. Marshal Service.
Whatever proposal the Appropriations Committee settles on will be paired with a revenue package fine-tuned by the House Ways and Means Committee. Smith, D-Morrisville, said the House will likely move forward with a revenue package of $35 million.
It will include, Smith said, a Shumlin proposal to eliminate the ability to deduct the previous year’s state and local taxes for taxpayers who itemize deductions. That will generate an additional $15 million tax revenue.
The House will look to also cap the amount of all itemized deductions at 2.5 times the standard deduction, according to Smith. That will raise about $18 million in additional revenue. Another $2 million in a separate fee bill will generate the remaining revenue to help balance the general fund.
Smith said he supports the framework of Johnson’s proposal which will help the committee finalize its plan this week, including the use of reserve funds.
“I do think that the framework that she’s put forward, it works. I think we both have been trying to figure out ways to bring down the amount of one-time money that is used, recognizing that next year could be difficult as well. At this point in time, I think she’s done about as good of a job as she can limiting the use one-time money,” he said. “I think it is appropriate to use (reserve funds) given the challenge that we face as long as we’re thinking strategically how we might replace it … in outgoing years.”
Smith and other House leaders are still planning to finalize a budget plan this week, but additional time will be taken if needed, he said.
“My view is that if something comes up I’d rather get it right than get it done fast. I think that we’re on target right now for the completion of the budget by the end of the week with consideration of the full House next week,” Smith said.
Read Johnson’s budget outline below:
Vermont Press Bureau reporter Josh O’Gorman and bureau chief Neal Goswami discuss guns, a sugar tax, new budget proposals and education in this week’s episode.
Gov. Peter Shumlin chats with Vermont Press Bureau Neal P. Goswami about a House Health Care Committee bill, the state budget and gun legislation.
MONTPELIER — The 2016 fiscal year state budget the House considers is likely to include $35 million in new revenue raised through changes in the tax code, according to House Speaker Shap Smith.
That amount is consistent with what Gov. Peter Shumlin recommended in his budget, which was presented to lawmakers in January, the Democratic speaker said in an interview Thursday. But the House plan will likely also look to cap itemized tax deductions to raise additional tax revenue from wealthier Vermonters, he said.
“The governor’s original budget relied on $35 million of new revenue and we are looking at that amount of revenue to balance the budget that the governor presented, as well as the additional … $18 million that was necessitated by the revenue downgrade. We’re continuing to rely on the need to raise $35 million in new revenue,” Smith said.
The 2016 fiscal year budget has a current hole of about $113 million. After raising $35 million revenue, lawmakers will need to make about $78 million in cuts.
The House, Smith said, will use the governor’s proposal to eliminate a current policy that allows taxpayers who itemize deductions to deduct their previous year’s state and local tax liability from their taxable income. But the House will look to go even further and cap all itemized deductions at two-and-a-half times the standard deduction. For a couple filing jointly that would be about $31,000.
Those two measures would raise $32.4 million, Sara Teachout, a fiscal analyst with the Joint Fiscal Office, told the House Ways and Means Committee Thursday. Revenue included in a fee bill makes up the additional general fund revenue needed to hit the $35 million target.
Smith said he did not want to commit to that plan before the committee fully considers it, but said he supports it.
“I think that given the reductions that we’re making in the budget and the fact that it largely impacts people at the lower end of the income ladder that it’s fair to ask those at the upper end of the income ladder to pitch in to solve the problem, and through capping the itemized deductions I think we could do that,” he said.
According to Teachout, Vermonters earning $75,000 or less would chip in an additional $3.91 million under the proposal. Vermonters earning $75,000 or more would contribute an additional $28.48 million in tax revenue.
According to data Teachout provided the Ways and Means Committee Thursday, about 84,000 of Vermont’s 310,389 tax filers would see a tax increase. But the increases would be minimal for low- and middle-income Vermonters. People earning $75,000 or less would see their tax bills rise by $144 or less, on average. The state’s 355 filers earning $1 million or more would see an average tax increase of $18,603.
Smith said limiting deductions will put Vermont more in line with tax policy in most states.
“They often times don’t allow the itemized deductions that we do. I think it moves us closer to what other states do,” he said.
Exactly where the House will look to make budget cuts is still evolving, Smith said. However, some of Shumlin’s recommendations are likely to be used, including cuts to the state’s assistance program known as Reach Up and to the Low Income Home Energy Assistance Program and through the consolidation of emergency dispatch centers.
The House will also look to include $10.8 million in labor savings from the state’s work force, according to Smith.
“Under any circumstance in balancing this budget it’s going to require some labor savings,” he said.
The administration ratcheted up pressure on the Vermont State Employees Association this week in its effort to obtain the labor savings by requesting that agencies and departments identify up to 325 positions to be cut. The administration has asked the union to reopen its contract to negotiate the savings without job cuts, but the union has so far refused to do so.
Meanwhile, the House Appropriations Committee held a public hearing Thursday on a list of potential cuts totaling $29 million. The list features a range of ideas, but most would not provide immediate savings for the 2016 fiscal year, Smith said. Many of those ideas could be used to address future budget gaps, including in 2017, which faces a shortfall of about $45 million.
Smith said the Appropriations Committee, led by Chairwoman Mitzi Johnson, D-South Hero, will use the list as needed.
“I really do have confidence that that committee will make the right recommendations that need to be done to balance the budget. I really rely heavily … on that committee to make the right decisions,” he said.
The final House plan must pass muster with both the administration and the Senate. Smith said there are ongoing conversations with both, but areas of disagreement will be addressed when the Senate considers the House version.
“I don’t think that we have identified, sort of, the areas of tension yet. I don’t think we’ll have a good sense of that until it gets over to the Senate,” he said.
MONTPELIER — Business and health advocates are squaring off over a proposed tax on sugar-sweetened drinks.
Wednesday morning, the House Ways and Means Committee took testimony on a proposal that would add a 2-cent-an-ounce excise tax on beverages with added sugar. Advocates claim the tax would raise as much as $34 million in state revenue while curbing rising obesity rates, while opponents say the tax will hit poor people the hardest and will drive Vermonters over the boarder into New Hampshire to shop.
What was a theoretical discussion in the morning took on more weight in the afternoon, when the House Health Care Committee approved a bill that included the proposed 2-cents-an-ounce tax, and a .3 percent payroll tax, as a way to boost Medicare reimbursements.
Dr. Barbara Frankowski,M.D., professor of pediatrics at University of Vermont Medical School, discussed trends in sugary drink consumption, saying consumption in the United States has risen 500 percent during the past 50 years.
Frankowski and other medial professionals argue that the rise in sugary drink consumption is a driver in childhood obesity rates, which in Vermont have risen from 11 percent in 1990 to 25 percent today. Frankowski noted that in the ‘90s, children began consuming more sugary drinks than milk.
“Children who become overweight tend to remain overweight for the rest of their lives,” Frankowski said.
Jane Kolodinsky, a professor of economics at UVM, argued that, with the exception of the Irish Potato Famine from 1845 to 1851, an increase in price will always lead to a decline in consumption and said the proposed tax would lead to people drinking fewer sugary drinks.
“An excise tax will work,” Kolodinsky said. “It will reduce demand.”
Opponents argued that an excise tax, which is not visible to the consumer in the store, will drive consumers to shop elsewhere, including over the border in New Hampshire.
“My customers will not see this tax on their price register receipt,” said Pam Trag,co-owner of Quality Market in Barre. “What they’ll think is, ‘Wow, your prices have really gone up and we’re going to shop somewhere else.’”
Rep. James Condon, D-Colchester, suggested that retailers would not apply the tax directly to the sugary drinks, but would spread the added cost over all of their products. Kevin Dietty, who has lobbied on behalf of the beverage industry for 29 years, said small stores, which have fewer products to spread the tax across, would feel the impact the most.
Jim Harrison, president of the Vermont Retail & Grocers Association, argued that the tax would be regressive.
“It penalizes people with the least money,” Harrison said.
“We cannot tax people into eating brussel sprouts,” Harrison continued. “Where do you draw the line? Do you tax all products with sugar? Do we tax salt? Do we believe, that through taxation, Montpelier knows what is best for us?”
Rep. Alison Clarkson, D-Woodstock, responded to Harrison’s remarks. She noted the public health costs of obesity, which nationwide topped $150 billion in 2014, half of which was paid for by public insurance programs, according to Frank Chaloupka, Professor of Economics, University of Illinois at Chicago.
“Montpelier is paying a wad for obesity right now,” Clarkson said. “Montpelier is concerned about the cost of obesity because it costs us all.”
Barre-Montpelier Times Argus Editor Steve Pappas discusses a proposed payroll tax with Gov. Peter Shumlin and Chief of Health Care Reform Lawrence Miller.
Barre-Montpelier Times Argus Editor Steve Pappas sits down with Vermont Press Bureau chief Neal P. Goswami to talk about town meeting, Gov. Peter Shumlin’s troubles selling his payroll tax plan, a renewed aid-in-dying debate and AHS Secretary Hal Cohen.
Gov. Peter Shumlin sits down with Vermont Press Bureau Chief Neal P. Goswami and discusses recent poll numbers on his job performance.
Senate President Pro Tem John Campbell sits down with Vermont Press Bureau Chief Neal P. Goswami to discuss the legislative session, the state budget and guns.
MONTPELIER — The House Transportation Committee is in a holding pattern as it tries to figure out how to deal with declining revenues in a gas tax based on the price of the fuel.
Members discussed various ways to deal with a $6.6 million gap facing the transportation fund Wednesday, including adjusting the Transportation Infrastructure Bond Fund, or TIB, to help bring in more revenue. Committee Chairman Rep. Patrick Brennan, R-Colchester, said the fund, launched in 2009, is bringing in less revenue as prices at the pump fall.
The fund is filled with a 2 percent assessment on the retail price of gasoline and a 3 cent per gallon assessment on diesel fuel. Brennan said those rates worked well when the fund was launched and gasoline was more than $3.80 per gallon. The average price of gasoline per gallon in Vermont is now $2.40.
“We’re not doing that well,” Brennan said. “The whole hole we’re facing right here, $6.6 million, is from the TIB.”
The $6.6 million projected shortfall was based on a gasoline price of $2.80 per gallon, however, so the gap is expected to grow.
“I would guess we’ll be up to ($8 million) by the time the next revenue forecast comes out,” Brennan said.
Adjusting the TIB would close the gap, but Brennan said the committee is essentially paralyzed until it is determined how a water quality bill out of the House Fish and Wildlife Committee will be funded. If it is partially funded by a 2 cent per gallon increase in the state’s regular gasoline tax, which typically only funds transportation costs, then the House Transportation Committee will likely scrap any plan to raise revenue through the TIB.
“They’ve got a big water quality bill that the governor has touted and now they’re implementing it and trying to find funding for it to the tune of $14 million,” he said. “They put the 2 cents in there.”
The 2 cent per gallon increase Fish and Wildlife may seek would raise $6.3 million. But that would effectively kill any political will to raise additional funds through the TIB, according to Brennan.
“I’m not raising two gas taxes in the same year,” he said. “There’s no appetite.”
In that case, the Transportation Committee will look to make cuts to transportation projects.
“If that flies, there’s no way we’re even going to talk about it in here,” Brennan told the committee. “These cuts will be real. It will be a fact of life at that point.”
Committee Vice Chairman Rep. David Potter, D-North Clarendon, said the committee will eventually need to address a long-term problem if gas prices remain low.
“The way I see it it’s a festering sore that doesn’t go away. We’re going to do this exercise into the future,” Potter said. “It’s not a popular thing but it’s the right thing to do to maintain our infrastructure.”
Rep. Herb Russell, D-Rutland, said the committee, if it seeks more revenue through the TIB, would be asking Vermonters to pay back a small amount of the savings they’ve seen at the pump.
“Perfect time to sell it. I don’t have any problem with it,” he said.
For now, however, the committee plans to wait and see if the water quality bill will seek funding through the gas tax.
“I think we’re in a wait and see mode,” said Rep. Timothy Corcoran II, D-Bennington, the committees ranking member. “We’ve got to see how it plays out.”
Gov. Peter Shumlin and Vermont Press Bureau chief Neal P. Goswami discuss his effort to obtain an “all-payer waiver,” efforts to find savings in labor cuts and the Vermont Veterans Home.
MONTPELIER — The Shumlin administration is considering a range of options to present to the Vermont State Employees Association as part of its effort to secure $10 million in labor savings, including eliminating scheduled pay raises.
With a gap of at least $112 million in the 2016 fiscal year budget, the Shumlin administration — and legislative leaders — insist that at least $10 million in labor costs must be trimmed as part of the effort to balance the budget. Administration officials say they hope to obtain the savings without having to take money away from workers that is already in their paychecks.
But, doing so would require the union to agree to renegotiated its existing labor contract.
Eliminating the 2.5 percent cost of living increase that is scheduled for the 2016 fiscal year would achieve about half of the $10 million the administration is seeking. That option is preferable to the administration because it would not require workers to give up pay they are already receiving.
Additional measures would still be needed, though.
The administration is also considering reducing the mileage reimbursement for state workers by more than 50 percent, down to 23.5 cents per mile. That would provide about $1 million in savings for the general fund, according to the administration. It would only impact those employees that use their personal vehicles rather than the state’s fleet.
Restructuring so-called “step increases” could also help reduce labor costs. State workers are grouped into various pay grades, with each grade containing 15 steps. The first five step increases occur every year. The next several step increases occur every two years, and the last group of step increases occur every three years. They average out to a 1.7 percent salary increase annually.
If the step increases are adjusted the state could achieve significant savings that would be ongoing in future years, according to the administration. Details of how the steps would be adjusted are not yet known.
Implementing five furlough days for state employees, which is also being considered, could achieve a 2.5 percent reduction in total salaries paid out by the state. That idea is less desirable, however, because it would be cutting pay that workers are already receiving.
Secretary of Administration Justin Johnson said last week that if the union does not work with the administration to achieve the $10 million in labor savings it is seeking more than 400 state workers could be laid off.
Vermont State Employees Association Executive Director Steve Howard and Johnson said Thursday they are working to set a meeting to begin discussions. The union is not interested in any discussion about opening the existing labor contract, however, according to Howard.
“We’re happy to hear what they have to say. We’re willing to hear what they have to say. We have some ideas on how they can raise revenue from the folks who have had all the income growth,” he said.
Howard said union officials will announce next week several ideas about where revenue could be raised.
“I think our position remains that before you take money out of the paychecks of state employees who are regular working class Vermonters who are struggling to pay their bills, the administration needs to work on raising revenue from Vermonters who have had all the income growth in the last decade,” he said. “For some reason they are putting all their energy into how we can take money out of the pockets of people who are serving the public and protecting with all their strength the wealthiest people in the state.”
Gov. Peter Shumlin, speaking at an unrelated news conference Thursday, again ruled out tax increases as a way to forego the labor savings it is seeking. House Speaker Shap Smith and Senate President Pro Tem John Campbell have also said the labor savings must be a part of the effort to close the budget gap.
Shumlin said the state must lower the growth rate in state spending, which has been about 5 percent, to the growth in revenue, which has been about 3 percent.
“I would caution us from thinking that we can turn to Vermonters when they’re struggling to pay their bills, when they’re frustrated that their incomes aren’t going up despite the recovery. I would caution us from believing that we can tax our way out of this problem,” Shumlin said. “Revenue will not solve our problems. We’ve got to make the tough choices … of actually matching our appetite for spending with the money that’s coming through the door.”
Howard said the union will continue to resist efforts to seek the cuts from state workers.
“The administration has set up a false choice. They have said, ‘Look, state employees, you can cut off your left hand or you can cut off your right hand. That’s not the right way. That’s not the right choice,” Howard said.
MONTPELIER — Legislation to legalize marijuana in Vermont was unveiled at the State House Tuesday, but a key lawmaker said it will not be taken up this year.
Chittenden County Sen. David Zuckerman, a Progressive and Democrat, has drafted a bill that would allow Vermont residents 21 and older to possess up to one ounce of marijuana, two mature plants, seven immature plants and any additional marijuana produced by the plants. Growing would only be allowed indoors.
Under the legislation, nonresidents could possess one-quarter of an ounce of marijuana. Criminal penalties would remain in place for anyone possessing more than the amount allowed under. Penalties would also remain in place for anyone possessing marijuana that is under the age of 21.
Edible marijuana products would be allowed, but those products would not be allowed to appeal to people under the age of 21. It would also prohibit edible marijuana products from mimicking similar products that do not contain marijuana.
The bill has been anticipated for some time following a RAND study released last month that showed the state could reap significant revenue if it legalizes marijuana.
A delegation, including Public Safety Commissioner Keith Flynn, recently traveled to Colorado to learn about that state’s legalization efforts. Upon returning, however, Flynn noted that officials in Colorado believed the state moved too quickly to legalize. They were forced by a ballot initiative. In Vermont, some hope to legalize the drug through legislation.
Any significant progress this year was ruled out Tuesday by Sen. Dick Sears, the Bennington County Democrat who chairs the Senate Judiciary Committee. The bill would need to make its way through his committee, but Sears said Tuesday that he will not take it up this year.
Zuckerman’s bill would create the Board of Marijuana Control within the Department of Public Safety to adopt rules governing the cultivation and sale of pot. It would also be responsible for administering a registration program for places that sell the drug. Zuckerman has proposed that the board consist of five members appointed by the governor, and that a director be hired to oversee operations.
The board would also create the regulatory structure for cultivation, production, testing and sale of marijuana.
Only nonprofit dispensaries or benefit corporations would be allowed to register with the board as a cultivator, product manufacturer, testing laboratory retailer or lounge, under the legislation. Registration of such groups would begin no later than Sept. 15, 2016.
The legalization of marijuana, under the legislation, would provide revenue to the state through a series of excise taxes and fees. Zuckerman proposed a $2,000 application fee for marijuana establishments and an annual registration fee ranging from $1,000 to $50,000. Those fees would be used to implement, administer and enforce the new law.
An excise tax of $40 per ounce would be charged for marijuana flowers. A $15 per ounce excise tax would be levied on any other marijuana, and $25 for each immature marijuana plant sold by a cultivator.
The bill earmarks 40 percent of the revenue raised through the excise taxes for public education about the risks of alcohol, tobacco and marijuana consumption, and for criminal justice programs and substance abuse treatment. Also funded by the taxes would be law enforcement and academic and medical research on marijuana.
The remaining revenue would go to the state’s general fund.
The bill includes several other provisions, including:
— Maintain criminal penalties for driving under the influence of marijuana
— Smoking marijuana in public would remain prohibited
— Smoking marijuana within 1,000 feet of a public or private school or regulated child care facility would be prohibited
— Allows municipalities to prohibit or regulate marijuana establishments
— Allows landlords and innkeepers to prohibit cultivation on their property
Gov. Peter Shumlin has said he favors legalization, but believes Vermont must learn more from the efforts in Colorado and Washington before acting. His office reiterated that sentiment Tuesday after Zuckerman’s bill was revealed.
“The governor’s bias is towards legalization but he wants to learn from the experiences of Washington state and Colorado. This is ultimately a conversation that the Legislature and Vermonters will have to have, and the governor is pleased that the conversation is underway,” spokesman Scott Coriell said.
Read the proposed legislation below: