Category Archives: Taxes

Exchange tax documents in the mail, state says

MONTPELIER — State officials are warning Vermonters who obtained health insurance through Vermont Health Connect to be on the lookout for important tax documents that should arrive in the mail by next week.

More than 25,000 1095-A forms have been mailed to Vermonters. The form has the financial information customers provided when signing up for health insurance coverage on the state’s online marketplace.

But Chief of Health Care Reform Lawrence Miller said some customers may experience problems because not all change of circumstance requests have been processed by the state. Another batch of changes is expected to be processed by Feb. 20, so some customers may received a corrected 1095-A.

“There will be some that get corrections but that doesn’t necessarily slow anybody down in completing their taxes,” Miller told reporters Thursday. “People may find that they’ve got a discrepancy … and need some help.”

State officials brief reporters on required tax documents for Vermont Health Connect customers.

State officials brief reporters on required tax documents for Vermont Health Connect customers.

Customers could also be required to pay back subsidies if their incomes changed during 2014, or could receive payments from the federal government, depending on whether their income went up or down.

Miller said 36 percent of the 37,239 Vermonters on the exchange had no federal subsidy. Ten percent of customers had only a federal subsidy, and 54 percent received a federal subsidy as well as additional premium assistance from the state.

Everyone who receives a 1095-A form in the mail will need to fill out IRS Form 8962. The 1095-A form includes the financial information needed to do so. Even those that didn’t receive tax credits as part of their coverage must complete the form if they purchased a bronze, silver, gold or platinum plan on the exchange, according to officials.

Customers with questions will see a “substantially faster” connection to the VHC call center than the IRS. Miller said the IRS “received inadequate funding to fully staff its’ call center” and wait times of at least 20 minutes are expected.

“That will be a bigger challenge for folks if they need to call the IRS help center,” he said.

Tax preparation software and accountants and tax preparers should be prepared to help complete required tax forms related to health care.

“Those people have been prepared and folks should expect a relatively smooth experience,” Miller said. “My hunch is, while this seems very new and very complicated, for the majority of people as they go through their taxes, it will be smooth.”

State officials said whether or not customers will owe money back for subsidies received or receive subsidies after-the-fact depends on how close their actual income was compared to what they estimated. That information is unclear to the state until forms are completed and filed.

“No way of knowing. This is the first year its’ been done. It’s hard to know what happens to people’s income over the course of a year. You would tend to assume, that if people based their financial information on their income from last year, most people would have seen a slight increase in their income,” Miller said. “It depends on what they estimated.”

Shumlin says no rush to legalize pot, won’t partake if Vermont acts

MONTPELIER — Gov. Peter Shumlin said Tuesday he has no plans to partake in legal marijuana if the state moves to allow it.

“No,” Shumlin said, when asked during a news conference by Seven Days reporter Terri Hallenbeck if he would smoke legal weed. “Been there, done that.”

Shumlin appeared caught off guard when asked when he last smoked marijuana.

“Oh my God,” he said. It was a while ago. I’m old.”

Shumlin then clarified that he last smoked pot in his late 20s, but gave it up as his responsibilities grew.

“My guess is that a lot of Vermonters of my generation feel like I do about marijuana, which is, it is something that we smoked when we were young,” he said. I found that as I got into my 20s and took on more responsibility, it didn’t have the same desirable effect on me and I stopped smoking it because as I took on more responsibility, or I don’t know what in my late 20s, I just found that it wasn’t much fun anymore.”

“My staff’s going to kill me for this,” he added, glancing at Chief of Staff Liz Miller and spokesman Scott Coriell.

The RAND corp. recently released a report estimating that Vermont could net between $20 million and $75 million annually by legalizing marijuana. The higher end of potential revenue would be possible of surrounding states did not follow suit and out-of-state residents came to Vermont to purchase it.

Shumlin said he is in no rush to beat surrounding states simply for additional revenue.

“I don’t think we should be driven by tax revenue. I think we should be driven by doing the right thing for Vermonters in a way that is better than the current system, which forces an illegal market that isn’t regulated, that isn’t controlled, that anyone can have access to, including kids,” he said. “Kids will tell you that it’s easier to get pot … than it is alcohol. That suggests that the regulatory market works.”

Shumlin said he spoke with Colorado Gov. John Hickenlooper on Monday about the issue. Colorado has legalized marijuana through a ballot initiative and Shumlin said Vermont should take its time and learn from both Colorado and the state of Washington before acting.

“I really think that we can learn a lot from the states that have gone first on this and are learning what works and what doesn’t,” he said. “I’ll continue to evolve and learn from their experiences. I think the report gives us a good road map of choices that we could make should we move to legalization.”

One lesson already learned, Shumlin said, is that Vermont should avoid allowing edible products made with marijuana.

“Edibles are a real challenge for states. I would love to see Vermont avoid those problems if we were to go ahead,” he said.

Shumlin heads to D.C. seeking federal highway funds

MONTPELIER — Gov. Peter Shumlin is heading to Washington Wednesday to provide testimony to the U.S. Senate Committee on Environment & Public Works about the need for funding in the Highway Trust Fund.

Vermont and other states rely on the federal fund to complete road, bridge and other infrastructure repairs and projects. But the fund, which is replenished through the federal gas tax, has solvency issues as that revenue source plummets.

The fund is supported with a federal gas tax of 18.3 cents per gallon, and a tax of 24.4 cents per gallon of diesel fuel. But Americans are driving less and the fund is not keeping pace with infrastructure needs across the country.

Shumlin said his testimony will focus on “the desperate need to refill the transportation trust fund so Vermont and the other 49 states can rebuild our crumbling roads and bridges.”

Gov. Peter Shumlin speaks to reporters during a news conference on Tuesday, Jan. 27.

Gov. Peter Shumlin speaks to reporters during a news conference on Tuesday, Jan. 27.

“I understand there’s tremendous difficulty getting anything done in Congress, but it seems to me the one thing that Republicans, Democrats, independents can agree on, if we let our roads and bridges crumble, we lose our quality of life and we lose our ability to grow jobs and economic opportunity,” Shumlin said at a news conference Tuesday.

Shumlin, who was invited to testify by Democratic California Sen. Barbara Boxer, according to his aides, will be joined by Republican Gov. Robert Brentley of Alabama, and South Dakota Secretary of Transportation Darin Bergquist. Connecticut Democratic Gov. Dannel Malloy canceled his appearance to oversee winter storm cleanup.

Shumlin said he was asked by the National Governor’s Association to present the states’ perspective to Congress.

“As I talk to both Republican and Democratic governors, we’re united on this one. The National Governor’s Association feels very strongly that Congress must come up with a solution by May to refill the transportation trust fund or we will lose jobs and we’ll lose our infrastructure, and it’s really critical,” he said.

States need to begin lining up contractors for the summer construction season but cannot commit to projects unless funding is secured.

“We just can’t be constantly in a situation where we say, ‘Hey, we have bridges that are falling apart, we have roads that are crumbling, but we can’t go out there and line up contractors because we just don’t know if the feds are going to get their act together to get us the money that we need to do it,’” Shumlin said.

The governor said he will not tell Congress how to address the shortfall in the Highway Trust Fund, but would support moving to a tax that is assessed on the number of miles driven rather based on the gallons of fuel purchased.

“I would love to see us move to a vehicle miles traveled tax, but I understand that can’t get done by May. The point is we have both a long-term need to move to a fairer way of raising revenue, because obviously electric cars need to contribute to, but the real challenge we face right now is if we don’t get money in that fund by May, all 50 states will lose the battle against crumbling roads and bridges and I just don’t think there’s an American who believes that’s a good idea,” Shumlin said.

Capitol Beat Podcast 1-26-15


Vermont Press Bureau chief Neal Goswami and VPB reporter Josh O’Gorman talk about sugar, beagles, Vermont Health Connect and a dispute between two Penn State graduate students and the state Agency of Education.


Economists: Revenue downgrade for general fund, despite drop in oil prices

MONTPELIER — Gov. Peter Shumlin and lawmakers crafting the 2016 fiscal year budget will have to dig a little deeper after state economists provided a downgrade to the general fund revenue forecast Tuesday, despite positive signs in the economy related to lower oil prices.

The Emergency Board, comprised of the governor and the chairs of the Legislature’s money committees, were told Tuesday that revenues are projected to be $18 million lower than previously expected in the 2016 fiscal year budget. The state was already facing a $94 million projected gap, which Shumlin’s proposed budget would close through a combination of cuts and tax increases.

Jeff Carr, left, and Tom Kavet

Jeff Carr, left, and Tom Kavet

Economists Jeffrey Carr and Tom Kavet, who provide revenue forecasts to the state twice a year, also downgraded revenues for the current fiscal year by $10 million. The Shumlin administration and lawmakers, anticipating that, are working to lower the current budget in the annual budget adjustment process by $17 million. That follows about $31 million in rescissions that took place in August.

The downgrade is projected despite an expected uptick in spending by Vermont residents as oil process drop.

“We’re looking at the economy finally starting to pick up like we haven’t seen in some time. A big part of that is the drop in oil prices,” Kavet told the board. “That’s something that’s very substantial to Vermont and other New England states.”

The Emergency Board receives an updated revenue forecast Tuesday inside Gov. Peter Shumlin's ceremonial State House office.

The Emergency Board receives an updated revenue forecast Tuesday inside Gov. Peter Shumlin’s ceremonial State House office.

Vermonters spend more than $2 billion annually on petroleum-based energy, mostly in transportation and home heating. With the price of oil around $60 per barrel, and projected to drop to around $40 per barrel this year before rising to $70 to $80 per barrel, Vermonters are projected to save about $600 million in 2015, according to Kavet.

“That’s a phenomenal stimulus to the economy and it really hasn’t been felt in full at all,” he said. “The projections right now are coming down not up.”

“To get an additional $2,500 (per family) in spending money … is bigger than any raise that anybody’s gotten for a long, long, time,” Kavet added.

Lower energy costs acts like a tax cut in the economy, without the corresponding decreases in government spending that actual taxes cause.

It also changes the psychology of residents and alters their spending habits, Carr said.

“The critical thing is it will help with psychology. Part of the reason that we really haven’t broken out of our funk is that people have been looking for some reason, there has got to be some catalyst,” Carr said. “I think that there still is kind of a residual hangover in households. Some of us now know what our parents and grandparents went through when we went through the Great Recession that they went through during the Great Depression. It changes you. It fundamentally alters the way that you approach things. You weren’t quite so aggressive in your spending.”

Oil prices in previous forecasts were projected at $103 per barrel. The current forecast projects prices at $63 per barrel, but prices will likely drop lower. As a result, the two economists boosted expected consumption taxes based on expected spending in their latest forecast.

Still, despite the relief in energy prices, unstable corporate income taxes and uncertainty surrounding some high-earning taxpayers has led to the near-term downgrade, according to the economists. Additionally, businesses are expected to hire, but profits will drop as they train and bring new hires up to speed, they said. That will likely lead to larger state refunds for businesses.

The state’s revenue growth should see improvements down the road.

“There is some good news. It’s a little farther out on the horizon than we might like,” Kavet said. “There’s some very good things happening right now.”

Shumlin said Tuesday that his administration anticipated a further downgrade in the current budget and moved to make cuts ahead of the annual budget adjustment in each January. He said a downgrade to the 2016 fiscal year budget was also expected, but the administration did not plan further efforts to patch it without knowing how much it would be.

“We didn’t know what to expect,” the governor said. “Obviously, we don’t guess. We have to actually build a budget based on the facts and we now have to work together with the Legislature to balance the budget, which is what I’ve done every term that I’ve been governor.”

He said he is “heartened” that the downgrade isn’t larger, and noted that the economists said there could even be revenue growth later in the year.

“I just heard a pretty upbeat report in terms of their hopes for their future, so we’re going to manage to the money but this is not an insurmountable challenge,” Shumlin said. “My job as governor is to roll with the punches and deal with the numbers as they come in. My job is to balance the budget and be fiscally responsible when we do it and we’re going to continue to do that.”

House Speaker Shap Smith laid the onus of addressing the $18 million additional gap in the 2016 fiscal year budget directly at Shumlin’s feet on Tuesday.

“Vermont joins other states in continuing to experience slower than expected revenue growth. The data presented today presents challenges for our money committees. I look forward to receiving a proposal from the administration on how they will address the additional shortfall,” Smith said.

Tuesday’s updated revenue forecast projected no changes to the transportation fund for the remained of the 2015 fiscal year, and a 1 percent increase in revenue, amounting to $2.7 million, for the 2016 fiscal year.

The education fund, meanwhile, is projected to see a revenue increase of $1.6 million, or about 0.9 percent, for the remainder of the 2015 fiscal year. In fiscal year 2016, the education fund is expected to see a 1.5 percent growth in revenue, which would amount to $2.8 million.

Video: Capitol Beat on ORCA with Speaker Shap Smith

House Speaker Shap Smith sits down with Vermont Press Bureau chief Neal Goswami and VPB reporter Josh O’Gorman to discuss the first two weeks of the legislative session.

Capitol Beat podcast for 1-19-15


On this week’s episode, Vermont Press Bureau chief Neal Goswami and VPB reporter Josh O’Gorman discuss Gov. Peter Shumlin’s budget, his education proposals and a study released Friday about legalizing pot in Vermont. Subscribe on the iTunes store to the Vermont Press Bureau’s podcasts.

Pot study finds $50 million in potential revenue

MONTPELIER — A study on marijuana legalization in Vermont released Friday has found that the state could net as much as $50 million in new revenue by taxing and regulating the drug, but it would come with some consequences and other expenses.

The report, called for in legislation signed into law last year, was completed by Rand Corp. and obtained by the Vermont Press Bureau Thursday. The study found that legalizing marijuana in Vermont could produce revenue ranging from $35 million to $50 million annually, based on myriad policy choices.

The calculation is based on tax models in Colorado and Washington, where marijuana is legal. In those states, assessments capture about 30 to 40 percent of the cost of marijuana and deposits it in state coffers. Continue reading

Shumlin calls for new payroll tax to boost Medicaid payments

MONTPELIER — Gov. Peter Shumlin is proposing a new, 0.7 percent payroll tax to boost Medicaid reimbursements, and is looking to close a $15 million tax loophole as part of an effort to balance the 2016 fiscal year budget and close a $94 million gap.

Shumlin, a third-term Democrat, will be outlining his budget proposal to a joint session of the Legislature this afternoon. His proposed budget calls for $5.62 billion in total spending, with $1.47 billion in general funds — that’s a 4.4 percent increase over current general fund spending. The proposal closes a projected $94 million gap, aides said ahead of the governor’s speech.

Newly appointed Secretary of Administration Justin Johnson said the proposed budget uses $12 million in one-time funds, down from $53 million in the current budget. And it reduces spending within the Agency of Human Services by about $21.7 million, and non-AHS spending by $22.2 million. There is a net decrease of 11 state positions, he said.

Gov. Peter Shumlin at least week's inauguration. (Photo by Jeb Wallace-Brodeur)

Gov. Peter Shumlin at last week’s inauguration. (Photo by Jeb Wallace-Brodeur)

Under the budget proposal, the state would see $15.5 million in additional general fund dollars through the use of a tax code change. A 2009 provision that allows filers who itemize deductions to deduct their prior year state and local tax bill would be eliminated. Officials say about 30 percent of taxpayers utilize the provision.

Part of the AHS reductions includes removing $6 million in base funding for the Low-Income Home Energy Assistance Program. There are no cuts to child protection services, according to aides.

“We have not at all compromised efforts around child protection,” Finance Commissioner James Reardon said.

The administration is looking to consolidate “public safety answering points,” where the Department of Public safety dispatches officers and takes 911 calls, from four to two. Rutland and Rockingham locations would consolidate, as would with Williston and Derby locations. That will save the state about $1.7 million, officials said.

The budget also proposes scaling back the recently enacted working lands program by $700,000, and finding $5 million in generic labor savings through discussions with the Vermont State Employees Association.

Meanwhile, the state hopes to see new revenue by providing additional prison beds to the U.S. Marshal Service. Doing so would require sending more Vermont prisoners out of state, though, so the net cost savings would be about $800,000.

The governor is also proposing a new, 0.7 percent payroll tax on all Vermont employers to boost Medicaid reimbursements to providers and reduce the so-called cost shift to private insurance. Health Care Reform Chief Lawrence Miller said current reimbursement rates have led to a $150 million total cost-shift.

The new payroll tax, which would take effect in January 2016, would net the state $41 million in new revenue from January through June. That would trigger $45 million in matching funds from the federal government. The Shumlin administration is proposing to use $55 million to bring Medicaid reimbursements from 60 percent of costs to 80 percent — the level at which Medicare reimburses providers.

The remaining funds would be used by the GMCB to continue cost containment efforts and bump payments with the Blueprint for Health program.

“That program has been going for a while now and they haven’t had a bump since Day 1,” Miller said.

Typically, the governor presents a budget after the Emergency Board meets to review revenue results and the economic forecast. This year, the budget has been proposed before that update.

Johnson said the administration is confident the proposed budget will hold up to a new revenue forecast next week.

“All the indications we have right now leave me, as the brand new secretary of administration, relatively comfortable with where we are,” he said. “I’m feeling like we’re in an OK place right now.”

A full story on Shumlin’s budget proposal and address to the to the Legislature will run in Friday’s editions of the Rutland Herald and Barre-Montpelier Times Argus.

Tax Department publishes list of top delinquents

MONTPELIER — The Vermont Department of Taxes has published a list of the 100 individual taxpayers and 100 business taxpayers with the highest unpaid tax debt as of Monday.

State officials said recent media accounts of the pending release of names has already netted the state more than $730,000 in back taxes.

The Legislature passed legislation that was signed into law in June giving approval to state Tax Commissioner Mary Peterson to compile and release the lists in an effort to encourage compliance. Vermont is not one of more than 28 states that publish such lists of delinquent taxpayers, according to the state.

Officials said the Tax Department, before finalizing the lists, mailed letters to individuals and businesses identified as having the highest levels of unresolved tax debt to inform them they could potentially make be eligible for the lists. The letters offered taxpayers an opportunity to pay the debt in full or enter into an installment payment agreement.

“Publishing the lists of delinquent taxpayers already is proving to be a useful tool to encourage people to pay the taxes they owe as our law requires,” Peterson said in a statement. “Not only are some of these taxpayers paying their outstanding debt, but we also are seeing people who are delinquent in filing tax returns finally submit their returns from past years and correct their accounts with the Department.”

The Tax Department said Monday that $732,000 has been been received from 131 individuals and businesses since September when it began notifying taxpayers of possible inclusion on the lists. Of the taxpayers who accepted the Department’s offer to correct their accounts, about 18 percent entered into payment plans and will have to continue making payments until their debts are retired to avoid placement on the delinquency lists.

The lists include the names and town of residence of delinquent taxpayers. Taxpayers named on the lists either have accepted the department’s assessments of taxes owed or have already exhausted all appeals and remedies available under Vermont law, according to the Department.

See the lists below:

Feliciano releases tax return

Libertarian gubernatorial candidate Dan Feliciano released his 2012 and 2013 tax returns Tuesday, showing income of $239,796 in 2013 and $174,773 in 2012. He filed jointly with his wife, Carol. Feliciano’s occupation is listed as consultant, while his wife’s is listed as “Greatest Mother.”

The couple paid $23,741 in federal taxes in 2012 and $35,424 in 2013.

Democratic Gov. Peter Shumlin, who is seeking a third two-year term, has released his 2013 tax return, showing $721,000 in income. He also released a list of his assets, which total more than $10 million. Shumlin did not release his 2012 return and indicated to reporters at an unrelated news conference Tuesday that he did not intend to release it.

Republican candidate Scott Milne said he plans to release his tax information on Oct. 15.



New strain of March Madness hits Statehouse

Basketball fans aren’t the only ones suffering from March Madness this week.

Rep. Heidi Scheuermann today began handing out copies of a tournament bracket that pits 32 taxes against each other in a race for revenue dominance.

It’s a fun jab at the very real deliberations going on inside the House Committee on Ways and Means right now, where lawmakers are winnowing a slate of revenue options that range from sales taxes on clothing, candy and bottled water to the elimination of capital gains exemptions and the home-mortgage interest deduction.

Scheuermann, Stowe Republican who sits on the House Committee on Commerce, has even seeded the various possibilities. A tax on items sold on vending machines earned a two-seed, and will look to advance to the second round with a win over the seventh-seeded tax on car washes. In anther first-round match up, a tax on break-open tickets will look to pull the small upset over a $15,000 cap on home-mortgage interest deductions.

No cash pool unfortunately, but the tax bracketology has made for a welcome distraction. For lawmakers on ways and means, any lightheartedness will be short-lived as they turn their focus to the very real task of coming up with a source for the $20 million in new revenues needed for next year’s budget.

Vermont hit with D-minus for transparency

Ouch. The U.S. Public Interest Group has graded all 50 states on government transparency. And Vermont is near the bottom of the barrel with a ‘D-’, according to the authors of “Following the Money 2012.”

Government here lacks the kind of “online transparency portals” through which modern-day bureaucracies ought to be transmitting data to the public, the study says.

In states with high marks, those portals offer a clear view of “the state’s checkbook – who receives state money, how much, and for what purposes.”

In the 10 states that received Ds, the study says, “online checkbooks are difficult to use,” and “rarely provide spending details for off-budget agencies, post information on state revenue foregone through tax expenditures, or link to city and county expenditure sites.”

The Legislature’s Joint Fiscal Office has worked in recent years to bolster transparency around the issue foregone revenue inVermont. Exemptions and tax loopholes, the JFO has found, amount to more than $1 billion annually. But apparently the analysts’ work isn’t as detailed or searchable yet as USPIRG thinks it should be.

New Hampshire, Maine and Rhode Island also got stuck with D-minuses. Massachusetts earned an A- for having a “user-friendly” portal with “comprehensive information on government expenditures.” New York got a B+.

State revenues disappointing for January, but better than 2011

MONTPELIER — A shortage of snow has hurt the Vermont economy and is one reason state tax revenues came in below target in January, the Shumlin administration said Wednesday.
General fund revenue was $4.7 million, or 3.5 percent, below target for the month, the administration said in a news release.
Administration Secretary Jeb Spaulding said the results were disappointing but not surprising.
“The lack of snow is having an impact on consumption tax receipts, and personal income tax withholding was less than predicted,” Spaulding said in a written statement.
The underlying economy appears to be stronger than the January results indicate, he said.
Revenues are below target for the year so far by less than 1 percent. But Spaulding noted that January revenue was still 1.3 percent higher than a year ago, “indicative of our modest but steady recovery.”
The transportation fund was also down 3.4 percent. Non-property tax education fund revenue — which accounts for 12 percent of the education fund — was down 1.5 percent.

House approves tax relief for Irene-ravage towns and cities

On just its third day in session, the Vermont House of Representatives voted out a tax abatement bill that will soften the financial blow to municipalities ravaged by Tropical Storm Irene.

On the whole, Irene’s impact on Vermont property values was pretty minor. The $109 million in damage to residential and commercial properties statewide amounts to only about one-tenth of 1 percent of the state’s $81.3 billion grand list.

But for communities like Waterbury, which saw $9.9 million in property damage, or Wilmington, which registered more than $13 million in losses, the legislation approved unanimously Thursday will prevent the disaster from triggering even more fiscal pressure on taxpayers in those communities.

The bill, expected to cost the state between $2 million and $4 million in general fund money, will reimburse towns for whatever property-tax revenue that will be lost as a result of the damage to homes and businesses. It also will prevent affected property owners from having to pay taxes on home value that no longer exists.

Otherwise, those towns would be left to make up the difference internally, resulting in higher – in some cases substantially higher – tax rates on the rest of the tax-paying population.

Eighty-two towns reported some property damage as a result of Irene; of those, 23 had losses of more than $1 million, according to Bill Johnson with the Vermont Department of Taxes. Residential homes were hit hardest, accounting for 71 percent of all property damage.

The bill enjoyed tri-partisan support in the House, and is expected to move quickly through the Senate as well.

“In the storms of the past year, significant damage was done to private properties across the state,” House Speaker Shap Smith said in a written statement. “I am glad we were able to expedite this bill to provide help to those hit hard by natural disaster.”