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.
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:
MONTPELIER — Members of the Vermont State Employees Association took to the State House Tuesday to make a direct pitch to lawmakers and the governor to abandon proposed cuts and embrace new revenue instead as they work to balance the state budget.
More than 100 state workers gathered for the union’s State House Day, hoping to ward off budget cuts proposed by Gov. Peter Shumlin to various services, including emergency dispatching and educating inmates.
The governor has proposed consolidating dispatch centers in Rutland and Derby with existing ones in Rockingham and Williston. The move, the Shumlin administration argues, will save the state $1.7 million and not impact public safety. The union counters that it will cost dozens of jobs and have a major impact on public safety.
Shumlin, a Democrat, met with some state workers for a casual conversation in the State House cafeteria. They used the opportunity to share their concerns with the governor about his proposed cuts.
“There’s an obvious public safety issue if you’re expecting less people to do more work,” said Melissa Sharkis a dispatcher at the Rutland facility that could close.
Dispatchers in Williston and Rockingham will not have the knowledge of local neighborhoods or rural locations, Sharkis said.
“The more time we have to spend looking up locations if we don’t know the area, that’s longer that it takes to get people help,” she said.
Thomas Lague, another dispatcher, said reducing dispatch jobs will have a negative impact on communities.
“We know there’s a budget and we know that we need to trim corners, but if we want to grow the economy, cutting the service sector doesn’t appear to be the best route to do it,” he said.
Meanwhile, Bill Storz, who works in the Community High School program, told Shumlin that cutting the program, which provides education to inmates, is a mistake. It’s facing a proposed 50 percent cut in funding.
“I want to make first clear that the budget cut is based on declining need, or perceived declining need. We feel that there really is no declining need,” he said.
But Shumlin did not seem to be moved by what he heard. Just a few moments later he told reporters that the cuts are necessary to help balance the state budget, which faces a budget gap of at least $112 million in the 2016 fiscal year.
“It’s my responsibility as governor to balance the budget in a responsible way. We came up with over $15 million of ongoing efficiencies just in the way state government can deliver services to be more efficient and meet the challenges that we’re facing of over a $100 million budget gap,” he said.
Shumlin said people “can always make an argument for not making change.” But, he said taxpayers are expecting that he and lawmakers will find a way reasonable way to find savings.
“Taxpayers expect me to make the choices that are necessary to responsibly balance this budget, and that’s exactly what we’re doing” he said.
Shumlin said his public safety team has reviewed the plans to consolidate dispatch centers. It can be done without harming public safety efforts around the state, he said.
“We firmly believe that we can make that system more efficient with technology that’s advanced since the system we created a long time ago, and deliver better services,” Shumlin said.
Shumlin said his administration wants to continue to provide education opportunities to inmates, but the program is not currently providing that service in an efficient way.
“We’re not saying let’s not educate young people in prisons, what we’re saying is we’ve got 49 teachers that graduated 41 students this year. I don’t think there’s a Vermonter who would say, ‘Wow, that’s an efficient way to deliver education — 49 teachers, 41 graduates,” Shumlin said. “All we’re saying is let’s find the areas where government isn’t being efficient and not always turn to taxpayers.”
Shumlin has told lawmakers and others that if they don’t like his proposals they must present their own that provide equal savings. So far, those ideas have not been forthcoming, according to Shumlin.
“We’re always interested in any alternative plans. What is not OK is to say, ‘Just go out and raise taxes on Vermonters,’ and that’s what I’m hearing in the background here. What they’re saying is, ‘Listen, don’t change anything. Don’t make government more efficient, just ask taxpayers to pay more.’ As governor, I’m not going to do that,” Shumlin said.
Later in the day VSEA members met in the House Chamber to discuss the impact the cuts will have. Leslie Matthews, an environmental scientist with the Agency of Natural Resources said Shumlin is “extracting millions of dollars” from state workers.
“We’re here to say, no more cuts, raise some revenue,” she said.
The cuts to state services are on top of $10 million in labor savings that Shumlin hopes to achieve be renegotiating the labor contract with state workers. Workers are slated to receive a 2.5 percent cost of living increase and a resumption of “step increases” that would provide an average salary bump of 1.7 percent to workers.
The budget gap should be addressed by seeking additional revenue, Matthews said, not by asking state workers to forego pay raises that are in the labor contract or cutting funding for the departments and agencies they work for.
“That crisis does not constitute an emergency on our part, or obligate us to open up our contract that we bargained in good faith,” she said.
She asked lawmakers to “raise revenue from the people who can afford it.”
“We need to grow it from those people who have seen their income grow dramatically in recent years,” Matthews said. “We call on our legislators to reject the governor’s proposed cuts and instead raise revenue.”
Shumlin maintains that he and legislative leaders are committed to achieving the $10 million in labor savings.
“The best way to do that would be if the union would come to the table and work cooperatively with us to find those savings. We have to do it. There’s no choice. If you talk to legislative leadership, if you talk to me as governor, they’ll tell you, we cannot solve this budget challenge without getting some savings from our workforce. It’s just not possible,” he said.
The Shumlin administration has asked union officials to sit down and discuss the best way to achieve the savings. If the union does agree to make some concessions, more than 400 state workers could be laid off, administration officials said last week.
“There’s many ways to do this and that’s why it’s so important they come to the table. We can do this the hard way, which won’t be the best for them and the best for taxpayers, or we can do this by doing what we do in Vermont,” Shumlin said.
So far, neither Shumlin nor his aides have provided any specific proposal to reduce labor costs. Those details should be be worked out with the union, they said.
Vermont Press Bureau chief Neal Goswami and VPB reporter Josh O’Gorman chat about the showdown between the Shumlin administration and the Vermont State Employee’s Association over labor costs, the state of gun legislation in the State House and a bill that would make organ donation the default option in Vermont. Also, Barre-Montpelier Times Argus Editor Steve Pappas talks about a few stories he’s worked on in the past couple of weeks, including a profile of Rep. Janet Ancel and Sen. Tim Ashe, the lawmakers that chair the taxing committees in the State House. He also updates on a potential second bid for governor by Republican Scott Milne. Lots going on in this episode — have a listen.
Check out recent episodes of City Room with Steve Pappas, which are discussed in today’s podcast episode:
Gov. Peter Shumlin stands behind his payroll tax proposal and expresses hope that state workers will negotiate with his administration to find $10 million in labor savings in the weekly podcast with Vermont Press Bureau chief Neal Goswami.
MONTPELIER, Vt. (AP) — The Vermont Department of Taxes is again issuing personal income tax refunds after temporarily halting them while it investigated possible cases of refund fraud.
The state suspended the refunds last week over concerns about an increase in tax refund fraud reported by other states. It says the surge was related to stolen identities elsewhere and not to any security breach of Vermont government systems.
TurboTax, the country’s most popular do-it-yourself tax preparation software, said Friday that it had temporarily stopped processing state tax returns because of an increase in fraudulent filings. But parent company Intuit says it resumed the filing of state returns with increased anti-fraud measures Friday evening.
The Vermont Tax Department says that it has expanded its fraud detection efforts in response to the growth in bogus refunds.
MONTPELIER — Secretary of Administration Justin Johnson issued an edict to agency and department heads Tuesday that all new hires within the executive branch must be approved by his office.
The move, according to a memo Johnson sent to agency and department heads, is the result of signals from the Vermont State Employees Association that it is not willing to work with the administration on finding $5 million in personnel savings called for in Gov. Peter Shumlin’s budget proposal.
Johnson wrote in his memo that he was “both surprised and disappointed to be approached to sign a VSEA ‘Fight Back’ petition that calls for no cuts in state government spending. The petition indicated that the union will not deal with the administration on labor savings.”
VSEA spokesman Doug Gibson said members are passing out petitions at work sites and to the public asking for signatures in support of their position against further cuts to the state budget.
“We are united, and we are calling on Vermont lawmakers to join us in seeking alternatives to cutting the vital public services that we all rely on every day. We also ask that you respect our collective bargaining agreements, the terms and conditions of which are mutually negotiated and agreed to by state employees and the State,” the petition reads.
Although the VSEA petition does not explicitly state that the union will not work with the administration, Johnson cited it in his memo as the reason for running all hiring decisions through his office.
“We are concerned that the union is saying “No” before we have even have an opportunity to talk. This approach leaves me very concerned that the administration won’t have an opportunity to take steps, in conjunction with the union, to help minimize any jobs losses while meeting a balanced budget,” Johnson wrote.
For now, all vacant positions must be approved by Johnson’s office. Any request to fill a position must include a justification for how the position “fits into department or agency priorities, is critical to the work of the organization, and why it would likely not be a part of any programmatic or staffing cuts going forward if that is where we end up,” according to the memo.
“The requirement applies to all positions across the executive branch — no exceptions,” Johnson wrote.
The restriction applies to vacant positions that are not already in active recruitment, and to all new vacancies that emerge.
Johnson expressed hope Tuesday that the administration and the union can find a way to find personnel savings in the general fund together.
“I’m still confident that we can sit down and talk things out, but I need their help to do that,” he said. “I can’t just go in there crashing around in the contract on my own.”
But VSEA Executive Director Steve Howard was clear Tuesday that the union is unlikely to agree to renegotiating labor contracts.
“Our members are not interested in opening their contract or seeing state employees be (laid off). It’s not in the interests of the state of Vermont,” he said.
Howard said union members want Shumlin to seek new revenue to help balance the state’s budget and is opposed to additional cuts.
“Our members are united behind the idea that the solution to this problem is to ask the wealthiest Vermonters to pay more,” he said. “If he asks millionaires to pay more, our members are all ears.”
Read Johnson’s memo below:
Bureau chief Neal Goswami joins Alicia Freese of Seven Days, Taylor Dobbs of Vermont Public Radio and moderator Stewart Ledbetter on this week’s show.
MONTPELIER — Vermont’s Tax Department has put a temporary hold on issuing income tax refunds to taxpayers who have already filed returns because of suspicious activity with a third-party tax filing program.
Returns sent electronically to the Tax Department through TurboTax, filing software made by Intuit, have had an unusually high amount of alerts, Gov. Peter Shumlin said Friday. As a result, the state decided to halt issuing returns on Wednesday night, he said.
“This is the new, ‘How do you rob a bank?’ It kind of used to be Bonnie and Clyde, now you figure out a way to exploit a technology, TurboTax, to get somebody else’s refund. This is not just a Vermont problem, it’s happening nationally and the IRS is all over this,” Shumlin said in an interview.
Intuit said Friday it is working with states that have seen “an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds.” Intuit stopped transmission of electronic tax returns to states on Thursday.
The company said it is working with a third-party security firm on a preliminary investigation of recent fraud activities. So far, instances of fraud do not appear to be the result of a security breach of its systems. Rather, the information used to file fraudulent returns was obtained from other sources outside the tax preparation process, according to the company. The investigation is ongoing, however.
“We understand the role we play in this important industry issue and continuously monitor our systems in search of suspicious activity,” Brad Smith, Intuit president and chief executive officer, said in a statement. “We’ve identified specific patterns of behavior where fraud is more likely to occur. We’re working with the states to share that information and remedy the situation quickly. We will continue to engage them on an ongoing basis in an effort to stop fraud before it gets started.”
Shumlin said no state systems have been compromised, but Tax Commissioner Mary Peterson chose to halt refunds until the problem could be solved. Other states have also suspended tax refunds.
“What the commissioner has wisely said is, ‘Let’s just put a hold on refunds for a few days and work through these red flags, individual, one-by-one, to make sure that no one’s ripping off Vermont’s taxpayers,” the governor said.
Shumlin said the delay in refunds is likely to last a few days.
“What I’m trying to protect Vermonters from is having their money ripped off by people who don’t deserve it,” he said. “This isn’t going to be a long pause, but we really do want to work through why we’re getting so many red flags. The other states, I think, are doing the same thing, taking a brief pause on refunds so we can get to the bottom of this.”
Intuit has set up a toll-free number for customers who believe they could be victims of fraud. The number will provide direct access to specially trained agents who can assist. The company is also providing identify protection services and free credit monitoring.
“We understand the pain and frustration identity thieves cause taxpayers,” Smith said. “We know how important tax time is and our number-one priority is making sure peoples’ returns are filed timely, accurately, and safely.”
This story was updated online at 1:45 p.m. on Friday, Feb. 6.
Gov. Peter Shumlin and bureau chief Neal Goswami discuss Medicaid and vaccinations. And the governor takes a tough stance — choosing puppies over kittens as his favorite animal. He also explains why the Tax Department has temporarily halted refunds. Have a listen…
MONTPELIER — General fund revenues came in more than $1 million lower than expected in January, the Shumlin administration announced Thursday.
Secretary of Administration Justin Johnson said the general fund came up $1.28 million short, or 0.83 percent off of projections. The revenue target is based on the revised forecast that state economists delivered to state officials last month, which included a $10 million downgrade in the current, 2015 fiscal year, and an $18 million downgrade for the 2016 fiscal year.
Total general fund receipts for the 2015 fiscal year reached $797.34 million, which is $1.28 million, or 0.16 percent, below target. Still, the results are $23.84 million, or 3.08 percent, higher than the results from the 2014 fiscal year.
“Although we are slightly behind the consensus forecast for January, GF revenues remain more than 3 percent ahead of last year. While Personal Income Tax receipts fell behind the monthly target, they were offset by above-target performance in Corporate Income Tax, Insurance receipts and the two consumption taxes (Sales & Use and Rooms & Meals),” Johnson said in a statement.
The transportation fund finished January at $19.01 million, 0.68 percent short of its target. For the fiscal year-to-date, transportation fund revenues are at $147.21 million, which 0.09 percent below target.
The education fund, meanwhile, fell slightly below target in January, finishing the month at $19.30 million, or 1.07 percent short. Fiscal year-to-date revenues are $108.95 million, which is 0.19 percent below the cumulative target.
“Clearly we would have preferred to meet the January targets in all three major funds. However, we are just one month into the revised forecast period and will wait to see how receipts progress, as we enter the busy income tax filing season,” Johnson said.
MONTPELIER — A state senator has sent a letter to each of the seven ski resorts utilizing state land asking them to renegotiate leases, but the closing paragraph he included has some lawmakers concerned he has issued a thinly-veiled threat to raise their taxes if they do not agree.
Chittenden County Sen. Tim Ashe, a Democrat and the chairman of the powerful Senate Finance Committee, sent the letters on Senate letterhead last week to Bromley, Okemo, Killington, Stowe, Smuggler’s Notch, Burke and Jay Peak. He signed each letter as chairman of Senate Finance.
Ashe’s letters follow the release of a report by State Auditor Doug Hoffer last month that found the resorts’ lease payments to the state have not kept pace with the resorts’ economic growth.
The long-term leases with the resorts range between 50 and 100 years. Bromley was the first resort to strike a deal with the state in 1942.
Over the last 50 years, resorts that once had just a handful of lifts and few facilities have become year-round enterprises. Many are now owned by large out-of-state corporations, according to Hoffer’s report. The resorts now feature new lodges, hotels, condominiums, retail stores, golf courses, waterparks and other amenities that generate significantly more revenue than the fledgling days of Vermont’s ski industry.
Between 2003 and 2013, development at the seven resorts led to increases in sales of goods and services, property values and revenues from excise taxes, all of contributed to more state revenue.
But lease payments for the 8,500 acres of public lands used by resorts have not kept the same pace of growth this decade as other tax revenues generated from the resorts. The leases were designed to capture a percentage of lift tickets, typically 5 percent of lift ticket sales. Lift ticket sales became a secondary source of revenue as the resorts evolved, however, according to the report, and the leases only generate about $3 million a year for the state.
Ashe’s letters ask the resorts to willingly open negotiations, even though most do not expire for several more decades. Bromley’s lease, for example, expires in 2032. Ashe pointed out in his letter, as Hoffer’s report did, that renegotiating makes sense because “the ski world of the lease’s origins would be unrecognizable today.”
“It is for that reason I ask you to renegotiate voluntarily your lease terms or agree to amend your lease to have it expire on December 31, 2016. Either of these options would allow for thoughtful, unhurried negotiations between the State and you to arrive at modern lease terms reflecting the great changes in the ski industry and in the revenue streams it features,” Ashe wrote.
It is the closing paragraph that has drawn the ire of some fellow lawmakers, however.
“From time to time, the Legislature considers various proposals that would have an impact on various classes of taxpayers. In terms of the ski industry, I have heard Legislators propose eliminating the property tax exemption on snowmaking equipment and other assets, and suggest creating a special non-homestead tax rate for ski areas. It seems to me that voluntary renegotiation of your lease with the State is a far superior method of striking the right balance of proceeds for the right to use public land,” Ashe wrote.
Rep. Patti Komline, R-Dorset, whose district includes Bromley Mountain, said Ashe’s letter is a clear threat to try to eliminate tax exemptions currently enjoyed by ski resorts if they refuse to scrap their current leases.
“It is very concerning when those in power look to interfere in contractual agreements using overt threats. This is an overreach and I hope it doesn’t create a precedent that will affect the credibility of our state’s reputation,” she said.
Komline said she learned about the letters Wednesday and planned to reach out to officials at Bromley and work with the Vermont Ski Areas Association to help ease any concerns the resorts have.
Rep. Heidi Scheuermann, R-Stowe, said she, too, found out about the letters on Wednesday after officials at Stowe Mountain Resort sent her a copy. Stowe’s lease is good until 2057, Scheuermann said.
“I think it’s inappropriate. That said, he can do it. I’m sure Stowe will have a response for him. They have a legal lease that is extremely beneficial to the state of Vermont and I expect they are going to maintain that lease,” she said.
Ashe said Wednesday his letters are not a threat and should not be seen as one.
“It’s reading the auditor’s report and saying that even though they are under no obligation to open their leases … it seems to be maybe appropriate that they do so,” he said. “It’s not about a threat. It’s hoping they’ll just do it.”
Making a threat to strip away tax exemptions should the resorts decline to renegotiate leases would be bad policy for the state, according to Ashe.
“I would never threaten a taxpayer, because I don’t think that’s a very good tax policy. But rather, saying, in thinking about the use of public lands, it’s better to voluntarily step up because the proposals that are from time to time directed at them or any other industry are usually sort of inartful,” he said.
Still, lawmakers question the tax exemptions every year, and Ashe said he wanted to point out that some lawmakers could look to use it as leverage to ensure the leases are fair.
“People gravitate to that … and say, ‘Why do we do that?’ It raises this whole issue about why that equipment and stuff is exempt,” Ashe said. “And then, there’s always the discussion about, ‘Well, they do get a pretty sweet deal.’ People articulate it in different ways.”
Senate President Pro Tem John Campbell, D-Windsor, said he was not aware that Ashe was planning to send the letters. He said would discuss the matter with him.
“I have not had an opportunity to discuss this with Sen. Ashe, nor have I seen the letter,” he said Wednesday. “It’s certainly an issue that I will discuss with him.”
Bennington County Democratic Sens. Dick Sears and Brian Campion, whose districts include Bromley, both said they had concerns with Ashe’s approach.
“There has to be a balance here. I don’t want to do anything to jeopardize Bromley’s ability to attract people to Bennington County,” Campion said.
“Right now people are in a desperation mode. They’re looking (for revenue) in every corner,” Sears said. “I don’t think I want to force ski areas. I don’t want to do anything that impacts the tremendous relationship with our ski areas.”
Parker Riehle, president of the Vermont Ski Areas Association, said Wednesday the ski resorts were still crafting a response to Ashe. However, he said all are comfortable with the lease agreements in place.
“We certainly still stand by the leases and their terms as still a very good deal for both parties and a very favorable deal for the state of Vermont,” he said. “Overall it’s a really strong partnership.”
The federal government only gets 2.5 percent of lift ticket sales, on average, according to Riehle, and neighboring states get about 3 percent of lift ticket revenue.
“Vermont’s actually way ahead of the game and there’s been a couple of reports issue in that regard that back that up. We certainly are very comfortable and confident in the leases,” he said.
Additionally, the ski industry generates an estimated $100 million in various tax payments to the state, and provides about 12,000 jobs during the winter when other industries are typically laying workers off.
“You can’t just focus on the lease payments and think that they look too small,” he said.
Given the what the ski industry provides to the state, Riehle said the resorts should not be facing the threat of higher taxes.
“In light of the numerous revenue benefits to the state, we certainly don’t see a need to look for any additional tax burden on the ski areas. We certainly don’t want to see anything like that hanging over our heads,” he said.
Read Ashe’s letter to Bromley Mountain below: