House and Senate Democrats look poised to end their veto showdown with Gov. Peter Shumlin by withdrawing an income-tax overhaul that would have delivered tax cuts to more than 200,000 middle-class Vermonters.
Neither House Speaker Shap Smith nor Senate President John Campbell have made any definitive announcements today about the status of their battle with Shumlin over the tax reform proposal. But in an interview on WDEV’s the Mark Johnson show this morning, Smith seemed to indicate that he didn’t want to escalate the standoff.
“It’s going to be a good proposal if it’s passed this year, or if it’s passed (next year),” Smith said.
Since the impacts of the reform proposal wouldn’t begin taking effect until fiscal year 2015 anyway, Smith said, “our feeling is we can still do it (next) January if we decide not to go forward with it today.”
The tone telegraphed the withdrawal of the proposal – an official announcement will be coming later this afternoon – a concession that would signal the end of a late-session battle that has pitted the Democratic governor against a House and Senate controlled by members of his own party.
Smith and Campbell had sought to cap itemized deductions, and used the resulting revenue to bring down marginal income-tax rates across the board. The changes would have had the effect of increasing taxes on about 15,000 wealthier tax filers, and decreased obligations modestly for about 240,000 people, mostly in low- and middle-class tax brackets.
Rep. Janet Ancel, chairwoman of the House Committee on Ways and Means, championed the plan as a revenue-neutral way of delivering tax relief to working Vermonters. Shumlin, however, said the proposal violated the no-new-taxes pledge he entered into with lawmakers last week, and made it clear he would veto the bill if it made it to his desk.
Shumlin also criticized the plan for coming so late in the session, and said it hadn’t been sufficiently vetted.
Smith this morning said that if there’s going to be a fight over the proposal, he wants it to be over the merits of the policy, not over whether it came too late in the session, or whether it reneges on any deals.
“We don’t think something that’s pretty good policy should be clouded by technical arguments, and we don’t want to fight about anything other than, is this a good idea?” Smith said.
In the months between now and the second half of the biennium, Smith said, he believes he can help Shumlin learn to appreciate the rightness of the House and Senate’s thinking.
“We think this is a fair tax policy that’s going to lower taxes for over 200,000 Vermonters, and we think we can take the time and convince the governor that this makes sense to do,” Smith said. “We think this is something the governor and the Legislature should be out championing, not fighting about.”
The dispute over tax policy may the most contentious issue standing between lawmakers and a Tuesday adjournment, but it isn’t the only area of disagreement in the building.
An effort to insert into the budget language previously stricken from a bill dealing with mountaintop wind development has tripped up negotiations around the $5.3 billion bill. House lawmakers are trying to desperately to salvage pieces of an education-funding reform bill that has stalled in the Senate. And the House floor this evening – and perhaps well into the night – will have one last debate over an end-of-life-choices bill that appears all but certain to win final passage.