MONTPELIER — Gov. Peter Shumlin said Friday he is asking lawmakers to cut an additional $10 million from the budget because they have rejected his proposal to institute a payroll tax to help pay for Medicaid costs.
Shumlin summoned the chairs of Senate money committees Wednesday — one day before the Senate took up the annual budget bill — to tell them they needed to cut more and tax less. The move frustrated lawmakers who are grinding toward adjournment, which is to come in mid-May.
On Thursday, administration officials presented a list of $8 million in further cuts to the Senate Appropriations Committee and made clear the third-term Democrat did not favor their tax plans.
Gov. Peter Shumlin speaks at a recent State House news conference.
“I really feel strongly that the tax packages being contemplated in this building will hurt our economy and hurt Vermonters,” Shumlin said in an interview with the Vermont Press Bureau on Friday. “I believe that the current budget framework needs to cut more and tax less.”
At the heart of the matter, Shumlin said, is how lawmakers have chosen to fund Medicaid case loads, which expanded under the federal Affordable Care Act to the tune of $16 million. The governor’s budget proposal used a 0.7 percent payroll tax on Vermont businesses to raise $90 million to cover that cost as well as to boost payments to Medicaid providers.
Lawmakers have rejected that, however, and funded Medicaid case loads through various taxes. But Shumlin, while now acknowledging his plan is unlikely, wants lawmakers to cut deeper rather than raise taxes.
“That idea has been an uphill slog and it looks like it’s possible that it may not come to fruition,” he said. “Unless they suddenly … see the light, which doesn’t seem extraordinarily likely, but I’m still hopeful, we have a $16 million budget challenge that we didn’t have, that we had taken care of.”
Shumlin said his proposal created an ongoing, dedicated source for Medicaid. Lawmakers, meanwhile, have created a host of new taxes to balance the general fund, he said.
“They want to take away your home mortgage deduction because you bought a home, they want to take away your charitable deduction because you want to support charities in your community, they want to take away the catastrophic health care deduction,” he said. “They want to tax soda and everything else with sugar in it because they say that drinking that stuff isn’t healthy for you, which it probably isn’t, but they also want to tax water. Tax water? Really? I thought you just said you shouldn’t drink sugary things, now they’re saying we’re going to tax water.”
Lawmakers are not amused with the governor’s late push to adjust their work. House Majority Leader Sarah Copeland Hanzas, D-Bradford, noted that lawmakers used the same amount of new revenue to support the general fund as Shumlin did in his proposal, but their challenge was even greater since the state saw an additional $18 million revenue downgrade after his budget address.
“We closed the $113 million budget gap with the same $35 million that the governor closed his $94 million gap. The same amount, not the same kind of revenue. So, to have the governor suggest that we are spending too much and raising too much in taxes is really perplexing,” she said. “I don’t know where they’re doing their math, but $35 million is $35 million.”
Rep. Sarah Copeland Hanzas
Hanzas said the governor should have made his pitch earlier — before the House passed its budget and sent it to the Senate.
“Where were you on Jan. 20 because it’s three months later and we’ve been through the painful process of vetting all of our painful priorities,” she said. “We would have appreciated them in January, not so much now.”
House Appropriations Committee Chairwoman Rep. Mitzi Johnson, D-South Hero, echoed that sentiment.
“It’s frustrating that he’s had opportunities for the last three months to weigh in on the budget and we don’t have a balanced budget proposal from him. He’s choosing to sort of nit-pick at different things,” Johnson said.
Both Johnson and House Speaker Shap Smith said Friday that the House-passed budget does fully fund the Medicaid case loads, but does not do it the way Shumlin sought.
Shumlin dismissed criticism of his timing, saying previous governors have also pushed for priorities late in the process.
“I don’t know where they’ve been. I’ve served under [Former Gov. Howard] Dean, [former Gov. Jim] Douglas, and I cannot remember as a legislative leader right before we’ve passed the budget not having the governor sit down with us and explain their concerns about budget and taxes. That’s what governors do. So, I understand it’s a time of year where folks get emotional,” Shumlin said.
Late-season requests are part of the budget process, Shumlin said.
“Folks get frustrated this time of year, I understand that, and I’m sympathetic to it. I’ve been on both sides of it in the governor’s office and the legislative leadership end of it,” he said. “The only thing I want to point out is this is not unusual and we shouldn’t be fearing frustration we should be fearing raising taxes on Vermonters at a time when they’re having a difficult time paying their bills, and we should be fearing passing a budget that isn’t sustainable for the years going forward.”
“I believe that my judgement is correct. We should cut $10 million more from the budget and not raise taxes on Vermonters by that $10 million,” Shumlin added.
The Senate appeared ready Friday to reject most of the $8 million in cuts the governor proposed this week. A $1.3 million savings pharmacy costs looked likely, but bigger ticket items, including an additional $2.8 million in labor savings on top of the $10.8 million Shumlin previously requested, appeared to lack support.