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Follow VPR's statehouse coverage, featuring Pete Hirschfeld and Bob Kinzel in our Statehouse Bureau in Montpelier.

Senate Approves Tax Package, Looks At Budget

The Senate has rejected a plan to raise income tax rates on wealthy Vermonters to help pay for next year’s budget.

Part of the Senate’s $10 million tax plan includes a provision to impose a tax on bottled water and satellite TV services. Washington senator Anthony Pollina argued that these taxes are regressive so he proposed higher tax rates on wealthy people.

“So when we talk about how we should not ask people with great wealth to pay more because they’re already paying too much, when you look at it as a share of their income they are paying less than others are.”

But Windham senator Peter Galbraith said a provision of the bill that imposes a new 3 percent minimum tax rate for individuals who make more $125,000 was a much better way to get new revenue from wealthy people.

“Because there are a lot of taxpayers including some at those highest levels we could raise their top rate to 15 percent it wouldn’t matter if they don’t pay even 3 percent.”

The Senate voted 22 to 7 to defeat the Pollina amendment. It then gave final approval to the tax package.

State Budget

Next up for the Senate was the state budget for next year.  Appropriations chair Jane Kitchel says the plan allocates roughly $2 million less than the House budget and nearly $17 million less than the Governor’s proposal.

The House appropriated $9 million for a special reserve fund to help cushion the impact from automatic federal budget cuts but Kitchel says her committee didn’t follow this approach.

“We did build this budget with the decision that we would not ask to raise taxes to fund reserves.”

The Senate plan also makes changes to Reach Up, the state’s welfare to work program.  Kitchel says her committee agreed with some of the Governor’s time limits for this program but the panel couldn’t support some of his sanctions.

“We have a proposal that we believe looks at both sides of that contract in terms of the accountability on the part of government,” said Kitchel. “And the accountability and the responsibilities and obligations for parents as well.”

Kitchel said her committee also rejected the Governor’s plan to take $17 million from a tax credit program for low-income working people to pay for his child care initiative. But she says the proposed budget does include just over $3 million for a variety of child care services.

Because the House and Senate have passed different versions of the tax bill and the budget, it’s likely that conference committees will be named to resolve these differences.