House Cuts Budget, Still Needs To Find $4.4 Million In New Taxes
House lawmakers are putting the finishing touches on their versions of this year’s budget and tax bills. And while their proposal will require some new revenues, legislators are calling for less spending than Gov. Peter Shumlin.
The budget proposal unveiled by Shumlin back in January required $14 million in new revenues. Shumlin said he wanted to raise the money by imposing a new tax on health insurance claims.
But lawmakers in the Vermont House have rejected that approach, saying it would put upward pressure on medical costs. That decision has opened up a $14 million hole in the fiscal year 2015 budget. And Rep. Mitzi Johnson, D-South Hero, vice-chairwoman of the House Committee on Appropriations, says her committee is on the verge of filling it.
“We have found a little over $5 million in cuts so far to close that gap, to about $9 million,” Johnson said Thursday.
The cuts consist mainly of reductions in Medicaid reimbursement rates to health care providers. The Shumlin Administration had wanted to increase those reimbursements by 2 percent. Other cuts include a Statehouse police officer position that the administration had sought to add.
Lawmakers plan to address the remaining $9 million gap with a combination of additional cuts and new revenue. The plan also calls for $4.4 million in new taxes.
Rep. Janet Ancel, D-Calais, is chairwoman of the House Committee on Ways and Means. She says her committee is considering tax increases on cigarettes, soda and health supplements to raise the funds. Ancel says the increased spending is due primarily to rising health care costs, and she says the cigarettes, soda and supplements all relate to the health care arena.
“There are good policy reasons for having higher taxes on cigarettes, because it discourages smoking.” Ancel says. “And also a lot of health care costs are related to the effects of cigarette smoking.”
A tax increase of 50 cents per-pack on cigarettes would come close to raising the $4.4 million lawmakers are looking for. Ways and Means is also considering an elimination of the sales tax exemption on soda and supplements. Doing away with that exemption would add 6 percent to the cost of those goods.
Johnson says her committee will have a difficult time over the next 48 hours finalizing its list of cuts. She says human services, physical infrastructure and other government programs are all in high demand.
“But we’ve got to balance all of those with taxpayers’ needs, and the ability of taxpayers to be able to pay for the services that Vermonters want,” Johnson says.
But Rep. Patti Komline, R-Dorset, is among the Republicans in Montpelier who say the budget plan from the Democratically controlled House still outstrips Vermonters’ ability to pay. With lawmakers scheduled to vote on a public financing plan for single-payer health care in 2015, Komline says the state needs to preserve its tax capacity now.
“I think we need to save everything we’ve got until we find out what the governor’s funding proposals are for health care, and what that’s going to cost us next year,” says Komline, who sits on the Ways and Means Committee. “And I think it’s a big mistake to start increasing taxes now.”
House committees have until Monday to cast final votes on the budget and tax bills.