Lawmakers ready for tax hike votes; expect pain at pump to help fix roads
BRISTOL — Local lawmakers were poised this week to vote on several tax initiatives aimed at improving the state’s road and bridges and backfilling federal dollars for health care and other services.
Lawmakers commented on those challenges at Monday’s legislative breakfast at the Bristol American Legion Hall. Chief among those tax proposals: A plan to raise the state’s gasoline tax by 2 percent this year and next year.
“We need to raise $36 million in transportation funds in order to draw down the maximum amount of federal funds available to us … so that we can begin to address some of the terrible highway problems we have,” said Rep. David Sharpe, D-Bristol and a member of the House Ways and Means Committee. “I think probably everyone in this room realizes how bad the roads are.”
Sharpe said a recent study performed for the House Transportation Committee indicated the state should spend $250 million more per year to address Vermont’s road problems.
“We didn’t raise that,” Sharpe said, noting the Legislature will likely seek to raise $21 million through new gas taxes this year, along with an additional $11 million in bonding, while diverting $4.5 million from proposed capital projects in order to get to the $36 million figure.
“One hundred percent of what we raise is going to go to our roads,” Sharpe said.
House Transportation Committee member Diane Lanpher, D-Vergennes, said the proposed gas tax, while unpopular, received bipartisan support coming out of the Transportation, Ways and Means and Appropriations committees, due to the fact that the state would lose an estimated $56 million in federal funds if it did not raise the state contribution.
Lanpher said she sympathizes with the impact on taxpayers, knowing that she used to be a single mom and is a regular commuter to a job in Burlington during the off-session.
“We have looked at the big picture and what the cost of failed infrastructure would be for commuters,” she said.
“People cannot afford to drive 100 miles around a piece of infrastructure that has failed. (The gas tax increase) is a tough thing to have to ask … We are trying to keep it as minimal as possible.”
Addison resident John Ball asked if lawmakers had considered a tax on tires as opposed to a gas tax.
Sharpe responded that a tire tax had been proposed twice in recent years and voted down each time — primarily due to the potential administrative costs of such a levy.
Rep. Michael Fisher, D-Lincoln, said lawmakers are doing the best they can to deliver government services to people while acknowledging pressures on Vermonters’ pocketbooks.
“There are times when people, in literally the same breath, will say, ‘Fix my road but don’t raise my gas tax,’” Fisher said. “I have got to say, ‘We don’t print money (in Montpelier).’”
Lincoln resident Claude Rainville voiced concern about the impact the proposed tax increases could have on people on fixed incomes.
“You are eroding away the disposable income of low-income people, fixed-income people,” Rainville said. “Their disposable income is disappearing. For the most part, they think twice about ‘Do I still want to live in Lincoln. Do I still want to live in Vermont?’”
Rainville added he hopes the Legislature will revisit the manner in which Vermont pays for its public schools.
“You are raising the state education tax by 5 cents and it’s rumored you’re going to do it again next year,” Rainville said. One of the consequences of all the tax increases, Rainville surmised, will be a change in people’s shopping habits. He said that people will increasingly shop at big-box stores looking for bargains rather than shopping locally.
Sharpe noted the call, from some, to get more tax revenues from the rich.
“The reality in the United States today is that there is plenty of money,” Sharpe said. “The problem is that only a few people and a few corporations have that money and they don’t want to share.”
Sharpe said the top 1 percent of taxpayers in the country control 40 percent of the wealth. The bottom 50 percent, he said, control 7 percent of the wealth.
“Quite literally, we are fighting for the crumbs on the table,” Sharpe said. “We tend to fight amongst ourselves as to where those crumbs are going to come from and what we are going to do in state and local government.”
But Sharpe added that it would be tough for Vermont to act unilaterally in passing new, sweeping tax policies.
“While we may like the idea of taxing the rich extraordinarily high, which maybe (tax laws) should be brought back to Eisenhower tax levels,” Sharpe said, “if we did that it would leave Vermont as an island, it would be very problematic. These are national tax problems and they need to be dealt with fairly by our national government.”
And Sharpe said the state’s revenue challenges expand far beyond transportation. He added the Legislature must find an additional $20 million to replace lost federal Medicaid revenue. The feds docked Vermont the $20 million, ironically because the state is more advanced than other states in managing its health care system, according to Sharpe.
As for education spending, Sharpe said the 5-cent increase in the statewide education property tax rate is a product of school spending decisions made at the local level. Many school budgets passed on Town Meeting Day featured increases of 5 percent or more.
“If you spend more in your district, you pay more,” Sharpe said.
“We are in a box in the state Legislature,” he added. “I believe we are doing the best we can to fund state government given the box we are in.”
Local lawmakers noted the General Assembly continues to balk at several taxes floated by Gov. Peter Shumlin. Among them: A proposed surcharge on break-open tickets most commonly sold by civic organizations, such as the American Legion, to fund local charitable causes. Shumlin had surmised that such a tax, on the producers of the tickets, could generate $17 million to be used for weatherization programs. Civic groups panned the proposal, fearing it would choke off revenues for charity. Sharpe said on Monday that there is little support for the surcharge, though he said there is a chance it could be applied to the sale of the break-open tickets by bars and other for-profits. The estimated $720,000 raised through the surcharge would be used to regulate the break-open ticket industry in the state, Sharpe said.
Vermont legislators continue to keep a close eye on the budget and federal sequestration process, through which a series of automatic, across-the-board cuts totaling more than $1 trillion are scheduled to be foisted on various federal agencies. This process, unless ameliorated, would cost Vermont around $15 million in federal money, according to Rep. Willem Jewett, D-Ripton, who serves as the House majority leader.
“The sequester will cost 750,000 jobs in this country, and drags down our economic recovery almost in half,” said Jewett, who recently returned from a briefing in Washington, D.C., about the nation’s financial picture. “I think this is a bad time to place our nation’s economic recovery in that kind of risk.”
Jewett said the federal government must avert three more “fiscal cliffs” before this summer.
“For deficit reduction, we need to get to some kind of combination of revenue and cuts in the $4 trillion to $4.5 trillion range, and even with sequester, we only get halfway there,” Jewett said.
Part of the answer, according to two local legislators, rests in creating more economic growth.
Sen. Christopher Bray, D-New Haven, spoke of some bills in the legislative hopper that could help accomplish that goal — including S.155, the so-called “strategic workforce development bill.” Through these initiatives, Bray said the state can identify, and create, high-demand jobs in growing industries.
Rep. Paul Ralston serves on the House Commerce and Economic Development Committee.
“It is important to understand that we are on our way through … the greatest recession since the Great Depression,” said the Middlebury Democrat. “We need to be thinking about and looking over that horizon, thinking about what our economy can be in the new generations that are coming, as commerce changes, as the ways we do business change. Vermont needs to look out and decide how it wants to support its economic growth.”
Reporter John Flowers is at [email protected].
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