Despite a legislative session that seemed geared to raise several broad-based taxes, news this week suggests that Gov. Peter Shumlin will get what he wanted: the appearance of holding the line on taxes in the face of a lot of red-ink at the start of the session. The somewhat unexpected turnaround this week was helped by better than expected tax receipts for the month of April (and a rosier than expected forecast for the rest of the year), and a proposed federal tax on internet sales that, if passed, could yield $15 million to $20 million for the state annually.
Personal income revenues were up $32 million over April projections, leaving the overall budget $26.8 million over budget. Of that, $16 million goes into three reserve funds — $4 million for sequester cuts and $4 million for rainy day funds, and $8 million automatically goes into the Education Fund.
That surplus gave the House the leeway it needed to back off tax increases to add to the reserve fund — a priority of House Speaker Shap Smith — and left the Legislature and administration to fill a rather small $10 million shortfall. That’s a number all agreed could be found within the budget with a few more tweaks.
The bottom line is a win-win for Democrats in the Legislature as well as for the governor, even as specific taxes were raised on gasoline (to fix roads and bridges) and on the property tax (which will go straight to education funding).
The Legislature will miss a golden opportunity, however, if it does not follow up next year on some of the tough discussions the House and Senate undertook this session. The rationale behind the decision to raise tobacco taxes by 80-cents, for example, is just as valid next year as it was earlier this week, even though it is now likely to die in committee because the revenues are no longer needed to balance this budget. Similarly, initiatives to put a tax on sugar-sweetened drinks should be reinstated next year because it encourages a change of behavior that improves public health and produces needed revenues that can be pumped into health care reform; a junk food tax would accomplish the same thing.
Other difficult fiscal measures were debated at length with many good suggestions made in times of dire need, which in the political world is another way of saying: “we know it’s good for us, but we’ll only do it if we absolutely have to.” Businesses make those tough decisions all the time; government should, but rarely does. The groundwork was laid on many difficult issues this session; it’d be a shame to see that groundwork lay fallow.
Angelo S. Lynn