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Editorial: State’s budget woes made worse by federal tax cuts

As Congressional Republicans eagerly anticipate their proposed massive tax cuts to the nation’s richest 10 percent, Vermont is facing projected revenue shortages for the 11th year in a row. The state recently reported the projected General Fund revenue for the upcoming fiscal year at $1,591 million, which is about $34 million more than the prior year. That represents a growth of about 2 percent across all state government. Expenses are higher, however, creating an expected budget shortfall of about $45 million.
That is, for the 11th consecutive year, the Legislature and administration must start the session figuring out ways to cut projected spending or raise additional revenue.
As Jack Hoffman of the Public Assets Institute noted in a recent blog, perhaps it’s time Vermont recalculate its revenue forecasts and “recoup some of Washington’s tax giveaways.” That sentiment will only be amplified by the proposed tax cuts netting an additional deficit of roughly $1.5 trillion (if we’re lucky and more if we’re not) over the next decade, prompting Republicans to once again find religion and want to curb deficit spending. (Such hypocrisy is beyond credulity, but just moments after huge tax giveaways to millionaires and billionaires, they already were talking about cuts to Medicare, Social Security, federal aid to farmers, education, clean air and clean water, and on and on.)
What Trump supporters don’t seem to understand, or care, is that cuts to federal spending prompt tax increases at the state and local levels. It does because these same fiscal conservatives have a little bit of a heart when it comes to helping neighbors or folks who live just down the road. Or, to put it another way, they don’t want to finance federal programs that help clean up the nation’s polluted waterways, or air quality, or help finance disadvantaged kids, or provide low-income housing, but move those same programs closer to home and they don’t want those programs taken away or cut.
The consequence is that state and local taxes go up because even some Trump supporters get squeamish when they see people wasting away in the streets from hunger, or a disability, or lack of health care, or homelessness, or families not being able to afford child care, or to be able to send their children to early child care, or watch their schools crumble from a lack of suitable funding.
But with Gov. Phil Scott’s posture against raising revenues getting additional revenues from the state is not going to come easily. And the numbers are stacked against the state: just three items consume $36 million of the $34 million that would create a balanced budget: retirement and health care for state employees and teachers consumes $24 million; a general fund transfer to the education fund eats up another $8 million, and debt service chews through another $4 million.
To avoid raising taxes or enduring more cuts to state government every other line item in the state’s budget would have to be level-funded or slightly less — and that’s a sobering thought.
Angelo Lynn

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