House gives $5.77B budget and $48M revenue packages preliminary approval


Lawmakers didn't have to pull out their toothbrushes and sleeping bags after all last night.

The House managed to give initial approval to both the budget and tax bills long before the witching hour on Wednesday. The debate was brief and civil, amendments were postponed and the votes were largely along party lines. They filed out of the Statehouse before 9 p.m.

While there was plenty of rhetoric on both sides — Democrats extolled the virtues of the Big Bill, while Republicans criticized the $48 million tax and fee package — the debate had the tenor of a well-rehearsed operetta. After all, most of the protagonists in leadership have known one another for a decade or more, and the chess moves are all played out. They all know the drill by heart, and the outcome is set ahead of time by virtue of the leadership and composition of the Legislature, which has a roughly two-thirds Democratic majority.

The budget passed 95-48 on second reading, and preliminary votes for the fee and tax bills, (98-46 and 86-59, respectively) were split along similar, mostly partisan lines. Most of the amendments to all three bills were put off for third reading, which will take place today.

Without much fuss, lawmakers gave preliminary approval to an increase in taxes and fees across state funds — transportation, general and special funds — and a $5.77 billion spending package. Last year's general fund budget, as passed by the Legislature and approved by the governor, was $1.47 billion and the growth rate based on that figure is 4.8 percent. The general fund is the pool of money that pays for the core services of state government. The all funds budget, which includes transportation, education Medicaid and state government, is $5.77 billion, an increase of 2.5 percent over the fiscal year 2016 budget after budget adjustment.

And in eight years, the situation hasn't changed. Since the Great Recession, the state's economy has grown slowly and the ongoing budget gap is a by-now overly familiar refrain. What has changed in the past two years is lawmakers' willingness to raise taxes and fees to ensure that programs supporting low-income Vermonters largely remain in tact.

While members of the House Appropriations Committee diligently level-funded item after item in the general government sections of the Big Bill, they didn't squeeze much out of the Medicaid budget, which is the biggest wedge of the pie.

There is a sense that last year's cuts in the growth of state spending went as far as lawmakers were comfortable with. The growth curve of the general fund has been more than 5 percent while state tax receipts have grown about 3 percent year over year. Bending the curve into the 4 percent range has proved difficult.

Party lines are often blurred in the budget debate. Several Republicans on the budget-writing committee, for example, adamantly defended the budget. And two conservative members of the body came to House Appropriations Wednesday with amendments that could lead to major Medicaid spending increases.

When Rep. Maureen Dakin, D-Colchester, proposed an amendment to zero fund Vermont PBS, Rep. Chuck Pearce, R-Richford, made a case to keep what remains of state funding for the public television station. Dakin's amendment was defeated.

Rep. Oliver Olsen, I-Londonderry, asked budget writers to consider an amendment to increase ambulance reimbursements from the Medicaid program by $2.3 million. And Rep. Carolyn Branagan, R-Georgia, presented an amendment to the committee asking for a report on increasing Medicaid funding for home health workers.

Carolyn Branagan

The big victory, as Rep. Mitzi Johnson, D-South Hero, put it, was that this budget has "no one-time funding" from sources that could dry up next year. There are modest increases in funding for the Vermont State Colleges, child care and mental health providers, a $7 million investment in child protection services and a boost in the payment in lieu of taxes program for the city of Montpelier (up by $86,000). The budget also includes a $1.3 million rainy day reserve.

Instead of relying on one-time funds, lawmakers in House Ways and Means increased taxes and fees. Banks will pay a higher franchise tax, securities firms will pay 150 percent more in fees to sell mutual funds in Vermont, fuel dealers will pay 0.25 percent more on the gross receipts tax and large employers will pay a higher employer assessment fee.

Rep. Kurt Wright, R-Burlington, decried the increases.

"At a time when we've heard from Vermonters about the affordability crisis in this state, we're about to pass a bill that increases taxes on Vermonters in many ways," Wright said. "We said we would do better and make the state more affordable, not less affordable."

The employer assessment fee was the revenue provision that caught the most flak on the floor Wednesday. Rep. Janet Ancel, D-Calais, chair of Ways and Means, explained to her colleagues that there are budget issues with Medicaid and the employer assessment goes to directly support state health care programs.

But Rep. Adam Greshin, I-Warren, a member of the House Ways and Means Committee, said the assessment has been described inaccurately as a tax on companies that are not paying for health insurance for workers. He said it is a tax on all businesses, even those that provide health insurance for full-time workers because the assessment applies to employees who have insurance through a spouse, workers who live out of state and part-time employees. Greshin will be proposing an amendment on Thursday that would exempt those workers from the assessment.

"We hear comments that are inaccurate, that this assessment is for employees on Medicaid or who have subsidies on the exchange," Greshin said. "I wish that were all it was, if it were just for employees on Medicaid or the exchange, perhaps it would be credible, but in fact it's not. It's also for employees who are not subsidized and don't even live in Vermont and can't get on the exchange or receive Medicaid. It covers many employee classes."


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