The momentum to reform Vermont’s earned income tax credit appeared to run out last week, but Governor Peter Shumlin continues to lobby a small group of state senators. He hopes to strike a deal on his proposal to subsidize child care by redirecting $17 million from the tax credit for poor working Vermonters.
A week after a key House committee narrowly rejected his plan, Shumlin has his work cut out for him in the Senate.
Shumlin has said for months that he has no intention of giving up on his proposal, even though it's been controversial. He's been meeting with a small group of senators at the Statehouse and continues to deliver his basic message.
“Welfare should be temporary not timeless, and we should spend the money on early childhood education so that every kid gets a strong start and parents don’t get punished for taking a job and taking a raise,” Shumlin said on Wednesday. “That’s the system we have now. I want to fix it. Vermonters that I talk to on main street every day want to fix it. I think the Legislature should join us in fixing it.”
That message didn’t resonate in the House. The proposal failed 5-6 on a party-line vote in the House Ways and Means Committee, and House Speaker Shap Smith said he was unlikely to back it.
“I’m not going to foreclose anything, but I have some real concerns about asking lower-income working Vermonters to put more money into the budget when you’re not asking those who make more money to do the same thing,” Smith said shortly after the House passed its budget.
Some fellow Democrats in the Senate say other tax exemptions should be seriously considered first.
Sen. Tim Ashe argues that Shumlin has shown no sign that he’s even listening to criticism, so the Chittenden County senator is not willing to compromise.
“The governor would have to explain why to fund other priorities we should take money out of the low-income workers’ pockets rather than perhaps removing an exemption that allows people to get tax advantages for second or third homes that might not be in Vermont. They might not even be in this country,” Ashe said.
Across the hall from Ashe’s committee room, however, the Senate Appropriations Committee is taking a hard look this month at the governor’s plan.
“I think it’s incumbent upon us to actually look at what the governor has requested,” said Senate President John Campbell. “That doesn’t mean that we have embraced the plan or that something is in the mix.”
Campbell and other state senators, though, appear to be more open to the governor’s proposal than their House counterparts, who passed a $26 million tax package last week that includes a half percent increase on rooms and meals. It also applies the sales tax to soda, candy, bottled water and clothing costing more than $110.
“Vermonters are tapped out with taxes, and I’m not about to put more burden on them unless it’s just absolutely necessary to provide the most basic services,” Campbell said.