Governor Peter Shumlin and Legislative leaders have agreed on a plan to balance next year’s budget without raising new taxes but some changes to the income tax could still happen.
For weeks the Administration and legislative leaders have been negotiating over the size of next year’s budget and the tax package that would be needed to support the budget plan.
Then, at the end of last week, they got the unexpected good news that revenues for April were $16 million higher than expected.
That development helped pave the way for an agreement to reject any new tax increases and to fill a $10 million budget gap by making cuts or savings that the Governor says will be identified in the next few days.
“We have come to an agreement on revenue and budgets that will allow us to leave this session without raising additional taxes,” said Shumlin. “ And instead we’ve asked our Appropriations conferees to reduce the budget or find other ways to get us to $10 million worth of savings.”
House Speaker Shap Smith said the deal was possible because the state is in stronger financial shape than it was when the session started in January.
“I think we have a hopeful future as we are looking forward. And so our view of the world is, we’re ten million dollars apart it solvable it’s not easy work but we can do it,” said Smith. “And we can do it while actually making sure that the rest of the session is very productive.”
Both the Senate Finance committee and the House Ways and Means committee have spent a good part of the session looking at ways to make Vermont’s income tax more equitable.
The question now is if these committees can pursue their goals in a revenue neutral way. Senate Finance chair Tim Ashe says it’s a conversation that’s worth having.
“None of the work that our committee has done is wasted. The equity issues that the Senate voted for remain relevant today just as they were yesterday or they were two weeks ago prior to any evolution of the Legislative process.”
And House Ways and Means chair Janet Ancel thinks making changes to the income tax might be easier if the proposal is revenue neutral and not seen as a way to raise new revenue.
“I think that moving closer to adjusted gross income is a good thing to do from a policy perspective,” said Ancel. “And so if we can find an opportunity to do it I would like to continue to talk about it and see whether we can come to an agreement on what they might look like.”
The two tax committees will also be busy in the final days of the session looking at ways to restrain education costs and they’ll be drafting a plan to help pay for the operations of Vermont’s Health Care Exchange in 2015.