State Employees Push For Tax Hikes On The Rich

Mar 6, 2015

The state workers union is calling on Gov. Peter Shumlin to raise an additional $30 million in revenues next year. And other groups are joining the union's push for tax increases on the wealthy.

Vermont has a serious budget problem. There’s a $112 million gap between the cost of running government next year, and the amount of revenues coming in to pay for it.

That leaves the Shumlin administration with a choice: Cut costs? Or raise revenues? And the Democratic governor has opted for some of both.

“We have to balance this budget in a balanced way. That means real cuts. That means finding efficiencies … And I recommended a small amount in revenue,” Shumlin said recently.

The union that represents Vermont state workers, however, says Shumlin’s budget plan relies too heavily on cuts, and not enough on revenue. Union leaders have submitted a revenue proposal they say would generate about $30 million next year, by raising taxes on the rich.

“We believe this austerity plan is failing Vermonters miserably, and is hurting our ability to recover from the recession,” says Steve Howard, executive director of the Vermont State Employees Association.

Howard’s organization has more than a passing interest in the fight. Shumlin has proposed about $30 million in service cuts, reductions that include the elimination of dozens of union jobs, most notably at state police dispatch centers, and at a high school for incarcerated students.

Shumlin’s proposal calls for an additional $5 million in cuts to the salaries and benefits of state workers.

Shumlin also called for changes to the tax code that would bring in an additional $15 million or so in tax revenue next year. But Howard says it isn’t enough.

“Before you take money out of the paychecks of snowplow drivers, nursing assistants, custodians and administrative assistants … we believe you have a moral obligation to ask for a greater contribution from a broad-based revenue source paid mostly by the wealthiest Vermonters who have had all the economic gains of the last decade,” Howard says.

The VSEA’s proposal includes a number of revenue mechanisms. The most significant calls for a $3 per night occupancy fee on hotel stays, which would raise about $17 million annually.

“And the fee would be barely noticeable to the skiers and leaf peepers who we welcome to Vermont and who continue to flock to our beautiful state,” says Leslie Matthews, an environmental scientists at the Agency of Natural Resources and chairwoman of the VSEA’s legislative committee.

The VSEA plan also would limit deductions used mostly by wealthy people to lower their tax bills, and increase taxes on investment income.

Opponents of other proposed cuts in Shumlin’s budget are also urging lawmakers to adopt the VSEA’s revenue plan. Christopher Curtis, a staff attorney at Vermont Legal Aid, says the cuts to programs at the Agency of human Services function like tax increases on the poor.

“And in essence what we have are proposals on the table that are a cold-weather tax, in the case of LIHEAP reductions, a disability tax in the case of Reach Up households that have disabled household members,” Curtis says.

Shumlin though has so far been unmoved.

“I would caution us from believing that we can tax our way out of this problem,” Shumlin says.

Shumlin has asked the union to reopen its collective bargaining agreement, so his administration can renegotiate compensation packages. If the union refuses, he says the administration could be forced to layoff up to 450 workers.

The union has so far refused to reopen the contract.