By Louis Porter Vermont Press Bureau
MONTPELIER – The Vermont Senate gave initial approval to its version of the state budget Monday.
The budget for fiscal year 2011 would spend a total of about $4.7 billion when state and federal money is included and plugs several large holes, some of which became apparent only after the House voted to accept its version of the spending plan.
The two budgets – the Senate is likely to give final approval to its version today– vary in several key areas and will have to be reconciled.
During a busy day, the Senate also gave final approval to its version of the annual tax bill. After a vigorous floor debate that split along unusual lines, the Senate included an assets test that would limit who can get a break on school property taxes. The test is designed to prevent residents with more than $1 million in holdings from being eligible for income sensitivity on school property taxes, the system that allows a majority of Vermonters to pay their property taxes based on their earnings, not the value of their homes.
One of the main differences between the House and Senate versions of the state budget is how to handle expected, but not yet arrived, federal health insurance money.
The House planned on socking away that increase, estimated at more than $60 million, in the Human Services Caseload Reserve, a backup account. The Senate, on the other hand, would put some of the money into that fund to use to draw down federal funding. But the senators would also spend some of the expected money to help hospitals, to improve state information technology systems, and to build 15 new secure mental health beds in Waterbury, as well as for other needs.
Sen. Susan Bartlett, D-Lamoille, the top budget writer for the Senate, said that although Gov. James Douglas, the House and the Senate all have their own versions of the state spending plan, everyone is aiming for the same thing.
“We have all made structural changes,” she said. “We have just made different choices.”
Much of the debate Monday in the Senate was about the “Challenges for Change” government efficiency measure expected to save roughly $38 million, which is not yet before the full Senate. The House version of that measure saved roughly $20 million of the $38 million target, which means the administration may have a tremendous amount of budgeting power to make the remaining cuts, some legislators worried.
“We may be walking out of here with a $20 million hole in the budget,” said Sen. Doug Racine, D-Chittenden. “That is a great deal of authority for the legislative branch to cede to the executive branch. After all of our deliberations somebody else is going to figure out how to balance this budget.”
But supporters of the budget bill said that work would be completed before the end of the legislative session.
Sen. Richard Sears, D-Bennington, a member of the Appropriations Committee, said to accuse his committee of passing a budget that is out of balance is unfair.
“The committee made some really tough decisions,” he said. “I don’t want to leave an impression that we didn’t do what we think is a balanced budget.”
He noted the financial situation of the state changes constantly.
The second half of the Senate’s day Monday was about those good and bad pieces of news which make up the revenue side of the ledger.
Two Democratic senators who have both recently made their incomes public as part of their campaigns for the governor’s office, Senate President Pro Tem Peter Shumlin, D-Windham, and Racine, both talked about that experience but came to different conclusions about what was being called “the millionaires’ tax” by the end of the day.
Under current income sensitivity rules, anyone earning less than $90,000 annually is eligible for some level of reduction in property taxes, without consideration of their assets – for example a $2 million home. The Senate proposal would set a $1 million cap on assets.
Shumlin, one of the sponsors of the provision, said he had “met with some success” during his career and argued that he did not object to paying taxes on the nearly $1 million in income he earned last year. “If you have a million dollars (in assets) you ought to pay your property taxes.”
He was joined by the majority of the Senate, which approved the amendment 21-5 despite the opposition of the Senate Finance Committee. But Racine, co-owner of a family owned car dealership in Chittenden County, saw things differently. The committee’s opposition after considering such a provision was based both on the difficulty of enforcing the provision and the difficulty in putting a value on a small business, such as a car dealership. The provision is unwieldy, he said.
“There is no way to enforce it or to monitor it,” said Racine, although he said the idea of a means test is a good one. “If we were serious about this it should have been done seriously.” Racine ultimately voted against the entire tax bill because of the property tax provisions.
Other members of the Senate also disagreed with how the measure was written, saying it was incomplete and did not consider how the state tax agency would enforce it.
But the majority, including Sen. Randy Brock, R-Franklin, another co-sponsor of the amendment said that was a poor argument against the idea.
“With any piece of legislation there are rules to be written,” he said.
This article appeared in the Rutland Herald
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