By JOHN FLOWERS
MIDDLEBURY — Rep. Michael Fisher, D-Lincoln, has promised to file legislation calling for a temporary state income tax increase in order to preserve some of the programs that serve the Vermont’s most needy citizens.
Fisher, speaking at Monday’s Legislative Breakfast at the Middlebury Legion, said he will specifically re-introduce what is now referred to as the “Snelling surcharge.” It was back in 1991 — when the state was also mired in a recession — that then-Gov. Richard Snelling successfully proposed a three-year surcharge on taxpayers’ state income tax liability.
Like Snelling, Fisher is pitching a three-tiered surcharge rate.
People earning $46,700 to $171,950 annually would be face a surcharge of 3 percent based on their state income tax liability. The surcharge goes up to 6 percent for households earning between $171,950 and $307,050; and to 9 percent for households earning more than $307,050.
For example, a household earning $50,000 would owe $30 (3 percent) for each $1,000 of state tax liability.
Fisher estimates the tax would raise around $40 million per year during each of the three years it is on the books. He would propose that half of each year’s revenues ($20 million) be used to replenish Vermont’s “rainy day fund,” or emergency savings account. The balance, he said, should be used to bankroll various human services programs — such as state subsidies for prescription drugs and mental health counseling — that are currently on the chopping block as Vermont lawmakers address a revenue shortfall that could hit $190 million next year.
“Richard Snelling gave us a starting place. We need to be talking about how we’re going to be raising some revenue,” said Fisher, vice chairman of the House Human Services Committee.
“(Snelling) provided some real leadership that I think we need today.”
Most local lawmakers at Monday’s breakfast agreed that new revenues should be considered — along with spending cuts and tapping into the state’s rainy day fund — as part of the plan to balance the state’s budgetary ship. It is a ship that continues to list for not only state government but many parts of the private sector. Rep. Christopher Bray, D-New Haven, noted the recent dip in milk prices that again has dairy farmers on the ropes.
“We’re heading into another trough in milk prices,” said Bray, a member of the House Agriculture Committee and the Vermont Milk Commission. “It is a rollercoaster ride, and we are headed to the bottom right now.”
Bray pointed to recent dairy forecasts indicating farmers, during calendar year 2009, will lose 50 cents per gallon on the milk they produce.
“Vermont farmers will be $100 million poorer by the end of the calendar year,” said Bray.
Sen. Harold Giard, D-Bridport, is vice chairman of the Senate Agriculture Committee and a former farmer. He said Addison County farmers could see a $32 million hit from lower milk prices, with a total impact of $64 million on the local economy, when once includes potential losses for ag-related businesses.
Fisher will face political resistance in his bid to boost taxes.
Gov. James Douglas, a Middlebury Republican, has rejected the notion of raising taxes to raise revenues during the current recession. Douglas has instead emphasized budget cuts, having already announced his desire to trim upwards of 600 positions from state government.
He has also recommended the level-funding of per-pupil spending on education and transferring the state’s teacher retirement contribution from the general fund to the education fund, moves that opponents argue will merely place more of a burden to the local property taxpayer.
Rep. Betty Nuovo, D-Middlebury, contended that cutting the number of state workers could backfire financially. She said laying off workers puts more stress on the very services — food stamps, subsidized health care and unemployment benefits — that are currently under stress.
“We’re going to find out just how much it costs to let people go,” Nuovo said.
Sen. Claire Ayer, D-Weybridge, is reviewing the proposed state job cuts as part of her work on the Senate Government Operations Committee. While the Douglas administration has recommended that the cuts be spread throughout state government, Ayer said it may not be prudent to spread the pain evenly.
“We think the emphasis ought to be on services,” Ayer said. “What services do (the to-be-laid-off employees) offer that are more necessary now than they were before?”
Ayer noted an initial round of state job cuts announced late last year has already produced some unforeseen financial impacts.
“There was a 200-position rescission, and we have had to hire people back as contractors at more money than we paid the employees,” Ayer said. “We’re asking the administration to talk to us about that and how does that balance out.”
Lawmakers acknowledged that some financial help may be on the way from Washington, D.C. The U.S. Senate is currently considering an economic stimulus package that could funnel $1.2 billion in assistance into Vermont over the next two years. Some of that money could help mitigate Vermont’s budget crisis, and also fuel investments in the state’s road, bridges, schools and health care system.
Rep. Diane Lanpher, D-Vergennes, said the federal stimulus money has been a keen topic of discussion on the House Transportation Committee, of which she is a member.
“Soon, we are possibly going to be looking at an influx of money into the state of Vermont that we need to be prepared to use,” Lanpher said.
With that in mind, she said it will be important for Vermont to have transportation projects lined up for funding and to ensure that the state does not lay off people who will be needed to manage those projects.
“When we are looking at 660 job cuts, who in Vermont is going to move these projects along?” said Lanpher, who noted the condition of Vermont’s roads and bridges has been ranked the sixth worse in the nation.
Rep. Willem Jewett, D-Ripton, said he is concerned about how the state budget cuts are affecting the state’s judiciary. Vermont has already cut around $1 million out of its judiciary budget and reduced hours at its courthouses, according to Jewett.
A member of the House Judiciary Committee, Jewett said it appears the courts are being targeted for another $1 million in reductions.
“I am not sure we are having the Constitutional access to justice that we are supposed to have if we start closing down the courts,” Jewett said.
Rep. David Sharpe, D-Bristol, said the sagging economy is not an excuse for the state to cut off key services.
“When the economy shrinks, it is no time for government to shrink from its responsibilities,” said Sharpe, a member of the House Ways and Means Committee.