Before the legislative session ends, lawmakers are expected to consider two important tax bills that deal with education spending and the financing of the state’s health care Exchange.
Big increases in school spending are expected over the next two years and lawmakers are looking at ways to encourage towns to limit their budget growth.
Currently, if a town spends 25 percent above the statewide average, a sizeable penalty is imposed. Under a bill passed by the House, this threshold would be reduced to 21 percent over several years.
Tim Ashe is the chair of the Senate Finance committee. He supports the approach taken by the House but he wants to broaden the scope of the bill:
“The key if it’s really intended to restrain spending it should apply to more school districts,” said Ashe. “And the House proposal didn’t quite capture the number of districts that I think would make noticeable impact on school spending.”
Ashe says he has a plan to achieve his goal.
“There would be a smaller penalty for lesser amounts over the average spending,” said Ashe. “And then that penalty would ramp up as the spending ramped up.”
Lawmakers are also looking at ways to raise roughly 18 million dollars to pay for the operations of the state’s health care Exchange.
When the Legislature passed the Catamount Health Care program, the plan included an assessment on employers that didn’t offer insurance coverage to their employees.
Although Catamount is being phased out when the new Exchange goes into place, Ashe wants to keep the employer assessment:
“We have an existing employer assessment it more or less directs the costs of those employers who are not providing coverage,” said Ashe. “So it seems to be the universe of people paying in seems to be appropriate for the purposes of the Exchange.”
The House Health Care committee rejected the employer assessment and instead backed a tax on sugar sweetened beverages but their plan did not survive. Committee chair Michael Fisher says the employer assessment might be a viable option.
“I would like to move to a place beyond asking employers to take on that responsibility and instead fund health care in a much more I think efficient and fair way,” said Fisher. “But in the time being while we have to comply with the Affordable care Act we’re still in that same dynamic.”
Governor Peter Shumlin proposed a 1 percent tax on all health care claims to pay for the operations of the Exchange. Because the plan drew strong opposition in both the House and Senate, Shumlin says he’s flexible on the final funding source.
“I think it’s smart that Vermont is running its own Exchange and helpful that we’re drawing down hundreds of millions of federal dollars to help us implement that Exchange,” said Shumlin. “I don’t much care about how we get funded as long as we get it funded.”
Both tax bills are expected to be debated on the Senate floor in the next few days.
