Divided On Fiscal Policy, House Advances Tax And Fees Bills

Two votes in the Vermont House on Wednesday afternoon highlighted the partisan divide in Montpelier over fiscal policy. 

This year’s fee bill will raise about $24 million dollars a year in new money while a tax bill will raise an additional $9.4 million in ongoing annual revenue. 

Democratic leaders say the government needs the money to support vulnerable residents, especially those in need of subsidized health care. Republicans say it’s the latest misstep by tax-and-spend liberals. 

That debate played out on the House floor Wednesday afternoon as Burlington Rep. Kurt Wright, a Republican, warned colleagues against the wrath they’ll incur from constituents fed up with new taxes. 

“What Vermonters want to know is … what’s the impact on jobs?” Wright says. “What are the impacts on the jobs they have to pay? And what are the impacts on the general affordability of this state? We’ve nickel and dimed them over and over and over again. Please defeat this bill.”

Ultimately, the bills in question both moved forward by comfortable margins and largely along party lines. 

The bulk of the revenue comes from an increase in mutual fund licensing fees, which will bring in more than $20 million annually. But some of the smaller items generated the most controversy. 

Rep. Heidi Scheuermann, a Republican from Stowe, says a plan to increase the assessment on employers whose workers don’t get company health benefits is of particular concern. The increase will generate about $5 million a year.

Scheuermann says businesses are in effect being punished for following the advice from administration officials in recent years. The Shumlin administration has encouraged companies to de-couple insurance from employment since their workers will likely be eligible for generous subsidies under the federal Affordable Care Act if they do so.

“There are many of us employers who did, in fact, drop our health insurance coverage for a number of reasons and are offering other things instead, because it is more beneficial for both of us, employers and employees, to do that,” Scheuermann said.

Burlington Rep. Chris Pearson, the House Progressive Party leader, says employers’ financial obligation to health care wasn’t supposed to cease when they dropped those plans. And Pearson says the reason the state needs to raise revenues in the first place stems largely from growing Medicaid subsidies for workers whose employers don’t pay a livable wage.

Pearson singled out Wal-Mart as a particularly egregious offender, and said it’s not the so-called employer assessment that’s unfair, but the low wages paid by some Vermont employers.

“That is unfair to that employee, and it is particularly unfair to the rest of the taxpayers of this state who indeed contribute and pay for Medicaid,” Pearson said.

An increase in the franchise tax on five of the state’s largest banks will generate about $2 million in new revenue. But Burlington Rep. Wright says the economic costs will far outweigh the fiscal benefits.

During the debate, he quoted from an email from the president of the Vermont Banking Association in which Chris D’Elia says the proposal could lead to job cuts or positions moved to other states.

“Taking $2.1 million, which is already being used efficiently and effectively out of the system, out of the economy, will have an impact,” D’Elia’s email said, according to Wright.

Gov. Peter Shumlin says the state’s commitment to lowering the number of residents without health insurance has seen it newly enroll thousands of residents into Medicaid. Shumlin says that commitment is a worthy one. But he says it comes at a cost, and that policymakers now need to find a way to pay for it.

“Until we figure out ways to pay for Medicaid, we’re going to continue to struggle with budgets,” Shumlin said.

The fee and tax bills go up for final approval Thursday.