- Associated Press - Saturday, May 16, 2015

MONTPELIER, Vt. (AP) - Vermont lawmakers approved spending plans totaling about $5.5 billion, raised taxes by about $30 million and declared their 2015 session complete Saturday night.

The final gavel came down in the Senate at 10:23 p.m., and in the House at 11:04 p.m., nine hours after Gov. Peter Shumlin and legislative leaders emerged from the governor’s office to announce agreement on the tax bill.

New limits on income tax deductions, applying the state’s 6 percent sales tax to soft drinks for the first time and its 9 percent meals tax to vending machines were the keys to an agreement announced Saturday afternoon.

By shortly after 8 p.m., both chambers of the Legislature, dominated by Shumlin’s fellow Democrats, had approved the deal, the Senate by 18-8 and the House by 78-51.

“Of all the things we did together, this was the most difficult,” Shumlin told lawmakers in remarks closing the session.

Republicans balked. “Taxing our way out of a spending problem, which we’ve done for years, is not responsible fiscal policy,” House Minority Leader Don Turner, R-Milton, told his colleagues.

Rising health care costs and cuts in federal funding more than offset the $30 million in new revenues, resulting in $56 million in what a budget summary distributed to senators called “cuts and funding changes” to state programs.

It was an odd session. It began with the election by lawmakers of Shumlin, who failed to win a majority of the vote in November. In such a circumstance the state Constitution calls for lawmakers to elect the chief executive.

Near the end of the session, the Statehouse was shaken by the arrest of Sen. Norm McAllister, R-Franklin, on sex charges. He has pleaded not guilty. He was absent the last seven days, but rejected calls for his resignation.

The session ended with a bit of a whimper, with more than 50 of the 150 House seats empty during Shumlin’s farewell address.

Lawmakers met Shumlin’s goals laid out in his third inaugural address in January for a bill to streamline school governance and one to address pollution in Lake Champlain and other waters.

“Our rivers, lakes and streams are more than just a part of our everyday life; they help define who we are as Vermonters,” Shumlin said in his farewell remarks to lawmakers. The blue-green algae blooms in Lake Champlain and some other lakes, blamed on phosphorus-laden runoff, “are a living testament to our collective failure.” He said the water quality bill would be “an extraordinary legacy to our children and their children.”

But they did not give the governor his highest-priced agenda item: $90 million in a new payroll tax, mainly to address complaints from doctors, hospitals and other providers that Medicaid has underpaid them for years, forcing them shift costs onto people with commercial insurance.

Both Shumlin and House Speaker Shap Smith acknowledged that the health care agenda remained unfulfilled.

“Every session, there is work that is not completed, and that needs to be continued in future years,” Smith said.

Both the House and Senate had called for nearly $35 million in new general fund revenues, while Shumlin wanted to hold the line at about $15 million. After hours of closed-door talks over recent days, lawmakers got most of what they were looking for.

Most of the money comes from limiting income tax deductions for tax filers who itemize. There would be no limits affecting charitable deductions or catastrophic medical expense deductions, but mortgage interest, moving expenses and others would be capped at 2.5 times the standard deduction: about $15,500 for an individual, $31,000 for couples.

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