Douglas and Legislature headed for showdown

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(Host) The Legislature and Governor Jim Douglas are now headed toward a direct confrontation over health care reform legislation.

On Thursday Democrats offered Douglas three different financing options and the governor rejected all three. The governor then called on lawmakers to adjourn as soon as possible.

VPR’s Bob Kinzel reports:

(Kinzel) The disagreement between the Governor and the Democrats hinges on one key issue: should companies that don’t provide health benefits to their employees be required to make a financial contribution to help support the state’s health care system?

The Democrats argue the answer is “yes” and they want to impose a three percent payroll tax on these companies to help finance a package of primary and preventive care benefits for uninsured Vermonters.

The governor is adamantly opposed to a payroll tax because he feels it will cripple the state economy and cause businesses to leave Vermont. Instead he wants to tax all health insurance premiums.

In a final bid to reach a compromise, the Democrats offered Douglas three financing options and they said they would support the one he picked.

Each option included a variation of the payroll tax and other tax possibilities. Senate president Peter Welch:

(Welch) “We’re going to make that move towards universal coverage or we’re not. We’re going to make that move towards universal payment responsibility or we’re not. Now all of us know that we’ve worked hard with Jim Douglas. All of us know that we like Jim Douglas. But Jim Douglas has got to decide if he’s going to do the right thing or he’s going to do nothing. And Vermonters will be the ones to benefit or Vermonters will be the ones to suffer.”

(Kinzel) Douglas rejected all three options because each one contains a variation of the payroll tax.

(Douglas) “I’ve made it abundantly clear the tax measures that are being offered by the conferees are unacceptable to me. Simply put, their new taxes would hurt the people we are trying to help. Their new government programs would add to our mounting health care deficits over time. Their attempt at meaningful health care reform would fall flat. And our promise to the people of Vermont would become just rhetoric”

(Kinzel) Democratic leaders say they’ll now proceed with a plan to levy a three percent payroll tax with a provision to help lessen the burden on small businesses. The plan also calls for 1.5 percent income tax surcharge for the employees of these businesses. There’s little doubt that Douglas will veto the bill and that the Senate will vote to override the veto. The outcome in the House is less certain. If Republicans hold together, it will be very difficult for the Democrats to override a veto.

If the House sustains the veto, lawmakers are then expected to include many of bill’s cost containment measures in next year’s state budget.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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