Douglas likely to sign transportation bill, taxes included

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(Host) Although the new Transportation bill includes some tax and fee increases, it’s likely that Governor Jim Douglas will sign the legislation. 

That’s because Douglas says the state would probably have to return more than 70 million dollars in federal stimulus money if new revenue isn’t included in the bill.

VPRs Bob Kinzel reports.

(Kinzel) When Congress passed its massive economic stimulus bill this winter, it included a provision in the legislation that could become a key factor in budget negotiations in Vermont.

That provision requires that a state "maintain" current funding levels in all areas where the state is receiving new stimulus money.

For instance, Congress didn’t want states to cut their own transportation budgets and then use the new federal money to fill in the budget hole.

The 2010 Transportation bill includes more than 70 million dollars in federal stimulus funds for a variety of road and bridge repair projects across Vermont.

The bill is financed, in part, with a two percent sales tax on gasoline at the wholesale level, a three cent per gallon diesel tax and increases in virtually every transportation fee.

While the governor says he doesn’t like the new taxes in the bill, he’s very reluctant to give up 70 million dollars in federal money:

(Douglas) "So the major sources of revenue into the Transportation Fund have not been sustained and that causes a problem in terms of the federal match. So despite my opposition to tax increases, that’s something I have to weigh because we don’t want to give up the federal money."

(Kinzel) And Douglas is also likely to sign the Transportation bill because he says it represents good public policy:

(Douglas) "I think the budget is a good one in many respects. It reduces the transfer to the General Fund which is helpful to keep those revenues for transportation related purposes, it really goes a long way toward addressing the backlog of projects of roads and bridges, it increases our paving budget substantially…and I’m pleased that it sets up a bonding mechanism even though we probably won’t use it for the next year or two."

(Kinzel) The acceptance of federal stimulus money in several parts of the state’s General Fund budget could also play a key role in the upcoming negotiations between the Douglas Administration and Legislative leaders over next year’s budget.

For instance, the Medicaid program is receiving tens of millions of dollars in new federal aid.  This could make it very difficult for the Administration to push for Medicaid cuts without jeopardizing the new federal funds.

For VPR News I’m Bob Kinzel in Montpelier.

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