Shumlin Says Federal Sequester May Force Tax Re-Evaluation

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Gov. Peter Shumlin says he may have to re-evaluate his opposition to any tax increases if the federal sequestration process continues for any length of time.

It’s estimated the new budget cuts will reduce federal spending in Vermont by roughly 15 million dollars over the next seven months.

Several educational and environmental programs would feel the biggest hit, and up to 1,000 defense related jobs, including 500 civilian positions with the Vermont National Guard, face furloughs in the coming weeks.

Shumlin says he’s worried about the impact that these federal budget cuts will have on the Vermont economy.

"My biggest concern is that it’s going to set us back in a recession," said Shumlin. "It’s also going to send a message to the private sector that you know the one thing business needs is predictability they’re finally seeing some life and this Congress created crisis is going to be another road block in the way to that recovery."

Shumlin says the proposed state budget for next year is very tight and that there’s no money available to backfill these federal cuts.

"So there’s just no way that Vermonters have in their pockets if this thing were allowed to go for any length of time we just don’t have the money to replace federal dollars."

The governor has strongly opposed most efforts to raise taxes this year but he says he might have to re-evaluate this position if the sequestration process drags on.

"If this thing were to go for any length of time we’d have to rethink everything that we’re doing."

Congressman Peter Welch voted against the bill that created the sequestration process.  He’s hopeful that Congress will find a way to end these automatic budget cuts when it considers a bill to reauthorize many federal programs at the end of the month.

"My hope is that this slow motion train wreck, it is going to be tough on the states…that before this gets out of hand March 27th is coming up, that’s our next negotiation for a budget," said Welch. "And my hope is that we can do something reasonable and responsible and unwind what is really a stupid across the board policy."

House leaders were hoping to bring next year’s budget proposal to the floor for a vote in the next 3 weeks but they say this timetable could be delayed if the federal budget cuts remain in place.

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