Smith’s Message To Lawmakers: Don’t Raise Taxes

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(Host) House Speaker Shap Smith has given lawmakers their marching orders: don’t hike taxes, even to save social programs from budget cuts.

Smith asked the tax-writing committee in the House on Thursday to stick to the Shumlin Administration’s plan to limit new revenue sources.

VPR’s John Dillon reports:

(Dillon) Smith dropped in on the House Ways and Means Committee and delivered a blunt reminder of the state’s financial situation.

Vermont faces a $170 million budget shortfall. The governor has proposed $44 million in cuts to human services programs. And Smith said the budget needs $30 million in new revenue from an expanded tax on health care providers, including dentists.

Smith’s orders: stick to the administration’s plan.

(Smith) "That is your challenge. The budget does not balance if we do not have the $30 million of new revenue. I can say to you at this point in time that the scope of what the governor has proposed is one that I think is a good direction to go in, or at least is an appropriate direction to go."

(Dillon) Smith is a former member of the Ways and Means Committee. So, he said he realized that members might be looking at other options for raising new revenue, such as with a tax on sugar-sweetened beverages.

He urged them to resist that temptation. Smith said it’s better to wait until the state moves forward with health care reform. He said the soda tax may be a way to get people to stay away from unhealthy products.

(Smith) "I believe that any discussion with regard to the sugar sweetened beverage tax or the soda tax is to a large degree tied to health care and the health of our population."

(Dillon) Smith cautioned against trying to raise income taxes to ease budget shortfalls. And he warned that Vermont needs to reserve its ability to raise new revenue in the future because of potential shortfalls created by reductions in the federal budget. For example, he said a federally funded fuel assistance program for low income could face massive cuts.

(Smith) "To the extent that we are going to be in a place where we have to make up for that difference, I think we have to be cautious in moving from the frame that the governor has put forward, because we may need a different frame in the future."

(Dillon) Smith said his visit to the tax-writing committee was prompted by the need to make progress on the overall state budget.

And he underscored that the additional $30 to $35 million in health care provider taxes are needed to balance next year’s books.

For VPR News, I’m John Dillon in Montpelier.

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