(Host) Senate President Pro Tempore Peter Welch says he’d like to use part of Governor Jim Douglas’ tax equity package to bolster the state’s rainy day budget fund. Douglas has proposed eliminating the 40 percent exemption on capital gains – a move that would raise about $15 million.
The governor wants to use the money to reduce personal income rates. But the plan is stalled in the House because many members of the Republican caucus don’t want to eliminate the capital gains exemption.
Speaking Tuesday night on VPR’s Switchboard program, Senator Welch said eliminating the exemption is good public policy. Welch would like to put the new revenue into the rainy day fund to help the state deal with a number of serious budget issues expected in the 2006 fiscal year:
(Welch) “We know that we’re looking at very substantial deficits next year. We’ll probably make it through this year. The projections on the deficit we’re going to have in our health care access trust fund – just maintaining the level of spending that we have now – is $40 million. So we are looking next year at a situation that’s very dire.”
(Host) House Speaker Walter Freed says he’ll oppose this plan because it will inevitably lead to more government spending:
(Freed) “Even this budget that we passed in the House does have about a four percent increase in the rate of spending in there. And I think that is enough, that should be enough – that has to be enough. I guess what it’s coming to, we can’t live with budgets that are going to go up six or seven percent, that we have to practice some fiscal discipline here.”
(Host) Freed says he’s optimistic that the House Ways and Means Committee will pass a bill that includes the governor’s plan to raise new money from many multi-state corporations. This revenue would then be used to reduce Vermont’s corporate income rate.