ILegislative update
by Rep. Gaye Symington

Fiscal choices for the coming year

Now that the Governor has presented his fy2009 budget proposal to the legislature, the work to balance the state's needs with more slowly increasing revenues is underway. There is a lot yet to learn about the budget, but it is clear that we have many difficult choices ahead.

On the expense side of the picture, the budget relies on several challenging assumptions. For one, the budget entirely leaves out any expenditure for holding elections this fall! Somehow, I believe Vermonters are looking forward to the prospect of the coming presidential election and would want ballots printed and election officials on hand. Of larger impact, the proposal raids housing and conservation funds to pay for health care for low income Vermonters.

The budget also relies in part on one-time revenues from a long term lease of the state's lottery to a private firm, using the resulting advance to pay down the overdue bills for school construction. The legislature is very dubious of this proposal for several reasons. Now Vermonters lose enough on the lottery to create $23 million in annual profits for the Education Fund, after paying for all those radio and tv ads. For anyone to make MORE money on the lottery requires Vermonters lose MORE money on it. I don't think it is good public policy to rely more heavily on gambling revenues to support state government.

In his State of the Union address Governor Douglas proposed to close a tax loophole that, in his words, "penalizes working Vermonters." Capital gains earnings are taxed at a lower rate than wages and salaries. In the Governor's words, "what this means is that a working man or woman in Vermont making $50,000 a year pays nearly 50% more tax than someone who does not work and simply lives off … capital gains income in the same amount."

In concept, I agree that the Vermont tax laws should be changed to largely eliminate the tax loophole that treats earned income differently than capital gains income.

However, the Governor proposes to use the resulting $21.4 million of new revenue to decrease income taxes. I think property tax relief is more important.

I have proposed:

- To direct an additional $8 million to town roads and bridges over what has been proposed in the Governor's budget. (The Governor's budget level-funded town roads and cut town highway bridges by 19%)

- To allocate $7 million to pay off the already incurred obligation to local communities for school construction assistance.

- To provide property tax relief for Vermonters whose incomes are just above the current income sensitivity level and to Vermonters who own more than 2 acres.

- To establish a cost containment initiative fund to assist municipalities and schools in making short-term investments that would lead to long term cost containment.

I would also slightly adjust the capital gains proposal itself. The Governor proposes to exempt the first $2,500 of long term investment income and to exempt the capital gains earnings of Vermonters 65 years and older. I agree there should be a flat exemption. But, rather than an an age-based exemption, I prefer an exemption for investments in hard assets based in Vermont such as a small company, herd of cows, or a family owned inn.

All in all, there's lots of work ahead to balance a responsible budget for Vermonters. Please let me know if you have questions or concerns about the budget or other state policy. You can reach me at 899 3324 or gsym@together.net.