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Budget Passes Senate, Lawmakers Concerned about One-Time Fund Use

The Vermont Senate passed the FY 2015 budget 23-5 Tuesday, but there is still work to be done.
MONTPELIER - The Vermont Senate passed the FY 2015 budget 23-5 Tuesday, but there is still work to be done.

The Senate's version of the budget includes increases to the medicaid reimbursement, among other things, and requires $3 million to be raised.

The Senate Finance committee will figure out how to raise that money in the tax bill. State Sen. Tim Ashe (D/P-Chittenden) is the chair of that committee, and says they will raise $700,000 by raising the tax on snuff. The House Ways and Means committee wanted to raise the tax on e-cigarettes, as well as snuff.

Sen. Ashe says the committee has a plan to raise the rest of the money:

"We're looking to create a gently tiered employer assessment to those employers who don't offer health insurance to their employees," Sen. Ashe said. This is a tax on employers that already exists, but will be raised in a tiered fashion to bring in up to $3 million in revenue.

So if it sounds like the budget is balanced, that's true--for this year.

"We cannot continue to fund balanced budgets with one-time funds years after year," said State Rep. Don Turner (R-Milton).

What started as a budget gap upwards of $70 million was filled with a lot of one-time funds, like legal settlements with Vermont Yankee ($5.5 million) and R.J. Reynolds ($8 million), plus millions in federal grants.

"Our concern all along has been that you use this one-time money year after year after year...and then the budget pressures just continue to increase," said Rep. Turner. He suggests bolstering Vermont's economy, which will bring in more cash from existing taxes. That will prevent new taxes from being levied, and balance the budget without the need for one-time funds.

"The problem with using one-time money is you have to make up for it next year," explained Sen. Ashe. He says one-time funds were also used to lower the property tax increase. The tax commissioner recommended a 7-cent increase in the homestead tax, but the House Ways and Means committee lowered that to 4 cents using one-time funds. Senator Ashe says that might result in sticker-shock for homeowners next year.

"We can make people feel a little bit better by lowering their rates, or we can invest money that we used for that one-time rate reduction in system changes that would lower rates looking out into the future," said Sen. Ashe.

The House passed a different version of the budget, and voted Tuesday not to concur with the Senate's budget bill. The bill will go to conference committee, where a compromise will have to be made.

As for the tax bill, the Senate finance committee needs to finish its work and send it to the Senate floor. The tax bill and the budget bill must pass before the end of the session.
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