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Deal With It: Shumlin and the Legislature Say (Almost) No New Taxes 

Fair Game

When the legislature calls it quits in the coming days, most everybody in Montpelier will be ready to declare victory and go home.

None more so than Gov. Peter Shumlin, who’s spent the past four months locked in battle with fellow Democrats over how much money to raise, how to spend it and who should foot the bill.

That battle came to an end Tuesday afternoon when the second-term gov joined House Speaker Shap Smith (D-Morrisville) and Senate President Pro Tem John Campbell (D-Windsor) in announcing a last-minute deal to break the logjam.

The new plan, spelled out during an impromptu press conference in the governor’s ceremonial office, is to scrub the $1.4 billion budget one last time, trim $10 million from it and adjourn without raising taxes.

Except for that pesky 6-cents-a-gallon gas tax hike they passed late last month!

The deal was greased by a rosy revenue report state economists issued last Friday indicating higher-than-expected income- tax returns for 2012. But it was also motivated by the realization that the three amigos simply couldn’t agree on which taxes to hike. With their rhetoric growing ever more heated, something had to give.

“Between the House and the Senate, they’ve now thought up every single tax they can raise,” Shumlin told reporters as recently as last Thursday. “You know, it’s always tougher for this legislature to take existing money and spend it more wisely than it is for them to turn to taxpayers and say, ‘Hey, we’re just going to dig into your pockets for more loot.’”

With an agreement reached, is it fair to say Vermont’s fiscally conservative, tax-averse governor snatched victory out of the hands of a bunch of spendthrift liberals who’ve never met a tax they didn’t like?

Only if you forget the first three months of the legislative session.

See, long before Shummy was against increasing next year’s budget, he was for it. When he delivered his budget address back in January, he proposed spending $17 million more on childcare subsidies and another $17 million on a slate of energy programs.

“The bottom line is he spent more in his budget proposal than anyone else did,” recalls Lt. Gov. Phil Scott, a Republican.

And while the governor eschewed raising so-called “broad-based” taxes — such as those targeting income, sales, rooms and meals — to pay for that spending, he certainly found other ways to raise the money.

Shummy’s targets? He proposed taking $17 million from the Earned Income Tax Credit, which benefits some 44,000 low-income, working Vermonters. And he sought to impose $17 million in taxes on those who buy “break-open” gambling tickets at clubs and bars.

“His package had $34 million worth of tax increases, basically on people who gamble and the working poor,” Smith said last week, noting that his own chamber proposed $27 million and the Senate just $10 million. “So it’s hard for me to understand how the governor’s package suggests no new taxes.”

But Shumlin’s budget proposal never made it out of the gate.

Sen. Dick Mazza (D-Grand Isle), a Shumlin ally and veteran Senate centrist, says that’s because the governor failed to do his homework and neglected to court lawmakers before unveiling his budget. He likens the situation to former governor Jim Douglas’ ill-fated attempt to privatize the Vermont Lottery back in 2008.

“It just lit a fuse,” Mazza says of the Douglas plan. “He threw it out there basically not knowing where it would land.”

Two weeks after announcing the EITC cut, Shumlin doubled down by going after the welfare state — otherwise known as Vermont’s Reach Up program. Antagonizing liberal legislators who packed the House chamber for his budget address, Shumlin paraphrased Ronald Reagan, saying, “There is no better social program than a good-paying job.”

Says Rep. Chris Pearson (P-Burlington), who heads the House Progressive Caucus: “There was an arrogance about his approach that perhaps set it off on the wrong foot. If nothing else, it surprised people.”

Shumlin’s right-leaning rhetoric may have made political sense for an ambitious governor looking to shed the lefty baggage he picked up during the 2010 Democratic gubernatorial primary. But it may well have cost him his biggest legislative priority this year: that $17 million in childcare subsidies.

Secretary of Human Services Doug Racine, who spent the session fighting for the subsidies, says he doesn’t expect the legislature to provide more than a pittance for the program — a result he calls “a disappointment.” Because the subsidies were to be funded by cutting the popular EITC, Racine says, “It got caught up in the tax debate.”

Clearly both sides share the blame: While the legislature wouldn’t consider trimming the EITC, Shumlin wouldn’t accept any other funding source.

“I think low-income kids and their families are the losers in this discussion, and I think that’s too bad,” Racine says. “In the end, I don’t think we’re going to be making any significant improvements in the lives of low-income children.”

There’s no denying that’s a major setback for Shumlin, who pitched the childcare expansion as the heart of his education-themed inaugural address. But the session wasn’t all bad news for the governor’s team.

While legislators have been cool to Shumlin’s proposed time limits on Reach Up cash benefits, they accepted enough of a compromise to let the governor claim at least a partial victory. And on several lower-profile items on his education agenda — such as providing free lunch to students already eligible for reduced-priced meals — the legislature has been amenable.

Then there are the four social and legal issues Shumlin singled out last November as priorities for the coming session: decriminalizing small amounts of marijuana, granting driving privileges to noncitizens, unionizing childcare workers and letting terminally ill Vermonters end their own lives.

On those, Shumlin appeared to be batting .500 as this column went to press — with the first two cruising toward passage and the last two looking dicey.

“When the legislative session is over, there’s going to be a lot of stuff where people say, ‘Wow, we’ve gotten a lot more than people realized,’” says Shumlin’s secretary of administration, Jeb Spaulding.

In the end, Shumlin may be able to have his cake and eat it, too.

Whether by devious design or happy accident, he can take credit for his valiant fight for expanded childcare subsidies — all without spending a single dime! And with a deal in hand to avoid raising taxes, he’ll surely take credit for that, too.

(Something tells me he won’t go out of his way to mention those $34 million in taxes he initially pitched.)

So where does that leave Smith and Campbell?

Before Tuesday’s deal, the dynamic duo seemed to be benefiting from their intramural skirmishing with the gov. Both earned accolades from their respective caucuses and the Democratic base for standing up to the governor on EITC.

Now that new taxes are off the table, will they and their caucuses breathe a sigh of relief — or will Smith and Campbell look like they got rolled by Shumlin?

Probably a little bit of both.

Heroic as their standoff with Shumlin may have appeared to EITC advocates, the two can’t erase the tough votes their caucuses cast in the lead-up to Tuesday’s deal.

House members are on record upping taxes on incomes and meals — and imposing the sales tax on everything from cigarettes to candy bars. Senate members, meanwhile, are on the hook for voting to raise taxes on satellite television and bottled water — and capping mortgage-interest deductions.

Don’t think Republican opponents and conservative super PACs will forget about those votes — even if those taxes never materialize.

And then there’s the matter of your average Vermonter, who’s already pissed about paying more for gas. Surely he wasn’t glued to Vermont Public Radio’s live stream from the Statehouse, listening for news of a compromise. All he’s been hearing during the last four months of legislative maneuvering and inside baseball is, “Tax, tax, tax.”

“There are many folks out there who think all the taxes are already in effect,” says Mazza, who also runs a general store in Colchester. “People come in and say, ‘How much is the tax on bottled water?’”

Surely this round of jousting is just a prelude of the fights to come over how to pay for Shumlin’s proposed single-payer health care plan.

“I think this should be a warning to the public at large about where they’re willing to go,” says Darcie Johnston, founder of Vermonters for Health Care Freedom and former campaign manager for Shumlin’s 2012 opponent, Randy Brock. “It’s clear they’ll look at any tax that walks.”

Even Smith admits as much.

“We all put different ideas on the table,” he said Tuesday after the deal was struck. “I think what you can say is we all decided that our ideas would wait for another day.”

Media Notes

Two years after joining Vermont Public Radio, reporter Kirk Carapezza is heading back to his native Boston to cover the higher education beat for WGBH.

“It seemed like a perfect fit, especially since I never learned anything in college the first time around,” Carapezza says jokingly.

Carapezza worked out of VPR’s Colchester studio, editing Public Post, the station’s online aggregator of local news, before joining its Statehouse bureau in January. His last day is next Wednesday.

“He’ll definitely be missed, because he brings great energy and a keen ear for storytelling to VPR,” says news director Ross Sneyd.

Carapezza’s not the only one signing off Vermont’s airwaves.

Steve West, Brattleboro’s favorite left-leaning radio personality, will host his last morning show on WKVT-AM on Friday.

After seven years at the mic, West says he chose to switch gears simply because he’s “grown tired of talking.”

Fair enough!

“I’m going to focus on where life gives me joy, where I feel more fully alive and where conflict is not such a seductive medium,” he says.

That, he says, entails concentrating on songwriting and recording, while eking out a living fixing computers, as he did before joining WKVT.

Lastly, who ever said nobody appreciates the media?

Castleton State College announced Tuesday that class of ’95 alumnus and WCAX news anchor Darren Perron will deliver the school’s 2013 commencement address later this month.

Caps off to that!

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About The Author

Paul Heintz

Paul Heintz

Bio:
Paul Heintz is Seven Days' political editor. He writes the weekly column, "Fair Game."

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