MONTPELIER – The Vermont Senate gave initial approval to its version of the state budget Monday.

The budget for fiscal year 2011 would spend a total of about $4.7 billion when state and federal money is included and plugs several large holes, some of which became apparent only after the House voted to accept its version of the spending plan.

The two budgets – the Senate is likely to give final approval to its version today– vary in several key areas and will have to be reconciled.

During a busy day, the Senate also gave final approval to its version of the annual tax bill. After a vigorous floor debate that split along unusual lines, the Senate included an assets test that would limit who can get a break on school property taxes. The test is designed to prevent residents with more than $1 million in holdings from being eligible for income sensitivity on school property taxes, the system that allows a majority of Vermonters to pay their property taxes based on their earnings, not the value of their homes.

One of the main differences between the House and Senate versions of the state budget is how to handle expected, but not yet arrived, federal health insurance money.

The House planned on socking away that increase, estimated at more than $60 million, in the Human Services Caseload Reserve, a backup account. The Senate, on the other hand, would put some of the money into that fund to use to draw down federal funding. But the senators would also spend some of the expected money to help hospitals, to improve state information technology systems, and to build 15 new secure mental health beds in Waterbury, as well as for other needs.

Sen. Susan Bartlett, D-Lamoille, the top budget writer for the Senate, said that although Gov. James Douglas, the House and the Senate all have their own versions of the state spending plan, everyone is aiming for the same thing.

“We have all made structural changes,” she said. “We have just made different choices.”

Much of the debate Monday in the Senate was about the “Challenges for Change” government efficiency measure expected to save roughly $38 million, which is not yet before the full Senate. The House version of that measure saved roughly $20 million of the $38 million target, which means the administration may have a tremendous amount of budgeting power to make the remaining cuts, some legislators worried.

“We may be walking out of here with a $20 million hole in the budget,” said Sen. Doug Racine, D-Chittenden. “That is a great deal of authority for the legislative branch to cede to the executive branch. After all of our deliberations somebody else is going to figure out how to balance this budget.”

But supporters of the budget bill said that work would be completed before the end of the legislative session.

Sen. Richard Sears, D-Bennington, a member of the Appropriations Committee, said to accuse his committee of passing a budget that is out of balance is unfair.

“The committee made some really tough decisions,” he said. “I don’t want to leave an impression that we didn’t do what we think is a balanced budget.”

He noted the financial situation of the state changes constantly.

The second half of the Senate’s day Monday was about those good and bad pieces of news which make up the revenue side of the ledger.

Two Democratic senators who have both recently made their incomes public as part of their campaigns for the governor’s office, Senate President Pro Tem Peter Shumlin, D-Windham, and Racine, both talked about that experience but came to different conclusions about what was being called “the millionaires’ tax” by the end of the day.

Under current income sensitivity rules, anyone earning less than $90,000 annually is eligible for some level of reduction in property taxes, without consideration of their assets – for example a $2 million home. The Senate proposal would set a $1 million cap on assets.

Shumlin, one of the sponsors of the provision, said he had “met with some success” during his career and argued that he did not object to paying taxes on the nearly $1 million in income he earned last year. “If you have a million dollars (in assets) you ought to pay your property taxes.”

He was joined by the majority of the Senate, which approved the amendment 21-5 despite the opposition of the Senate Finance Committee. But Racine, co-owner of a family owned car dealership in Chittenden County, saw things differently. The committee’s opposition after considering such a provision was based both on the difficulty of enforcing the provision and the difficulty in putting a value on a small business, such as a car dealership. The provision is unwieldy, he said.

“There is no way to enforce it or to monitor it,” said Racine, although he said the idea of a means test is a good one. “If we were serious about this it should have been done seriously.” Racine ultimately voted against the entire tax bill because of the property tax provisions.

Other members of the Senate also disagreed with how the measure was written, saying it was incomplete and did not consider how the state tax agency would enforce it.

But the majority, including Sen. Randy Brock, R-Franklin, another co-sponsor of the amendment said that was a poor argument against the idea.

“With any piece of legislation there are rules to be written,” he said.

This article appeared in the Rutland Herald

The candidates will appear at a candidate forum at the Barre Town Middle and Elementary school where all the questions will be asked by seventh- and eighth-graders.

The forum will feature appearances by Democrats Peter Shumlin, Susan Bartlett, Matt Dunne and Doug Racine.

Democrat Deb Markowitz and Republican Lt. Gov. Brian Dubie both said they had previous commitments and will not attend.

Organizers say non-major party candidates were not invited. The event begins at 6:30 p.m

This article appeared in the Brattleboro Reformer

MONTPELIER — The Flynn Center in Burlington hopes the Legislature will help resolve a dispute it and potentially other nonprofit entertainment organizations have with the state Department of Taxes over when they have to pay sales tax on income from ticket sales.

The Senate amended a tax bill Monday to provide a retroactive remedy that could spare the Flynn from having to pay $190,000 in back taxes — despite objection by the Douglas administration.

It was one of two last-minute changes made to pending tax legislation before senators gave the bill final approval by a vote of 24-2.

The other amendment supplemented a provision already in the bill that tries to prevent wealthy property owners from paying lower school taxes because some of their income and assets don’t count in determining their eligibility for the state’s tax adjustment program. Monday’s addition would require a declaration of net worth and disqualify households with net worth greater than $1 million.

Senate President Pro Tempore Peter Shumlin, D-Windham, stepped down from presiding over the Senate debate to offer and argue for both changes.

Shumlin said the Flynn’s tax problem came to his attention late last week. He offered an amendment he said would serve as a “placeholder so we can try to resolve this question.”

While the House and Senate negotiate the differences in their versions of the tax bill, he said the Senate Finance Committee would have time to look into the dispute over the tax on ticket sales.

Finance Chairwoman Ann Cummings, D-Washington, warned lawmakers that the issue was complex and the proposed remedy might be costly. “If it looks like we can do something and not cost the state a lot of money, we’ll do it.”

Flynn’s situation

The controversy over taxes on tickets goes back to a Grateful Dead concert in Highgate the early 1990s, said Andrea Rogers, the Flynn’s executive director. The Flynn sold the tickets.

This combination of a profit-making venture and a nonprofit theater prompted tax questions, a new law and Rogers said she believed a resolution of the question of when taxes were due. She understood that nonprofit organizations would be exempt from paying tax on tickets when they “presented” performers. She said the Flynn never partners with performers, but takes all the risk. It does pay bonuses if ticket sales achieve certain targets spelled out in contracts, she said.

Molly Bachman, an attorney for the tax department, said the 1990s law did tighten up the rules and made clear that when nonprofit organizations jointly put on entertainment with profit-making organizations such as bands, they have to collect and pay the tax.

“That is what we enforce,” Bachman said. She wouldn’t comment on the Flynn’s situation, but noted, “A lot of nonprofits do it the right way.”

Rogers said the Flynn ran afoul of the tax department as a result of an audit begun last fall. In March, the tax department presented the Flynn with a bill for $190,000 in taxes due since 2006.

Rogers said she turned to the Legislature in hopes of resolving the dispute faster, without protracted legal appeals, because the theater is booking new acts all the time. “It is important to us to get this clarified.”

Senators agreed to the placeholder amendment on a voice vote.

Millionaires

Shumlin’s millionaire amendment also came up without much review by the Senate’s budget-writing committee.

“This seems like a very good idea and a simple idea,” Cummings said, “but it needs to be worked on.” She noted that the tax department has no means to judge net worth.

Sen. Doug Racine, D-Chittenden, noted the proposal would “play well on Main Street.” Shumlin and Racine are Democratic gubernatorial hopefuls.

Still Racine worried the proposal wasn’t workable. How would the tax department decide if taxpayers filed accurately about their net worth?

“We use estimates of net worth all the time,” said Sen. Randy Brock, R-Franklin, who had joined Shumlin in sponsoring the amendment. He said people seeking mortgages or college loans have to list net worth.

Sen. Robert Starr, D-Essex/Orleans, questioned why this wasn’t an easy amendment to support. “We are sitting here arguing about whether we should give tax dollars to millionaires,” he said, explaining that the Education Fund makes up the difference between property taxes based on assessed value and payments based on a household’s income.

Cummings objected to Starr’s dismissal of the concerns she and Racine had raised. “This has been a debate over process and whether this amendment is ready for prime time.”

Senators voted 21-5 to add the millionaire amendment despite Cummings’ objection.

This article appeared in the Burlington Free Press

MONTPELIER — The Flynn Center in Burlington hopes the Legislature will help resolve a dispute it and potentially other nonprofit entertainment organizations have with the state Department of Taxes over when they have to pay sales tax on income from ticket sales.

The Senate amended a tax bill Monday to provide a retroactive remedy that could spare the Flynn from having to pay $190,000 in back taxes — despite objection by the Douglas administration.

It was one of two last-minute changes made to pending tax legislation before senators gave the bill final approval by a vote of 24-2.

The other amendment supplemented a provision already in the bill that tries to prevent wealthy property owners from paying lower school taxes because some of their income and assets don’t count in determining their eligibility for the state’s tax adjustment program. Monday’s addition would require a declaration of net worth and disqualify households with net worth greater than $1 million.

Senate President Pro Tempore Peter Shumlin, D-Windham, stepped down from presiding over the Senate debate to offer and argue for both changes.

Shumlin said the Flynn’s tax problem came to his attention late last week. He offered an amendment he said would serve as a “placeholder so we can try to resolve this question.”

While the House and Senate negotiate the differences in their versions of the tax bill, he said the Senate Finance Committee would have time to look into the dispute over the tax on ticket sales.

Finance Chairwoman Ann Cummings, D-Washington, warned lawmakers that the issue was complex and the proposed remedy might be costly. “If it looks like we can do something and not cost the state a lot of money, we’ll do it.”

Flynn’s situation

The controversy over taxes on tickets goes back to a Grateful Dead concert in Highgate the early 1990s, said Andrea Rogers, the Flynn’s executive director. The Flynn sold the tickets.

This combination of a profit-making venture and a nonprofit theater prompted tax questions, a new law and Rogers said she believed a resolution of the question of when taxes were due. She understood that nonprofit organizations would be exempt from paying tax on tickets when they “presented” performers. She said the Flynn never partners with performers, but takes all the risk. It does pay bonuses if ticket sales achieve certain targets spelled out in contracts, she said.

Molly Bachman, an attorney for the tax department, said the 1990s law did tighten up the rules and made clear that when nonprofit organizations jointly put on entertainment with profit-making organizations such as bands, they have to collect and pay the tax.

“That is what we enforce,” Bachman said. She wouldn’t comment on the Flynn’s situation, but noted, “A lot of nonprofits do it the right way.”

Rogers said the Flynn ran afoul of the tax department as a result of an audit begun last fall. In March, the tax department presented the Flynn with a bill for $190,000 in taxes due since 2006.

Rogers said she turned to the Legislature in hopes of resolving the dispute faster, without protracted legal appeals, because the theater is booking new acts all the time. “It is important to us to get this clarified.”

Senators agreed to the placeholder amendment on a voice vote.

Millionaires

Shumlin’s millionaire amendment also came up without much review by the Senate’s budget-writing committee.

“This seems like a very good idea and a simple idea,” Cummings said, “but it needs to be worked on.” She noted that the tax department has no means to judge net worth.

Sen. Doug Racine, D-Chittenden, noted the proposal would “play well on Main Street.” Shumlin and Racine are Democratic gubernatorial hopefuls.

Still Racine worried the proposal wasn’t workable. How would the tax department decide if taxpayers filed accurately about their net worth?

“We use estimates of net worth all the time,” said Sen. Randy Brock, R-Franklin, who had joined Shumlin in sponsoring the amendment. He said people seeking mortgages or college loans have to list net worth.

Sen. Robert Starr, D-Essex/Orleans, questioned why this wasn’t an easy amendment to support. “We are sitting here arguing about whether we should give tax dollars to millionaires,” he said, explaining that the Education Fund makes up the difference between property taxes based on assessed value and payments based on a household’s income.

Cummings objected to Starr’s dismissal of the concerns she and Racine had raised. “This has been a debate over process and whether this amendment is ready for prime time.”

Senators voted 21-5 to add the millionaire amendment despite Cummings’ objection.

This article appeared in the Burlington Free Press

By Ellen Oxfeld

I agree with the gist of your editorial “Health care study bill is logical step forward” (April 11) that supporting a study of different options is a small but rational step forward to achieving universal access to health care in Vermont in a fiscally responsible way.

However, the editorial needs to take a broader look in crediting the many parties that made the passage of this legislation possible. For instance, you assert that leaders in both houses dismissed chances of passing a health care reform bill this year. In fact, Senate President Pro Tempore Peter Shumlin was an early supporter not only of the bill that passed, but of the single-payer concept. And, he was one of many Senate co-sponsors of the original S.88, which was a single-payer bill. In addition, this spring, Sen. Shumlin invited professor William Hsiao of Harvard University, who designed the single-payer system in Taiwan, to testify before a joint session of the Health and Senate Health Care committees. Surely, professor Hsiao’s testimony about designing universal health care systems (to a standing-room-only crowd), was also an impetus for the final bill’s passage. I think it is also important to note that the original S.88 was hardly a fringe bill even at its earliest inception, but had the support of nearly half of the Senate (14 senators overall).

Similarly, the Health Care is a Human Right campaign deserves enormous credit for holding meetings across the state this year on health care. But, in addition, many other groups sponsored health care forums across the state as well, including forums initiated by local community groups in towns such as Middlebury, White River Junction, Burlington, Norwich, Montpelier and Ripton. We should also not forget the strong representation of single-payer supporters in all three health care meetings held by Sen. Bernie Sanders last summer.

The push for universal health care, and particularly universal publicly funded health care or single-payer, is coming from a diverse group of people and legislators. This indicates that support for this concept in Vermont is broad and deep and goes well beyond a single constituency or interest group.

Ellen Oxfeld lives in Middlebury.

This Op-Ed appeared in the Burlington Free Press

(Host) Vermont could be forced to borrow as much as $200 million this year to keep its unemployment insurance fund solvent.

But Senate President Peter Shumlin says he believes a compromise will be found with the Douglas administration to shore up the fund.

VPR’s Bob Kinzel reports.

(Kinzel) The state’s unemployment fund has been hit hard in the past two years because of layoffs caused by the recession. There’s no money left in the fund and the state is borrowing $4 million a week from the federal government in order to meet its obligation to pay out unemployment benefits.

Senate President Peter Shumlin, House Speaker Shap Smith and Governor Jim Douglas have been meeting to try to hammer out a compromise.

Speaking on VPR’s Vermont Edition, Shumlin said he’s optimistic that an agreement can be found but he says it’s not going to be popular:

(Shumlin) “The challenge is that nobody’s going to like the solution, so politicians don’t like to vote on issues where there’s only pain to go around. What we’re trying to find is a balance between not overburdening our businesses that are struggling in these economic times and still maintaining the benefits for the unemployed…So this is the line that we’ve drawn – we will not lower the maximum weekly benefit from $425 a week, we just won’t do it.”

(Kinzel) But Shumlin says there are ways to reduce spending on overall benefits by imposing a waiting period or adjusting the formula that’s used to determine benefit levels:

(Shumlin) “There are ways that one could “reduce benefits” without reducing the $425 a week and we’re willing to look at some of them but obviously the balance needs to be found.”

Shumlin says increasing the income level on which employers pay unemployment taxes should be part of the package. He says these levels were raised slightly last year but he notes that there hasn’t been a major increase since the early 1980s.

But he says he won’t support a plan to include an income tax surcharge on all employees as part of the agreement:

(Shumlin) “It basically says we’re going to impose a tax on every working Vermonter for the problems that have been created because business didn’t have their premiums increase for 30 years…Many of us should have gone ‘isn’t it funny that our rates haven’t changed in 30 years’. And yet obviously inflation does and benefits go up, so we all made a huge mistake. We’ve got to fix it together but we shouldn’t do it on the backs of all Vermonters.”

(Kinzel) Shumlin says he hopes to have a final agreement in place in the next week or two.

For VPR News, I’m Bob Kinzel in Montpelier.

This story appeared on Vermont Public Radio on April 23, 2010

BENNINGTON – Four of the five Democrats seeking their party’s gubernatorial nomination shared similar visions for Vermont’s future Thursday night in a public forum that focused on differences with the current Republican administration.

State Sens. Peter Shumlin of Putney and Doug Racine of Richmond were joined at the forum by Secretary of State Deborah Markowitz and former state Sen. Matt Dunne. Sen. Susan Bartlett did not attend.

The four Democrats shared similar views on a range of topics, but the theme was clear: All four intend to run the state much differently than retiring Republican Gov. James Douglas and Republican Lt. Gov. Brian Dubie, who is hoping to replace Douglas.

Markowitz, in her sixth term as secretary of state, said Douglas and Dubie, who are now serving in their fourth term together, are only now looking at what the state is getting for the money it spends. “For the first time (Douglas) and the Legislature are saying we are going to look at outcomes,” she said. Markowitz said her experience running the secretary of state’s office will help her better manage the state’s budget. “We need to get our state working again and what I bring is different. I bring the practical skills of running government,” she said.

Racine said his business background will benefit the governor’s office. “I believe that the governor has to be a CEO,” he said. “You don’t get over-exuberant when times are good and you don’t get down in the dumps and preach doom and gloom when times are bad,” he said of his business philosophy.

The next governor must also plan more for the state’s future than the current administration does, Racine said. We’ve had an administration that sort of lets things happen to Vermont,” he said. “We need to control our own destiny and not just let things happen to us.”

Shumlin, leader of the Vermont Senate, said he has been working to do things differently than Douglas and Dubie contemporaneously. “We’ve been delivering on the budget. We did it in every way the Douglas-Dubie team didn’t want us to do it,” he said, noting the Legislature’s override of Douglas’ first-ever veto of a state budget last year.

Shumlin said he plans to end the practice of speaking ill of Vermont, too. “I have never sold a product by telling people how terrible it is. That’s never worked,” Shumlin said. “These guys are going around the state saying how terrible it is to do business.”

Dunne, an executive with the search engine Google, said Douglas and Dubie have failed to deploy an effective economic development strategy. “You need to have clear goals and you need to have people who will bring in fresh ideas and you have to have trust that you’re not going to bring in ideas from years ago that were already rejected,” he said.

All four expressed a need for greater broadband and cell phone coverage in Vermont to provide economic growth. Shumlin was willing to go a step further, however. Douglas promised universal coverage by 2010, he said, but has failed. Shumlin pledged Thursday to finish the task by the end of 2012 if elected.

“I will pull together Vermonters with the plans to make it happen and we will deliver that by 2012,” he said.

Markowitz said the state must “treat high-speed Internet the way we treat other utilities” because “it’s the electricity of today.” A public-private partnership will be needed to bring those services to all Vermonters because if providers could make money doing it “they would have done it” already, she said.

Economic and job growth will come from investing in and focusing on the state’s main sectors — manufacturing, agriculture and tourism, Racine said. Budget cuts have reduced needed investments, and the state’s rainy day funds could be used to stave off additional cuts this year, he said.

Dunne, meanwhile, said the state’s economic future is “rooted in its past.” The state has a history of “frugal people who have come up with new ideas and then been able to bring them to the marketplace.” He advocated for investments that will boost the state’s infrastructure, access to capital and education system. Dunne also proposed offering capital gains exemptions for people that invest in Vermont companies.

How can Vermont improve its school system and make it an asset to recruiting new businesses? All four candidates offered similar ideas, including investment in pre-K education and ending the practice of blaming teachers and schools for the state’s economic woes. “We make sure that when children walk into that kindergarten school door, they are ready to learn,” Racine said.

Markowitz said the next governor must “end the war of words” with teachers. “I’m offended by the governor always blaming our problems on teachers,” she said.

Dunne said the state should look at consolidating supervisory unions in a way that leads to collaboration and efficiency. Dunne and Shumlin also advocated for increased “distance learning” through video conferencing that will allow schools to share educational resources.

Additionally, Shumlin said he would have the state “back off standardized testing” and find better ways to help individual students learn.

This article appeared in the Bennington Banner