Report From Montpelier, Rep. Alison Clarkson
The Vermont Legislature’s first full week was an interesting mix of diving right into work and ‘booting up’. Each committee was busy reviewing their missions, setting their preliminary agendas and meeting the new governor’s new appointees who we will be working with. And, the National Conference of State Legislatures, a great resource for state legislatures, held a very useful training session for committee leadership.
The House Ways and Means Committee had our first meeting with Vermont’s new Tax Commissioner – Mary Peterson. A lawyer and former legislator representing Williston, Mary served on our committee for several years and was my predecessor as the clerk of the committee. In addition, we were briefed on many things from our current revenue forecast to the latest Education Fund outlook. And, on Thursday, we welcomed the three Blue Ribbon Tax Commissioners: Kathy Hoyt, Bill Sayre and Bill Schubart, along with their Director, Michael Costa, to present their report. Their work provides a thoughtful framework for a full discussion in our committee. You can find the entire final report online at this address: http://www.vermonttaxreform.org/library/ by clicking on “Final Report.” I encourage you to read the Report’s Executive Summary which is short and concise. The Commission will continue its work on property taxes this year. We expect to see this report in September.
As you have no doubt read, they make a number of recommendations to broaden the tax base and lower tax rates for both income and sales taxes. Their recommendations reflect our economy’s move from being goods based to being service based. Among the recommendations are the following:
• move from taxable income to adjusted gross income to calculate our personal income tax
• eliminate standardized and itemized deductions from the income tax
• lower the sales tax from 6% to 4.5%
• apply sales tax to all goods except food & prescription drugs
• apply sales tax to consumer-purchased services
• move, with other states, to collect the sales tax on internet based sales (this will require Federal action)
• remove most exemptions from income and sales taxes
Our Legislative Economist, Tom Kavet, presented the new revenue forecast – which has improved by $27 million for FY 11 (the year we are in) and $10 million for FY 12 (the budget we will be building this session). This news, coupled with the $12 million hiring freeze announced by the Governor last week, means that the $150 deficit we faced going into this session has been reduced a bit. Unfortunately, most of this bounce in our revenues has been as a result of one-time income from Estate and Corporate and Bank settlements. While Kavet is cautiously optimistic that revenues will begin to slowly improve – he is very concerned about the Education Fund tax implications with the decline in our real estate values. Vermont has been lucky to have the lowest price decline in New England. However, real estate values take longer to improve – meaning that with lower real estate values we may be faced with having to raise our property tax rates in order to fund level education spending.
I always appreciate hearing from you. I can be reached by email: firstname.lastname@example.org or by phone (Sat-Mon) 457-4627 or at the Statehouse (Tues-Fri) 828-2228. To get more information on the Vermont Legislature, and the bills which have been proposed and passed, visit the legislative website: www.leg.state.vt.us