Legislators use cuts, taxes, rainy day fund to balance budget

first_imgLegislative leaders announced today that they had put together a package of tax increases, budget cuts and some of the state’s “rainy day” funds to offset a $100 million General Fund budget deficit.Speaker Smith and Senate President Pro Tem Shumlin called it a responsible approach to balancing the budget. The proposal is made up of a $26 million revenue package, $71 million worth of reductions and $3.3 million of rainy day funds. By eliminating the capital gains and income tax deductions loophole, the revenue package reduces Vermonters income taxes by lowering the marginal tax rates.  The full passage of this package will result in lower incomes taxes for the vast majority of Vermonters and would drop Vermont s top marginal rate from first to fifth nationally.  We have proposed a thoughtful package that reduces Vermonter s income taxes at a time when they need the relief more than ever, said Senator Shumlin.The proposal also includes an additional $46 million of reductions, on top of the $25 million that the Senate proposed earlier this year. These reductions include a $19.8 million reduction in the General Fund transfer to the Education Fund and $26.5 million of additional reductions to various state services. The reductions to services are incredibly hard to make but these very difficult times call for very difficult decisions to be made, said Speaker Smith.The legislative leaders said they have been involved in productive conversations with the Douglas Administration over the past several days and remain open to further discussions.  The leaders put forward their balanced proposal today in order to continue to move forward and meet their adjournment schedule.  The budget and miscellaneous tax conference committees will begin their work on this proposal this afternoon.Budget Closing Construct:Adjusting for the Revenue downgrade:I. FY 2009 Shortfall: $14.7 milliona) Use carry forward which was to be held for FY 2010 $11.7 millionb) Use Caseload Reserve or other receipts $ 3.0 millionII. FY 2010 Deficit before revenues: $75.7 millionConsists ofa) Additional revenue downgrade: $34.3 millionb) Less property transfer tax to GF $ 3.6 millionc) Less FY 2009 carry forward $11.7 milliond) Senate revenue package $26.1 millionIII. FY 2010 Closing Constructa) Revenues (built on House/Senate agreed items) $26.1 million[Misc. Tax conference committee]b) Further reductions above Senate Appropriations bill $26.5 millionIncludes:1. No funding for Human Resources IT project unlesscovered in capital bill ($4.5 million)2. $6 million for economic development reducedto $4.5 million ($1.5 million)[Appropriations Conference Committee]c) Reduction in GF transfer to Ed Fund $19.8 million& Related Ed. Fund adjustments:1. Education payment reduced to 2.1% growth2. Non residential tax rate at $1.36d) Caseload reserve or other budget reductions $ 3.3 million- TAX PROPOSAL ATTACHEDSource: Senate President’s Office AttachmentSize Final May Tax Proposal.pdf13.52 KBlast_img

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