House Speaker Shap Smith on Thursday threw cold water on Gov. Peter Shumlin's proposal to finance expanded child-care subsidies by reducing a tax credit that benefits low-income Vermonters.
"I have reservations about it — and they're pretty strong," Smith said.
The proposal, which Shumlin first outlined in his second inaugural address last Thursday, was panned earlier this week by a group of Progressive and Democratic lawmakers. But until now, Smith has kept quiet about his reaction.
"The governor and I are in agreement that it's important to put more money into child care subsidies and that it certainly will help young families — particularly single moms — in their effort to get into the workforce," Smith said. "My question is should it be taken away from a program that encourages people to go back to work and makes work make more sense for a lot of people."
Shumlin and his Secretary of Human Services, Doug Racine, have proposed spending $17 million to expand the availability of child-care subsidies and raise the rates the state pays to child-care providers. The program currently serves 5900 families and 8400 children and could reach 900 additional families if its funding is increased, VTDigger.org reported Thursday.
That's a goal Smith and other lawmakers share — but they're concerned about Shumlin's plan to finance it: namely to cut the state's match to the federal Earned Income Tax Credit by $17 million. That $25 million program provides a tax break — and often a lump-sum payment — to some 44,000 low-income Vermonters. The average tax credit recipient could lose $376 a year, the Barre-Montpelier Times Argus reported earlier this week.
"I think it's a priority, but it's not a necessity," Smith said of increased child-care funding. "If I can find a way to put more money into child-care subsidies, I will do that. We've been doing it in little chunks over the last couple of years in the budget. We've been doing it relatively quietly, but we still need more assistance."
Smith's top tax-writing lieutenant shares his concerns about the Shumlin proposal.
"I do have serious reservations about taking it from a program that has been so critical for low-income families and the working poor," said. Rep. Janet Ancel (D-Calais), who chairs the House Ways and Means Committee. "It's a program that helps 44,000 Vermonters and it's made a big difference for families who are able to utilize it."
While Shumlin says he opposes raising "broad-based" taxes, Ancel says she sees this as a tax hike for a large group of Vermonters.
"I don't know how the governor defines 'broad-based' taxes, so I'm not going to second-guess him," she said. "But this is a tax increase — a pretty significant one."
In Ancel's view, speculating about other means of paying for a potential increase in child-care subsidies is premature. But if the Legislature opts to move forward with expanded subsidies, she says, "we would want to look more broadly at a larger group of taxpayers."
Whether Smith and Ancel will ultimately put the kibosh on Shumlin's plan remains unclear.
"I appreciate the fact that the governor is trying to be creative in the ways that he can address child-care subsidies," Smith said. "I have expressed some concerns about whether this is the right way to do it, but I've also said I'm not closing the door on it."