Ways and Means chair Janet Ancel (D-Calais) flanked by Rep. Carolyn Branagan (R-Georgia), left, and Rep. Joey Donovan (D-Burlington)
The House Ways and Means Committee has approved raising $48.3 million from fee and tax hikes — which should pave the way for budget writers to wrap up work on a House spending plan.
The House tax-writing panel had rejected some of the sources of new revenue that Gov. Peter Shumlin proposed in January, including a tax on dentists and independent physicians and a policy change for medicating psychiatric patients involuntarily, intended to save money by shortening hospital stays.
Ways and Means struggled to reach consensus on alternatives. Wednesday evening, the panel split along party lines in a vote on the total revenue package, which increases fees and taxes to raise $48.3 million. Its vote Thursday on the tax portion was similarly split along party lines.
The three Republicans and one independent on the committee opposed the tax package. It would increase the franchise tax on big banks, revise the way employers are assessed for workers without health insurance, increase the fuel gross receipts tax and collect rooms and meals taxes from private rental properties such as Airbnb.
The tax changes would raise $13.4 million.
Rep. Jim Condon (D-Colchester) said he was supporting the tax package with his fingers crossed, hoping that the Senate would be able to pare spending so less revenue would be needed.
Rep. Patti Komline (R-Dorset) criticized this strategy. “We are just dumping it on the Senate again,” she said. “It should be stopping here.”
The fees proved less controversial. Republicans and the independent on Ways and Means joined the Democratic majority in supporting the fee increases, which include the biggest revenue generator in the package — an increase in the fee on mutual funds. It is expected to generate $20.8 million. The vote was 9-0, with two lawmakers absent.
Ways and Means Chair Janet Ancel (D-Calais) noted that the mutual fund fee “is one source of revenue we get to export,” meaning it will be paid almost completely by out-of-state businesses.
A bill to fund transportation projects would raise $10.5 million from fee increases at the Department of Motor Vehicles. Ways and Means increased the fee package that the House Transportation Committee recommended. The increase was to cover the projected loss of revenues from a bill that would forgive many unpaid parking tickets as part of reforms to the state’s policies for suspending drivers’ licenses.
Rep. Patrick Brennan (R-Colchester), who chairs the House Transportation Committee, noted that DMV fees hadn’t been raised for four years. Normally the state revises fees every three years, he said.
“I hate to sound like a broken record,” House minority leader Don Turner (R-Milton) said when asked about the revenue package. “The majority continues to fix a spending problem with revenues.” He criticized the size of the mutual fund fee increase, calling it gouging. And he said the bank franchise tax increase and the changes to the employer assessment are “just an attack on business.”
Ancel argued that the committee fashioned the revenue package to have as little impact as possible on individuals and businesses. She argued the bank tax increase and the employer assessment changes spared small banks and employers.
Chris D’Elia, president of the Vermont Bankers Association, said the 26 percent increase in the bank franchise tax hits the five largest banks in the state and “seems to foster the mentality that big is bad.” He predicted the increase would likely lead to job cuts, less lending and reduced charitable giving by those banks.
The higher rate would mean consumers would pay a total tax of two to three cents per gallon on home heating fuel, depending on its price, said Matt Cota, executive director of the Vermont Fuel Dealers Association. He acknowledged that the fuel gross receipts tax hadn’t increased in 26 years. The increase would raise $1.3 million.
The revenue and budget bills are expected to be on the House floor by the middle of next week.