Legislative Report 3/28/2013 - Taxation Angst

This week and the next the House will be sending three big bills over to the Senate: the transportation bill, the tax bill, and the budget bill. Each of these bills touches on fundamental fiscal responsibilities that we in the legislature take very seriously.

You elected me to be your voice in the legislature, reflecting your concerns about the economy, our infrastructure, our education system, the environment, and how we support our own citizens by ensuring that our fiscal plan reflects your values. You want us to spend wisely and keep in mind that your budget is being stressed as well. By the end of this session we will pass a balanced budget that meets the financial obligations of state government in a fiscally responsible way.

Concerns about tax increases have been at the top of the list of emails and phone calls I’ve received in the past week.  At the statehouse we all share your concern about tax increases.  We have all been looking at cutting spending where appropriate within the areas of our committees' jurisdiction, as well as looking for efficiencies in state programs to avoid tax increases.  Misleading TV ads about "$70 million tax increases by Democrats" as well as misleading claims by special interests serve only to distort the reality we have to work with.  An example is the claim that fuel oil taxes were going to increase by 12 cents per gallon.  The reality is that a nominal 1/2% increase on the wholesale price (less than 2 cents/gallon) was ever considered, and that was dropped because of competing budgetary concerns.  If it had been adopted, it would have meant an increase of $15 to $20 to a household's heating bill for the entire heating season.  This would have helped more homes to get weatherization services to reduce the amount of heating fuel needed.  However, we on the Natural Resources and Energy Committee elected to depend only on current funding sources which will get us through the next heating season.  This means that we'll have to come back to this issue again next year since one of those funding sources resulting from the CVPS-GMP merger will eventually disappear.

This past week the House passed a Transportation Bill that restructures how gasoline taxes are assessed.  The bill is $4 million less than what was requested by the Agency of Transportation and $800,000 less than last year's budget.  The restructuring of the gas tax was essential because of the huge decrease in gas tax revenues leading to underfunding of needed road and bridge repair work and other transportation services.  About 39 million fewer gallons of gas were purchased in Vermont in 2012 compared to 2005 because of more efficient vehicles and fewer miles being driven.  While this is good for the environment, it does not produce the revenues needed to maintain our aging roads and bridges essential to keeping drivers safe.  This year’s Transportation bill has split the taxation of gasoline between a cents-per-gallon basis and a percentage of the price per gallon (minus state and federal per gallon taxes).   This will lead to a 6.9 cent increase in 2014, rising to 7.7 cents in 2015, and 8.8 cents in 2016 at current prices.  (In comparison, New Hampshire just voted to increase their gasoline tax by 12 cents/gallon.) It is also worth noting that 1/3 of our gas tax revenues are collected from out of state drivers.

A common criticism is that the Transportation Fund is being raided for other purposes.  While this may have been true in the past, it is no longer so.  Other than transportation infrastructure expenses, the only other programs receiving Transportation Fund money are a small percentage for Fish and Wildlife-related transportation expenses and $25 million for DUI enforcement by State Police.

I appreciate your concern about rising taxes and will seek to critically balance the needs of Vermont taxpayers with the needs to keep Vermont healthy, strong and everything that makes Vermont a great place to live and work.

You can reach me by phone (425-3960) or by email (myantachka.dfa@gmail.com).