On May 7, 2015

Senate passes TV tax, drops candy, rejects income tax increase on the rich

By Anne Galloway and Elizabeth Hewitt, VTDigger.org

The Senate gave final approval to the money bills on Friday. Amendments that would have pushed forward the Shumlin administration’s request to cut $8 million from the budget didn’t materialize, and the budget passed virtually unchanged.

A proposal from the governor to cut state workers by an additional $2.87 million was rejected, along with reductions to working lands grants, funding for a detox program and a change in funding for weatherization. Lawmakers accepted a $1.3 million reduction in Medicaid pharmaceutical benefits.

Sen. Philip Baruth, D-Chittenden, challenged a provision that would have given the Shumlin administration more authority in further budget deliberations as the Senate and House enter conference committee negotiations. Baruth objected to the idea that the governor could continue to insist on additional cuts for state workers who already saw a $10.8 million hit in the budget.

The Senate general fund budget is $1.469 billion, which represents a 3.9 percent increase over last year’s budget. All state spending, including transportation, education and Medicaid other funds, is $5.5 billion under the Senate proposal. The increase is 1 percent above last year’s budget, according to Joint Fiscal Office figures.

The Senate filled a $113 million gap with $53 million in reductions in anticipated state spending, $25 million in one-time funds, $36 million in new taxes.

Meanwhile, the Senate revised the $36 million revenue package with a floor amendment Friday.

The bulk of the changes came from a six-part amendment from the Finance Committee.

Lawmakers reduced the proposed 5 percent excise tax on satellite TV to 2.5 percent. The measure raised a ruckus from Vermont’s Dish Network and DirecTV subscribers. The new proposal would generate about $2.5 million, according to Sen. Tim Ashe, D/P-Chittenden.

The Senate also ditched a measure that would extend the sales tax to candy, reducing the revenue package by $2.5 million.

The amendment also included a revenue increase of about $800,000 under the use tax, which covers online purchases or items bought out of state. The amendment would increase the recommended use tax from 0.1 percent to 0.15 percent of a persons’ gross adjusted income.

Ashe told lawmakers that the amendment would help make up for the gap in the sales tax.

“This recommendation we believe better reflects the amount that people are actually purchasing and then failing to report,” Ashe said.

Senators rejected two amendments from Sen. Anthony Pollina, P/D-Washington. One would have raised the rates on the two highest income brackets. The other would have recaptured what Pollina called the “lost nickels” from bottle deposits that beverage distributors keep.

Lawmakers accepted an amendment from Sen. David Zuckerman, P/D-Chittenden, that calls for a report on how the $12,000 cap on mortgage deductions will impact farms and other businesses. The senator from Hinesburg originally asked for an exemption for farmers. He is concerned that farmers who need to go into debt to buy land will be affected by the cap.

The body also accepted an amendment from Sen. John Rodgers, D-Essex/Orleans, that would no longer mandate that engineers determine whether larger sewage pipes are needed for municipal hookups when homeowners build additions. The amendment originated with H.217, a bill that passed the House in March but the Senate Natural Resources and Energy Committee did not have time to take up.

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