Ebb and Flow on Money Issues: As we began the week, the thought was that of the two House-Senate conference committees appointed to work out differences on the money issues, the one charged with tackling the spending side of the equation would have a much easier time of it, than the one anointed to wrestle with revenue questions (I'm one of the 6 conferees appointed to resolve revenue differences). It was reasoned that the committee of conference on the "tax bill" would have its hands full, because the approaches to raising the revenue needed to balance the FY 14 budget were so strikingly different between the House, Senate and the Governor.
This dynamic changed rather dramatically on Tuesday, when the Governor, the Speaker and the Senate President announced that they had reached an agreement to shave another $10 million from the budget, and thus, negating the need for any new revenue for the next fiscal year. So, by mid-week the pressure shifted from the "tax bill" conference committee to the budget conferees. The budget folks had been working for the past five months to scrub the budget, so finding another $10 million would not be an easy task. However, since the "tax bill" conferees were relieved of the task of raising new revenue, their mission, theoretically, was reduced to ancillary income matters and to making tax code improvements.
Could this chess match possibly change again by week's end? Oh yes, mon capitan. The three Senators and three House members on the conference committee I sit on spent the latter part of the week fleshing out some income tax reform ideas. Specifically, the approach that appeared to be gaining a consensus in conference, entailed a revenue neutral plan to transition to an income tax system that would cap itemized deductions at 2.5 times the standard deduction (at about $30,000). This would have the effect of reducing marginal tax rates, and based upon 2010 data, decrease state income taxes for 73% of Vermont taxpayers, while 5% would see a tax increase (for the remaining 22%, it would be a wash). This approach puts us on a road aimed at stripping the tax code of the complex, convoluted and dizzyingly absurd amount of deductions, credits and exemptions that are sprinkled throughout the state income tax system. I'll admit, it's a very small first step, but at least a policy step that the 2010 Blue Ribbon Tax Commission and many economists have favored. However, while Senate and House conferees were beginning to sing kumbaya over this idea, the Governor was singing a much different tune (I think it was a funeral march). In fact, he was pretty clear that he did not like it at all. He didn't like the timing and his folks challenged the plan's revenue neutrality.
So, as the sun set in the western sky Friday evening, and I began the trek home to Manchester, the week ended pretty much where it began on money matters - no resolution on taxes, no resolution on budget. But fear not, unlike D.C, one way or another, we'll come to a landing by May 14th.
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