Peter Shumlin, R

Who knew Peter Shumlin was secretly a Republican?

If you left aside the governor's plan to overhaul the state's health insurance system, you could be excused for confusing his response to the revenue package endorsed by the state House of Representatives last week with a sentiment that could have come straight from any conservative blogger or GOP politician in good standing.

"Income taxes are portable," Shumlin said before expressing the thought that should the revenue package as it exists survive more or less intact in the state Senate, that he'd be looking for a tall building to jump off of (jokingly, we assume). "We know that Vermonters already migrate to Florida, New Hampshire and other states to avoid paying income taxes ... the higher your rates, the more they migrate."

Wow. Jim Douglas or Randy Brock couldn't have put it any better.

Maybe the health care overhaul was part of larger political strategy designed to build a firewall for a later moment - now at hand and likely to be here through next year - when the Governor could point to that to bolster his bona fides with the large numbers of politically left-of-center Vermonters who thought they'd voted in one of their own. Maybe the Governor knew that the moment would come when federal dollars and a still weak economy would be incapable of providing the revenue to finance all the social programs and general bloat of Vermont's government built up over a long period of time.

That moment has clearly come.

There might have been a time, not so long ago, when coming up with $20 million - a somewhat arbitrary number but one identified as the amount of "new revenue" needed to keep things going - might not have seemed insurmountable. But given the recent verbal volleying back and forth between the governor and the Democratic-controlled House leadership, it's clear that times have changed.

At issue was the package of tax increases voted through to close that budget gap, which include a hike in the gas tax, which we supported last week. But legislators are also looking at increases in the cigarette tax, an increase on restaurant meals and new taxes on soda, candy and clothing purchases of $110 or more. Another package designed to raise about $5 million in taxes for the next fiscal year would include a cap on itemized deductions likely to be used more frequently by high-income earners, while at the same time eliminating an employer health assessment reckoned at $15 million.

Again, it's not final yet, and the package awaits passage, or revision, in the state Senate.

In truth, the Governor has no one to blame but himself for the rough sledding his budget proposals have encountered so far. While there was widespread support - at least among the super-majority Democrats, for expanding support for pre-Kindergarten education and daycare subsidies - most found his ideas for funding them baffling.

The two most controversial have been a proposed tax on so-called "break open" tickets favored by social clubs for in-house fund-raising, and a $17 million redirection of revenues from the Earned Income Tax Credit, a program which already helps low-income Vermonters. The ground was not well prepared for either proposal, which the Governor introduced during his budget address early in the session. His claims that a tax on the break open tickets would yield $17 million have not gained much traction amid widespread disbelief that a 10 percent tax on such tickets would yield anything close to that sum.

Plus.... do we really need the government sticking its nose into small non-profit entities who apparently use them for small scale fund-raising? We didn't think so either.

Let us remember, it was barely a month ago when the House voted to increase residential and nonresidential property by five or six cents. This increase is needed to support an educational system that is spending more and more money to educate fewer and fewer students. And while we're not convinced that people make decisions about where to live solely on the basis of taxes, there's no question that there is a tipping point where too much is simply too much. The flip side of a progressive tax structure is a large burden is placed on a relatively small number of high net-worth individuals. It wouldn't take too many of them to emigrate to make a difference.

It's worth noting that the overall size of Governor's proposed budget and spending plans were trimmed by the House actions. The Governor's plan bumped overall spending up by 5.8 percent; the House cut that to a 4.7 percent increase. It also would have wiped out a $1 million reserve fund (not to be confused with the famous and misleadingly named "rainy day fund" which currently totals about $62 million); the House budget restores about $7 million to those internal reserves. So maybe the state GOP might not be so ready to embrace Mr. Shumlin as a fellow traveler after all.

Where the Governor does deserve some credit, along with his sensitivity to tax rates and their possible impact on the state's economy, is on a courageous proposal to reform the state's welfare eligibility rules. Currently Vermont is apparently the only state that has no term limits for welfare benefits. The Governor wants, and the House, with some modifications to his original proposal, have endorsed limiting those benefits to a maximum of five years, although that cap can apparently be waived under certain circumstances. Here, we would have preferred the governor's original proposal, but sometimes, you take what you can get.

Just like Richard Nixon went to China to shake hands with Mao Tse-tung, maybe so does Peter Shumlin embrace his inner Ronald Reagan.


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