1.25.2013 – Transportation Issues and the Governor’s Budget Address
The House gave its final approval to the Budget Adjustment Bill this week. Budget Adjustment allows for mid-year budgetary corrections to the agencies and departments of government. It is now off to the Senate for its review and approval.
One area that we know will require additional work is the Transportation Budget due to a significant, on-going shortfall.
We are aware of the fact that there is a structural problem in the transportation revenue stream. It is due to the fact that our gas tax is essentially a per gallon tax. When the price of gas goes up, people restrict their vehicle use. Also, the current trend is to buy cars and trucks that use less fuel. As a result, fuel sales decrease and we take in less money to the Transportation Fund, which is used to maintain our transportation infrastructure.
Cars and trucks will use the roads as much as ever, so the need for road maintenance will continue to be necessary – we will just have less money to do it with. One suggestion is to charge people based on their road usage through their tax returns. This is an interesting proposal and would be a fair way to go about it – the more you use, the more you pay – but the practicality of how you figure it out sounds like a bookkeeping nightmare and accountability could be difficult.
What we really need is a revenue source that is more like a sales tax so when the price of fuel goes up, so does the revenue, rather than decreasing.
A recent revenue forecast for transportation indicates a $3.3 million downgrade – not a good prospect as we continue to recover from Irene and try to repair our infrastructure that was already crumbling before the storm arrived. As a result, the Chairs of Appropriations and Transportation offered an amendment to the Budget Adjustment Bill that requires the development of a plan to address the 2013 revenue shortfall. This is a good example of legislators working together in a non-partisan way to solve Vermont’s problems.
On Thursday, Governor Shumlin gave his budget speech in which he outlined his priorities for the FY 2014 budget. The goal for all of us is to build a balanced budget that takes into consideration the taxpayers of Vermont while taking care of our most vulnerable citizens – children, the elderly, the disabled, and low-income Vermonters.
While the economic picture is improving in Vermont and the economy seems to be easing a bit, we still have a distance to go before we are in the clear. Our revenues are up 27% and we have the lowest unemployment rate in the east. We will be able to replace the Vermont State Hospital with insurance money, FEMA funds, and other revenue sources so that we don’t have to raise taxes. That is all good news but we still have challenges ahead of us.
Governor Shumlin cited several areas where he believes we need “bold transformation and targeted investments”: These include education (early and higher), the welfare benefits structure, health care, transportation, and clean energy.
The governor recognizes the need for early education and how important it is for a child to get a good start. His proposal to increase Vermont’s early childhood support by $16.7 million was met with approval until it was discovered that he would fund it by redirecting money from the State’s portion of the Earned Income Tax Credit. Critics felt this was taking from the poor to give to the poor.
In his Budget Address, Governor Shumlin explained that Vermont taxpayers pay the second highest contribution in the nation to supplement the federal earned income tax credit, amounting to $26 million. While 23 other states match the federal credit, 27 do not. It would be interesting to see which states do and don’t make contributions, and what the relative conditions are for the low income people in those states. An argument could be made that one of the reasons Vermont seems to be recovering from the great recession faster than surrounding states is that our low income citizens have had more money in their pockets to spend.
For higher education, the governor includes an additional $2.5million for UVM, the state colleges, and VSAC to reduce tuition for Vermont students.
Regarding health care, the governor promises that Vermonters who are now in Catamount and VHAP will not be subject to any federally-imposed cost increases.
Finally for this week, the very good news for the agriculture and forest products sectors is that the governor includes $1.5 million for Working Lands Enterprise Act. This will go a long way to encourage economic development and job creation.