Act 60 reform remains a challenge

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(Host) Legislative leaders say they’re making solid progress resolving budget differences between the House and the Senate. But finding a compromise Act 60 plan is proving much more difficult.

VPR’s Bob Kinzel reports:

(Kinzel) The basic disagreement between the House and the Senate over Act 60 reform is how much money should be raised from other revenue sources to help reduce property tax burdens across the state. The House wants to allocate $70 million for this effort by raising the sales tax from 5% to 6% and by imposing the sales tax on beer and soda. House leaders say this plan will reduce property taxes, on average, by 30% in many towns.

The Senate wants to raise less money initially for property tax relief. It passed a bill that appropriates roughly $35 million for this purpose by increasing the rooms and meals tax and several other splinter taxes.

Senate President Pro Tempore Peter Welch says he’s very reluctant to support the House plan for several reasons. He thinks the full capacity of the sales tax will be needed to meet key budget needs next year. He wants to phase in the full impact of property tax relief so that additional cost containment measures can be put into place. Welch is worried about the impact that a proposed federal tax cut will have in Vermont:

(Welch) “We can’t raise the kind of taxes that they want and we can’t front load relief and back end the cost containment. Otherwise we’re going to be right back where we were. So that’s the big fundamental difference and we’ve got to resolve that before we decide specifically which taxes are the way that we’re going to fund this.”

(Kinzel) House Ways and Means Chair Dick Marron says one option might be to raise the sales tax by .5% and then seek additional revenue from other sources:

(Marron) “Well it’s a possible option. This morning we put a proposal on the table that has $65 million in revenue. We’re going to need $65 million to $70 million in revenue or changes in the funding mechanism to make this work, and to provide the kind of property tax relief that Vermonters are going to need.”

(Kinzel) Representative Marron and Senator Welch are hoping to reach an agreement on a new compromise plan by the end of the week.

For Vermont Public Radio, I’m Bob Kinzel in Montpelier.

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