House approves Act 60 compromise plan

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(Host) A compromise Act 60 school funding plan won approval on Thursday in the Vermont House. The bill shifts some of the burden of the statewide property tax to the sales tax. The House defeated an effort to substitute an income tax surcharge for the sales tax.

VPR’s Bob Kinzel was in the Statehouse:

(Kinzel) The so called consensus plan emerged from the Ways and Means Committee with lukewarm support. Many members of the committee wanted to help reduce property tax burdens by imposing an income tax surcharge, but the panel dropped the idea after Governor Jim Douglas threatened to veto the bill if it included any plan to raise the income tax.

The legislation creates a two-tiered statewide property tax system: one rate for residents that will be based on a community’s spending on education, and another fixed rate for businesses. The plan also increases the sales tax from 5% to 6% and it applies the sales tax to beer and soda.

Representative David Deen (D-Westminster) urged House members to substitute a progressive income tax surcharge for the sales tax increase:

(Deen) “We bring this proposal forward because the sales tax is a regressive tax and hits lower income Vermonters harder than moderate and upper income Vermonters. We bring this proposal forward because the sales tax sacrifices certain areas of the state. The sales tax sacrifices retail sales, retail business income and employment and to name just one of the areas throughout the Connecticut River Valley.”

(Kinzel) But Representative Kurt Wright (R-Burlington), said adopting Deen’s amendment would eliminate all chances for property tax reform this year:

(Wright) “Mr. Speaker, the governor made clear this year that he would veto that bill with an income tax component in it. This amendment with an income tax increase far greater than the one that was being proposed is obviously an amendment that will kill Act 60 reform this year. To vote for this amendment will mean no reform this year that’s clear.”

(Kinzel) The House defeated the amendment by a vote of 82 to 60. The legislation also creates a special cost containment commission that will hold hearings throughout the state this summer and fall in an effort to draft a comprehensive plan to help control educational expenses in the future. The measure is expected to come up for final approval in the House on Friday.

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

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