Legislators compromise on Act 60

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(Host) The House Ways and Means committee and the Douglas administration have reached an agreement on an Act 60 reform package. Senate Democratic leaders say they think the package may provide a solid framework for a final deal.

VPR’s Bob Kinzel has the details:

(Kinzel) The compromise plan shifts some of the current burden of the statewide property tax over to the sales tax. Under the proposal, the sales tax rate would be increased from 5% to 6% and it would be expanded to include soda, beer and perhaps some other items.

The plan establishes a statewide property tax rate of a $1.10 to help fund a block grant of $7,000 per student. This represents an increase of roughly $1,500 in the block grant. If towns spend above the block grant amount, their statewide property tax rate would go up accordingly. All business and non residential property would be taxed at a rate of $1.59.

A plan by the Ways and Means committee to use the income tax and to impose the sales tax on professional services is not included in the compromise because of the strong opposition of the governor. Ways and Means Chairman Dick Marron (R-Stowe) says he agreed to the proposal because the plan does help reduce property tax burdens:

(Marron) “I’m still talking about $50-60 million in new revenue sources, non-property tax revenue sources. So I think it does shift. There’s some shift, not as much as we would have desired and we still think a larger shift would be better, but we’ll do what we can do.”

(Kinzel) Administration Secretary Michael Smith says the proposal is a fair compromise but Smith wants to be certain that some additional cost containment measures are included in the final deal.

(Smith) “The governor has said he is not going to sign a bill that does not have cost containment in it. Because without cost containment, we’re going to have this problem every five or six years. So I’m optimistic.”

(Kinzel) Senate President Pro Tempore Peter Welch says many parts of the plan are very similar to a bill passed by the Senate earlier this session. Welch thinks the compromise creates the foundation for a final agreement.

(Welch) “What’s good about this is that this is a step forward. I think that the House plan was ambitious and had a good concept but I don’t think it was at all close to being realistic, especially with the governor being so adamantly opposed to it. But the House did a lot of good work and I think that this represents the compromise between the governor and the House. It’s going to give up a lot of room to work towards a big improvement on Act 60.”

(Kinzel) The House Ways and Means committee plans to work out the final details of the legislation next week.

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

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