There’s growing opposition at the Statehouse over Governor Peter Shumlin’s plan to take $17 million from the state’s Earned Income Tax Credit program to finance an increase in child care subsidies.
About 45,000 low income working Vermonters take advantage of the Earned Income Tax Credit. It’s a federal and state program that’s designed to help working families with some of their basic living needs.
The maximum state credit is roughly $1,200 and the program allows families to get a refund if the credit is larger than their tax liability. The state spends roughly $25 million on the program by supplementing the federal credit.
Chittenden senator Tim Ashe is the new chair of the Senate Finance Committee. He has a lot of concerns about Shumlin’s plan.
"I have always believed that the problem with the EITC program is not that it’s too generous, it is that we need to make sure everyone who is eligible for it utilizes it," said Ashe. "I’ll be a tough sell and I know that many of my committee members here in the Senate Finance committee are staring from a position of needing to be convinced that this makes sense."
House Ways and Means chair Janet Ancel says she wants hear from those Vermonters who will be hurt by the Governor’s plan and she thinks it’s a mistake to link an expansion of child care to the Earned Income Tax Credit.
"We need to look at what we do for child care and what the needs are and make a decision about what we want to be able to fund and what the benefits of that would be," said Ancel. "And then I tend to think that we ought to make a separate decision on how to finance it."
Shumlin is defending his decision. He says using state tax dollars to provide more child care subsidies is a higher priority than the Earned Income Tax Credit.
"The question we have to ask as a state is are we utilizing those dollars as well as we possible can to get the maximum bang for our buck which is moving people out of poverty which you can’t do if you don’t have an educated populace, educated kids and by giving our kids a strong start. So are there winners and losers you bet."
But House Minority leader Don Turner says it’s a mistake to ask working Vermonters to be the losers in this debate.
"Working Vermonters are already struggling we can’t afford to take something that they were getting and take it away from them so I know there’s always winners and losers but we don’t want working Vermonters to be the losers in this case."
Shumlin says he’s using the Earned Income Tax Credit funds because the state is facing a challenging budget for 2014 and there simply isn’t any money available to substantially increase child care subsidies without raising taxes and that’s something he’s vowed not to do.