The Vermont House is expected to take up the $4.5 billion state budget either today or tomorrow, with a possible legislative adjournment tomorrow. However, Governor Douglas is expected to veto the budget bill if it comes to him in its current form, which is also expected. Even though the bill cuts income taxes across the board ($22 million total reduction), the governor has stated that he does not support the increase in overall spending and that total taxes are increasing $26 million, most of which is being bourn by the statewide property tax. Taxes are also being raised on capital gains, tobacco products and being initiated on liquor. If the governor vetoes the budget bill, the Legislature would probably reconvene in June. Legislators leaders maintain that the economic recession raises the need for state services, on the one hand, while on the other, state spending provides economic stimulus.
Meanwhile, the $649 million capital and transportation bills have received wide support in the Legislature and administration. This spending is mostly targeted to road and bridge repair. Vermont's transportation infrastructure is generally recognized as being in disrepair. Along with federal stimulus funds, which will pay for most of the road and bridge work, Vermont will be able to upgrade the infrastructure and increase related employment.
The non-transportation part of the money - the capital bill - calls for $109 million, of which $38.8 million will come from federal stimulus funds and $70 million from state bonding. The biggest items on this list are $10.3 million for school construction projects, $8.6 million for state park and community project grants, $8 million for a new state office building in Bennington, and $6.8 million for the new state archives.
Another bill the governor is likely to veto is the renewable energy bill. Among other objections by the Douglas administration, the bill sets rates for renewable energy projects, which typically is the responsibility of the Public Service Board. Department of Public Service Commissioner David O'Brien told VBM that the bill will raise rates to consumers. He said the green energy industry is building itself up on its own at a lower cost than the bill would demand.
The price guarantees for producers would be 20 cents per kilowatt hour for wind generation, 30 cents per kwh for solar and 12 cents per kwh for methane (Cow Power, landfill generation). The average consumer price is about 12.5 cents per kwh now.
O'Brien said the entire bill is poorly conceived as is not within the bounds of good public policy. Nor, as he sees it, is it good for economic development because it will make the price of power more expensive. He said if the maximum of 50 megawatts were reached, it would add about $9 million in consumer costs.
"I don't think it's fair to consumers, especially middle income and lower income consumers," O'Brien said. The Department of Public Service represents consumers in rate cases. He said the governor has not stated whether or not he will veto the bill as written.
Other Highlights:
An Act Relating to the State's Transportation Program (H.438)
Creates the framework for a state-bonding program
Levies $9.2 million in motor vehicle feesCreates a two percent tax on gas at the retail level
Creates a three-cent tax on diesel fuel
An Act Making Appropriations for the Support of Government (H.441 & H.442)
Increases tax on cigarettes and other tobacco products
Places a six percent sales tax on liquor sold at VT liquor outlets
Provides for a tax amnesty program
Studies the creation of a State Department of Revenue and the imposition of service-based taxes
Lowers the exemption threshold for the estate tax to $2 million
An Act Relating to Capital Construction and Bonding (H.4 45)
Provides funding for repairs at state welcome centers and historic state buildings
Appropriates money for the use of the Vermont Telecom Authority to leverage additional money for the state's telecommunication and broadband services
Authorizes the head of any state agency to apply for funds made available through the federal American Recovery and Reinvestment Act of 2009.
Source of Highlights: Vermont Chamber of Commerce.