Tag Archives: Janet Ancel

Winning the Speakership was the easy part

Congratulations to Mitzi Johnson, the apparent successor to Shap Smith as Speaker of the House. She pipped House Majority Leader Sarah Copeland-Hanzas at the post. And although her selection must be ratified by the Democratic caucus and then the full House, there’s no real doubt that she will win.

Johnson is whip-smart and highly capable. She was skillful at managing the House Appropriations Committee, which is a hell of a trick.

As for being Speaker, well, she’s about to discover how different and how difficult that job is.

Shap Smith made it look effortless, but there was constant furious activity below the waterline. He also enjoyed the support of an informal cadre of loyal House members who helped him keep tabs on the ebb and flow of lawmaking and the interpersonal dynamics that must be managed effectively if the House is to function. In that regard, a capable inner circle is just as important as the actual caucus leadership.

Johnson won’t have that. She may or may not realize the importance of having that. But the House is a somewhat random gathering of 150 willful souls with 150 agendas. And by “agendas,” i don’t mean policy; I mean unique admixtures of principle, practicality, intellect (or lack thereof), knowledge (or lack thereof), curiosity (or lack thereof), debts payable and receivable, and ludicrously overdeveloped senses of self-preservation..

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A useless program gets a little better

Raise a glass, boys, to Janet Ancel, hardworking chair of the House Ways and Means Committee. For it was she who ignored the express wishes of the Shumlin administration and added some oversight to a program that sorely needs it.

I’m talking Vermont Employment Growth Incentive (VEGI), the slush fund economic development program that gives public funds to private employers promising to grow their workforce. VEGI was up for renewal this year, and the administration wanted a permanent extension (or at least five years) with no strings attached.

What it got instead, thanks largely to Rep. Ancel, was a three-year extension with legislative oversight added. She also inserted a mandated “cost-benefit analysis” to determine whether VEGI is actually accomplishing what it’s supposed to. And yesterday, the full House approved an omnibus economic-development bill including her VEGI provisions. A noteworthy accomplishment, given the administration’s active resistance.

After the jump: the unprovable merit of VEGI. 

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Glass half full, glass half empty

There are two ways of looking at the 2015 legislative session so far. Well, two if you’re on the left-of-center side of the political equation. The right, I suppose, is probably in full Ted Cruz “The World Is On Fire” mode.

You can look at it like Progressive Rep. Chris Pearson during last week’s House budget debate, lamenting big cuts to human services: “There have been program cuts every year since I joined the legislature in 2006.”

The glass is half empty. If you’re a liberal or progressive Vermonter, it seems like we’ve been in constant retreat since Peter Shumlin took office. And it got worse after the November election, with conventional wisdom telling us that Republican gains were due to Democratic overreach, the governor abandoning single-payer health care, and Democrats scurrying to the center.

Then there’s the glass-half-full approach. House Ways and Means Committee chair Janet Ancel noted that this year’s tax bill represented the biggest one-year revenue increase in all her years on the committee. And Health Care Committee chair BIll Lippert had this phlegmatic reaction to the rapid diminution of the health care reform bill:

We knew when we put that together it was robust. That was our job, to articulate priorities and how to get there. But I think in the context of the $35 million that was raised on the floor [in the tax bill], and $8 million for the lake [Champlain], if we were so fortunate as to have $20 million for health care, that’s a pretty big appetite for raising revenue in one year. So I would be pleased to have that much dedicated to health care in a year that’s as financially difficult as this.

And, the unspoken corollary: “I won’t be surprised if we get less than $20 million.”

Which leads back to my previous post, “Peter Shumlin: Defender of Liberalism.” If the House is stripping most or all the funding from health care initiatives, we’ll have to depend on the Governor’s political muscle — if he still has any — to get it back.

Anyway, which way do you see it: glass half full or glass half empty?

The current situation has echoes throughout the five-plus-year tenure of Gov. Shumlin. He’s delivered some good stuff, more than many liberals are willing to admit, while keeping the ship afloat in tough budgetary times. Plus, he’s been swimming against three powerful tides: a sluggish recovery which has yet to benefit the middle or working classes, a tax system that has failed to keep up with our changing economy, and the effort to fully fund public-sector pension plans that were revenue-starved by previous administrations. (Lookin’ at you, Tom Pelham.)

On the other hand, many of Shumlin’s promises have been curtailed or abandoned — most notably single payer health care, the issue that arguably won him the 2010 Democratic primary and hence the governorship. Plus, liberal expectations were inflated, fairly or not, possibly both, by the size of the Democratic majority. Shumlin and legislative Democrats never seemed to realize how much political capital they had; and now, much of it is gone, unspent.

And on the other other hand, it’s not as if the last five years have been without accomplishment. And it’s not as if this legislative session will be a failure if we don’t get significant movement on health care reform.

It’ll just kinda feel like one.

Peter Shumlin, Defender of Liberalism

So this is what we’ve come down to: as the House continues to slash away at health care reform, Governor Shumlin has become its stoutest defender.

Isn’t it ironic, don’tcha think. A little sad, too.

Here’s the situation: the House Health Care Committee originally came up with a $52 million package that would have greatly reduced the Medicaid gap, made health care more accessible to our growing cohort of working poor*, expanded proven measures to enhance delivery while holding down costs, and boosted incentives for badly-needed primary care providers.

*Thanks to our top-heavy economic recovery, which has produced stagnant wages and lots of jobs with unlivable wages while fattening the pockets of the wealthy and corporate.  

The Ways and Means Committee couldn’t agree on any tax scheme to pay for the $52 million — or even part of it. So the ball got bounced back to Health Care with a new diktat: devise a bill that will only cost $20 million a year.

The two committees remain at loggerheads, with each other and within their own ranks. Health Care can’t decide how to downsize its deftly-woven tapestry without the whole thing unraveling, and Ways and Means can’t reach consensus on a tax plan to produce $20 million.

Which almost certainly means the package will be further reduced before it even gets to the full House.

This is where Peter Shumlin, Defender of Liberalism comes in.

“I think that it’s really important that we make real progress here, and you’re not going to make real progress with $10 or $20 million,” the governor said in an interview Friday.

That interview was with the Vermont Press Bureau’s Neal Goswami, who wrote a front-page story in today’s Times Argus about the developing tussle between cautious lawmakers and a determined governor. (The story is paywalled, but you can listen to the interview for free.)

Shumlin rightly points out that a modest health care package would leave “$100 million of federal [matching] money on the table,” and would reduce private insurance rates by closing the Medicaid gap. Penny wise and pound foolish, you might say.

Problem is, the legislature is in penny-pinching mode after approving a tax bill that will raise $33 million in new revenue. Well, that’s the next problem. The first problem is Ways and Means, which has just enough centrist votes to effectively roadblock any of the tax plans outlined by Shumlin or the Health Care Committee.

Hmmm. And who, pray tell, appointed the committee? Oh yeah: Mr. Speaker.

Ways and Means has eleven members. A bill needs at least six votes to pass. But wait, you might be saying, there are seven Democrats on the committee and only three Republicans.

Well yeah, but two of the Democrats are definitely in the party’s centrist wing. Jim Condon is one of the most conservative Dems in the legislature, and Sam Young is definitely a taxation skeptic. The lone independent, ski resort mogul Adam Greshin, might as well be a Republican.

That leaves five relatively liberal votes, and a tough task for committee chair Janet Ancel to find a majority for any tax proposal.

Problem is, the Governor is right: spending more up front would make the system more robust and effective, and bring down costs for private payers. It’d also bring in the aforementioned truckload of federal matching funds.

And oh yes, if you’re interested in the “humanity” angle, it’d make health care accessible to thousands more Vermonters.

Goswami reports that Shumlin “may have to turn his attention to the Senate if he is to rescue his own plans.”

Oh boy. The disorganized, testosterone-and-ego-fueled Senate, with the centrist Cerebus of John Campbell, Dick Mazza and Phil Scott guarding the portal.

Good luck with that, Governor.

House Ways and Means at impasse

This afternoon, the House Ways and Means Committee was scheduled to discuss the health care bill. You know, the one with the two-tax solution: the .3% payroll tax and the sugar-sweetened beverage tax.

Well, it didn’t happen.

The committee took testimony in the morning. But after lunch, members did not reassemble. At one point, committee chair Janet Ancel entered the Ways and Means room; I asked her what the plan was.

I don’t have her exact words, but here’s the gist. They’d heard from all the witnesses, but the committee had stalled out on the two tax provisions. Neither tax would get majority support in the committee, if she held votes today. So, no votes.

No witnesses left. (She jokingly asked me if I’d like to testify.) And apparently she feels that more discussion or debate wouldn’t change any minds.

Welp, without those two tax provisions, there’ll hardly be any money for closing the Medicaid gap or any of the other improvements adopted by the House Health Care Committee.

Ancel had no idea what would happen next, or when it might happen.

Of course, either tax (or both) could be added back at a later point. But if Ways and Means can’t agree on a funding mechanism, it’s  certainly a discouraging sign for those of us hoping to redeem a few scraps of the lost promise of single payer health care.

Happy budget fun times

The two House committees in charge of the state’s purse strings got together for a joint meeting Wednesday afternoon, and heard a solid hour of sobering news. The state has a substantial budget gap that seems to be widening by the day, and there is little appetite for the scale of cutbacks or tax increases necessary to close it. The two panels: Ways and Means, which acts on taxation and revenue; and Appropriations, which makes the spending decisions. In a tough budget year like this one, each of the two panels wanted to gain a better understanding of the challenges facing the other.

The bulk of the session was a walkthrough of proposed expenditures and revenues for the coming fiscal year, led by Joint Fiscal Office budget guru* Sara Teachout.

*Not necessarily her actual title. 

Sara Teachout of the Joint Fiscal Office, pointing to a large flatscreen display full of dispiriting numbers.

Sara Teachout of the Joint Fiscal Office, pointing to a large flatscreen display full of dispiriting numbers.

She began the session by outlining one of the little-known worms in the budgetary apple: cuts in spending would take effect on July 1, the start of FY 2016, but many of the potential revenue enhancements would not. For example: If the state eliminates a tax deduction on personal income, that revenue would not be realized until April 2016, when 2015 tax returns are due. That’s three-quarters of the way through FY 2016.

Much of Teachout’s presentation was a repeat of her tax-budget tutorial I heard at a recent Ways and Means meeting; I wrote three reports on the meeting, which can be found here, here, and here. (If you don’t want to wade through all three, do the last one first.) She did offer more detail at this joint meeting, including a very specific listing of the real costs of various tax expenditures and deductions. (All of her documents are posted on the Ways and Means webpage.)

There was some limited discussion after Teachout’s teach-in. Most significantly, Ways and Means chair Janet Ancel restated her support for a cap on tax deductions: “Speaking for myself, it’s the right thing to do if we’re looking for new revenue.” Rep. Mary Hooper, a member of the Appropriations Committee, noted that a cap on deductions “spreads out the impact, rather than zeroing in on specific exemptions or deductions.”

As I reported previously, Vermont’s tax rules allow the average million-dollar earner to claim hundreds of thousands of dollars in deductions. That’s why top earners pay an effective income tax rate of 5.1% instead of the statutory rate of 8.95%.

Two years ago, the House approved a cap on itemized tax deductions at 2.5 times the standard deduction; the measure died, mostly because of Governor Shumlin’s opposition. This year, he has signaled his openness to changing deductions and expenditures, even as he remains steadfast in opposing increases on his Big Three taxes: income, sales, and rooms & meals.

The cap would, IMO, greatly enhance the fairness of our state tax system. Currently, top earners pay a lower proportion of their earnings in state and local taxes than people in any other income group.

There was also some support in the room for looking at some of the sales-tax exemptions. For example, the state could impose a ceiling on clothing purchases — making them tax-exempt only below a certain dollar amount.

Rep. Mitzi Johnson, Appropriations chair, said her committee will “begin a conversaiton soon to lay out targets [for spending cuts].” She noted the importance of the joint meeting for gaining a clearer picture of “where the revenue could be coming from.”

The meeting was one more small step in what promises to be a long, grinding process leading to decisions that will make at least some constituencies unhappy. As one Statehouse observer told me — only half jokingly — “it might take until July” before they can work everything out.

Tax deductions: the big kahuna

This is the third in a series of posts about the January 27 meeting of the House Ways and Means Committee, which explored the tax expenditures and deductions available under the state’s tax code. Part 1 concerned tax expenditures; part 2 focused on the tax deduction for medical expenses as an indicator of the widespread distress caused by our pre-Obamacare health system. 

It’s no secret that state lawmakers are looking for ways to raise some extra revenue without causing too much pain. One area under close examination is the tax code, and all the ways we allow people and businesses to limit their tax liability.

Some tweaks are possible in the tax expenditure side of things. But tax deductions actually offer a better opportunity to make our tax system fairer while giving the money tree a modest shake.

It’s an underreported fact that the wealthy actually get the best deal in our supposedly progressive tax system. According to the Institute on Taxation and Economic Policy, the wealthy pay the lowest per-capita share of state and local taxes combined, and they pay the lowest actual income-tax rate of any group besides the poor. Top earners are subject to an income tax rate of 8.95%, but the amount they actually pay is only 5.1%.

The single biggest reason for that disparity? Our generous rules on taxable income and tax deductions. A couple of examples from the category of Bet You Didn’t Know… (all information from the Joint Fiscal Office; tax figures are from the 2011 tax year)

— “Interest You Paid” is tax deductible. For most of us, that means mortgage interest. But it also applies to vacation homes — and boats. That chiefly benefits the wealthy. Renters, who tend to be at the bottom of the income scale, don’t benefit from the mortgage deduction.

— Property taxes are deductible. Including property taxes paid in other states. Again, that benefits those sufficiently well-off to own multiple properties.

— Charitable contributions can be deducted up to 50% of a taxpayer’s adjusted gross income. Only the wealthy can support anywhere near that level of giving. And, given the proliferation of ersatz foundations, it’s easy for a person of means to effectively launder money through a nonprofit. (For example, check out the nonprofit empire spawned by the Koch brothers.)

The power of this virtually unlimited allowance? Among Vermont taxpayers with incomes over $1 million, the average charitable deduction — the average — was $131,360. That’s a lotta stops at the Sally Army bell-ringer.

But here’s the biggest eye-popper of them all. If you add up all the average deductions for Vermont’s million-dollar class, you get $528,000.

That’s right: the average million-dollar taxpayer claimed deductions worth more than half their income.

And that’s how 8.95% turns into 5.1%.

The numbers for those earning less than $1 million are not quite so appalling, but the upper and upper middle classes clearly benefit from our current tax code. The primary reason: our permissive rules on tax deductions and taxable income.

Setting limits

The 2011 standard deduction in Vermont was $5,800 for a single taxpayer, $8,500 for a head of household, and $11,600 for a married couple filing jointly. Peanuts by comparison. I bring this up because Betcha Didn’t Know that 10 of the 50 states don’t allow itemized deductions. Everyone gets the standard — no more, no less.

That option could be on the table. It would bring the effective tax rate for top earners much closer to statutory levels. The resulting revenue could be used to cut taxes on the middle class, who get hit hardest by Vermont’s tax system; or they could be used to close the budget gap without sacrificing state services.

I’m not expecting anything that radical from our frequently timorous Legislature. But as recently as two years ago, the House passed a bill that would have capped itemized deductions at 2.5 times the standard. That bill died in the Senate, mainly because of Governor Shumlin’s opposition.

Yes, our Democratic Governor blocked the path to a fairer tax code. Wait, let me double-check… Yep, he’s a Democrat. Says so, anyway.

If that bill had passed, members of the Million-Dollar Club would have seen their deductions capped at $29,000 — a far cry from $528,000.

The situation may be different this year, as the state faces a large budget gap and Shumlin has deliberately soft-pedaled his anti-tax stance. During his budget address, he stated his opposition to “raising income, sales, and rooms & meals tax rates” — very deliberately emphasizing the word “rates,” which had not been part of his boilerplate in the past.

If that wasn’t signal enough, Shumlin’s budget proposed an end to the tax deduction for state income taxes paid in the previous year. And with that, as Ways and Means chair Janet Ancel told me, “He put the whole discussion about itemized deductions on the table.”

Ancel would not commit to revisiting the deduction-capping bill, but it’s clearly on her mind. “It [would have] made the tax system more fair,” she says. She may get a second bite at the apple this year, and thanks to our budget situation it might actually pass muster with the Governor. One can only hope.