1-4-15 – Shumlin/Benning Wrong To Consider Tax Increases

Posted by Rob Roper

A January 4 article by the Associated Press quoted Senate minority leader, Joe Benning (R-Caledonia) as saying the current fiscal situation in Montpelier (including a $17 million budget shortfall for FY15 and an $100 million deficit for FY16) will, “force us to look for new ways to get revenue.”

In other words, raise taxes.

It’s time for Vermonters to call B.S. on this kind of thinking. We have a spending problem, not a revenue problem.

The budget gaps the state is facing are not the result of bringing in less tax dollars – the state is collecting more tax revenue than ever (see JFO revenue chart below) – they exist because our politicians want to spend even beyond their record take from our paychecks.

JFO Tax Revenue Chart

Governor Shumlin is quoted in the same article as saying, “We’re going to need everybody to help. You can’t fix a structural deficit like the one we have or make progress toward fixing it if you don’t ask for shared sacrifice.”

But here’s the problem with that statement: When has state government ever “shared sacrifice” by spending less than the year before? Or even in line with inflation? Never. These are the total state appropriations numbers for the last five state budgets (source: Vermont Transparency):

2015 $5,592,162,894
2014 $5,370,335,935
2013 $5,125,205,156
2012 $4,867,953,655
2011 $4,849,096,588

 

Up, up, up. They’ve increased spending by 15% over the last five years – more than twice the rate of inflation! Our overall population is stagnant. Our school-aged population is declining. How can they honestly justify this, and ask for more on top?

“Shared sacrifice?” In a just world that would mean it’s government’s turn to cut spending for a while, and the taxpayers’ turn to pocket more of what we earn.

Rob Roper is president of the Ethan Allen Institute

{ 6 comments… read them below or add one }

Gerry January 4, 2015 at 8:46 pm

there is info behind these numbers that is important. I do not believe the inheritance tax revenue is down because we cut the tax rate. It is probably due to older people changing state residence or in-state deaths not having as much net worth. As for the Corporate tax revenue increase is that due to activity or tax rate increase. Do you have info on these issues?

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Sen. Joe Benning January 4, 2015 at 9:33 pm

Rob, it is indeed unfortunate that you have decided to lump me in with Peter Shumlin here without at least having a conversation with me about that Associated Press interview first. As you well know, when dealing with the press, you are bound to be misunderstood, misquoted, mistaken and/or just plain misinterpreted. By casting me in with the tax raiser crowd without asking for clarification, you’ve now left both of us vulnerable to attack by our respective antagonists. So let’s back up the train a bit, shall we?

First off, the AP interview was my first with Wilson Ring. Usually Dave Gram handles their interviews and Dave and I know each other well enough to understand each other. Wilson’s report, at least those words he chose to print, were technically correct. But in total context, I believe he came up short on the story. I’ll remember that the next time he interviews me. For now, I’ll have to take the heat for that.

But you and I know each other too. That’s what makes it difficult for me to understand why you didn’t at least call me before jumping to conclusions. I would have told you everything I did the AP, but I think you would have better understood the context. I think, or I hope, that your headline would thus have been very different.

As for the AP interview, I made it quite clear that it was far past time for Vermont to do a complete overhaul of government in order to streamline the bureaucracy that delivers our services. I suggested taking at least one legislative session and NOT creating any new laws. Instead, every committee would examine everything within its jurisdiction and figure out if there isn’t a way to deliver necessary services without duplication, and to get rid of those services that are not necessary and/or not delivering as originally intended. (The mandatory Exchange comes immediately to mind.)

In speaking about our current situation, I did indeed say I didn’t see any way out of it without both cutting services and raising some taxes, but I was also pretty direct in how and why we are in this position, which I’m pretty upset about. (It’s why I’m voting for Milne this week, and I believe I also said that to Wilson.) I also used the example of our impending second rescission with our last budget cycle and the 100 million dollar shortfall we anticipate in our next budget cycle as a demonstration of just how bad things are fiscally in this state. I also said I’ve voted against every budget presented since I was first elected in 2010. I truly believe we are being taxed too much and knew those budgets could not be sustained. I’ll vote against the next one too, since I don’t see that situation changing.

And since I believe I still have a 100% voting record in all things fiscal with the Ethan Allen Institute’s report card, I’m kind of surprised you chose to write this without at least giving me a call to inquire whether I had lost my mind. Relax, I haven’t.

Reply

Alex Knight January 4, 2015 at 9:50 pm

Notice how those in government are always seeking to “fix” that which they failed to on the previous couple of hundred tries. Enough with such a ludicrous, inexcusable shell game.

This will actually fix things, and permanently. I invite one and all to complete it:

http://www.tolfa.us

Reply

Estella January 4, 2015 at 10:22 pm

We can Start by REPEALING act 48 and the mandatory exchange. STOP making mom and pops more marginal and or defunct by making us subject to anti large business sentiments and legislation. The DOL statistics show most biz are very small.

Call the Shumlin admin on their double standards every chance you get and shout it from every rooftop. Is the AP story another piece of spin to blame republicans for agreeing to tax increases.. ask the reporter for a correction or write an op/Ed to clarify.
We cannot afford any new taxes. Replace ‘programs’ with private sector JOBS!!

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Sen. Joe Benning January 5, 2015 at 1:14 am

Well, believe it or not Estella, my bill repealing the mandatory exchange is already being drafted by legislative council. I have also requested that they help me establish whatever connections are necessary to open the exchange to regional insurance company access. And as for calling the Shumlin administration out, I long ago lost count of the number of speeches and op-ed pieces I’ve made doing just that, which is why your comment here leaves me frustrated. Must be I’m not advertising myself very well.

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Meredith Angwin January 6, 2015 at 1:43 am

According to this article from Vermont Digger, in April 2014, the state received about $24 million less than it had projected to receive from personal and corporate income taxes. This could have led to a state budget shortfall, but a “surprise income from inheritance and estate tax collections”….$19 million….made up most of the shortfall. Clearly, Vermont cannot expect this to happen every year. This was the highest inheritance tax year on record, by about $3.3 million.

https://vtdigger.org/2014/05/07/april-revenues-bailed-record-estate-tax-collections/

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