State revenue: What do we want for the new “normal”?

Posted by Jack Hoffman on August 18, 2022 at 1:34 pm | Comments Off on State revenue: What do we want for the new “normal”?

A strong economy, spurred by federal stimulus money and funds to fight the COVID-19 pandemic, is producing a surge in Vermont state tax receipts. Personal income taxes are up, meals and rooms taxes are up, and so are corporate taxes.

Now is the time to start planning for when revenues come back down to earth.

A giant leap backward

Posted by Staff on June 29, 2022 at 9:38 am | Comments Off on A giant leap backward

The U.S. Supreme Court’s decision last Friday to overturn Roe v. Wade has devastating effects on anyone who can get pregnant. Plain and simple, this ruling is a clear effort to assert control over women’s bodies and therefore our agency, our autonomy, and our freedom.

Vermont has codified the right to reproductive health care in statute and will vote on a constitutional amendment to reinforce that in November. The governor issued a statement on Friday in support of that right and the amendment. But none of that means that Vermonters are shielded from the consequences of this decision.

Many have made the case that this ruling is wrong, that it sets us back 50 years and that it subjugates those who can get pregnant to the whims of the state they live in. Others have pointed out that the history of systemic racism in this country means that Black, Indigenous and other people of color will pay a disproportionate price for this ruling. Low-income people will struggle to access health care that better-off individuals can seek across state lines. And the lack of access to reproductive health care has severe long-term economic consequences for women and their families. These are all true, and yet this is even bigger than any of that.

What’s the plan when pandemic aid ends?

Posted by Jack Hoffman on June 9, 2022 at 3:26 pm | * Comments (1)

In the past few years, Vermont has gotten a taste of what it would be like to have a state that worked for everyone who lives here. Thanks to extraordinary federal relief in the wake of the COVID-19 pandemic, the state received billions of dollars that allowed policy makers, at least for a time, to acknowledge and address gaps that had been lingering for decades: health care, child care, livable incomes, and clean water to name a few. Read more

A flexible, effective revenue adjustment tool

Posted by Jack Hoffman on May 12, 2022 at 2:56 pm | Comments Off on A flexible, effective revenue adjustment tool

Twenty years ago, Vermont lost a valuable tool that let the state easily adjust state revenues to respond to fluctuating demands for public services. It’s time to find a replacement.

In 2002, the state ended the simple, straightforward system for assessing personal income taxes that had been in place for more than 30 years. Vermont stopped using the “piggyback,” whereby the amount of income tax a person owed to Montpelier was calculated from the amount owed to Uncle Sam. Typically, the rate was about 25 percent of a person’s federal tax liability. But it varied, which was the beauty of that system.

Vermont started using the piggyback in 1968. As a result, it had one of most progressive personal income taxes in the country because the federal income tax was much more progressive than typical state income taxes. Under the federal system, income is taxed in tiers, and income in the higher tiers is taxed at higher rates than the income in the lower tiers. Such systems are fairer because they better reflect people’s ability to pay. Thanks to the piggyback, Vermont’s income tax system mirrored the progressivity of the federal system.

Vermont needs to make a real, ongoing commitment to our kids

Posted by Julie Lowell on May 6, 2022 at 1:28 pm | * Comments (1)

We saw first-hand how the expanded 2021 federal child tax credit (CTC) reduced child poverty in the country. The additional income to families from refundable state credits like CTCs have also been shown to improve child development and educational outcomes and boost local economies. Seeking these benefits for the state, the Vermont House initiated a state CTC earlier this legislative session for kids six and under. But the state Senate has cut back the House bill and would end the credit in 2025.

In order to lower the price tag, the Senate’s version of the CTC, passed last week, would help fewer children and families than the House plan. The Senate reduced the amount of the credit, disqualified six-year-olds, and lowered the income threshold for qualifying families, cutting nearly 10,000 kids from the benefits of the credit.

Where is the state headed?

Posted by Jack Hoffman on April 29, 2022 at 10:43 am | Comments Off on Where is the state headed?

The Vermont House, Senate, and governor’s office are thrashing out their differences over state appropriations for the coming fiscal year that will total roughly $8.3 billion. We’re all aware that a massive amount of federal aid has poured into the state in response to the COVID-19 pandemic. But it’s worth pausing for a moment to grasp the magnitude and the potential of all of that aid.

In the five years prior to COVID, Vermont’s annual spending averaged about $6 billion a year. Since COVID, the budgets have been: $6.3 billion (FY2020), $7.2 billion (FY2021), $7.9 billion (FY2022), and $8.3 billion (FY2023, pending).

Much of the early COVID money—and not all of it flowed through the state’s coffers—was used to protect people from the virus and treat its victims, but it also was intended to protect states from economic collapse. States faced extraordinary and unexpected costs, and fortunately the federal government stepped up to foot the bill.

Then came the American Rescue Plan, which extended and expanded some of the earlier programs, but also contained some elements of a traditional economic stimulus plan. As part of that plan, Vermont received $1.05 billion, essentially, to spend as it saw fit.

Child poverty in Vermont

Posted by Julie Lowell on April 1, 2022 at 1:01 pm | * Comments (1)

Does Vermont want to help families with children living in poverty?

So far we’ve gotten a mixed message from policymakers on this question.

But there is still time for the Legislature to act decisively.

The Ed Fund needs an outside opinion

Posted by Jack Hoffman on March 17, 2022 at 3:33 pm | * Comments (1)

Gov. Phil Scott wants to use a $96 million surplus in the Education Fund for a little tax relief for homeowners and to expand job training. Another scenario laid out by the tax commissioner in December was, in essence, to just lower everybody’s school taxes for one year. These aren’t the only options, nor the best ones, which is why the Legislature needs to create an Education Fund Advisory Committee to oversee the long-term stability of the education finance system.

Governor Scott proposed last week that half of the surplus—about $48 million—be returned to resident homeowners in the form of a rebate. He recommended a flat amount of $250-$275 to each household. If you were going to issue rebates, that would be a better way to do it than, say, a small percentage reduction in everyone’s tax bills. The percentage approach favors those with higher tax bills, i.e. those with more valuable property or higher incomes. A fixed rebate is better for lower-income households, but better still would be to set a maximum income threshold and to include something for renters.

A big opportunity to improve school funding

Posted by Jack Hoffman on February 24, 2022 at 3:35 pm | Comments Off on A big opportunity to improve school funding

The Legislature is actually looking at two big changes to education funding this session. There are misconceptions about each, but both, if done right, can strengthen the school funding system and make it fairer.

The change that has generated the most attention and discussion is a plan to provide more money to students who require additional resources, such as English-language learners, kids from poor families, and those attending small, rural schools. The money isn’t really the sticking point, although there are questions about the latest cost estimate for teaching English as a second language. The main point of disagreement is how to distribute additional resources to the districts that need them. One approach, student weighting, is more complicated for voters and tends to favor high-spending school districts. The other option, cost equity aid, would provide fixed payments per pupil for various categories of students, which would be more transparent and easier for voters to follow, and it wouldn’t exacerbate disparities in per-pupil spending among districts.

The other important change being considered doesn’t involve the distribution of education funds, but how those funds are generated.

Vermont Child Tax Credit: Good for kids, good for the economy

Posted by Julie Lowell on February 15, 2022 at 11:56 am | Comments Off on Vermont Child Tax Credit: Good for kids, good for the economy

Last week the Vermont House passed a child tax credit bill. If the legislation becomes law, it would go a long way toward helping over 34,000 families with children, especially the lowest income households, meet their basic needs.

The bill, which creates a $1,200 refundable credit beginning this year for kids six and under, is modeled on the expanded 2021 federal child tax credit, which was refundable and paid in monthly installments. A refundable credit ensures that families with no or low earnings get the full credit.