VERMONT LEGISLATIVE NEWS: WEEK 12 - MARCH 24, 2006
The House is nearing completion of its review of the budget, also known as the "Big Bill." On Thursday, the House Appropriations Committee presented its FY07 General Fund spending proposal request of $1.123 billion, representing a 2.6% increase over the 2006 adjusted budget. The total increase in the base budget inclusive of the pay act (state employee compensation) is 5.82% versus the 6% increase recommended by the Governor. Although the focus of the debate today will be the General Fund, the total spending package including the Transportation Fund, Education Fund and Capital Budget is $4.4 billion dollars. Some items of interest in the budget bill include:
Housing Affordability
Retaining the purchase and use tax for the Education Fund.
Increasing funding for the Vermont Housing and Conservation Board (VHCB) by 4.5%.
Allocating the first $3.5 million of the property transfer tax over the FY07 forecast to the VHCB and $1 million of waterfall funding for affordable housing.
Investing in Vermont's Workforce
Increasing funding for higher education by 4% (compared to the Governor's 3.75%), in lieu of funding the Governor's Promise Scholarship Program.
Providing one-time investments for the Governor's Next Generation initiative, including $1 million to UVM for research and development of innovative and sustainable technologies, $1 million to the State Colleges to invest in workforce development programs, and $1 million to the Vermont Student Assistance Corporation to invest in initiatives that encourage students to attend Vermont colleges.
Providing $100,000 as a match to build up the Vermont State College endowment.
Increasing childcare subsidies by 2% for licensed and registered day-care facilities.
The House agreed with many components of the Governor's budget including funding for Lake Champlain cleanup, a chronic-care initiative to improve Vermont's health, an increase of $350,000 for tourism and marketing (although not to the level requested by the Governor) and a $100,000 increase for the Vermont Training Program. Additional funding was also given to agriculture and rural economic-development programs. Appropriations Committee Chairperson Heath (D-Essex/Westford) cautioned House members about the many remaining long-term fiscal challenges for future budgets including the five-year $212 million Medicaid deficit, teacher's retirement obligations and the state hospital conversion.
Just one week after receiving the House Health Care Bill (H.861), the Senate has released its expanded version of the legislation. In addition to including components as passed by the House, the Senate proposal contains the following:
Medicaid outreach and enrollment for those eligible but not insured.
Removal of hospital care from the Catamount Health benefit, and codification of the charity care and incidence of bad debt that hospitals currently absorb.
Establishment of a uniform hospital payment policy, basing charges on a percent of income and size of bill.
The setting of provider payments in Catamount at Medicare plus 10%.
Payment for part or all of an employee share of a premium when the employer plan is at least as generous as Catamount Health (a modified version of the Governor's ESI).
An individual mandate to have insurance coverage that automatically begins in 2010. A charge on employers who do not offer insurance at an estimated $365 per employee (full and part time) or $100 per employee if there are fewer than 10 employees total.
Ability for employers in the small group and non-group markets to purchase Catamount Health in a separate pool from the uninsured population.
The Senate Health Care Committee introduced these changes with the goal of making everyone have a financial stake in reform. There are many issues, however, with the latest modifications to the bill. First, hospitals currently offset the cost of free care by cost shifting to private insurance plans. This, in addition to Medicaid and Medicare underpayments, increases private premiums by 37 cents over each dollar for the actual cost of care. Placing this practice in statute only perpetuates the cost shift borne by private businesses and individuals.
A further concern can be found in the premium assistance program for employer plans. In order to be eligible for the ESI portion of the bill, an employer benefits plan would have to be at least equivalent to the Catamount Health Plan. Catamount Health is based upon the state employees' select care plan, which costs approximately $5,800 per person per year (the Senate anticipates the same plan to cost $2,972 under the circumstances laid out in H.861). Meeting this standard is likely to prove impossible under current economic circumstances.
Once employers in the small group market (fewer than 50 employees) begin to purchase Catamount Health, the remaining medium to large size businesses (including the self-insured) will be alone in the marketplace, bearing the cost shift caused by Medicaid, Medicare and the hospital "default insurance" program for uncompensated care.
Although H.861 was originally designed to decrease the rising cost of care, the above changes are likely to have the opposite effect in the private market.
The Senate gave preliminary approval of the Growth Centers/Prime Agricultural Soils Mitigation Bill (S.142) thereby setting the stage for final approval of the bill. Senator Lyons (D-Chittenden Co.) presented the bill to her colleagues, explaining the bill's overall goal was to focus growth in the state's downtowns and village centers and to limit sprawl. Senator Cummings (D-Washington Co.) of the Finance Committee explained the tax credit portion of the bill, stating that growth centers would be the recipients of specific, fairly scarce state resources such as downtown tax credits and state grants in addition to automatically fulfilling the public purpose finding requirement for tax increment finance district approval. The specific tax increment finance revisions have been separated out of the growth centers bill and is now a stand-alone bill, S.291. The Lake Champlain Regional Chamber of Commerce and GBIC remain concerned with the following areas of S.142: The exclusion of our high-value-added job centers from the growth center definition, thereby limiting the availability of the incentives for these areas and allowing them to be "shovel ready" for development.
The focus of the bill on natural-resource protection and a potential expansion of mitigation requirements, resulting in increased costs.
The unpredictability of the designation review and Act 250 processes given the need for review by an expanded downtown board and the land use panel.
There are several amendments to this bill that are being proposed by Senators Wilton (R-Rutland Co.) Starr (D-Essex/Orleans Co.) that the Chamber and GBIC supportYou can reach your Senator by leaving a message at the Sergeant at Arms office (802-828-2228). If you want to provide comments on the bill as it crosses over to the House, contact dawn@vermont.org.
The question of how to finance Education and Transportation has become intertwined. At the urging of the Republican leadership, the House reconsidered its proposal to increase the gas tax. The Administration had proposed directing a portion of the purchase and use tax to the Transportation Fund as well as modifications to the rules that govern education and property tax-related calculations including cutting income sensitivity property tax reductions. Collectively, these proposals would increase the funds available in the education fund for reducing property tax rates. However, the Democratic leadership argued that most of the savings would be temporary or raise property taxes + an argument that kept the gas-tax increase intact.
The House Ways and Means and Appropriations Committees presented H.880, a simplification of the education finance system. This bill combines the prebate/rebate system into a credit that appears on municipal property tax bills instead of sending a check to the taxpayer..
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