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The crisis of affordability in Vermont is real, according to Washington County Sen. Ann Cummings, who says she generally agrees with Republican Gov. Phil Scott that now is not the time to be raising new taxes or fees.

“I don’t raise taxes lightly,� said Cummings, the influential Democratic chair of the Senate Finance Committee. “I think affordability is an issue for people, and I’m not seeing anything that says grocery prices are going down.�

If the Republican-controlled Congress approves a federal budget that results in dramatic funding cuts to states, however, then Cummings said an increase in state income taxes may be the least worst option for Vermont.

“If things sugar out so that large numbers of people would be hurt, I would consider a Snelling-esque surcharge at some level, to keep from cutting holes in the safety net, and putting more people out into the homeless category,� Cummings said recently. "And that’s a real risk right now.�

The “Snelling surcharge� alludes to historic bipartisan compromise in 1991, when Republican Gov. Richard Snelling worked with Democratic lawmakers to enact a temporary income-tax hike in order to fill a budget deficit.

Peter Hirschfeld

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Some elected officials in Montpelier worry Vermont is on the brink of another fiscal emergency. Actions undertaken by the Trump administration have already canceled, suspended or put at risk $378 million in federal funding that was earmarked for broadband, solar, weatherization and other programs.

Sen. Peter Welch says a budget reconciliation vote, tentatively scheduled to take place sometime around Memorial Day, could make those reductions look trivial in comparison.

“If their reconciliation bill goes through the way the House has its budget resolution, there would have to be massive cuts in Medicaid in order for them to pay for the tax cut, which would have massive implications for Vermont,â€� Welch told ¿ªÔÆÌåÓý on Thursday.

Brattleboro Rep. Emilie Kornheiser, the Democratic chair of the House’s top tax committee, said federal budget deliberations have direct implications for the Legislature.

Lia Chien

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“In the background of everything we do this year � is the reality that more than half of our state spending comes from federal money,� she said. “If big changes do happen in that case, then we’re going to need to sit down and rethink all of our assumptions about how the state budget works.�

Since the proposed reductions in federal spending would be used to fund tax cuts that disproportionately benefit the richest Americans, Kornheiser said, a progressive increase in state income taxes could both soften the financial blow to Vermont and prevent the wealth gap from widening.

“As we continue our work, I’m going to hold those values of wanting to live in a state where we have as much fairness in our communities as possible, where folks are looking out for each other, and I think the tax system is a great way to do that,� she said.

Asked at his weekly press briefing this week whether he’d entertain the prospect of raising revenues to offset federal funding cuts, Republican Gov. Phil Scott said, “I’m not prepared to answer that at this point in time.�

“I think we’re talking about what ifs, and at this point in time we don’t know what’s going to happen,� Scott said.

Scott said the tax increases approved by Democratic lawmakers over his objections over the past four years � notably a payroll tax that funded child care subsidies � have eroded the state’s ability to respond to potential challenges later this year.

“Every time they came up with another tax or fee and increase here and there during the good times, I said, ‘You know, there’s going to be a time when you’re using up all our taxing capacity, and we made need that at some point,� he said.

Regardless of what comes down from Washington, D.C., Scott said, program cuts � not increased taxes � will be the first option.

“We’ll have to determine where we can make some cuts, not do certain programs,� he said. “We’ll see the magnitude of this, because we don’t really know what it is. But when and if that comes, we will be looking internally to try and fill the gaps.�

Republican Lt. Gov. John Rodgers said the governor is right to be wary of state tax increases. He said he also has severe concerns about what federal cuts could mean for local health care providers.

David Littlefield

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“One of the most informative meetings that I’ve held in this office was with the federally qualified health care centers,� Rodgers said Thursday.

The centers operate more than 60 primary care and 17 dental care clinics statewide, and serve low-income and uninsured patients. Rodgers said one center was operating with less than five days cash on hand.

“Cuts to Medicaid could close them,� Rodgers said. “Our hospitals, our health care system, is already in trouble. If those FQHCs close, I believe it has the potential to collapse our entire health care system.�

Asked whether raising state revenues should be one option for backfilling potential Medicaid funding losses, Rodgers said, “I’m not opposed to looking at any option.�

“I think if it is as bad as we think it may be, we’re going to have to look at every option out there,� he said.

Vermont will have to do so thoughtfully, Rodgers said. The so-called Snelling surcharge, which raised about $80 million, used a tiered income tax surcharge that resulted in Vermont’s highest earners paying the most in additional taxes. Rodgers said elected officials need to make sure that proposed revenue solutions don’t exacerbate Vermont’s fiscal problems.

“It’s all about having a conversation, and I think you need all the right people at the table,� he said. “I think you have to have some of those people that are high income at the table, because if we implement at tax structure that forces them all to move to Florida, it doesn’t help us a bit and puts further pressure on the folks that can least afford it, so there has to be a balance there.�