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Vt. governor wants to tax break-open tickets

Dave Gram, Associated Press

MONTPELIER, Vt. (AP) -- Vermont Gov. Peter Shumlin on Thursday proposed a fiscal 2014 budget that would raise $17 million for energy programs through a new tax on certain betting tickets sold in bars and social clubs, and place new time limits on participating in the state welfare-to-work program.

Shumlin outlined a general fund budget plan of nearly $1.4 billion in his annual budget address to lawmakers. Other spending under separate budgets for education and transportation would bring total state spending next year to about $5.3 billion.

"Today I present a proposal that balances our budget without raising broad-based taxes," like those on incomes, sales or meals and lodging, the Democratic governor said. "It invests in areas critical to our future jobs success. It keeps our reserves full and our pension contributions funded at recommended levels."

He did propose a new 10 percent tax on "break-open" betting tickets. An aide to the governor said patrons typically pay $1 for the tickets that have payoffs up to $50. Nonprofit groups often use them as a fundraising tool.

Shumlin said he would use $6 million of the new revenue to replace federal cuts in low-income heating assistance; $6 million for expanded weatherization programs to improve homes' insulation and $5 million to support renewable energy like wind and solar.

Administration aides said somewhere between $135 million and $224 million — the estimates come from the Tax Department and Department of Liquor Control, respectively — worth of the tickets are sold each year in Vermont, so a 10 percent tax could raise as much as $22.4 million. With the tickets, a bettor pulls a tab off the front to see if symbols inside match those printed on the back.

Shumlin also signaled he will support — though he did not provide details — an increase in taxes on gasoline and other transportation fuels. Aides said he wants to talk with lawmakers about raising $30 million to $35 million to make up for declining transportation fund revenues.

"As we move to more fuel-efficient cars and drive less, we are buying fewer gallons of gasoline — 34 million fewer gallons per year since 2005. As a result, our revenues to maintain our crumbling roads and bridges have dropped and are projected to drop even further," Shumlin said.

The governor offered a strong defense of a plan he outlined in his second inaugural address earlier this month to trim a popular benefit for low-income working people — the earned income tax credit. He wants to cut $17 million and use the money for expanded child care subsidies.

"We have concluded that the biggest barrier to work for many lower-income Vermonters is the cost of quality child care," the governor said. Low-income working Vermonters can take advantage of a range of state programs, making the earned income tax credit less crucial, he said.

And he offered another proposal that immediately drew the ire of advocates for low-income Vermonters. Shumlin said Vermont is the only state with no time limit for participants in its welfare-to-work program to complete the transition. He said he wants to set a time limit of three years, with two years of extensions possible.

Shumlin is widely regarded as a liberal Democrat, but his proposals came under immediate fire from the head of the left-leaning House Progressive caucus.

"The governor has progressive priorities and Tea Party funding schemes," said Rep. Chris Pearson of Burlington. He said slashing the earned income tax credit would hurt 40,000 Vermont families.

Republicans applauded the governor's proposal to trim a welfare program, but questioned whether Vermont can afford Shumlin's overall 3.5 percent general fund budget increase.

Senate Minority Leader Joe Benning, R-Caledonia, said he was "pleasantly surprised" the governor did not call for a tax on heating fuel. The possibility of a new tax on heating fuels to pay for expanded weatherization had been much discussed in the Statehouse recently.