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Douglas warns of dropping incomes, revenues

SOUTH BURLINGTON - Citing the Chinese proverb - "living in interesting times" - Vermont Gov. Jim Douglas brought his bold plans for the new session of the Vermont legislature to the first Lake Champlain Regional Chamber of Commerce and Greater Burlington Industrial Corporation Legislative Breakfast of the year Monday, Jan. 12.

The breakfast attracted a full-house to the ballroom at the Sheraton Hotel. Douglas stressed the need to focus on the economic crisis that faces Vermont as well as the nation.

"With a shortfall in our budget estimated to be $46 million in the current year and projected to be as high as $150 million in 2010, we can't just tweak and tinker," he said.

Douglas warned against tapping into the rainy day fund to help to balance the budget.

"We need to save that resource until after we see where we are after April 15," he said. Douglas speculated that taxpayers might be getting back the estimated payments they made as incomes drop.

He also recommended waiting until it is clear what the federal government in D.C. will do to help Vermont. While he said there was an expectation that there will be help for infrastructure transportation projects, he said he hoped there would be significant help for the state's Medicaid costs which have been rising.

He also repeated his recommendation for a new formula for education funding, saying that one-third of the general fund goes to education funding and teacher pensions, with the cost of education continuing to rise, even though the number of students has been dropping. "It's not fair to ask the state agencies to reduce their expenses by 13 percent and not ask the K-12 education system to make cuts," he said.

Among what he described as "bold steps to position Vermont for competitive success in the future," Douglas listed renewable energy incentives, research tax credits, incentives for rehabilitating old buildings, and making changes in the permitting process to encourage entrepreneurs.

In response to a question from the audience about tax policy reform, Gov. Douglas recounted a conversation he had had recently with a seasonal resident of a ski resort who suggested that Vermont should recognize its strong attraction for seasonal residents, and instead of taxing them more heavily, the state should cut their tax rate in half.

He said that "so many people would like to be Vermonters that such an action would probably attract 200,000 more taxpayers."

The next legislative breakfast, on Monday, Feb. 9 will focus on transportation issues.

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