Wednesday January 16, 2013

MONTPELIER -- When it comes to Gov. Peter Shumlin’s plan to take money from a tax program that helps low-income workers and put it into child care subsidies, Dawn Gingras understands both sides of the equation.

The 42-year-old Sheffield resident says state and federal earned income tax credits combined are a much needed supplement to her annual income from a job at a daycare center. She nets about $8,000 a year that she can add to her income of less than $25,000.

But at her job at Cherry Street PlayCare in St. Johnsbury, Gingras says she sees parents every day struggling to pay their share -- after the state subsidy -- to keep their kids in daycare so they can work.

"It’s going to hurt the low-income worker," she said Tuesday of Shumlin’s plan to reduce what the state spends each year on the earned income tax credit from about $26 million to about $11 million. "That’s how I pay my property taxes."

Since the governor proposed in his inaugural address last week to shift about $17 million from the tax credit program to child care subsidies, legislators and others have complained the plan would help poor working families by taking from other poor working families.

Some Progressive and Democratic lawmakers took aim Tuesday at the Democratic governor’s proposal, saying at a news conference that they were fully on board with more support for child care but want to see the money come from somewhere else. They want the earned income tax credit to be left alone.

Under the program, lower-income taxpayers get big tax refunds, often larger than the taxes they paid.

"The earned income tax credit is one of our most effective anti-poverty programs," said Sen. Anthony Pollina of Washington County. "Diverting money from this important benefit is a tax increase on over 40,000 Vermonters who are least able to afford it: lower income people, working families and others struggling to make ends meet."

Rep. Chris Pearson, a Burlington Progressive, said he wants the state to have a discussion about possible new taxes, including a tax on the extraction of natural resources, which Vermont does not have.

A top aide to the governor replied to the criticism by saying Shumlin is trying to invest limited state dollars in the most effective way.

Human Services Secretary Douglas Racine said too many parents drop out of the workforce because they can’t afford the child care they need to allow them to work. Increasing child care subsidies, something state officials have talked about for years, would help many of them stay in the work force and would mean their children could enroll in high-quality programs, he said.

"If we don’t help those families get their kids off to a good start we pay for it down the road" in lower educational levels and rising prison populations, he said.