In this week's update I will explain my vote to support the budget. In the following weeks I will update you with this session's highlights.

The question before the Legislature during an override session was "Shall the bill pass, the failure of the Governor to approve notwith- standing?" I viewed my role, not as one to win and defeat the Governor, but to uphold and pass a fisc ally responsive budget that preserved services to our neediest Vermonters, decreased income taxes for our low and middle income Vermonters, cut state spending, decreased cuts to our state workforce, and lessened impacts on the Education Fund, property taxes and our school boards.

The budget we passed represents a careful balance between cuts to state programs and services, a modest income tax cut also passed a "companion bill" that incorporates a number of the economic development priorities outlined by the business community, legislators and the administration.

The fiscal challenges we are facing are large and they require a multi-year approach to solve thoughtfully and effectively. While other states are reeling under bankruptcies and deficits, Vermont is methodically moving forward to carefully address its challenges this year and into the future.

The budget this year cuts spending of state dollars - the money generated by Vermont tax dollars -- by five percent. We cut over $15 million from Medicaid, including reducing support for hospitals, nursing homes and prescription drug programs. We also made substantial cuts to the Agency of Human Services, including to alcohol and drug abuse programs, the Department of Corrections and Aid to the Aged, Blind and Disabled. The budget also reduces state funding for the Vermont Housing and Conservation Board by about 50 percent and makes $14.7 million in cuts to state employees and contracts.

In this year's budget, we were able invest additional money from the federal stimulus package jobs and provide Vermonters with support they need in difficult times.

The budget also closed two tax loopholes and applied some of the revenue to lowering income tax rates for all Vermonters and some to allow us to avoid deeper cuts to health care or the Education Fund, the cost of which would be shifted to privately insured Vermonters and property tax payers. We also raised taxes on cigarettes and liquor to help avoid those cost shifts.

One of the most difficult decisions in the budget was to reduce the amount of money we transfer to the Education Fund to the General Fund. Since the Education Fund is primarily supported by property taxes, and decisions that impact the fund also have the potential to impact property tax payers. To help absorb this reduction, the budget freezes the base per pupil education payment for next year, which allows our school boards to craft their budgets in advance, knowing the lay of the land.

Though the budget does reduce the transfer to the Education Fund, we rejected a proposal to lower income sensitivity for property taxpayers from $90,000 to $75,000. Currently, households making between $75,000 and $90,000 pay their property taxes based on their income. If this proposal was accepted, 44 middle income families in Moretown would pay an average of $442 more in property taxes per year, 62 families in Northfield would pay an average $247 more and 12 families in Roxbury would pay an average $568 more. The hardest hit families in the district would pay up to $2,700 more a year.

The final component of the budget package I want to highlight is the companion bill we passed to incorporate other priorities and address concerns raised by Vermonters inside and outside the state house. The companion bill includes a Research and Development tax credit, two one-day sales tax holidays in August and March, and modest additional funds for telecommunications and student scholarships. The companion bill also made some adjustments to the package closing the capital gains loophole that allows farmers and timber lot owners to continue claiming a 40 percent capital gains exemption. It also creates an 18-month transition period for seniors age 70 and above to continue claiming the higher exemption.

Taken together, this budget package is a solid first step in a multi-year process of dealing with new fiscal realities. The budget we passed incorporates many varied priorities and attempts to address some of the most significant concerns raised about how we can move forward. These are difficult times for all Vermonters, but I am confident we will continue engaging with each other and the issues to keep moving forward together.

Please stay in touch: maxjg@wcvt.com/496-4244.