Douglas Wants
Lottery Lease,
Tax Change
By M. D. Drysdale

Two initiatives were proposed by Gov. Douglas last week to bring down property taxes.

One of them, a proposal to lease the state lottery for 40 years to a private company, received a frigid reception from Democrats and even some Republicans.

The other, a proposal to tax people on unearned income at the same rate as earned income, was welcomed by Democrats but may lead to a partisan split later on, as the details are worked out.

Leasing the Lottery

The proposal to lease the lottery had leaked out in the previous two weeks. It has one dramatic selling point—an initial payout of about $50 million in cold cash, to be used as the state desires.

The deal, which would be the first in the nation, would also continue to pay Vermont the $20 million annual profit it has been getting, plus a certain percentage of increase every year.

To make their $50 million back, the private operators of the lottery believe they can scare up millions of dollars of new business a year.

Douglas said that half the $50 million bonanza should be spent to pay towns for school construction, payments which have already been promised. The other half should go into a one-year reduction in property taxes, he said.

House Speaker Gaye Symington immediately attacked the lottery proposal, and other Democrats appeared to line up with her. Symington is no fan of state-sponsored gambling in any form, and she noted that a more profitable lottery would mean more Vermonters losing money. She also questioned why part of a one-time infusion of cash would be used for a tax reduction just for one year, "albeit an election year."

Unearned Income Tax

The proposal to tax unearned income at a higher rate did find favor with Democrats. The current system "is grossly unfair," the governor said, pointing out that a working person making $50,000 a year "pays nearly 50% more tax than someone who does not work and simply lives off investment or trust fund capital gains income."

While Democrats agree heartily with the fairness issue, it is predicted that a struggle will come later in the legislature about what to do with the extra money, estimated at $20 million, which will come largely from taxing dividends from stocks and bonds.

Gov. Douglas insisted that that money be used to bring down income tax rates for other taxpayers. Democrats, however, said the state has crying needs that may need the additional funding.

Douglas will attempt to insist on a legislative package tying the new tax on unearned income to a tax reduction for others. Democrats may try to pass the unearned income tax, then argue later about what to do with the extra $20 million.