Just one day before the state starts mailing out millions of dollars of refund checks, Senate Republicans and House Democrats came to an agreement on a compromise estate tax fix, only to have senate leaders refuse to put it up for a vote.
"We have a policy deal," House Finance Committee chair Reuven Carlyle told me. "We came to terms, we shook hands, and we wrote this together." Democrats agreed to index the current $2 million exemption to inflation, while providing an additional $2.5 million deduction to estates of some small family businesses. Republicans agreed to raise the tax rate by 1 percent on the portion of estates worth over $4 million so as to keep the changes revenue neutral.
Earlier today the revised compromise bill passed the house by a 53-33 margin, with two Republicans joining the Democratic majority. But not until after Rodney Tom's "Majority Coalition Caucus" nixed a vote on it in the Senate.
"They decided not to decouple the estate tax from the broader politics," explained Carlyle. In other words, although Republican leadership has fully agreed to the estate tax compromise, they are refusing to give it a vote unless Democrats cave on the GOP's non-budget related policy wish list: bills that would weaken workers' compensation, allow school principals to fire teachers at will, and starve future budgets by capping non-education spending at population plus inflation.
"We will not be held hostage to an ideological series of bills simply for the honor of doing our normal jobs," vows Carlyle.
The potential losers of this standoff are too numerous to count. Mostly children. The winners are a handful of millionaires who are about to reap a windfall.
At 8 a.m. tomorrow morning, says Carlyle, a Department of Revenue employee will be standing at the post office "with a handful of checks in one hand and a cell phone in the other." If this staffer gets a call saying the governor has signed an estate tax fix, those checks will be canceled and shredded. Otherwise, $13 million worth of refunds will be dropped in the mail, money our state Education Legacy Trust Fund will never recoup.
UPDATE: To be clear, the amount of money immediately at stake is more than just $13 million. According to DOR there are $95.6 million worth of refunds outstanding. Once the first round of checks out, the other eligible estates would likely win refunds under the equal protection clause, even if the legislature were to fix the law retroactively the very next day. Altogether, failing to fix Bracken would cost the state $159 million through 2015.
So that is the game the Republicans are playing. It is nothing short of extortion.