Week 13: March 28 to March 31st

A Deep Breath

The snow is gone in front of the Capitol. The ice in the ice rink is melting. Crocuses are just starting to appear. Spring, and the close of the Legislative session, is approaching. May 12th is the target closing date for ending the 2023 session, though we may be back for a day or two in June for a veto session.


Last week we endured two more late days with Thursday lasting until 11:00 PM. There always comes a point during these late-night debates when each speaker prefaces their remarks with "I know it's late but . . ."  When that happens, we know we're getting near the end. But it can drag on. Speaker Krowinski repeats, "The question is 'Should the bill be read a third time? Are you ready for the question? " The Speaker looks around the chamber to see if anyone stands up to speak. We all hold our breath. It's either "The Chair recognizes the member from Somewhere" and the debate continues, or she says, "All those in favor please say 'aye.'" and the debate ends. 


Last week the House passed several big pieces of legislation: the Transportation Bill, the Capital Bill and the Big Bill (the budget). Those have now been pushed over to the Senate where they will suffer changes. It's unlikely the Senate will like our proposals, so the bills will come back after being amended. We can change them again and send them back to the Senate, but often a Committee of Conference is set up to resolve the differences. The closer we get to the end-of-session the more critical is time spent on each piece of legislation.

Where do we stand?


The JFO's Fiscal Note on H.479 further summarizes the bill and the intentions of the MBUF. It also illustrates the changes in DMV fees.


H.492 also stipulates that $22 million of the FY2024 education fund is to be reserved to offset education property tax rates in fiscal 2025, so some funds are being set aside to use next year. The bottom line is that property tax rates may not go up this year but . . . because the value of your home may go up, your property tax amount you pay may be different.


New to the House


The House Proposed Budget - $8.5 Billion

The House proposed budget is $118 million less than last year's budget, but that's a little deceptive. The Joint Fiscal Office's (JFO) summary of the budget shows that General Fund expenditures are up $303 million. The chart shows the various fund sources for this and last year's budgets.


Back in January the Governor sent us a proposed budget. The House committee on Appropriations has been working on it ever since. That committee is unique in that the members only come to the House chamber for important votes. They spend most of the day (including Mondays) in their committee room pouring over spreadsheets and taking testimony. Each member of that committee has a "portfolio" of issues for which they are responsible.  So, they sit in on other committees, read agendas, and keep track of what legislation is moving and likely to impact the budget. 

Last week the Appropriations committee voted H.494 (The Big Bill) out of committee. The Governor's proposed budget became the House proposed budget. On Tuesday members of the Appropriations committee presented the budget to a "caucus of the whole," meaning all House members. You can watch it here.


Where does all the money go?

Do you really want to know? Finding out exactly where the money went is not easy. It's not that the numbers are hidden, it's just that there are so many. The Joint Fiscal Office published a "web report" that details the expenditures but if you are not familiar with its format, it's a little hard to use.  There's also this "one pager" that helps.


The budget tries to make clear the difference between one-time appropriations and those that will continue in future years. There is a great deal of concern that extra federal funds will be used to start programs that will continue after those federal funds are gone. Those that will continue are considered part of the Base Budget. This document shows what expenditures have been designated as one-time expenses.

Fees

There are two primary methods for the State to raise the cash it needs to support services: taxes and fees. The funds raised through taxes are generally a percent of something: income, sales receipts, property values, etc. Fees are usually a set amount for some related service: a motorcycle skills test has a fee of $9.00, an inspection sticker costs $6.00, etc.  This document is an analysis of the 76 fees charged by the Department of Motor Vehicles (DMV). The document shows when the fee was last changed. Notice that many have not been changed since 2016. Inflation since then has been about 20%.

Governor Scott has consistently said that he can run the government with no increase in fees. Prior to his taking office, there was an agreement that the executive branch of the government would review one-third of the State's fees every three years and make suggestions as to which might be raised or lowered. Governor Scott has not done that. Since 2016 there has been no increase in DMV fees. As a result, there has not been enough money in the Transportation Fund to run the department. The difference between what is needed and what is bought in is about $10.95 million. It is projected to be about $68 million for FY2025 and FY2026. The Governor proposed taking that $10.9 million from the General Fund, rather than raising Transportation related fees.

To complicate matters there is $1.7 billion of federal Transportation funds available to Vermont through the Infrastructure Investment and Jobs Act (IIJA). But .  . . those funds are not free. They require a match. Generally, the match is 20% State and 80% Federal. For every $20 we put into a project, we get $80 contributed by the Feds. But where does that $20 come from? The House-proposed increase in DMV fees is projected to bring in an additional $20.5 million each year starting in January of 2024. As the Joint Fiscal Office points out: "H.479 does not increase authorized Transportation Fund expenditure levels in FY 2024 above the levels included in the Governor’s Recommended transportation budget. Additional revenues collected from revised fees would instead accrue to the Transportation Fund and be available for appropriation to help meet non-federal match needs in future years." So, the increase in fees will be used as a match for additional federal funds.

The Secretary of State has also been reviewing fees. There will be increases there as well.

Coming up

The big money bills have all been sent to the Senate. The House can relax a little for a week or so . . . perhaps.