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?
Paid Family Medical Leave Insurance (PFMLI - H.66) is in the Senate Committee on Economic Development, Housing and General Affairs. They will be taking testimony soon.
Online Sports Betting (H.127) is in that same Senate committee..
The Bottle Bill (H.158) is in the Senate Committee on Natural Resources and Energy.
Affordable Heat Standard (S.5) - came over from the Senate a week or so back and sits in the House Committee on Environment and Energy.
Universal School Meals (H.165) - is in the Senate Committee on Education.
Suicide Prevention (H.230) This firearms related bill is in the Senate Committee on the Judiciary.
Property valuation and reappraisals (H.480) is now in the Senate committee on Government Operations. While taking testimony on this bill it became apparent that the House was moving too fast on a rather controversial issue. I've covered this in previous posts. This section by section description of the bill explains what's being done. Note that the implementation dates of any proposed statewide property appraisal system does not start until July of 2026, after consideration of a detailed plan.
School Construction (H.486) The controversy in this bill is PCB testing. The bill sets aside $32 million for remediation of PCB contamination. But of that $32 million, $16 million is granted to Burlington to remove PCBs from the High School's former site. The bill passed the House on a 98 to 41 roll call vote and is now in the Senate. Because a report on what the State's school construction needs really are is due in October, H.486, as it came from the House sets up a School Construction Aid Task Force to review the results of that reports and suggest a plan by January of next year.
Independent Schools (H.483) Since the U.S. Supreme Court's Carson v. Makin decision last year there has been considerable discussion about Vermont's use of Independent schools for public education. If a Vermont town does not have its own school, the state dollars used to fund that student can be used to tuition the student into another town's public school or to an approved independent school. "Approved" means that it meets the many requirements imposed on public schools. There are also "recognized" independent schools that can accept students, but because they do not meet all the State's requirements, the parents (rather than the State) pay the tuition. What's new is that H.483 makes it clear that Approved Independent schools (like public schools) cannot pick and choose who they will accept if that student's tuition is paid for by the State. Other portions of the bill require the Independent school to provide the sending town or district with information about the student's progress and standardized test results. H.483 passed the House on a voice vote and is now in the Senate.
The Transportation Bill (H.479) came out of the House Transportation Committee last week and after some debate on the floor, passed with a roll call vote of 100 to 39. The most controversial portion of the bill was/is the section that raises fees in the Department of Motor Vehicles. This is explained below.
Milage-Based User Fee (MBUF) - The Legislature is working to make up for the reduced revenue that the state is receiving from the gas tax. As more users switch to electric vehicles, less gas is being purchased. With that in mind, H.479 authorizes the design of a Milage Based User Fee. However, it does not explicitly establish or define such a fee or tax, so it's not about to happen right away. The bill discusses the "intent" of the Legislature, which is not the same as requiring something by law.
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.
The Yield Bill (H.492) Each year the General Assembly passes a bill that is the foundation for property taxes in Vermont. That's the Yield Bill. It specifies three important numbers: the Homestead Property Yield, the non-Homestead Property Tax Rate and the Income Dollar Yield. Those numbers are used to calculate Colchester's property tax rates. Last week the House, by a voice vote, agreed with the way the House committee on Ways and Means (HW&M) determined those numbers. HW&M decided to keep them the same as they were in the "December Letter." That's the letter that comes out each year with a projection of what those numbers might be. School districts throughout the state use those numbers to tell voters what the district property tax rate might be and to help plan budgets. Those who understand how property tax rates work in Vermont will be interested to know the following values, though they may be changed by the Senate:
Homestead property dollar yield: $15,477.00
Income dollar yield: $17,577.00
Non-homestead property tax rate: $1.388 per $100 of equalized property value
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.
The Capital Bill (H.493) came out of the House Corrections and Institutions committee last week and easily passed out of the House. H.493 details how funds received from the sale of general obligation bonds are spent. That's big 20-year projects and major maintenance to facilities as well as Clean Water projects all over the state. It's about $60 million each year for two years. The State is cutting back on such expenditures in an effort to reduce the amount of debt service that must come out of General Fund each year. With a total of nearly $700 million in debt, we are paying close to $73 million each year in debt service. H.493 is off to the Senate where it will be reviewed by the Senate Institutions committee.
New to the House
Housing - S.100 is the Senate's response to Vermont's shortage of affordable housing. It passed out of the Senate on a 27 to 2 roll call vote. Here's a VTDigger article about it.
Child Care - S.56 passed the Senate with a 24 to 6 roll call vote and will be in the House next week, The Joint Fiscal Office released a summary and cost analysis of the bill. You can find it here.
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.