Statehouse Journal: March 26th to March 29th

A Rough Week Under the Golden Dome

Last week was tough one. The hours on the floor were long. The bills under consideration were complex and significant. We're desperately trying to get bills over to the Senate.

Tuesday we were on the floor from 10:00 in the morning until a little past 8:00 in the evening, with a half-hour break for dinner.  That included a joint assembly with the Senate on the retention of a couple Superior Judges and a Magistrate. 

Wednesday was from 1:00 to 7:30, then Thursday from 1:00 to 11:00 at night. The photo above was taken as I staggered from the Capitol Thursday evening.

What did we accomplish with all that time debating and voting? Taxing and spending, for the most part. The following list is what we are moving over to the Senate. If my vote is shown after the bill number, it's a link to the roll-call vote of everyone else.


That's a lot of spending and a lot of taxing. But notice just who is being taxed: property transfers on houses with a value over $750,000, large corporations, and individuals with annual income over $500,000. Most Vermonters will see little, if any changes. The counter-argument, of course, is that the higher taxes will drive businesses and the wealthy out of Vermont, causing us all to suffer.  For the most part the votes on these bills fell along party lines. They will all be changed in the Senate and perhaps vetoed by the Governor.

Changes in the Property Transfer Tax (PTT) and the Clean Water Surcharge

Perhaps the most controversial change to taxation are those to the Property Transfer Tax. Because it is only paid when real estate is transferred (sold) many may not be aware of the tax. Even with those that have bought property, it all gets rolled into the closing costs and so much money is moving around that it may not be noticed.

It's also a "marginal" tax, which can confuse people. It has brackets relating to the value of the property being bought. This is similar to the Income tax.

The PTT Brackets

The following table shows what the new tax rates for the different types of property at the different values. For Principal Residence there are three brackets: 0$ to $200,000, $200,000 to $750,000, and Over $750,000. The "X" in the 0.5% column means that for the first $200,000 of value, the buyer pays 0,5% of that value. The "X" in the 1.25% column means that for the portion of the value between $200,000 and $750,000, the rate is 1.25%. This means that if you buy a house for $200,001, you pay .5% for the $200,000 (that's $1,000) and then 1.25% for the one-dollar above that rate (that's $0.0125). The total paid would be $1000,01. Likewise for a house of $750,001. The new higher 3.65% rate is only paid on the portion above $750,000.

The proposed changes move the top of the first bracket from $100,000 to $200,000. This is a REDUCTION in PPT taxes for anyone that buys a home with a value less than about $790,000 because they are paying that lower 0.05% rate on $200,000, instead of $100,000.  The following graph compares the old brackets and rates to the new brackets and rates. You can see where the change becomes a tax increase, rather than a decrease. This table compares the tax before and after the changes. You can see a 30% DECREASE in the PTT for a $260,000 home and a 45% INCREASE for a million-dollar home. 

The Clean Water Surcharge is a "flat" tax with no brackets. Everyone would pay 0.22% when the property is transferred, instead of the current 0.2%, of the property value.

The New Income Tax Bracket

Income taxes are also marginal. There are brackets with rates for each level of income. H.829 added a new bracket for those returns with annual income above $500,000 and filing jointly. For unmarried individuals it's $410,650. The rate for the portion of income above that level is 11.75%

The Whole Idea

The goal is to make Vermont's taxes a bit more progressive, with the wealthy paying what some consider their fair share. Others note that wealthy Vermonters already pay 30-some percent of the taxes collected. If they're required to pay more, they will leave Vermont. 

Housing and Act 250

H.687 makes changes to Act 250. It's not the complete permitting reform that some want, but it significantly restructures the governing structure to make it more professional. It should shorten the time it takes to permit projects, to process appeals, and should provide consistency across the state. 

H.829 puts more resources into the Housing sector as follows, for a total of $51.7 million.

Here's a summary of the bill and the expenses.

Education

H.630 encourages Boards of Cooperative Education Services (BOCES). The bill allows supervisory unions to join together as a single economic entity for the provision of services. This is seen as a cost saving effort, though some see it as a potential new layer of bureaucracy.

Health Care

H.721 expands the Medicare Saving Program. This give Vermont access to more federal health care dollars and enables greater access to federal programs that have no State costs. The cost to the State of this expansion is $15 million. It will bring an estimated 20,000 Vermonters into the Medicare Savings Program which means that they will not have to pay Medicare Part B premiums out of their Social Security.  The $15 million will deliver $40.3 million into low income, senior, and disabled Vermonter's pockets. Other savings will be achieved. All told, the $15 million from the State will deliver a little less that $100 million in benefits. Here's a summary of the bill and the costs.

Public Safety

H.880 addresses the backlog in the judiciary system. The bill adds one to the two Superior Court judges that the Governor included in his budget proposal. Fifteen staff positions are also added. 29 other positions including Sheriff's Deputies and Judicial Officers are funded. Ten private contract positions are eliminated. The bill passed with a roll-call vote of 97 to 40 pretty much along party lines. I voted "Yes." Here's the others.

The Budget

H.883 is the House proposed budget. The Appropriations committee started with the Governor's proposed budget and made changes. The highlights of the $8.58 billion budget include investments in housing, flood resilience, public health, child care, and education. 

On Thursday of last week the House passed the budget on a 104 to 29 roll-call vote. I voted in favor. Here's everyone else. It's now in the Senate, where there will. no doubt, be changes.

What usually happens is that the Senate makes changes and sends it back to the House. The House will, no doubt, not like the changes and will either change it again or request a Committee of Conference to work out the differences. One way or another there is usually a Committee of Conference. They work out the differences and propose a new budget to both the House and Senate. If both agree, and they usually do, it goes to the Governor. He may well veto this one, in which case we are back in Montpelier for a short veto session in June to attempt an override.

Coming Up

Next week should also be difficult as we finish up the bills that need to get to the Senate. 

We are beginning to consider bills that have come over from the Senate.

The Legislative session general ends in mid May, so there is not a lot of time left.