Legislative Update, March 22, 2014

Legislative Update 

Rep. Anne Donahue

March 22, 2014

 

The House version of the state budget for fiscal year 2015, the tax proposals to pay for it, and the education tax rate are all due out for votes at the end of this week before heading to the Senate for its review.

It appears that the Ways and Means Committee will be proposing tax increases in the realm of $4 million, less than the governor’s $14 million proposal and thus turning down some of his budget proposals.

One item that is likely to not make the cut is the reimbursement to families that were billed for repayment for our processing errors for Food Stamps. Our Human Services Committee bill making the state responsible was presented to the Appropriations Committee last week, and it ended up low on the Committee’s wish list.

The Pay Act, which came out of committee on a 6-5 vote Friday, supports the 4.2 percent COLA and step increases for state employees negotiated by the administration.

Addressing Poverty

My committee succeeded with a bill that may prove to be the most significant action in years in helping families out of poverty.

The bill was attempting to address the obstacle for families on public assistance when they start earning wages. Different benefits – child care, housing, and so forth – drop off more quickly than the income one begins to earn. It’s called the benefits cliff. It punishes work.

By not counting initial wages earned against Reach Up income limits, we can help get over that hump. The bill will increase that “earnings disregard” from the first $200 to $300 of income, and from 25 percent to 50 percent of wages earned. It will also allow savings up to $5,000 before becoming ineligible for assistance, instead of $2,000.

These two measures are recognized nationally as optimal ways to help families succeed in getting off of public support. So the public policy for doing this has always been sound, but the cost to do it climbs well above $1 million.

A young, business-minded representative from Bellows Falls, Matt Treiber, set out this year to find a way to do it from within the existing resources in the Reach Up program, and he discovered that a shift of less than $20 per month from the cash assistance grant would pay for the proposed work incentives in the bill.

He worked to convince his Democratic colleagues that the benefit of the change outweighed the burden of the reduction in the basic grants. Friday, the House voted 141-4 in support.

Medical Consent by Proxy

If you have not completed an advance directive and have a car accident or stroke and end up in a coma, who makes medical decisions for you?

A court can appoint a guardian, but Vermont law provides no other “proxy” consent. Hospitals muddle along with policies that do not have backing in statute. Worse yet, Medicare has started warning providers that it will not accept a proxy that is not authorized under state law for admission to hospice care, and could stop paying in situations where the patient cannot consent for themselves.

I presented a committee bill last week that creates a legal proxy (family member or known close friend) and requires decisions that reflect what the patient would have wanted, if known, and it passed the House easily.

Unfortunately, two other parts of the bill I introduced were not addressed. Under current Vermont law, consent for a “do not resuscitate” order can come from an agent, a guardian, or an “other individual” who signs. No definition of who that must be; no requirement on how that decision is made.

My committee decided we did not have time this year to correct this. I was able to convince the others to extend rather than eliminate a “due date” for addressing it for two more years, so that a reminder of the need stays in place.

The final part of my bill sought to clarify that an agent or guardian may not consent to a physician-prescribed lethal medication for end of life. This protection was one of those stripped in last minute changes to the physician aid-in-dying bill last spring. On a straw poll, 7-4, the committee chose to not act on that part of my bill.

Police and Tasers

Last year, I introduced a bill to require statewide standards and training for the use of electronic control devices by police (typically known by the brand name Taser.) I think they are a vital tool to avoid the use of lethal force, but they are sometimes mistaken as being a non-lethal alternative.

Deaths have resulted, including one in Vermont two years ago. The victim in that case had called for help with a mental health crisis.

The issue of distinguishing symptoms of mental illness with intentionally disobeying police orders is intertwined with potential Taser misuse. One of the standards in the bill requires that, when safe to do so, police attempt to de-escalate a crisis before using a Taser.

Verbal de-escalation in a mental health crisis is a learned skill. In 2006, funding was provided to develop new training for police for these interventions, and since then, it has become a component of training for all new recruits. I am a member of the ongoing Attorney General’s Task Force on this training.

Thirty-two percent of officers in the state have still never taken the course.  I proposed a floor amendment to require that all police receive it within the next three years. (According to the 2014 report, 8 of Northfield’s 10 officers and 11 of Berlin’s 12 officers have completed this training.)

Both the bill and my amendment passed easily.

More on Police

An issue that has irked Northfield for years will finally get some serious review from a committee appointed to study state and local police coverage this summer. The issue is taxpayer inequity when some towns rely on state police coverage, while others pay for local police.

Earlier this year I heard a compelling example from a constituent. Tourists from England heading for Stowe slid off I-89 into a snowbank in the middle of a bitterly cold night.

State police were not available, and Northfield police spent several hours bringing the family to warm shelter and arranging assistance with the car. They later received a letter of gratitude from the tourists they rescued.

A heart-warming story, but it didn’t occur in Northfield.

“I am paying for Northfield police to provide service on the interstate and for state police to provide services to other towns,” the constituent wrote. “The transfer of Northfield property and income taxes to the communities that receive state police services at bargain costs should cease.” 

If the bill passes the Senate, this issue would be one of several that the study committee would review in order to propose legislative options next year.

Health Care Reform

I attended my first meeting as a new member of the Advisory Committee to the Green Mountain Care Board this past week. We were asked for recommendations on how the Board should meet its responsibility to review financial sustainability into the future before a single payer health system may be launched.

The seriousness with which the Board is taking its many obligations is gratifying to see. On the philosophical level, I continue to believe that in its broad strokes, our plans for reforming the system are the right direction to go to create more equitable payment for health care. I also believe that an attempt to do it as a single, small state will prove to not be feasible, and that we stand to lose a great deal in the course of trying.

I am honored to have been asked to contribute to the decision making process of the Green Mountain Care Board.

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Please be in touch about issues that concern you, or if you have questions about the topics in this column. You can reach me at 485-6431, at counterp@tds.net, or via message at the state house at 828-2228. You can review earlier updates on my blog at http://representativeannedonahue.blogspot.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legislative Update, March 9, 2014

Legislative Update

Rep. Anne Donahue

March 9, 2014

 

The budget will become the big focus in the House as we move through March. Thus far, the governor’s budget, with its $88 million increase, is not selling well, in that it relies on a $14 million increase in taxes on health insurance claims.

The Ways and Means Committee, which has responsibility for revenues, hasn’t accepted this tax or an alternative yet. At the same time, the Appropriations Committee is desperate for that money to be found in order to balance the budget, as it sees little flexibility in budget pressures.

The $88 million would be a five percent increase over last year, and there is an irony to that, since the governor challenged local school boards around the state to hold down their budgets to a much lower growth rate.

The Republican caucus is pressing to hold the growth to three percent, or $54 million.

A full 35 percent of our $5.3 billion state budget comes from federal dollars. Last week, the Joint Fiscal Office published its annual “Fiscal Facts” booklet, which is a fascinating summary of almost any budget question you might have. You can access it directly at www.leg.state.vt.us/jfo.

I went through it to put together a few highlights for poster boards for town meeting, so I’ll share several of the things that caught my eye here.

Where Does the Tax Revenue Come From?

For the state budget (this doesn’t count local government funding or the local share of school budgets), the largest pot is the income tax, raising $738 million, followed by the non-homestead property tax, at $598 million.

The homestead property tax raises another $596 million, but $154 million of that is returned through income sensitivity rebates, so the net is $442. There is also $6.2 million returned in renter rebates. About another $45 million is excluded from the pool of property tax revenue as a result of the current use program, which reduces rates for property that is kept undeveloped.

Sales and use taxes raise $367 million and rooms and meals taxes raise $145 million. Gas and diesel taxes raise $98 million, the purchase and use tax, $96 million, and motor vehicle fees, $80 million. Other revenue sources are smaller and include the $23 million raised by the lottery.

That ranks us nationally as 20^th in state income taxes, 8^th in total state and local taxes, and 5^th in state and local property taxes (2011 data.)

Where Does It Get Spent?

The big pieces of the pie are really big, while the rest of state government functions are minute in comparison. Some funds are restricted (property tax and the lottery to education, and the gas tax and motor vehicle fees to transportation, for example), but there is some crossover.

On the top of the list is education, at $1.68 billion last year, or 32 percent of the whole. Next is all state-funded health care, 20 percent, followed closely by human services, for another 20 percent, at just over $1 billion each.

The transportation budget is 11.6 percent, $612 million.

Protection to persons and property (the courts, state regulators, and state police) receives 5.4 percent ($247 million); the corrections system takes up three percent ($152 million), and the other shares are all two percent or less: (natural resources, higher education, general government, labor, commerce and community development and debt service).

We are 9^th, nationally, in government spending per capita.

Who Pays for It?

Everyone chips in to an equal degree on everything we buy, to the extent that we buy more or fewer things. Property tax is a function of the amount of property one owns, unless, for those making under $80,000, some of it comes back as a rebate.

The big range comes in how the income tax is distributed, which is broken down in detail in the Fiscal Facts booklet.

Several facts struck me the most from this data. First is that 31 percent of Vermont wage earners make less than $20,000 per year. (Many benefit from the earned income refund, so on average, those in this group receive $23 each per year).

Second is that the three percent of Vermonters with the highest earnings – those making $200,000 per year or more -- pay almost 42 percent of all income tax revenue. (Our 520 individual millionaires contribute 16 percent of income taxes.)

If you drop down to the next grouping, and include all those who earn more than $100,000 per year, it adds up to 13 percent of all those filing, but they pay 68 percent of the state income tax.

The lowest 59 percent of wage earners contribute a bit less than two percent of the total raised. This reflects our progressive income tax structure, but also our low average earnings, since that 59 percent reflect incomes of less than $50,000 per return.

The Education Fund

The Education Fund is made up principally of all the state property tax revenues ($1.04 billion), a share of all sales taxes ($161 million), a contribution from the general fund ($296 million) and the lottery. It goes back to towns in the form of an equal amount per pupil, next year expected to be set at $9,382 each.

The rest that a town spends per pupil gets raised by the local share of the property tax. That is how a local school budget affects local property taxes. This year in Northfield, for example, the cost is $12,965 per student, so $3,583 will be raised by the local property tax share. Berlin has a $15,188 per student cost (including tuition to U-32.)

It is estimated that next year’s statewide average will be $14,050. Vermont is ranked fifth nationally by the census bureau on per pupil spending (most recent data 2011), and Governing magazine adjusts that to number 1 when regional cost differences are considered.

The devil is in the details of how the tax rate is determined. There is one rate statewide based on the total amount that needs to be raised as determined by the town budgets. However it is applied in each town differently based upon a calculation of local property values compared to all other towns (the infamous “common level of appraisal” factor.)

That’s what creates all the confusion and all of the risks of inequities… and would take an entire update to attempt to explain.

Back to the Future

The single largest general fund line item increase each year for the past several years has been in the overall administration of the health care system as it evolves from merely administering Medicaid to setting up the health care exchange to developing our state single-payer system.

It was $52 million in 2012; $92 million in 2013; $133 million in 2014; and budgeted at $152 million for 2015.

To get a relative sense of what $152 million means in what the state budget buys: the entire Agency of Natural Resources budget for 2015 is $99.5 million; Protection of Persons and Property, which includes the entire court system and state police, Secretary of State, insurance regulation and agriculture regulation, is budgeted at $302 million.

That may be why those watching the development of our new health care system financing plan question whether we can run it for less than private insurers do, or why they predict it will bring on the largest tax increase in the state’s history.

The assertion of billions in tax increases isn’t fair if its costs are offset by elimination of health care premiums but these questions – along with whether we can reduce health care cost increases – will be the devil in the health care details.

The administration has pushed back several deadlines for presenting the cost and financing, so this debate won’t begin until next year.

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The second half of the second year of this legislative biennium will soon become very chaotic, and only snippets can be covered in these updates. Keeping you informed is part of my job in serving you. Please feel free to get in touch with questions or input, particularly if you hear news reports of concern. You can reach me at 485-6431, or by email at counterp@tds.net. Rep. Patti Lewis’ number is 223-6319, and her email is pattijlewis@myfairpoint.net. You can leave messages for either of us with the Sergeant-at-Arms at 828-2228. This, and past updates, can be found at http://representativeannedonahue.blogspot.com