Legislative Update, March 30 2019

Legislative Update

Rep. Anne Donahue

March 30, 2019

There are not many bills that generate extensive contact from constituents. (And if you think your voice does not matter, keep in mind that “extensive” in this context usually means 10 to 15 emails or phone messages.)

The tax increase on heating fuel to increase the funding for home weatherization was one of those bills, and it presented a tough issue.

A greater number of individuals asked Rep. Goslant and me to vote against it, but those who supported the weatherization fund made compelling arguments.

This was a question we also asked in the town meeting day poll, and a majority of the 160 who responded opposed this increased tax.

The purpose of the tax (and the proposal to double it from two cents to four cents per gallon) was to increase the funds made available for lower income folks to weatherize their homes.

Increasing heating efficiency has a huge payoff, both in heating costs and in reducing the environmental impacts of burning unnecessary fuel. Those with an income of less than 80 percent of the state median income are eligible, and there is a waiting list.

A sales tax, however, impacts people with lower income at a higher percent of their income than it impacts wealthier individuals, something called a regressive tax. The income tax, as a contrast, is progressive: the more you earn, the higher a percentage of what you earn is taken back in taxes.

Low income advocates insisted this was OK, because it is low income Vermonters who will reap the huge benefits in money saved on heating. That’s true – but only for the small percentage who actually get that benefit. Everyone pays; only a few benefit.

Supporters argued that the average cost would be only about $15 a year. The problem with that is that every tax we add is just that – something added to a growing pile of fees and taxes. It isn’t in isolation, and it’s a real bite for those who are on fixed incomes and tight budgets.

The debate on the bill stretched for hours over two days, with various alternatives being offered. One option would have shifted the revenue source to an income-based tax, and I was leaning towards supporting that, but it was found out of order on a technical challenge.

On the second day, an amendment proposed a compromise: increase the current tax by 50 percent, instead of doubling it (one cent instead of two). I voted in support of this, but it flopped miserably, in a 16-122 vote.

Those who supported the program didn’t want the benefits cut in half, and those who opposed any fuel tax increase didn’t want to only cut the increase in half.

The vote to pass the overall bill was 81-60, with some Democrats joining in opposition. I voted “no.”

Two other tax bills were adopted in the past week. One increased the “universal service charge” on telecommunications bills by a half percent to invest in getting broadband coverage to all parts of the state.

The impact of this on the average user was estimated at $1.20 per year, and I supported it.

Finally, we voted on the overall “miscellaneous” tax bill that made adjustments to other revenues.

The biggest changes this year were an increase in the estate tax exemption level to bring us more in line with federal rates, and a reduction in the exempt level for capital gains. This bill passed on a 116-22 vote, and I was in support.

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The other two biggest bills were on how to spend taxpayer’s money.

Hopefully, our state budget appropriates it wisely and carefully, and an overwhelming majority of members believed it does. The vote was 137-1; the one “no” vote came from a member who said she felt we should be spending much more to combat climate change.

There was a big injection of funding (almost $8 million) into child care support, and funding was added to our reserves to protect against an economic downturn.

The biggest drain on the budget is the increasing cost -- $21 million this year alone – that we are paying for, as the expression goes, “the sins of our fathers” (and mothers.)

That is for our Teacher’s Retirement Fund, which was short-changed from what the actuaries said it needed in funding over the course of many years in the late 1990’s and early 2000’s. The catchup is painful, and will continue to increase until we are back in line in 2038.

In fact, the General Fund budget growth this year was 3.9 percent over last year, but would have been 2.6 percent if not for the needed increases to the retirement fund.

The second major spending bill each year is the capital bill for state construction projects, funded through bonding (which is then paid back in the regular appropriations bill.)

There were no big new projects this year, but the groundwork is being laid for two. The women’s correctional facility in Burlington is, by all accounts, in deplorable condition and the worst among many of our aging prisons. The planning work is being authorized for its replacement.

In even worse condition is a 7-bed psychiatric hospital step-down residence in Middlesex that is made up of two temporary FEMA trailers, set up in 2012 after Irene. Its projected “useful life” was for four years, but work on replacement has stalled several times.

My Health Care Committee visited it this winter to assess it first hand, and during our tour the operations director attempted to take us through a side emergency exit to access the rec yard. But ground movement under the trailers often causes floor buckling, and a recent, unnoticed result had been that the door was jammed tightly shut.

This was the fire exit. No amount of attempted force got it to budge.

The fastest the state can potentially build a larger, new facility is in four to six years. Our committee joined with the Institutions Committee in pressing for a faster interim solution that could be ready in about two years.

The hospital and community mental health agency in Rutland are willing to team up to build a program there that could function until the state facility opens. It would then convert to another needed use.

This is not an ideal way to proceed, fiscally. We will have to pay the construction costs back in operating reimbursements. But we are at a point of urgency that we need to follow these dual tracks towards closing the Middlesex trailers.

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The end note of the week was the health care market stabilization bill that my committee had passed two weeks ago. Our bill arrived partially gutted by the two subsequent committees that reviewed it.

Any bill that takes in money must go through the Ways and Means (tax) Committee, and any bill that spends money must go through the Appropriations Committee.

This was the bill that established a penalty for those who could afford to buy health insurance but failed to do so, thus requiring Ways and Means review. (We passed a bill establishing this mandate last year, but wanted to take some time to explore the means for enforcing it.)

The bill also includes all of the protections that can be a part of the insurance market when the pool of buyers is inclusive enough: coverage of pre-existing conditions, bans on annual and lifetime coverage limits, coverage on parent plans until age 26, and so forth.

The Ways and Means Committee decided it didn’t have enough time to fully evaluate the penalty sections, so it removed them. Our committee accepted that change, because the rest of the bill is too important to lose.

We can monitor for another year, and if our coverage rates begin to slip, bring the issue back next year. (We are at three percent uninsured right now, and we don’t want it to creep back up.)

Because the bill included a series of information-gathering assignments to the administration, the Appropriations Committee had to approve the costs for them. It approved the studies, but only if we removed two parts which carried a higher cost because they required actuarial analysis. So we accepted that change as well.

One of those lost pieces was a real disappointment to me, because it was the analysis I requested for the cost to ensure access to primary care for everyone through subsidizing only those who don’t already have it – rather than pursuing the proposal that some are endorsing, to create an entire system of universal primary care.

But that’s why they call the process of creating legislation, making sausage.

Now it goes to the Senate – and who knows how our work will fare over there.

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It is truly an honor to represent you. Please contact me with your concerns and thoughts; I’m best reached via email at adonahue@leg.state.vt.us. My back legislative updates are available at representativeannedonahue.blogspot.com.