The 2021-22 legislative session ended on Thursday with passage of an $8.3 billion budget. Of that, 2.8 is state general fund revenue, 1.9 is the property tax part of the education fund and 3.5 is federal funding. We also passed two tax bills, one with $40 million in tax relief, and the other, the annual education funding bill, with $20 million in a rate reduction from last year’s surplus and another $15 million reduction resulting from anticipated revenues this year. It was a high stakes week, with two efforts at an override of vetoes by the governor that both failed by a single vote as a result of just a few Democrats who did not support their caucus position.
This is a summary of the major bills, without as much of my usual commentary, because there were so many. That’s typical of the last week, which is a headlong dash to get bills wrapped up before agreement is reached between House and Senate on the tax and budget bills, which mark the end.
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Budget
Huge investments were made using the remainder of the federal COVID rescue funds. These included workforce and economic recovery ($19 million in state general funding and $65.5 in federal COVID funds), housing, broadband, water and sewer, and climate initiatives including weatherization and $45 million in grants for municipalities for energy resilience measures.
It was a balanced budget that still allowed for $40 million in tax refunds or credits but included a number of new state positions – some temporary, but many permanent – as well as program increases in the base budget (those that will continue year-after-year, rather than one-time initiatives like the one from COVID funds.) I agreed with many of those key investments, though not all. The community mental health system has been seriously underfunded for years, for example, and we included a crucial eight percent increase for them, at a cost of $26 million. We have to vote on new spending on a one-bill-at-a-time basis, however, without the ability to see the full picture.
What is scary this year is the degree of uncertainty regarding how much we increased budget areas through blending with federal money, enhancing the ability to maximize the money yet muddying the question of what the base budget will look like next year. We delegate to the Appropriations Committee the job of pulling it all together and deciding on how to balance all those issues. When it comes out on an 11-0 tri-partisan vote of committee members, as it did this year, we have to trust in their judgment. I supported the budget; it passed the House on a 133-3 vote.
I did make one plea to my colleagues. We pass multiple bills every year asking for reports to be written – sometimes by a specific agency and other times through creation of a task force or work group. These cost time and money. They are important. We don’t have the time to delve deeply into complex topics; we need to ask for better information and more input. But all too often, a new session begins, and attention has turned elsewhere. The reports don’t result in action. Sometimes they are not even read. “Read them,” I begged.
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Taxes
I voted against both tax bills, despite the fact that both returned some money to some taxpayers. I don’t think the money was targeted in the right ways.
The annual yield bill, which sets the property tax rate to fund Vermont's PreK–12 education system, projects an average homestead tax rate of $1.385 which is considerably lower than it was last year. That includes a return of $20 million out of the $95 million that was surplus this year. The surplus was from raising more in taxes than was needed, but we spent $65 million of those surplus taxes instead of returning them.
Most were worthy investments. It creates a new program in our career and technical education centers for building trades. It sets aside $40 million for addressing PCB chemical contaminants in our schools. It also allocates $29 million to expand free school meals to all students regardless of income. Since this is a one-time surplus, we will need new funds to continue it next year. Under review for its future funding is expanding the base for the sales tax. The irony is that the sales tax is our most regressive tax, meaning those with the lowest income use a much higher percent of their total income when they pay this tax on purchases. So lower-income families would be contributing more to pay for meals for higher income kids.
The second tax bill reduced $160 million in surplus revenues by returning some money to some taxpayers. The biggest chunk of that $40 million in tax relief was $32 million for a $1,000 check per child under age six for every family with an income under $125,000 (continuing but with a gradual reduction up to a cap of $175,000.) At the same time, the refundable tax credit for child or dependent care was increased from 50 to 72 percent of the federal level and the earned income tax credit was increased from 36 to 38 percent of the federal. “Refundable” means it is received as a check if the amount is greater than the taxes that were paid in.
Student loan interest will now be deductible for those earning $120,000 or less. The level at which Social Security income will be exempt from taxes was increased from $45,000 to $50,000, followed by partial exemption up until reaching $75,000. A new exemption was created for civil service retirement and military retirement income. Both exempt the first $10,000 of income for those earning $60,000 or less, with a graduated reduction up to an income of $75,000.
Both the Social Security and the military retirement exclusion were considerably less than what many of us had pressed for, and what the governor had asked for, and it continues to place us at a major disadvantage compared to what other states do for older residents and retired military. I voted no, but it passed on a 144-4 based on its many positive aspects.
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Veto Overrides
The House voted 99-51 to override two vetoes, which was one vote less than the two-thirds majority required. There were slight differences in how legislators voted on each. One bill was a Burlington charter change permitting “no cause” rental terminations; I had voted against the original bill and I voted no on the override.
The other was the Clean Heat bill establishing required reduction in the uses of fossil fuels for heating. I voted against this bill when it came through the House, because the program design and implementation was turned over completely to a state agency without us even knowing what it might cost Vermonters in home heating. The Senate amended the bill to require the agency to bring a proposal back to the legislature and require a new vote after we received and reviewed the details, before any implementation could begin. On that basis I voted to support the bill, and therefore also voted for the (unsuccessful) override.
A bit of an ugly scenario developed because the “swing vote” that lost the override came from a Democrat who had changed his mind just a day prior. He was pressured intensely by his caucus to change his vote through a rarely used special procedure that allows someone who voted “yes” to ask for reconsideration the next day. He held to his vote. If there had been a re-vote, I had already decided I would change my own vote on principle based on the coercion that was used on that member. That would have preserved the original 99-51 vote.
The week before, the governor’s veto was rejected unanimously by both House and Senate after he objected to the compromise bill worked out with union support to reform the state pension program. When the legislature adjourned, we did not set a veto session date, meaning there will be no attempt to override any vetoes of bills from this week. That includes one expected to be vetoed, a controversial proposal to restructure the environmental review process for Act 250 development decisions.
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Other Big Bills
Workforce: Looking for a degree? Interested in nursing? Now is the time to check into the major expansion in scholarship and loan repayment opportunities. If it’s in a field that Vermont has a particular shortage, a one-year commitment to work in Vermont can be traded for a year of scholarship funding or repayment.
Environment: A number of bills added attention to the environment, but parts were mixed and matched at the last moment. One that survived was the expansion of the current use tax program to include old growth forests that are being conserved. A controversial bill to change how we recycle bottles and expanding the category was passed by the House last year. The Senate finally took it up last week, was divided on the question, and let it die for lack of time.
Housing: Initiatives include $15 million to support the construction of homes that middle income residents can afford. It also includes $4 million to help people repair and upgrade manufactured homes, including down payment assistance for new energy efficient homes. An additional $20 million is aimed at helping owners fix up homes and apartments so that they can be rented and to renovate properties into accessory dwelling units.
Education: The Senate accepted the major revisions to pupil “weighting” that will shift how much education tax must be raised locally. Northfield and Berlin were among the few who will see little change, up or down. The process for towns which want to withdraw from a school district was also rewritten.
Cannabis: As part of approval of various rules for the market that will open in October, the House held firm to its position that edibles and liquid concentrates of greater that 60 percent THC (indicating potency) cannot be sold to the public. There is medical evidence of significantly higher health risks at this level. The Senate had wanted no restrictions to have the Vermont market on par with other nearby states.
Hunting: Bills passed in the final week on standards against hunting unless for the use of food or pelt, a plan for development of “best practice” for trapping, and planned regulation of using dogs for hunting coyote. An amendment was attached to one on the House floor to make it legal to use noise suppressors when hunting. Most other states permit this, and our “doctor in the House” (his regular job is as an MD) made a passionate plea for protection against hearing loss.
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Health Care Finale
Two significant bills from my Health Care committee came back from the Senate and were passed in the closing week. One sets limits on the power of prescription benefit managers to control which pharmacies can fill prescriptions (currently they restrict them to pharmacies they own), which will help open up competition and protect independent pharmacies from being shortchanged.
The other set the parameters for how the Green Mountain Care Board and Agency of Human Services will engage public participation in new efforts to reform health care payment structures. Cost containment seems like a constant uphill battle. Expect major increases in insurance premiums for next year. Insurers are asking the Board for significant rate increase approval, based upon expected hospital rate increases driven by COVID, inflation, and workforce shortages. Also last week: the governor signed our new telehealth bill, setting standards and oversight to allow continued use by out-of-state providers.
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Tidbits
Last minute rushing inevitably results in at least a few poorly crafted bills. A bill to update liquor tax rules added a definition for what most of us would call “hard cider” – but it defines these alcoholic beverages as “cider.” I know that when I am offered a glass of cider, I assume it’s not fermented. I said on the floor that if I am back next year, my first bill will be to amend it to read, “hard cider.” Afterwards, a liquor department administrator came over to me and thanked me, saying that he – as a person with 15 years of sobriety– couldn’t believe he had missed it. The department hopes to use internal rules to ensure that the labelling of “cider” still makes clear when it has alcohol.
Another bill directed police to collect and send data on all law enforcement “encounters” for compilation in a state database to track gender, race and other characteristics. We do this now for roadside stops. Does “encounter” include responding to a tourist looking for directions, I asked? The amount of new data collection could be massive, and expensive. The reporter of the bill acknowledged that it included no definition of what an “encounter” was. With the help of a colleague, I intercepted the bill in the Senate and convinced the bill sponsor there to drop that component in the bill in exchange for our promise to get House rules suspended to expedite the amended version so that the underlying bill would not die. As rewritten, the commissioner will come back with recommended definitions and feasibility for data collections.
I also reported a resolution to amend our House rules to waive our privilege to ignore the Americans with Disabilities Act. This was essentially a decades-long oversight that only came to light this year. Although we come under the ADA, we have immunity from enforcement within our own body, if we don’t comply. The new rules adopt ADA standards for ourselves.
I also reported a resolution for my committee that came from the Senate affirming protection of access to best-practice health care for transgender youth. It was adopted on an 134-5 roll call. Resolutions like this are symbolic only. This one was driven by restrictions popping up in other states. Symbolic statements can have value but shouldn’t take time and energy away from our real work. It got a bit ridiculous on the last day of the session when we debated a resolution “urging the President and Congress to spearhead a global effort to prevent nuclear war.” Huh? This is part of our job? And they are going to listen to us?
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Big changes are afoot for next year. More than half of the chairs of House committees are retiring, including Northfield’s former representative Maxine Grad (from prior to the last redistricting in 2012.) She has served 22 years. Of the six statewide offices, there have been four departures so far. Along with the open US Senate and House seats, it will be an active campaign season. There will also be the two constitutional amendments on the ballot. One eliminates reference to slavery and involuntary servitude. The other protects “reproductive liberty,” aka protects our current abortion law, which allows abortion for any reason up until the moment of birth.
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All my past updates are available on my blog at representativeannedonahue.blogspot.com. Please contact me or Ken Goslant at any time with comments or input at adonahue@leg.state.vt.us or kgoslant@leg.state.vt.us. It is an honor to represent you.
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