March 31, 2024 Legislative Update

 This past week’s House session should leave all Vermonters reeling, if they have been following the news.

I usually try to avoid speaking in partisan terms in my updates. It is impossible not to, when discussing the action of the supermajority to plow through with $131 million in new taxes in just a few days, while claiming its “balanced budget” was practically equivalent to the governor’s proposed budget.

By refusing to include major expenditures in three bills that passed separately, which caused the need for the taxes, it created a deceptive budget. 

I tried for public transparency with an amendment to include the extra $26 million in the budget we were passing, because it is, in fact, an additional part of the House budget proposal.

It was rejected 97-41, but I was honored by the fact that four Democrats broke from party lines along with two Progressives and two Independents to support it.

The program expansions belonged in a more thoughtful overall budget that kept them in line with our revenues by balancing among priorities. 

They added new positions in the Judiciary to address court backlogs, Medicaid expansions focused on our older, low-income Vermonters, and housing programs, partly to try to add housing units but also for expansions to the emergency housing (hotel) program.

I was deeply disappointed by Medicaid bill because the Medicare support component came from a bill I introduced and believe to be vital, but it jumped levels too quickly and was combined with other expansions so that it cost much more; plus, it was not included in a balanced budget.

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Pieces of Tax Burdens

In order to re-balance the actual budget, new taxes were required for the general fund. 

Why $130 million in taxes to pay for $26 million in program expansions? 

Because the budget increase in those bills for this year only gets them started. The new taxes coming in will be raising the funds for much larger full costs next year.

It’s like that with many programs and taxes. It takes them a while to get up and running; the impact hits later.

Last year, motor vehicle fees were increased by 20 percent; those are now being felt as renewals come due. The $100 million payroll tax to increase childcare support that was passed last year will go into effect this July.

The historic property tax increase is also looming and in the next week, it seems probable that another new tax will be created in order to reduce that impact.

This would be “property tax relief” to at least a small degree, but it will not be tax relief, because the statewide education funding will still be paid with taxes; just another type. 

All of this comes in the face of significant increases in tax revenues over the past ten years in all categories – increases that far exceed inflation. It is spending, not inadequate revenue, causing the shortfall.

Outside of direct taxes we are also piling on major new costs in home heating when last year’s “clean heat standard” bill kicks in. That will require more electrical energy use, and we will be paying much higher electricity rates, thanks to the most expensive version of revisions to the Renewable Energy Standard bill, also passed last week.

And finally, we moved forward with a bill that will make it harder and more costly to build new housing in most of the state. In the middle of a housing crisis!

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Taxing the Rich

The new tax bills were developed mostly behind closed doors: presented to the committee of jurisdiction the prior Thursday morning and voted out that afternoon.

They are being promoted on the premise that they are directed only at the very wealthy and big business. That requires a deeper dive.

The income tax increase is imposed only on those earning more than $500,000 per year. Surely, they should pay their fair share.

Those tax filers represent about 3,500 taxpayers. That represents one percent of all income taxpayers. They currently pay 35 percent of all personal income taxes in the state. They are already supporting the rest of us. 

When we demand more, and become the state with the second highest upper bracket tax rate in the country, some will choose to move away, and others will not move in. 

We kill the goose laying golden eggs. At a high tax-revenue-per-person, it only takes a small number leaving to create an overall revenue loss. 

Another of the new tax bills increases the corporate tax rate. The bill would make Vermont the state with the highest corporate tax state in the country. 

We do not live in a vacuum. Businesses choose locations based on costs of doing business. 

And over the past 10 years, the revenues we’ve received from corporate taxes have tripled. If they make more money, they do paying higher taxes.

We are sending a message to businesses: we do not want you, or your jobs, here. 

Some of the new taxes were embedding the program policy bills, even though the revenue goes to the general fund and is not guaranteed to specifically fund them.

I went through procedural gyrations to force a vote on the corporate tax alone before the vote on the full bill. The tax passed, 97-40. 

The housing bill expressed an intent to spend $900 million over the next ten years. The tax on high income, raising $17.5 million in the start-up year, passed 92-43. Of that, only $7 million actually goes towards new housing.

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The Act 250 Bill

The most contentious bill – one that divided some majority Democrats in the debate from their colleagues – was the “reforms” to Act 250.

Act 250 is our decades-old land planning law that protects the environment through tight oversight of development. 

It has been highly successful in doing that, and the major complaints over time have not questioned that aspect. The complaints have been how unwieldly it is, costing excessive bureaucracy and time, meaning high costs even for good development.

Given the housing crisis, there has been pressure for reform to ensure that we do not have unnecessary barriers for new construction.

But this bill adds them. It creates requirements that most of our smaller communities will not be able to afford as a trade-off for easing the burdens in very small, contained areas in large towns. 

There are no estimates of how much land will be added to the protective class for highly restricted use because the new Environmental Review Board it creates will be setting those higher thresholds.

The most bizarre aspect of the new bill is that the Board that sets the standards is the same body that would hear appeals of permit denials based on those standards. 

That part of the bill drew an amendment from a tri-partisan group of legislators (including me); bill supporters opposed it saying it would “gut the bill” of its intended process.

It failed on an 89-53 vote, splitting the majority party to a virtually unheard-of degree, with 14 Democrats supporting the amendment. Most of them later voted against the bill itself.

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Other Stuff

Those were such major subjects that other bills that would usually make bigger news received less attention – but not necessarily less debate, resulting in several late nights on the floor.

A few key bills included:

A bill expanding emergency housing, replacing past, pre-Covid rules. The changes would go into effect under this year’s budget, then become law next year. 

The former “adverse weather” rule, for example, intended to shelter any person who is homeless in frigid temperatures, would become an automatic entitlement from November 15 through March 15 – five months of the year – under a new “Winter Shelter” part of the bill. 

The policy allowing hotel shelter to be discontinued for criminal activity was not included. Vulnerable individuals would be eligible for more extended time frames. 

Other changes include broader definitions of who is eligible and a requirement that if a shelter is full in one county, the individuals must be given access to a hotel/motel room even if there is available space in another county.

A statewide ethics bill is halfway through the floor debate process. There have been concerns expressed about the new mandates on municipalities, including training costs, all imposed by a state board.

I was very disappointed that a bill that will allow retail cannabis establishments to receive a license endorsement to sell to medical-use patients – which thus includes those under age 21 – did not add language requested by the Human Services Committee (where I serve) to require rules that protects underage buyers in that new environment.

Instead, it added language saying that rulemaking by the Cannabis Control Board must include “rules requiring access for patients who are under 21 years of age.”

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And Good Stuff

Some broadly supported bills:

A revision of the law on how a person accused of child abuse is placed on the registry, which can be a lifelong impairment to access to many jobs. It maintains the protections for children but improves the fairness of the process.

A new disclosure requirement of flood history for home sales and rentals. I was gratified that the committee included my bill for rentals of lots for mobile homes. 

I will not easily forget the couple I met who were among those who lost everything in the July flooding at the Berlin Mobile Home Park, who had moved in two months earlier with no knowledge of the flooding history. Their home was a wedding gift from their parents.

Finally, after months of Agency of Human Services insistence that no state licensing was required for a new psychiatric residential treatment facility for adolescents that will be funded by the state, I pressed the issue enough so that the agency reversed its position.

Just hours before the House was to adopt bill language to mandate licensing, the agency decided to agree to it. We still included language I drafted prohibiting use of state money to place youth there prior to the licensure. It seemed wise, based on the foot-dragging that had occurred.

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Thank you for the honor of serving you. Please reach out to Rep. Ken Goslant (kgoslant@leg.state.vt.us) or me (adonahue@leg.state.vt.us) at any time with questions, concerns or input. All of my past updates are available at RepresentativeAnneDonahue.blogspot.com

March 17, 2024 Legislative Update

 In these updates, I typically discuss bills in some depth when they are of particular import or being worked on in my committee. There isn’t nearly space to address every bill throughout the session. But this past week, the crossover deadline, it seems of value to briefly summarize many of them to provide a sense of the breath of subjects being addressed.

Crossover means the last chance for bills to come out from House or Senate committees if they are to be taken up by the other body this year. Many have broad or unanimous support, so they don’t make headlines.

Deadlines are later for the two biggest decisions of the session: what do we spend, and do we raise taxes to do it? There are various tax increase proposals on the table to fund more spending. An example is H.828, which would add a three percent surcharge on existing income taxes for individuals making more than $500,000.

First, a couple of notable bills that passed this week on the House floor: 

A bill on retail theft allows multiple small thefts within the same two weeks to be combined in their value so that if they add up to $900 – the current level to become a felony – they can be treated as a felony. This is a bone being tossed towards being able to claim to be addressing the widespread concerns about public safety and lack of accountability for crimes. On the same day, we passed a bill that allows for expanding the diversion system so that folks can be “diverted” from criminal prosecution multiple times, and have their records expunged. I think diversion is an excellent tool, but not for repeat offenses and not to fully delete records. (Also coming up is a bill that revises the categories for such expungements of records.)

One of the best health care bills of the session passed this week, to address unnecessary administrative burdens that interfere with the time doctors can give to patients. It requires all insurance companies to use uniform categories for prior authorization requirements. My primary care doc once said if we could do this, he’d “dance his happy dance.” Federal law was a barrier in past years, but that was recently solved through a court case.

The sales ban on flavored nicotine products, including all vapes plus menthol cigarettes, also passed. Though these have been banned for kids, kids are getting them from adult purchasers and use is exploding; the bill’s ban is focused on the effort to enhance youth protection by blocking all sales. In an unusual move, the Democratic caucus permitted its members to vote based on individual decisions, so it was a much closer vote than typical contested topics, at 83-53. The menthol ban was particularly controversial, and an amendment to remove it from the bill only failed by a vote of 54-64.

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Significant bills pending on the House calendar that came out of committees this week include these:

A bill from my committee to formalize and reshape the emergency shelter program. It sets a long-term policy goal of leaving no one behind to live on the streets; creates a Task Force to work on parameters for the first steps; and sets a July, 2026 start date for the initial new structure. (All good.) But as we worked through the new bill under a tight time frame, more and more was added to the mandates in statute for what the new program has to include. All were things that expand the scope of anything we’ve done before – as well as that will massively expand costs. The administration’s rough estimate is in the $50 million range. Just as with the tobacco bill (which will cost up to $14 million due to lost revenue), that doesn’t need to be addressed in the current budget since it doesn’t take effect until next year’s budget. “Let the next legislature figure the money part out.” I voted no.

The bill that first proposed major expansion groups for Medicaid is now pared down to require development of a cost and feasibility proposal. The one part it retained is the financial support for those who turn 65 or become disabled and lose existing coverage when they go onto Medicare. This is an incorporation of the bill that I introduced to protect low-income seniors who have been abandoned by all prior reforms. How much of that new support survives the budget balancing process is yet to be seen. Many of this bills that came out of committees this week have yet to go through the “money” committees (taxes and spending.)

Another health care bill will add to regulation of pharmacy benefit managers: the companies that serve as go-betweens to set price deals for insurance companies and drug manufacturers.

“Neonics” is the shorthand for a pesticide used to protect seeds but that are believed to harm the environment and in particular, the fragile bee population. Their use for crops would be banned under H.706. There are lots of concerns about access to alternative seeds, given our small state market, but the bill mirrors the ban and the 2027 timeline that New York has passed. Given their market power, I’m good with it.

The annual update of laws for our “tax and regulate” cannabis market includes a problematic expansion to allow the medical-card program to include all cannabis outlets. This could vastly expand the places where those under age 21 who have medical needs can make purchases, with some significant resulting risks. It needs an amendment to require regulation on that issue, or I can’t support it.

The alcohol law update is a major disappointment to me, because despite all the discussion about protecting kids from nicotine, the committee with the jurisdiction over this bill refused a health policy addition requested by my Human Services committee to protect youth. Two years ago, we made it legal for convenience store to sell those single-serve spirits that include the same kind of youth-appealing fruit flavors as nicotine vapes. Now in some places we see them turning up in bins next to the candy bars at the checkout. A peach-mango-vodka drink in a can may be side-by-side with its look-a-like flavored peach-mango iced tea. I had a youthful-looking friend go to a local store and buy one of each, together, and he wasn’t carded. My Human Services committee’s request -- the one that was rejected – would have created a small level of protection: prohibit alcoholic drinks to be displayed mixed in among non-alcohol products.

Expect to hear much more about H.687, a controversial approach to addressing how to balance reform to permit requirements for urgently needed housing construction with maintaining our environmental protections. A proposal supported by a group from all parties and the governor did not move forward; instead, this version came out of committee on a partisan vote despite a claim that it is a compromise.

Another significant controversy will play out when H.289 gets to the floor on revising the state renewable energy standard to expedite achieving 100% renewables in 10 years. The Joint Fiscal Office first estimated it would cost $1 billion over that time to implement. It revised its report this past week to an estimate of between $150 million and $450 million, but added, “due to various unknowns – potential technological advances, changes in demand for electricity, adaptations in the ISO-New England grid, actions of Vermont’s utilities in future years, etc. – considerable uncertainty regarding the overall cost and impact on the State budget remains.”

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A sample of bills moving forward with broad support:

H.173, making it a crime to manipulate a child for the purpose of sexual conduct; H.614, addressing land improvement fraud and timber trespass; H.657, updating communications taxes and fees;

Also, H.702 on improving government accountability; and H.868 for the annual funding of roads and bridges (yes, including, at last, Route 12 from Cumberland Farms on North Main in Northfield on through Berlin to Montpelier.)

H.871 moves work forward on planning how to address the funding needs for a huge backlog of school construction/rehab, while H.873 attempts a compromise on how to move forward on testing schools for PCBs;

H.875 establishes uniform ethics codes for state and municipal officials; H.121 addresses data privacy; H.707 focuses on workforce expansion and development; and H.622 updates reimbursement fees for Emergency Medical Services.

The agriculture committee apparently has less urgent work to do than others. It took testimony on multiple separate days to establish a state mushroom (in line with our state flower, bird, fish, mineral, pie and so forth.) It was a learning tool for a group of schoolkids. All fine and good if you spend a couple of hours to do it. This was a bit much.

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Thank you for the honor of serving you. Please reach out to Rep. Ken Goslant (kgoslant@leg.state.vt.us) or me (adonahue@leg.state.vt.us) at any time with questions, concerns or input.