April 27, 2024 Legislative Update

 

Legislative Update

Rep. Anne Donahue

April 28, 2024

 

Sometimes the legislature is a pendulum of careening objects… and that’s even before a bill moves from the House to the Senate. Two weeks ago, a whole new education funding plan was unveiled in the Ways and Means Committee and the initial announced plan was to vote it out in a mere two days – far too fast for judicious consideration.

Two weeks later, we received the bill on the House floor. It was stripped of any and all reforms, even short-term cost containment for next year. Perhaps it was a straw man, only intended to draw in negative reaction from those with vested interests and thereby create an excuse for doing nothing this year to change factors that led to the crisis in property taxes.

The core of the new bill is yet another study. There have been 39 different studies on Education Fund reforms since 2000. The new Commission has 23 members and a huge array of tasks, almost guaranteeing that its mandate cannot be achieved. Waiting for its recommendations means at least two years before any proposals come forward to reform what everyone agrees is a dysfunctional system. We know the status quo is failing.

It is now in the Senate hands to consider whether to agree to our proposal.

What is not transparent within the complexity of the current system is how much local taxpayers are held hostage to what other towns want to spend. Without better cost-containment mechanisms on upper-end spending, towns that maintain thrifty budgets end up paying for those that want to spend more. It is what makes cutting a local tax increase so difficult: for every dollar cut, the town only sees 25 cents reduced from the budget impact on its own tax rate. Those who want to spend more have only to contribute 25 cents locally per each dollar increase.

That is a key part of what is meant by the structural change needed: We need mechanisms that prevent excessive spending by individual districts from being included in the statewide funding that places the cost on everyone. At the same time, maintaining enough sharing of costs to protect equity is a core value.

The crumbs tossed to taxpayers in the House bill were that we eased the homeowner tax increase slightly by creating several new taxes and putting that revenue in the Ed Fund. In addition, an increase was shifted onto all commercial property, landlord property, and camps or second homes.

In the legislature, one often relies heavily on colleagues who have developed an expertise in a particular area and whose analysis one trusts. For me with education funding, that is Rep. Scott Beck, who has been on either the Education or the Ways and Means Committee since 2015 and understands the system deeply. His words on the floor:

“There is nothing in this bill for short-term or long-term cost containment, or structural reform... Our taxpayers are going to get absolutely hammered this fall and we will not even be able to tell them that we made a course correction. And then they are going to get hammered again next year, and then this Commission will come… and tell [taxpayers] we might make a change by fiscal year ‘28. Our taxpayers can’t handle any more; it is unconscionable that we aren’t making structural reforms right now.”

One of the proposed amendments was an interim “allowable spending” percentage for the next two years that, if exceeded, would place a higher cost on the spending district. It was rejected.

One truly logical proposal was to suggest that if were delaying reforms to avoid unintended consequences, we should at least make the new taxes on computer software and short-term rentals temporary – then reassess as part of those future comprehensive reforms. As I said in explaining my vote of support, “We have a misfit when we refuse to initiate even interim changes that actually address our Education Fund stressors – we say we shouldn’t move that fast – yet reject a sunset on what should be solely a stop-gap measure, not permanent new taxes.” That amendment was rejected 41-100.

I need to note that of the $200 million or so in increases in the education budget statewide, close to $30 million was caused by the legislature’s decision last year to fund universal school lunches. I mention it because I supported that decision and need to be transparent about it. Unlike some types of constituent input in the form of cut-and-paste emails, I heard thoughtful and persuasive direct arguments in support from local residents. We knew that decision would be borne by the Education Fund.

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Lots To Come

The Senate passed its version of the budget this past week, with numerous changes from the House bill. That signals that we are on schedule for ending the session by the end of the second week in May, because it takes about two weeks to reconcile differences. There are too many differences to sort out quickly. The Senate does rely on significantly fewer tax increases. It also pared back the House expansion of the hotel emergency housing program.

Although it budgeted a lower level than the House for the increase in support for Medicare cost-sharing for low-income elder Vermonters, it did still support the need for some increase. These Vermonters actually experience a significant drop in health care support when they go onto Medicare. I was glad to see it included, as it is something I have been fighting for.

These two weeks will see bills passing at dizzying speed. Many controversial bills I described in updates throughout the session are coming back from the Senate with significant changes, so new decisions (are they better? worse?) will need to be made before we wrap up. Among those controversial bills include the changes to the Act 250 process and whether it will help or hurt housing development (H.687); the changes to the Renewable Energy Standard (H.289); and Fish and Wildlife Board changes (S. 258). Still in play in the Senate but with time running out is my Right to Repair bill for agricultural equipment (H. 81).

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Right Person, Right Timing

One little “add on” in the Senate Transportation bill was $2 million to purchase a large parcel of land in Berlin for a new state central garage. The old one was destroyed in the July flood and it would be senseless to rebuild on the same flood plain. I got a word of alarm from a resident last weekend: The land is a 23-acre piece of the state-designated town center that has been in development by Berlin for years. The hope has been that it would be a growth area for desperately needed multi-family housing.

I got in touch with Sen. Andy Perchlik who was well positioned by being both one of our Washington County Senators and the Chair of the Transportation Committee. It turned out the bill was already up for a vote on the Senate floor, usually too late to initiate any change. But Sen. Perchlik got a day’s delay on the bill to hear from both Town Administrator Ture Nelson and the Secretary of the Agency of Transportation, Joe Flynn.

There was quick consensus that though the money should still be appropriated, it shouldn’t be tied to a designated piece of land. That will allow the time and leeway for AOT to work with Berlin to assess the best options for moving forward. The amendment was made on the Senate floor the next day. Although the parcel seems to be well suited for the state garage, Flynn said AOT has no desire to be somewhere it’s not wanted and is in strong agreement that housing is the state’s highest priority. Rep. Ken Goslant and I were able to sit in to hear the discussion and praise the outcome, and I’ve talked to the House Transportation Committee to ensure smooth support there.

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Congrats

This year’s class of new Eagle Scouts were presented on the House floor this week, and it was a joy to see one of our own on the list, Jonathan Andrew Tenney of Northfield!

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Thank you for your support and the honor of representing you. Rep. Goslant and are available anytime to hear your concerns and input at kgoslant@leg.state.vt.us or adonahue@leg.state.vt.us. My archive of legislative updates is available at representativeannedonahue@blogspot.com.

April 14, 2024 Legislative Update

 Legislative Update

Rep. Anne Donahue

April 14, 2024

I was all ready to rant and rave in this week’s update, until I found out that, 

a) the news media had exaggerated the status of a proposed bill and, 

b) major parts of the preliminary draft had already been put on hold. 

We are not going to pop a new education funding system into place with three days of committee review.

It may come as a surprise to know how often legislators must rely on the same news broadcasts the public gets. There are 11 Senate committees and 13 House committees, so keeping track of what they are doing prior to a bill being voted out and reaching the floor is nigh impossible. When a constituent writes to ask about the status of a bill, I can always catch a colleague to find out what’s happening within their committee. I usually also skim the weekly calendar for all committees to get a sense of what they are working on. But that’s a far cry from actually knowing details.

There have been rumors about development of a new education funding formula ever since the catastrophe that struck this year with soaring budgets and voter rejections. But obviously doing that is not a three-day job. Even after much longer work on some revisions last year, one part of the crisis this year came about as a result of unintended/unforeseen consequences of those changes. 

What actually happened in the Ways and Means Committee this past week is that a number of ideas that have been under discussion for weeks were put into a draft in order to see what concrete language would look like. That doesn’t mean that there was an actual bill yet that was proposing those ideas. But the draft certainly lit a firestorm. To clear the air, the committee chair publicly clarified that none of the long-term system changes are on the table for this year. There is not enough time left in the current session to do due diligence on major changes. 

That would have been my rant; now instead I’m letting you know you can ignore the reports. There is now an actual draft bill which, as of Friday, proposes some interim ways to ease this year’s homestead property tax increase by several new taxes and shifts among tax sources. Some of those will be controversial. I’ll mention them without opining at length, since they may or may not remain in the bill by the time it reaches the floor next week:

~Add what is called a “cloud tax,” applying the sales tax to software you purchase and access over the internet. That would raise a projected $20 million annually.

~Add a 1.5 percent surcharge for a “short-term rental impact” tax that would raise about $6.5 million. (A 10% surcharge, raising $24 million, has also been considered.) The majority of those rentals are AirBnBs that homeowners use to raise some added income.

~Increase property tax credits for one year by 15 percent to further reduce the homeowner tax burden for those at $90,000 income or less, who pay in part or fully based upon income rather than house value.

~Increase the higher, separate non-homestead property tax (rental property, business and second homes, most owned by Vermonters and some passed down to renters) to reduce the homeowner rate.

A reminder of where the money comes from currently to pay the $2.3 billion Ed Fund, in rough percentages: 

~non-homestead property tax, 38% (40% minus 2% in current use land exemption); 

~homestead property tax, 27% (34% minus 7% in property tax credits); 

~sales tax, 26%; 

~one quarter of rooms and meals tax, 2.6%; 

~one third of purchase and use tax (vehicles), 2%; 

~lottery, $1.5%; then smaller miscellaneous items.

The long-term proposal that drew such consternation before it was taken off the table for now was to develop a statewide tax that would be used to provide all school districts a base payment per student. The payment would be based on an analysis of what an “adequate education” costs in Vermont. Voters would only consider any added local spending in excess of that base, thus taking most of the local decision-making power away from voters. It would recognize that current local budget votes end up imposing costs on everyone else, and thrifty budgets hardly reduce a local tax burden at all. 

The current draft bill turns that proposal into a task force study for a report back next year.

***

Back to the general fund budget: the Senate is working to finalize its response to the House, and is taking a much more conservative course, pushing back on some of the major new tax and spending bills that the House passed. 

There was an interesting comment by Sen. Jane Kitchel, the Chair of the Senate Appropriation Committee, as reported by VT Digger. She said the budget is where new positions and revenue sources should end up, rather than through individual policy bills, as the House sent over. “We’re going to be building our budget the way we always do — so some of these bills that the House passed will end up being incorporated into the budget,” she was quoted as saying.

It caught my eye because that was what I argued for on the House floor: that we were being deceptive by passing an alleged budget that put some major new expenditures and the taxes to pay for them into separate bills, rather than including them as part of a full budget.

Most other major bills that worked their way through House or Senate are also now being vetted by the opposite body; they will either be accepted, die, or most likely come back with proposed revisions (minor or major.) 

If the changes aren’t acceptable, appointed conference committees of three Senators and three Representatives get to hash it out to seek compromise. This is the end-of-session process that gets highly chaotic. With a May 10 date set for the session’s end, the pressure will be upon us soon.

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Can the process of compromise and consensus-building work? 

Yes. I give credit to my committee chair for leading us through a Senate bill to reduce exposure to chemicals with significant health risks. It’s a highly important topic, but how to approach it could have been very controversial. Our committee includes seven Democrats, two Republicans, one Progressive, and one Independent, bringing a wide variety of views. We voted the bill out 11-0 because testimony was considered from all sides and incorporated: tackling risks but weighing feasibility of how quickly restrictions could be made effective.

Importantly, we recognized that Vermont is not large enough to be a “market changer.”  If we ban something, our market is not large enough to get manufacturers to change course. We will just lose the ability to get the products and hurt our local manufacturers in the process. Instead, we carefully followed the lead of a few larger states (California, most often) in terms of both the chemicals and the products, as to whether alternatives are available. We also set phase-out timelines based on those factors. 

The intentional addition of a number of chemicals will be banned in 2026 from products with a lot of risky skin contact, namely cosmetics and menstrual products. Cosmetics is very broadly defined: anything “intended to be rubbed, poured, sprinkled, or sprayed” on the body for the purpose of “cleansing, promoting attractiveness, or improving or altering appearance,” with soap as the only exclusion.

Dangerous PFAs (“forever chemicals”) will also be regulated then, from children’s products, clothing and textiles, and cookware. By 2028, the ban will reach artificial turf, which is currently loaded with these chemicals which slough off onto the skin and clothing of those playing on them, as well as into our water tables.

There was one skirmish. On the last day, finishing up the 30-page bill, we were resolving a few final items, including the maximum amount traces of lead that could remain in cosmetics (including in naturally occurring forms.) 

The Senate had sent us the bill saying it had to be under 10 parts per million, the same limit as set by California and others. Washington State alone had recently set the maximum at one part per million, which our local manufacturers said was not feasible. Local environmental groups pushed for that level, and we were split on it.

We came up with a compromise at five. But that was without taking any new testimony since we were in the final “mark-up” before the vote. Testimony is typically not continued for the committee back-and-forth changes on final parts of a bill. 

The day after our committee vote we – and many of our House colleagues – heard outcrys that five was no more feasible than one. We received an amendment proposing a return to 10 and after stalling on reaching agreement, had a vote and agreed 7-4 to accept 10. 

There were some vigorous voices of opposition on the floor and a roll call vote was requested, ending up with 101-28 favoring the revision. After resolving that, the final vote, also a roll call, was 138-0 in favor of the bill as a whole. 

Now, we watch and await whether the Senate will accept our improvements to its bill!

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The repaving of Route 12 from Northfield (just past the front of my house and just before Cumberland Farms) through Berlin to the Montpelier line is now underway. It will be starting on the Northfield end, with single lane closures with alternating one-way traffic throughout the length of the project. 

If you would like a weekly email updating where the work will be happening that next week, you can email Bethany Oprendek at bethany@bbo-enterprises.com and request to be added to the email list for “Northfield-Berlin STP PS24(1).” If you want to check the status on your own, go to vtrans.vermont.gov/projects/updates and click on the “Northfield-Berlin” project.

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Speaking of roads, Anyone else on the roads Monday evening?

My brother came up from Maryland for a visit and wanted maximum totality viewing of the eclipse, so we went up to North Troy to avoid the big-town crowds. The return home was going fine most of the way, since we were going via local roads.

Just a few miles north of Montpelier on Rte. 12 south, we were diverted by GPS via back roads to Bailey Drive and hit total gridlock. It took about an hour to get back on 12 via Dog River Road, then it seemed to be clear sailing continuing south.

Just before Chandler Road, GPS gave a “road stoppage ahead” alert and diverted us onto Chandler. Once again clear sailing, until about a quarter mile before Cox Brook Road: dead stop. We inched forward and realized that Rte 12 and Chandler/Cox Brook would have to merge – and then reached Cox Brook and discovered there was a long line of cars there to merge with first, as well!

It looked like it would take an hour or more for that last mile home, so we went west on Cox Brook instead to cross on Aseltine. The stop-and-go line of cars heading south extended endlessly beyond Aseltine! It appears they were all avoiding the jammed-up I-89 Waterbury entrance and then hitting the backlog of cars that was avoiding the Montpelier entrance, all trying to reach exit 5. My brother was driving his compact 2WD car and we had quite the experience with his crash course in Vermont mud driving, but made it easily home by reaching Rte 12 and doubling back north.

Watching from my house, the traffic on 12 was still stop-and-go at 9 p.m. By 10 p.m., it was moving steadily but still an endless stream of drivers. But even all those out-of-state folks were behaving politely, taking turns with merges and even breaking their flow to allow us to cross the Cox Brook one-lane covered bridges when we were headed counter-direction.

A memorable eclipse, and memorable traffic.

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Thank you for the honor of serving you. Please be in touch with me (adonahue@leg.state.vt.us) or Rep. Ken Goslant (kgoslant@leg.state.vt.us) at any time for questions or input.