SmartTranscript of Senate Finance - 2025-05-01 - 4:05PM

[Ann Cummings]: We are live, and we are going to do the wheel build. Page four ninety one. And Julia is here. We went through Cleveland. Catch your breath. Yep. Now when you do it, can you put that slide you have last week that do you want me to go ahead? Yep. Yes. Do you see No. I didn't know. Yes. That one with the Yeah. With options. And it's roosted in here. We have a separate one. Mhmm. I'm gonna send it to you all. Yeah. He did. So that's you just he's got in an email. I think if we put another column in there, we will never be able to read it. [Julia Richter]: Julia, are you joining us at office? I will. I'm just logging on my computer running from another committee. I do have the PDF that's a like a referencing from senate dot org, so I can have both open and Okay. If that's helpful. [Ann Cummings]: The bill, as it came to us, has a yield which uses seventy it uses the forty two million in debt was in the Ed Fund as of December first. So we checked the union to the property tax rate that people would give in. [Chris Mattos]: Yeah. Yeah. [Ann Cummings]: They voted, which was that's it. The five percent plus and minus. They voted the five percent plus or minus a decimal point. There is a further seventy seven million dollars in general fund revenue. Last year, I believe it was seventy. Oh, every yeah. Right? That we borrowed. Yes. One time money from [Julia Richter]: last year, you had there was a total of sixty nine million used to buy down property tax rates. That was the twenty five million at one time general fund transfer, the thirteen million, the tax rate offset reserve, and that the education fund surplus who also introduced or the general assembly also introduced, the short term rental surcharge, which was added to so a hundred percent dedicated to the education fund as well as the review on cloud based software, the sales tax cloud to access that. [Ann Cummings]: So in this year, there's seventy seven million plus forty two that will buy the tax rate down to last year's tax rate, which was close to a fourteen percent, thirteen point eight on average, which mean somewhere above and south and below. It will buy the governor's proposal bought it down to that rate that was there last year. The house is up one point one percent from that because they included universal school meals into the cost of education, and the governor had taken it out. So we are there. We can just do that. It buys people down so that they are not going to see a huge tax increase this year at a time where they are going through equal economic uncertainty. Yes. Or we can put aside part of that seventy seven million. We've been sitting on the bottom line, and I think we've got four or five scenarios as to what we would like to do. The first decision, I think, is do we want to do anything, or do we just want to improve the yield as it has been said to us? Senator Harvey. [Ruth Hardy]: You you guys have all heard me say that. But I I think we should be saving money for the inevitability of next year at what we may be in a worse situation or at least yeah. And then in a worse situation, and we won't have as much money around to help with mitigating property tax increases next year. I do wanna remind everybody, and I know you all know this, but the the rate that is is, you know, cited in Julia's work is the average statewide rate. It's not you know, everybody is has a slightly different rate. And so a lot of school districts, a lot of the towns are seeing tax decreases already this year because their school boards did the hard work of decreasing their budgets. And so I think that and and what I proposed or what I asked Julia to to model was taking the seventy seven million plus the forty one, adding it together, having it. So it's about fifty nine million using fifty nine million this year and saving fifty nine million for next year so that we don't have a bigger cliff next year that would hurt in tech payers. And as you all know, every time we buy down the rate, sort of create that cliff because then you have to buy it down again next year. And so creating a smaller smaller amount to buy down and leaving some money to give us flexibility is what I think we should do. [Ann Cummings]: I think we did remodel. I know we talked about it. About buying down increasing the income sensitivity amount. It's been thought [Julia Richter]: Yeah. So so that was in last year. There was a one time thirteen percent increase to the property tax credit [Ann Cummings]: Right. [Julia Richter]: That was being applied with people's property tax bills. The reminder is when we set the income yield because of the property tax credit lag, setting of an income yield is going to affect property tax credit that's showing up on the year after's bills. Right? So we're setting the FY twenty six income yield that's going to be used to calculate property tax credit applied on FY twenty seven bills. So if you were to want to do something for income, there's just a few big picture policy levers. One would be adjusting the property tax credit again one time, which would be increasing this tax exist credit, this negative revenue that we see here in the property tax credit of one fifty three million by some amount. That's what you did last year. This column g that I was asked to model, essentially, what it does is it halves the seventy seven million in one time general fund, puts half of it in a reserve, and then the other half is used to to buy down the homestead homestead rate. So, right, all folks who receive a property tax credit may pay some property tax also on their homestead property. That's another way of getting at your homestead property tax. [Ruth Hardy]: Okay. So it just buys down the homestead, but stead, but please Right. The non home stead. And what would the non home Right. [Julia Richter]: So the way that I the way that this has been modeled, and as you all know, there's infinite ways variation. For me to model it. But the way that this has been modeled at request was to take the seventy seven million in the general fund, half it, put half of it into the reserve, and then the other half to lower the homestead rate and not touch the nonhomestead rate. So you see that the homestead rate would go would be an average bill increase of point eight percent, whereas the nonhomestead rate would be an average bill increase of five point eight percent, and that five point eight percent corresponds with if no money were to be used to buy out rates. So I'm just saying a homestead rate in both columns e and g. The difference is in the homestead and income yield. And I think [Ann Cummings]: we found out last year when we looked at doing this for income sensitivity that nonhomestead doesn't you know, you can say this renter credit program. It also hits our affordable housing programs. They do get the renter subsidy. And I don't know how that figures because last year, they told us their rent is is subject to a percentage of the people's income. So they have to pay x percent of their income. But if their income doesn't go up, the downstream housing can't raise your rent a hundred dollars to cover the increased property tax. They can only raise it if your income has gone up. I guess my question is I'm thinking out loud here is if the renter rebate gets included in that in your income calculation. I have No. [Julia Richter]: So the renter rebate is a general fund expenditure, so that's not being captured anywhere. Here, you are correct that the non homestead rate is everything that's not a homestead. So it is your apartment, second homes, businesses to your camp. [Chris Mattos]: I'll make a motion. Okay. That's h four ninety. Did we know that's four ninety one has passed by the house. [Ann Cummings]: Okay. Standard backed has removed that we approve h four ninety one as it was presented to us by the house. And even discussion on that motion [Ruth Hardy]: should be money aside for the share. I'm happy to vote now. I haven't straightened that already. Okay? [Ann Cummings]: Is there any further discussion? There you go. Second. [Thomas Chittenden]: I'm torn. I'm not I'm torn [Chris Mattos]: a hundred percent here what you're saying about wanting to save money for the future, But I'm also thinking about the twenty percent increase over the past two years if we we had the five point eight percent increase on average. It's gonna be time by time, but on average across the state, you know, the fourteen percent last year, the almost six percent this year, thinking of the taxpayer and the next bill of having twenty percent on average across the state over the past two years. So I'm I am torn because I do see the future as well, and none of us can predict it, but we can prepare for it. But we also have to think about where our taxpayers have bet as well. We've just settled over the past two years. There's a lot to swallow, and I can't recall off the top of my head what it was prior to those years. So I'm torn. I'm gonna think about it for the next couple of minutes, and we'll see what other folks have to say. That's. [Thomas Chittenden]: Here's Here's what I'd say is [Speaker 5 ]: for everything you just said, senator Matos, it's why I'm gonna vote yes. In South Burlington, I was at a meeting last night with Supero Hinsdale and Senator Lyons with the superintendent. The statistic was thrown out there that the average property tax bill in South Burlington was, like, nine thousand nine hundred dollars. So that's up twenty percent over the last two years. And this five percent is another five hundred bucks on there. That's real money in people's pockets. And so I I I [Chris Mattos]: know that there might be [Speaker 5 ]: a more prudent path where we put some of this aside. I'm just dealing from the community members. Now that's two thousand dollars in [Chris Mattos]: the last two years and [Speaker 5 ]: that five hundred dollars. That's changing whether or not they do certain sports programs with their kids. It's just it's a big hit for the family budget. So I support the seventy seven million buy down for this year because of the tax bearing after the last two years. [Thomas Chittenden]: What's the contingency plan? That's what I keep asking. So what if we have the worst case scenario as far as spending needs of the next year? We have a degree of we have a degree of reserve, but is it enough if we spent seventy seven million dollars this year? Right. Is there enough of a reserve to be able to deal with this? I'm not sure. I haven't heard any testimony about a bonding capacity and what the impact of that would be. We have to go out and borrow more money because we spent all the money. We do That worries you. [Ann Cummings]: We do still have the reserve in [Thomas Chittenden]: No. And fifty five percent is full. [Ann Cummings]: Yeah. It's full. Yep. Understood. And that is there. [Thomas Chittenden]: What's the total amount in that right now? Fifty [Julia Richter]: four Fifty four point nine million, which is twenty five point twenty six, which, yeah, this construct is nice. [Ann Cummings]: Which is the bottom drops out, and we lose title nine, and we lose everything. That's our cushion, but that's not huge cushion. And we will be in such a distraught place. This may be the least. I don't know if we we can prepare. We we we just don't know. But we do know that people will be looking at yeah. We're on top of the fourteen percent last year and five this year. [Thomas Chittenden]: And we'll be percent. Planning remediation measures. Yeah. I'm just waiting and walking the door, the notion that we got a former summer study committee to figure out what we're gonna do next. And You'll love those. I'm concerned that the absence pressure to do that may cause that to happen Mhmm. Which would be, to me, the worst response aside from raising taxes that we can make. [Ann Cummings]: I mean, we're gonna have to. Well, we are gonna have, I believe, this summer doing districts. We could also assign them to do this, or we could ask the administration. I gather they don't want us to tell them. If everything crashes and burns, it won't just be education. It will be everything. The most likely thing we're watching most closely right now is Medicaid because that's been mentioned as a target how big a hole is made, which is one reason we're coming back here in September. Or we may come back. [Thomas Chittenden]: And then all this will help by the recession, if we're gonna have. [Ann Cummings]: But this money will go out the door, and I don't think anyone intends to claw it back. Mhmm. The last clawback was the way we got to go home before July, shut everything down, and it was the governor's It was brutal. [Ruth Hardy]: It was brutal. Yeah. We cannot do that to schools. [Ann Cummings]: We've since it was Yeah. Yeah. We we can't. But we can't make promises for next year either. It's we might be fine, and we might be well on the road to transforming our system to a more efficient one. Or we may be building the ground up. We don't know. We could have religious charter schools. No. I've been charged. So that's forty eight percent. Then the Supreme Court in Oklahoma is that the Catholic group wants to do a Catholic charter school. It would be a public school run by the Catholic church. [Ruth Hardy]: Some people [Ann Cummings]: Right. Church and state concerns about that. Right. I'll I'll I'll but We don't know what the supreme court's gonna do unless they've already done. Martin, did you take it on first, then [Ruth Hardy]: I I could follow-up. Well, I had a question, I think, maybe for Chris, which is so this seventy seven million dollars transferred to the education fund in the budget that just passed on the senate floor. If if we were to reserve some of it here, which that's not the motion on the table, but if we were to and we needed fifty million for something over that's funded in the general fund, can we transfer money back from the education fund to the general fund? [Thomas Chittenden]: Well, you are a legislature. [Chris Mattos]: But so so, technically, I think you could, but as long as doing so wouldn't sort of complicate the yield count. I think that's the issue. I If [Julia Richter]: if I may, there's [Ruth Hardy]: Please. [Julia Richter]: There's also one other thing to be aware of is that now it's the I forget the name of the the statutory reference of the No. It's Right? But there's that provision in title sixteen that education fund dollars can only go to education. Education for specific purposes. So that language would need to be not listed. I mean, because that's as legal. [Ruth Hardy]: This was one of my reasons why I didn't think we should move that seventy seven million dollars to the education fund. I thought we should keep the seventy seven million dollars in reserve in the general fund with language saying that the intent was to be used if our health care or education system needed it. And that's why I was really not happy with the construct and the budget. And people kept reassuring me, oh, well, now it's the yield bill decision. And now we've made it yes. But there's this complication of moving it back to if we need to shore up our hospital system. So we've made the money less flexible. Yes. We cannot stand things. Yes. We're legislature, but we've made it less flexible, and it's harder to do that. And and, you know, I hope I'm wrong, but I I just feel like now is not the time to be now is the time to be preparing for the possibility of of bad things happening. And, I mean, I guess, the opposite to what senator Chitten was saying, most of the school districts in my district have seen this year, not not last year, but this year, property tax decrease. And so I've heard at at constituent meetings, you know, forums, oh, you should not be spending that money. You should be saving it just in case for next year. So that's the messaging I'm getting because my school district cut a lot. They all did so that they were able to reduce their their spending and therefore their property taxes this year. But I think they're worried about being able to do it again next year, and they might need more help next year, and we might not have the help to give them. [Ann Cummings]: Infinable notice. This committee over the last few years has killed more tax increase bills than I think we have in a decade. And part of that reason, at least in my part, is because I wanna maintain some taxing capacity for situations like this. If we run-in to really hard times, we can follow governor Snelling and raise some money to keep everything afloat. It's been done before. It could be done again if we have to do it. And so temporary. Right? Yep. We got a we did a, what, three, four year surcharge at sunset and raised enough money to keep us from shredding the safety net, which is Medicaid, housing. Education is definitely part of the safety net. So it's not an all or nothing thing. We can respond. When we left here during COVID, we had a fifty million dollar deficit in the fund. When we came back in September, we had a hundred and fifty million dollar surplus. I think we probably shouldn't have spent as much of that surplus as we did. [Thomas Chittenden]: It's very low figures. Yeah. And a lot of surplus is what we came from the federal government. [Ann Cummings]: Well Yeah. We spoke with a different position than I understand. Think it went up. [Thomas Chittenden]: In terms of looking at my But [Ann Cummings]: I mean, it it we do have options. No one wants to do it. But if things go the way Washington is telling us it's going to go, we will be on Easy Street next year. And that company that's making PFAS free fire equipment that we were told is going into Newport will get their French equipment without tariffs and create jobs, and we'll be booming. But I don't know. Right now, we better make the decision. I have a motion. Is there further discussions? And do you know if they do have a No. I was just we didn't really look at senator Ruth Hart's modeling. Well, we did as much as the other day. I think Correct. Yeah. If we're going right now, the motion is to approve as it was sent to us. [Thomas Chittenden]: Yeah. Yeah. [Ann Cummings]: If that motion fails [Chris Mattos]: I think that's [Ann Cummings]: then we can discuss other options. I is there any further discussion on that motion? No. I have the correct call at all. Okay. Yeah. And and I emailed [Thomas Chittenden]: First. [Ruth Hardy]: Are we the clerk? Yeah. I think we're supposed to have a. [Ann Cummings]: Thank you. It's [Chris Mattos]: Text message from [Ruth Hardy]: a brother-in-law. [Ann Cummings]: Sorry. That's right. You can get those things out of your watches. I'm gonna have to stop this game watches in here too. [Speaker 5 ]: Can you set your dishwasher, Edward? [Ann Cummings]: That's right. Call it. Alright. [Thomas Chittenden]: I'm gonna [Ann Cummings]: Unless there's more discussion. Alright. I see. [Chris Mattos]: Since I'm [Thomas Chittenden]: Yeah. [Chris Mattos]: Laying out my field, I'm just gonna do a random order this time. Did anyone second the motion just first? [Speaker 5 ]: I'll second it. That's [Ruth Hardy]: Does it I mean, I've been told both ways. You might thirt it. [Ann Cummings]: Is somebody listening to say something? [Chris Mattos]: Thanks, people. [Ruth Hardy]: Outside outside. It's just like a beer [Ann Cummings]: and one of, like, periods. Okay. Like, there's a rally at four thirty. So Yeah. It may Let's get down to It's also the Vermont State Colleges reception right there. Okay. Well, once we do this, we can all go involved. [Chris Mattos]: Alright. I'll start. [Thomas Chittenden]: If we're ready. Pardon? If we're ready. [Ann Cummings]: Yes. I think we're ready. [Chris Mattos]: Senator Gittany. Yes. Senator Meadows. Yes. Senator Yes. Senator Purdy. [Thomas Chittenden]: No. Senator Groff. Yes. Thank you for that clarification. [Chris Mattos]: I can't draw on that. Senator Eulink. [Ann Cummings]: I second what senator Brock said. Yes. With reluctance. Yeah. Senator Cummings. Yes. With lightning coming out of that. [Ruth Hardy]: But I'm not hopeless. You guys realize that, all of what you just said, it's meaningless like you're [Ann Cummings]: moving out. I know. No. I think there's no vote with a plaque. Wow. I can't Report it that way before. Okay. I'll report it while somebody else wants to volunteer. [Thomas Chittenden]: Record it. We don't [Ann Cummings]: Oh, you wanna record it? Fine. [Speaker 5 ]: Sections. I think I can He's done it. [Chris Mattos]: That's I [Speaker 5 ]: do it every year. [Ann Cummings]: Oh, we do it every year? Okay. I can [Speaker 5 ]: record it if you don't want. [Ann Cummings]: We usually just stick it in, miss Alexis. [Chris Mattos]: You want it? I'll take it. Sure. [Ann Cummings]: Okay. We can do it. Thank you, everyone. I don't know if it's a hard goal. It is first with many. And we can all go into the reception, the rally. I can get the drumroll started.

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SmartTranscript of Senate Finance - 2025-05-01 - 4:05PM

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