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[Rep. Robin Scheu, Chair, House Appropriations Committee]: Good morning. It's not afternoon yet. This is the House Appropriations Committee. It's Friday, 01/23/2026. It's about 09:50 in the morning. We're continuing to talk about things related to Budget Adjustment Act. And we have the Chief Operating Officer at the Department of Taxes, Andrew Stein, and Emily Byrne, our Deputy Fiscal Officer at the Joint Fiscal Office, to talk about child care language and maybe some other things too, I'm not sure, but at least child care language. So I turn it over to you guys. Should we post?
[Emily Byrne, Deputy Fiscal Officer, Joint Fiscal Office]: Good morning. Welcome to that. Emily Burns from the Joint Fiscal Office. And with me
[Andrew Stein, Chief Operating Officer, Vermont Department of Taxes]: Andrew Stein, Chief Operating Officer of the Axis.
[Emily Byrne, Deputy Fiscal Officer, Joint Fiscal Office]: And I'll just kick off real quickly. So you'll know in the Budget Adjustment Act, there is language recommending a process for how to close the general fund in a way that ensures that the, payroll tax, the childcare contribution, that goes into the childcare contribution special fund, or if that's where its final resting place is correctly accounted for at year end close. Part of the reason for that, and I'll let Andrew go into the details around it, is the way that the tax department implemented and collects this revenue makes closing the general fund a little bit more complicated. I'll let you know. At year end. At year end. Yeah.
[Andrew Stein, Chief Operating Officer, Vermont Department of Taxes]: Yeah. So the way that this revenue is collected is we incorporated this revenue source into two existing revenue sources. And we did that for two main reasons. The first reason is that it made it a lot easier on taxpayers to add it as a line on existing tax types. If we were to create a whole new tax type, a whole new set of forms for taxpayers to comply with, it would have been more difficult and burdensome for taxpayers, which would have reduced revenues collected, especially in the early years. So we incorporated it into withholding for employers to pay and employees to pay out of wages and personal income tax for self employed individuals. The vast majority of this revenue, we're talking like 98.6% of this revenue last year came in on withholding. So that's where most of this is. What ultimately happens, well, other reason we decided to do it this way is if we were to stand up a new tax type in our integrated system, it would have cost the state an additional 1.25 to $2,000,000, which we did have an appropriation from the general fund for that, which we did not use. So that was money that we could use for other purposes. So that was the other main reason. So what that means, though, is if we focus on the folding, which, again, that's where most of this revenue comes from, it comes we get the it gets paid at different intervals depending on the size of the business. So the money is already in. We don't have the information to transfer it until the return comes in. And so those returns come in, the first return in a fiscal year comes in on 07/25, then 10/25. Well, actually, should say in a fiscal year, let rephrase that. The first fiscal year this came in, this all began with the first fiscal year. The first return came in on 10/25, then it came in on January 25, then April 25. But the last one of the year comes in on July 25, which is after the fiscal year has closed. So there's three quarters of we have three quarters of revenue transferred over. But the payments are sitting there in the general fund, which is where withholding goes to. And we don't have the information to know how much to transfer over until we get that return after the end of the fiscal year. So initially, the thought was, this is a one year problem. There's going to be a down in the fund for the first year and up in the general fund. In the future, it'll get resolved. But because of various statutory transfers that are required, it became a big problem at the end of the fiscal year. That's for the finance and management on why this happens. But I can wrap up really quickly here, which is our plan is in two years, as part of this version upgrade that we're doing, we're
[Emily Byrne, Deputy Fiscal Officer, Joint Fiscal Office]: then going to have to have
[Andrew Stein, Chief Operating Officer, Vermont Department of Taxes]: an outreach campaign to make it so that withholding taxpayers convey the child care contribution as part of their payments. We don't have that functionality right now. But so the hope is that this whole end of year twenty to twenty, I don't know, I think of the year, 5,000,000,000 transfer is a two year thing, and that in the future, we'll be able to get most of the money in the right pot at So any
[Emily Byrne, Deputy Fiscal Officer, Joint Fiscal Office]: we have to go upstairs, but So we'll go on that. Go do your thing. I'll be here.
[Andrew Stein, Chief Operating Officer, Vermont Department of Taxes]: And you'll be beginning this summer Yes. After you get Do you me to stick around for when you all come back? Would that be helpful?
[Rep. Robin Scheu, Chair, House Appropriations Committee]: It might be.
[Andrew Stein, Chief Operating Officer, Vermont Department of Taxes]: You have another question?