Vermont Legislature SmartTranscripts:

[Robin Scheu (Chair)]: Here we go. Good afternoon. This is the House Appropriations Committee. It is Thursday, 04/09/2026. It's 02:00 in the afternoon, and we are going to review a couple of issues. Given all the things that are going on this year and the challenges that we're facing, a number of people have been asking around the building, what happens if you change state budget? What happens then? And then the other question is, what happens if there's no yield bill? And the yield bill is related to the education, property tax, and how all of that works. So Joint Fiscal Office put together two issue briefs. And we have Emily Byrne from Joint Fiscal to talk about them. Julia Richter, who would normally in a yield bill, is madly working with ways and means on that part of the education bill. We also have with us Brynn Hare from Counsel to help us answer questions on the legal side as well. So you're welcome to sit where you are, Brynn, or come join them, whatever you'd like. Okay.

[Brynn Hare (Legislative Counsel)]: Am likely to be a conduit for your questions because the legal issues implicated by additional reads are quite substantial and broad and it is unlikely that I will be able to answer that. So you have to be a conduit to Perfect.

[Robin Scheu (Chair)]: Great. Thank you so much. All right. Take it away.

[Emily Byrne (Joint Fiscal Office)]: For the record, Emily Byrne from the Joint Fiscal Office. I should acknowledge also that while JFO wrote the issue briefs, we had a lot of feedback from our friends at Pledge Council. We started working on these issue briefs like three years ago, and a lot of brainpower has gone into these seemingly short two page issue briefs. But this has been something we've been talking about needing to do and finally we're able to finalize it. So for the sort of context in terms of not having a budget or yield bill, it's pretty much uncharted territory, right? There's never been an instance that anybody could remember or know where neither has happened. So to that end, if there was no budget sort of any the issue brief and any commentary is really pure speculation in terms of what would happen on July 1 if there was no appropriations bill approved by the general assembly and signed by

[Robin Scheu (Chair)]: the governor or Some some things are in statute, and some things are we don't know what would happen.

[Emily Byrne (Joint Fiscal Office)]: Well, there's not a lot in statute about what would happen. Okay. The yield on the other hand is it's very specific when there's no yield bill. That's in 32 VSA. Which one do you want to? Let's do the yield first because the yield is pretty straightforward.

[Thomas Stevens (Member)]: Okay.

[Emily Byrne (Joint Fiscal Office)]: It's explicit what what the property tax rates get set at in the event of no yield. Okay. So it's in '32 BSA, fifty four zero '2. The non homestead rate gets set at a dollar 59 if there's no yield bill. But then it's adjusted by the statewide adjustment. So that's related to the CLA in terms of, updating property values. You all are familiar with the CLA. That would bring after that adjustment, would bring the non homestead rate to $2.26. The current non homestead rate in f y twenty six is a dollar 70. It's projected to be $1.703 In 2027, it's projected to be $1.698 in the yield bill as passed by the house. That would yeah. Which one? Those numbers again, please. Sure. So in, 2026, it's 1.703. That's projected to be 1.698 in FY 2027.

[Robin Scheu (Chair)]: So it's would go up $0.30 Yes. Basically.

[Wayne Laroche (Member)]: Without a yield bill.

[Emily Byrne (Joint Fiscal Office)]: Yes. Without a yield bill. So then the average estimated bill for the non homestead property taxpayers compared to as compared to f y twenty six with no yield bill would increase by 42.4%.

[Robin Scheu (Chair)]: Percent or cent? Percent. Percent. Percent. Percent. Percent. Percent. It's the second group of bullets on the So that's the non homestead if there was no yield bill.

[Emily Byrne (Joint Fiscal Office)]: Correct. So the law says this is the rate, increase it by the statewide adjustment, and if we compare how that would calculate to what's in f y twenty six to 42% increase over f y twenty six.

[Wayne Laroche (Member)]: Why do they I'm sorry. May I ask a question?

[Robin Scheu (Chair)]: Go ahead

[Wayne Laroche (Member)]: and Why why does that happen? Somebody wanted the penalty there just in case?

[Emily Byrne (Joint Fiscal Office)]: Well, I think the I wouldn't necessarily call it a penalty. I think in the when the statute went into effect, right, there was this sort of backstop for if there was no yield bill that passed, this is what the tax rate would get set at. Then there's the statewide adjustment thing, which sort of just updates it to sort of current where we are today and comparing that to if we set the yield through the yield bill, right, the rate would be much closer to what that 1.59 would be. But that's what's

[Brynn Hare (Legislative Counsel)]: in the law.

[Thomas Stevens (Member)]: Could I

[Emily Byrne (Joint Fiscal Office)]: don't know that I can speculate anymore as to why

[Wayne Laroche (Member)]: Would the law be changed so that it wouldn't increase so much?

[Robin Scheu (Chair)]: I would I would speculate that this was done to have a backstop to ensure that there's a yield bill that's appropriate for

[Wayne Laroche (Member)]: Yeah. What what of whatever that word is. Yeah. It's a poison pill.

[David Yacovone (Member)]: Yeah. Could be. But From the African trends. So how

[Robin Scheu (Chair)]: long have we been doing the yield bills? That's it's been like decades, isn't it? We've been doing the yield pills. Seven. Yeah. Since Reagan. Well, no. Or maybe a few years.

[David Yacovone (Member)]: I think 16 was with act six. Back on education,

[Brynn Hare (Legislative Counsel)]: it was like 2016, 2017. Right. It's been here since. Yeah.

[Trevor Squirrell (Clerk)]: During the time I've been here, we started the

[Brynn Hare (Legislative Counsel)]: Heal Bill.

[Trevor Squirrell (Clerk)]: So, it's only been ten years. Yeah, because that's when we

[David Yacovone (Member)]: made the education committee, both policy committee and a money committee for two years and that was when we did act 46. Right.

[Robin Scheu (Chair)]: We've had a yield bill, yeah.

[David Yacovone (Member)]: And they called us something else either earlier than that, but that's when we came up. I have

[Thomas Stevens (Member)]: a question to put in the parking lot.

[Robin Scheu (Chair)]: Okay.

[Thomas Stevens (Member)]: When we get our ratings from Moody's and the others, they look at our overall financial health. And if we were to show up on July 1 without a budget, is there speculation or is there anyone that could speculate what kind of effect that would have on our rate?

[Robin Scheu (Chair)]: Well, when we get to the budget, let's talk about that. So keep that in the parking lot. Right now, we're just doing the yield bill if there is no yield bill. So we've talked about the non homestead rate. And then

[Emily Byrne (Joint Fiscal Office)]: Yes. So on the Rates. On the homestead rate, so in the income yield and the homestead rate are the same as last year per statute, that would result estimated average bill increase compared to FY '26 for the homestead payers at 13.7%. And an estimated average bill increase for the income group, income yield would result in an average bill increase compared to FY 26 of 9.7%.

[Robin Scheu (Chair)]: That's the income sensitivity, folks. Yep.

[Emily Byrne (Joint Fiscal Office)]: So in that, if those rates are set that way, we would raise an additional $325,000,000 on the property taxes than if the yield bill passed. So you would have a lot of extra education.

[Robin Scheu (Chair)]: More than we need to fund education programs.

[Thomas Stevens (Member)]: Always been calling so many programs education.

[Robin Scheu (Chair)]: We'll just shove everything back into education. And if there was no yield bill, this would be as of July 1, Emily, is that right? So if something happened, if there was a yield bill after July 1, we would cure it or something like that, right? Or we would would it go back, or would this be set for the year until the legislature did something else?

[Emily Byrne (Joint Fiscal Office)]: Presumably, right? You could. I don't

[Robin Scheu (Chair)]: know if that's a legal question or

[Emily Byrne (Joint Fiscal Office)]: But I think you could amend it.

[Trevor Squirrell (Clerk)]: Yes, you could.

[Brynn Hare (Legislative Counsel)]: Would you please state the question again? So if

[Robin Scheu (Chair)]: this is what the situation was on July 1, could With no yield. With no yield bill, could the legislature, in some form, whether it's joint fiscal committee or the emergency board or we could fall back in session, could we create another yield bill to fix it?

[Brynn Hare (Legislative Counsel)]: And you can think about that. I think so. I just think I don't totally understand the implication with

[David Yacovone (Member)]: the new fiscal year, if

[Brynn Hare (Legislative Counsel)]: it happens after the new fiscal year begins.

[Robin Scheu (Chair)]: Well, if there's no yield bill, we'd have to create a yield bill to change it from what it is. Yes.

[Emily Byrne (Joint Fiscal Office)]: I mean, the You don't have to come back.

[Robin Scheu (Chair)]: I don't know. That's what I'm saying.

[Thomas Stevens (Member)]: So the

[Emily Byrne (Joint Fiscal Office)]: first part of your question, joint fiscal or the emergency board can't set the yield? We can't do

[Robin Scheu (Chair)]: the yield.

[Emily Byrne (Joint Fiscal Office)]: No. That has to be through an act of general assembly. Okay. So I'm not a lawyer, but I'm like, that's

[Thomas Stevens (Member)]: We would never gavel out if the if if there's a bill in flux, yield or budget, and it's been vetoed and we don't come back because we know we can't override the veto, and we haven't gabbled out since what is it called?

[Wayne Laroche (Member)]: Any day.

[Thomas Stevens (Member)]: We haven't gabbled out yet, then we would just keep coming back because it's the session isn't over. Right. Mhmm. So we can't call a special session. So by not gabbling out, then if we had to come back somehow

[Robin Scheu (Chair)]: Well, we could also gavel out.

[David Yacovone (Member)]: And call

[Robin Scheu (Chair)]: us the governor would have to call us back. The legislature, if we if we

[Thomas Stevens (Member)]: can a special session

[Robin Scheu (Chair)]: Yes.

[Thomas Stevens (Member)]: Which means anything can happen in a special session.

[Robin Scheu (Chair)]: Oh, excellent.

[Wayne Laroche (Member)]: What do you mean by that?

[Robin Scheu (Chair)]: Well, a special session just opens things up.

[Wayne Laroche (Member)]: Okay. But you still have a committee process. It doesn't happen.

[Robin Scheu (Chair)]: You did this in 2018.

[Thomas Stevens (Member)]: Yeah. You can you can have any number any bills that have been hanging out. Well, what's in oh, here we go. We gavel out. Does that that wall gets wiped clean. If there's any live bills at the end of the biennium, it's wiped clean and then a special session we'd have to introduce any bills.

[Brynn Hare (Legislative Counsel)]: Yes, that is correct. Once you've adjourned, it's gone. It's my understanding. However, if you come back, let me confirm that.

[Thomas Stevens (Member)]: I think it's when we did it in 2018, we did the special session, it was eight point one.

[Robin Scheu (Chair)]: We need to start over. We need start over. So it isn't like the old budget adjustment from last year is suddenly in play because it will have been back this year. So let

[Thomas Stevens (Member)]: me finish off the wall There's no wall. It'll be a new session.

[Robin Scheu (Chair)]: Yeah. Right. Right. So there's no wall.

[Wayne Laroche (Member)]: Yep. You

[Emily Byrne (Joint Fiscal Office)]: did not have a yield, could you set it after July 1? Probably you'd have to think about the administrative ramifications of that, right? Like towns start setting property tax bills out, right? Like once it's fine, like that you would have to deal with.

[Robin Scheu (Chair)]: Yes. That would be the

[Thomas Stevens (Member)]: only thing is the complex have the timing of sending out tax bills.

[Emily Byrne (Joint Fiscal Office)]: Right. And if they start towns start collecting money, and if you change the yield after that, like, don't even

[Robin Scheu (Chair)]: It depends on what what your town does. And our town moved from being the first payment being in September to being in November to allow for changes that could happen because we weren't towns weren't always getting the property tax information until, like, late July or early August, and then it was too hard to figure it out for September.

[Thomas Stevens (Member)]: Depending on what your fiscal year is as well. Ours is our fiscal year starts on July 1. Right. Means on January 1, we borrow money to pay whatever bills we have to pay, but then we only pay we only have two property tax days.

[Robin Scheu (Chair)]: Mhmm. We do.

[Thomas Stevens (Member)]: And there's a lot of towns that start January 1. So they wouldn't necessarily be affected by Right. A couple of months of of not knowing. Right. But those towns that borrow money against what the tax collection would be in the fall.

[Robin Scheu (Chair)]: Well, or or if they if this was what reverted to and there and it was a while before we met to change it, towns might start sending out property tax bills, and they would have to send out a second set of property tax bills because there would be a new. Right?

[Thomas Stevens (Member)]: I'm sure we would cover that cost for them.

[Robin Scheu (Chair)]: From the pilot. The pilot.

[David Yacovone (Member)]: Yeah, think in my community, for many years, we had multiple votes on our budget, and we sometimes had them after school started. And I think Barry had this in '24, '25 going into '20 I think it was into '25. I think the towns can make an adjustment to their They send out the original ones based on whatever the 75% or whatever the number is that they can carry forward and use as the previous budget and then can adjust the other payments as the budgets come in, they know what to expect.

[Robin Scheu (Chair)]: Well, so those are sort of

[David Yacovone (Member)]: two different things. If the

[Robin Scheu (Chair)]: school board doesn't pass it, if the school doesn't pass this budget, they can operate at 87. So the default for school with 80 or 87 or whatever it is percent of the previous years. That's not the same as collecting property taxes to run the school. That's completely different than what this is. So this is about what you, a property owner,

[Emily Byrne (Joint Fiscal Office)]: are going

[Robin Scheu (Chair)]: to pay on your property taxes based on what the yield bill

[David Yacovone (Member)]: taxes On are going to my question, are they forced them to use these new rates that are here on the second section? They would have to send it out And for then if it turned out we passed something in Later. July. Yeah. Or maybe August or whatever date you want to pick. Then you could go and adjust accordingly and reduce the rest of them.

[Robin Scheu (Chair)]: That's right. Yes. So that would be annoying for towns, I would think. Yeah.

[David Yacovone (Member)]: I don't know. Maybe Brent has an idea how that works.

[Robin Scheu (Chair)]: We've never done it. So, right? We've never done this.

[Thomas Stevens (Member)]: We shouldn't do it.

[Robin Scheu (Chair)]: Right. But that's why it's important to understand what the ramifications are if we don't have a yoga. Tom, do look like you want to say

[Wayne Laroche (Member)]: something?

[Thomas Stevens (Member)]: I'm just blowing my eyes. Like the concept of Yeah. Could

[Wayne Laroche (Member)]: could another bill, not the big bill because that presumably would be vetoed, in fact, but a miscellaneous tax bill or some other piece of legislation have language added to it to fix so that it wouldn't go up 42% and hurt many, many people. Couldn't you say, you could come up with any language, you know, in the event of a budget veto, the yield bill shall be yada yada, whatever it needs to be. Couldn't you? And avoid any of that uncertainty that towns would feel or people coming back and fixing it. Would have the those are out

[Thomas Stevens (Member)]: there that would be germane. What could you hook it to that? I mean, the governor still can veto it.

[Wayne Laroche (Member)]: If he wanted, he'd have to find the other bill.

[Thomas Stevens (Member)]: I'm sure he would find the other bill.

[David Yacovone (Member)]: Well, you know,

[Robin Scheu (Chair)]: it didn't count. But he's got a full time staff for that.

[Trevor Squirrell (Clerk)]: It's a piggy thing, but Lynn's question about if the school didn't set their budget and they kept modifying their budget, Indeed, that does affect the tax because the education tax is partly tied to the student spending, the per pupil spending, which would be affected by whatever budget is finally adopted. So the purple people spending would change, could potential change, and then you apply the yields to that, which means you're changing the tax collection.

[Robin Scheu (Chair)]: Right. Which wouldn't affect not having a yield bill. That would only affect it if there was an actual yield bill.

[Trevor Squirrell (Clerk)]: Well, no, because if,

[Wayne Laroche (Member)]: all right,

[Trevor Squirrell (Clerk)]: well, okay, if we say that the income and the property yields revert to the prior fiscal year, if they're still real, then that takes care of that. It's just the non homestead fixed. Right, it's

[Robin Scheu (Chair)]: a fixed rate, but the others are not, they revert to the prior fiscal year. Which Okay. Presumably is less than the current fiscal year. But they wouldn't have. But in this case, for our current year, they wouldn't have the $105,000,000 that's been sent to help buy that property taxes Because it was at last year's rate. So maybe not. Right. So that yeah. Tom and mine.

[Thomas Stevens (Member)]: So Emily, just comparing pennies of the statewide property tax versus townwide property tax. Let's say that for some reason the towns have enough energy and focus and technology to say, oh, well, if the statewide money that's coming in, if it reverts back to a certain number and the state's going to pay it, But that has a certain amount of difference like if if because the town's property tax is gonna be and we're gonna give them x and then they're adding onto it in order to finish up the bill, We're still we're not giving them, we don't give them a 100% of their money individual to the districts have a separate add on their local tax add on to the statewide tax, right? No.

[Emily Byrne (Joint Fiscal Office)]: No. They have you have your tax rate that's specific to your district or Right?

[Thomas Stevens (Member)]: But if if we're paying two twenty two on our taxes in the Harwood District, but the state's only giving us whatever the number is that's supposed to be in the yield bill. We're we're covering that. Does that make sense? Money goes to the state and then

[David Yacovone (Member)]: the state turns around and gives it back to the towns. That's how it's not like the old days where you have to raise money locally, you got your state aid. This is money goes into one pot, which is one of the problems with having people who vote, who decide to not pay it or cannot pay it or vote it down and they trust in it. The money's got to go into the pot so everybody shares it. So it doesn't guarantee that you're going to get back what you're committed.

[Robin Scheu (Chair)]: No, in fact nobody does. I mean, they set the yield bill and that's just to cover the whole education payment for all the budgets in the state of Vermont. And then all these other factors go in like your own grand list and everything else. That's I why

[Thomas Stevens (Member)]: mean, if I'm paying two twenty two on my tax rate, you're not. Mean, it's equal in some way. Right? That's the that's the elegance of the of the equal right, equitable funding.

[Trevor Squirrell (Clerk)]: It is if you're spending the same amount per student as she is. If Mike's spending more per student, his rate is going to be higher.

[Thomas Stevens (Member)]: Do we have to adjust locally?

[David Yacovone (Member)]: You you got a different tax rate if you got a Right.

[Thomas Stevens (Member)]: I mean, how do we how do we how would we meet a tax rate that that fit what we voted on at town meeting day and how much more would that come from local tax What

[Robin Scheu (Chair)]: did Barry do? There's there's

[David Yacovone (Member)]: one there, but the budget didn't pass till later. I mean, does anyone remember what Bryn, do you know what happened to Barry and how that or how that worked? Anybody in JFR? Because they were like the outlier. Everybody else They finally passed the budget.

[Robin Scheu (Chair)]: They had to fit into that same But, again, their taxes wouldn't have been based on 87% of the previous years or whatever it was, because that's all they were allowed to spend, but it didn't mean their budget changed. Until they got a budget approved, that's all they were allowed to spend. Once their budget was approved, they could spend up to the amount of whatever their budget was.

[David Yacovone (Member)]: And that's the money they got back from the state, counting the CLA for the rate and all Right, right. Yeah.

[Emily Byrne (Joint Fiscal Office)]: So I think for the for towns that vote late, assumption goes into the statewide Yes. Yeah. Affiliation. Right? Right. Because you at some point, you have to pick a number.

[Wayne Laroche (Member)]: Then they adjust it after a tax.

[David Yacovone (Member)]: And then,

[Emily Byrne (Joint Fiscal Office)]: Right. The tax rate gets adjusted, you know, what their education payment is and the payment gets made and, you know, the education fund is going to raise a certain amount of money and maybe like a raise too much may raise too little, there are lots of variables in it. But you try to set the yield so that it raises enough to cover everything based on your best assumptions.

[Robin Scheu (Chair)]: Set the yield based on the December 1 letter. We wait and see what the actual budgets are. We're pretty close. We have enough years of doing this. So the school budgets as a whole came in about $29,000,000 under what was projected in the December 1 letter. So that was one thing that helped. It wasn't $290,000,000 but it was 29 lower.

[Emily Byrne (Joint Fiscal Office)]: But it's not I wouldn't say it's atypical to not have every single budget totally set by the time the yield bill passes. Just because some towns don't vote until early May. But they have good enough. Know what they're putting for. We know what they're gonna they're warning. Warning, right? And you can use that.

[Robin Scheu (Chair)]: So the current yield bill operates under the assumption that we use that $105,000,000 over a two year period. And so the yield was set assuming the 52,000,000 plus the $20,000,000 that was in the reserve fund or the 30 I can't remember the exact number. So that was how the yield bill was done. The yield bill would have been different if all 105,000,000 had gone in. So there's the where else are you going to get the money before you go to taxpayers part. But we voted in the yield bill to do that over two years. So the yield bill makes that assumption as well.

[Emily Byrne (Joint Fiscal Office)]: I think for representative Stevens, for your question about cash, we could do a whole thing on this sort of cap, how the money moves between the state and locals and the districts. And it depends on whether or not you raise enough money to pay for your budget on your local tax rate or not enough. And some towns send money to the state, and then it gets redistributed back to towns. And some towns raise enough money or raise not enough money, and then they receive distributions from the state. So it just sort of depends on where your town falls. But the rate that you pay doesn't all of it necessarily comes to the state, but it's the rate that's determined that you need to pay to meet your contribution. If that helps, We can talk about it offline.

[Thomas Stevens (Member)]: It's a question, I think I mean, just the fact that I'm sitting here thinking about local tax rates on top of the state gift not gift, but the state gift. And here I am sitting in the building, and I perhaps should have known better than that question with And old I think my given the fact that my particular school board has lots of new people always every year, and they may or may not know and be up to date on what's going on. I know, I mean, based on the emails that we all get about policy, we know that our constituents can know a little about everything, kind of what's They have a legal requirement.

[Robin Scheu (Chair)]: Julia will be in on Monday to talk about the education bill. Don't know if Monday's Sorry, Tuesday.

[Wayne Laroche (Member)]: Oh, yeah, we go in there.

[Robin Scheu (Chair)]: I'm just almost still getting my head around it. We're not here on Monday.

[Thomas Stevens (Member)]: It's, even

[Robin Scheu (Chair)]: though it's April. I should know better. But, anyway, I don't know if that'll be the time to talk, but after we get the education bill off the House floor, we could also get Julia back in to give us, like, give her a couple of nights sleep. And then we'll just let her, you know, come in, and she can kind of go into more detail about how all of this works. Because I think it's, you know, the more people that understand how it works currently in the body, the better it is that we can. And I always understand it beautifully for at least five minutes after I hear that. And there's actually a very good presentation that she has that I can go find and share with all of you about how all of this works. The yield is determined by math. It's a math equation. I mean, the only political part is like, are you going to use this $105,000,000 over one or two years? But the budgets are math. So anyway, I'll get that out to you guys. We'll find out. Okay. So who else had a question?

[David Yacovone (Member)]: Do you have a question, Wayne?

[Wayne Laroche (Member)]: Oh, no. Okay.

[Emily Byrne (Joint Fiscal Office)]: All right. So that was the easy one. That's the easy one. The straightforward one in terms of what happens, Yes. Then the second issue brief that we did is, you know, what happens if there's no, appropriations act or no budget.

[Wayne Laroche (Member)]: We're gonna have a lot more money in the bank.

[Robin Scheu (Chair)]: We'll just skip you.

[Emily Byrne (Joint Fiscal Office)]: So to start with, I think the most important thing is section 27 of the Vermont constitution says no money shall be drawn out of the treasury unless first appropriated by an act of

[Robin Scheu (Chair)]: legislation. So we have the power of the purse, as people like to say.

[Emily Byrne (Joint Fiscal Office)]: So right. Layman's terms, meaning if on July 1, no appropriate there are no appropriations. There's no spending authority. Treasurer can't make payments on behalf of agencies, departments. Departments have no spending authority.

[Thomas Stevens (Member)]: In

[Emily Byrne (Joint Fiscal Office)]: the issue brief, we use the word shutdown, but just want to acknowledge that shutdown is of a loaded word. And we hear that a lot when we talk about the federal government, but shutdown is just necessarily mean that like government completely stops operating and nothing happens, right? Like it's more of the So things would continue to operate. It's just not clear, like how. What would operate where, all of that would need to get figured out in the event that there was no appropriations act and what the impact would be. From there. So, one thing that we looked into is what happens in other states. So some other states have specific sort of legal contingencies about what would happen. Some states have, like in air quotes, continuing resolution type language. We hear about the continuing resolutions at the federal level. It's not always necessarily characterized as that in other states, but it's sort of this mechanism that's either, you know, annual language in their Appropriations Act or in statute language that says, in the event there's no Appropriations Act on July 1, you know, the prior year use the prior year budget as your spending authority amount or, you know, things of that nature. So the other place where other states, have directions on what to do is they have court decisions that say, in the event of no appropriations, this is who gets paid. This is how, you operate until there's legislative resolution to, spending authority in an appropriations act. So Vermont currently doesn't have anything in statute, nor has there been anything in session law that's sort of specific directing the government what to do on July 1 if there's no appropriations act. And because it hasn't happened, we don't have court decisions that would direct operations accordingly. Similarly, because this hasn't happened, JFO, alleged counsel, can't really speculate on what would happen, would have to play out in the courts

[Robin Scheu (Chair)]: and whatnot. The administration could not write checks or spend any money. Generally, no. A budget that's basically, there's not a budget that's been approved that appropriates the money to do all these It

[Wayne Laroche (Member)]: will probably quickly.

[Emily Byrne (Joint Fiscal Office)]: Yeah. I think the one area where this gets complicated again, and the risk of speculating a little bit to the extent the legislature has passed language that allows carryforward to be approved by the Commissioner of Finance and Management to allow the legislative and judicial carry forward to be carried forward. Then presumably those funds would carry forward. The challenge there is sort of twofold is The first two that I can think of challenges with that is that carry forward typically isn't finalized until later in July. So you don't really know who has carry forward to spend and payroll would run, presumably, and you wouldn't necessarily know if you had spending authority. Similarly, not all departments are created equal in terms of who would have carryforward and who wouldn't. So you couldn't rely on the carryforward authorization granted to finance and management to guarantee operations of any one part of state government over another.

[Robin Scheu (Chair)]: So like we have a lot of clean water funds carry forward, so it

[Wayne Laroche (Member)]: wouldn't be paying for Medicaid or That'd be diversion. Right. I mean,

[Emily Byrne (Joint Fiscal Office)]: so Right. So Right. The clean water rate so general fund, clean water fund, transportation fund carry forward. The special funds spending authority dissolves on June 30. Federal spending authority dissolves on June 30, it would only be those funds that you allow carry forward for. And not everybody has Right. Spending authority has carry forward in those funds. So

[Robin Scheu (Chair)]: And they're not getting paid to be there to spend it, Probably. Unless it's being used for payroll or something like that. But Right.

[Wayne Laroche (Member)]: Could the reserve funds be used?

[Emily Byrne (Joint Fiscal Office)]: The only way money can come out of the reserves is by act of legislation. So you would have to the legislature would have to unreserve it.

[Thomas Stevens (Member)]: Have to come back to it and

[Emily Byrne (Joint Fiscal Office)]: take that action. There is the money appropriated to the emergency board through the federal funds thing. But, again, that would have to be authorized for the emergency board and transferred through the

[Brynn Hare (Legislative Counsel)]: emergency board action. It's almost not very much less.

[Emily Byrne (Joint Fiscal Office)]: $42,000,000 at this point.

[Robin Scheu (Chair)]: Right. Well, keep I don't know what we burn through every day or year or week, but got my glasses till 12:00 that day.

[Emily Byrne (Joint Fiscal Office)]: The other, to representative Mrowicki's question earlier, I think it is, I can speculate that it would likely negatively impact the bond rating. One of the things that's often cited by Wall Street, the rating agencies is timely, balanced budget is something that always happens. And so long as that always happens, that's a good thing to say that there's good fiscal management in the state. It may if there was a situation where there was no budget, they may they read the newspaper and pay attention to those things and may reconsider how that impacts the rating accordingly.

[Robin Scheu (Chair)]: And also federal funds and grants and

[Emily Byrne (Joint Fiscal Office)]: Yeah. Federal funds can't move without appropriation by the general assembly. So none of those funds could move. I think you've mentioned some of the big ones that would be impacted by paying state employees. There's no specific guidance on what would happen. To Brynn's comment earlier, that's a good question for Legg Council, sort of how labor laws would play into that and what potentially would happen. Right? There's lots of contractors that work for the state. So making timely payments would be challenging and sort of what contractual obligations we have to pay vendors. Just in terms of me thinking about other things, we make payments for Medicaid weekly. So what impact would not making timely Medicaid payments have on things like hospitals, nursing homes. We had a issue with SNAP benefits go out on the first of the month. Those would likely be impacted. Thinking about, this is more of in context of what you hear about a lot when there's no funding authorized at the federal level, right? The impact on state parks and state lands and, you know, in the summertime, not having people could still access those resources, but people wouldn't be there to collect fees probably. Could it be fee loss? Yeah. You talked about payments to school districts. It is the summertime, so theoretically, the cash flow of the school districts is at its low point. But to the extent there's funds that would need to flow to school districts and towns that can impact them, it is the construction season. So if the agency of transportation wasn't able to issue payments to vendors, then it may slow, construction. Those are just seven, six random things that I thought of. But, you know, the impact you could speculate on sort of lots of impacts of not having spending authorities may have on the operations of government.

[Robin Scheu (Chair)]: Right. And then picking up the pieces on the other side.

[Emily Byrne (Joint Fiscal Office)]: But I think in the right big picture, we don't know. And if we got there, we would find out.

[Robin Scheu (Chair)]: Yes. Well, I think the sentence that's in here, it's difficult to overstate the seriousness of the shutdown, is something that is important to keep in mind. I'm sure there'll be impacts that we there would be impacts that

[Wayne Laroche (Member)]: we can't even think of. The political fallout, you don't even know where the land.

[Robin Scheu (Chair)]: Well, there's that too. But there's the political, there's the financial, there's the go ahead, Lamoille.

[David Yacovone (Member)]: There's also things that are essential that you cannot discontinue. You would have to have people in the correctional center, you should have to have police, you have to have prison staff.

[Trevor Squirrell (Clerk)]: The other

[Wayne Laroche (Member)]: thing is that all of

[David Yacovone (Member)]: those state employees would not be paid, and that would be a huge impact on the economy of

[Robin Scheu (Chair)]: the state. Who would not be paid? The employees. Oh yeah, the employees.

[David Yacovone (Member)]: I mean, that's probably the single biggest huge impact because payroll is probably a huge part of the economy for this. I think it's one of the largest employers.

[Trevor Squirrell (Clerk)]: Well, I'm just sitting here trying to think like, what would be the rationale for going over that cliff? Like, why would we ever On a punishment basis.

[David Yacovone (Member)]: To go over that cliff?

[Trevor Squirrell (Clerk)]: Perhaps history has

[Thomas Stevens (Member)]: not had to happen.

[Robin Scheu (Chair)]: Right, but right, or you, why would we go to, if we're using it as leverage for something else, that's the

[David Yacovone (Member)]: always find a way of compromise. Hopefully,

[Robin Scheu (Chair)]: this is something that everybody would see as kind of important. Eleventh hour. Unless it's a crisis, nobody moves. So rather sobering, but I think it's important for us to understand what the potential impacts could be. I mean, I hope we never get here. Oh, I think we would all agree on that one. But that is the We should know what consequences of actions are.

[Thomas Stevens (Member)]: Emily, if I can ask you a question. You kind of referenced other states like New Jersey, Pennsylvania, others. They've had some experience with shutdowns here and there's a reference here to a state level court getting involved in some of their decision making concept things. I mean, that would still create substantial gap in anything really happening from a July 1 shutdown if that were to happen.

[Emily Byrne (Joint Fiscal Office)]: Yeah, I don't know.

[Thomas Stevens (Member)]: I mean you've kind of looked

[Emily Byrne (Joint Fiscal Office)]: at the cases here. Would

[David Yacovone (Member)]: getting paid? The courts

[Brynn Hare (Legislative Counsel)]: looking at you. Many people would be furloughed from all the branches, yep. So this disruption will serve as take by certain leads to all three branches of government. And what is likely is that, I mean, our current CBAs furloughed employees are due and entitled to back pay by the state. So all of those employees that are not working would still be entitled to pay at some point. So my understanding from other states that have experienced a shutdown is that it's generally a net cost to the state at our very end because of all the litigation that ensues and all of the back pay that has to be paid and that all of the costs that the disruption causes.

[Robin Scheu (Chair)]: And the back pay, it isn't like people are necessarily working during that time. So the work isn't getting done, but we will be paying people for that because of the furlough.

[Brynn Hare (Legislative Counsel)]: Right, but not until you authorize

[Robin Scheu (Chair)]: future bend it. I

[Trevor Squirrell (Clerk)]: don't understand how, what the courts could do. I mean, is the Supreme Court gonna say, you must raise taxes, you must collect wounds and meals taxes, you must collect income taxes and proceed on the previous budget? That doesn't seem something that's not for the court to do. But I

[Brynn Hare (Legislative Counsel)]: think that my understanding is that the court will get involved in all sorts of matters that will arise before it in the events of a shutdown, including employee, I mean, employment connections.

[Trevor Squirrell (Clerk)]: Sure, I can understand that, but I don't, I guess I thought before you're implying that the court could order state to begin operating again. That's kind

[Thomas Stevens (Member)]: of the nature of my question here.

[Trevor Squirrell (Clerk)]: What would do? The

[Thomas Stevens (Member)]: That would be like saying that the court could order that we pay them.

[Trevor Squirrell (Clerk)]: But with what? If you have no spending authority, I

[Robin Scheu (Chair)]: mean, if you have no Yeah. When it says in here, there's some precedent for state level courts making decisions on the operations of government during this shutdown as of Minnesota, do

[Brynn Hare (Legislative Counsel)]: you know what they actually decided? So I did not put together that portion, but my understanding is that many of these court decisions are around what employees the court's decision or not. I'm not sure.

[Emily Byrne (Joint Fiscal Office)]: But other vendors

[Thomas Stevens (Member)]: that

[Emily Byrne (Joint Fiscal Office)]: get paid by the state I spoke with the hospitals. Right? Like, I imagine they would have something to say and would

[Wayne Laroche (Member)]: What would that

[Robin Scheu (Chair)]: Could you just share

[Wayne Laroche (Member)]: that with though with that? You know, the constitution says x. Wouldn't matter whether you went through your essential, you could do all that, but if you're prohibited from making the payment, you're prohibited, right? They can't amend that constitution. It doesn't give them authority to say, here's all the essential employees, pay them. Because you wouldn't have that authority, did you?

[Emily Byrne (Joint Fiscal Office)]: Not the right person to

[Robin Scheu (Chair)]: ask about this or Do you have an opinion? I

[Wayne Laroche (Member)]: could speak

[Robin Scheu (Chair)]: to But you can see what a conundrum it would be to not have a budget and how devastating it could be. So, it's why we balance our budget, get one passed. Has there

[Trevor Squirrell (Clerk)]: ever been any legislation suggested to put in some kind of a backstop? Like, you don't have a budget you have to operate on.

[Robin Scheu (Chair)]: I think this is part of why this first piece was like, so what happens if there is a governor shut down, as Emily said, they've been working on this for several years to try to put something together. And so now knowing what the consequences are, then another question could be, does the general assembly want to put something? Right.

[Trevor Squirrell (Clerk)]: Other things done should be considered that.

[Thomas Stevens (Member)]: Not this year.

[Brynn Hare (Legislative Counsel)]: No. Just force ourselves to make sure we have a bit. Right.

[Thomas Stevens (Member)]: So,

[Robin Scheu (Chair)]: I mean, that is something to consider in future general assemblies. But it's important to understand what the problem is, potential

[Thomas Stevens (Member)]: problem is. Well, think this is all still, to me, kind of all out here. But coming up with whatever the message is from the house overall. I mean, the administration may have a completely different opinion on what happens.

[Robin Scheu (Chair)]: Yeah.

[Thomas Stevens (Member)]: But getting what we're as a house, not even part not part of them, but just as a house or as a general assembly because we should find out from that we should the senate should be on the same page.

[Wayne Laroche (Member)]: Yeah.

[Thomas Stevens (Member)]: What we understand because if we start 11 of us start saying 11 different things where it ends up being it could be anything. Yeah. That's not gonna be helpful too if we're trying to create what the story is and what's at stake. I mean, this is a great conversation to start now because I mean, I'm gonna pick June 15 for the last day of the session because And I may pick June 21 just simply because of the way the mood is. So, like, May May 15.

[Robin Scheu (Chair)]: Well, that's what we're supposed to if we all finish

[Thomas Stevens (Member)]: wallet on the table. Predictive marketing says

[Robin Scheu (Chair)]: cash out. Right.

[Thomas Stevens (Member)]: There's no reason why we couldn't get to May 15. It's all this matters to solve the education problem. Doesn't seem that difficult.

[Wayne Laroche (Member)]: Yeah. Problem is that it's a political will.

[Thomas Stevens (Member)]: Doesn't exist.

[Wayne Laroche (Member)]: Worried So about political. Any

[Robin Scheu (Chair)]: other questions or comments or anything on these two reviews? I

[Thomas Stevens (Member)]: think more alcohol.

[Wayne Laroche (Member)]: Should get my way in and get all these things.

[Robin Scheu (Chair)]: Raise the tongue, return my own way.

[Thomas Stevens (Member)]: Just thinking in order to even think about it. All

[Robin Scheu (Chair)]: right. So something to think about, this is posted on our webpage.

[Thomas Stevens (Member)]: You guys should

[Robin Scheu (Chair)]: take a look at it. Dave, do you want to say something? No. Okay, you're

[Wayne Laroche (Member)]: just pondering. Everybody's got

[Robin Scheu (Chair)]: me thinking about all this stuff. Emily, thank you so much for this, and thank Julia for her work also. I know we'll see her next week. So, this is it for today. Tomorrow, after the floor, and it looks like the floor may be shorter than I originally thought, so that's good. We will have, thank you, Brynn.

[Wayne Laroche (Member)]: Thank you so much.

[Robin Scheu (Chair)]: Will have Council, Beth St. James, and maybe John Gray, and Julia may be in also. But to go through the, again, once again, I'm just repeating for the audience and everybody, so we set expectations, We're just doing the house education piece. On Tuesday? Tomorrow.

[Wayne Laroche (Member)]: Oh, okay. We're gonna do

[Robin Scheu (Chair)]: the policy, the house education part. Okay. And then we are gonna get the bill tomorrow, but we're gonna break it into two. And then we're gonna do the ways and means part on Tuesday. And that'll be at 01:00 on Tuesday because we'll have the floor. There's going to be a caucus of the whole for the ways and means part of it. We're going to have our caucuses. We'll have lunch and then come back and we'll do that. And we'll fill out the bill on Tuesday. So we'll hear half of it tomorrow and the other half on Tuesday. We'll have possession tomorrow, so you can have some lovely weekend reading on the ways and means part of it. There'll be a fiscal note, I'm sure. And I don't know what else there'll be. We'll try to get our hands on everything we can. But for tomorrow, we're just listening to the house education piece of it. Okay? And there is an updated map. The maps that came out, I guess there were a couple of errors. So it's now on ways and means from I think Wednesday, maybe Tuesday. I can't remember where I got it. The ways and means has a draft map. It doesn't have all the big black holes.

[Thomas Stevens (Member)]: It's not

[David Yacovone (Member)]: posted on our committee page.

[Robin Scheu (Chair)]: We can send it. I can send it to you, but we aren't gonna post on the committee page. Do we have something? It's still

[Trevor Squirrell (Clerk)]: in draft form. I think it's dated.

[Robin Scheu (Chair)]: Okay, I'll find it and send it out to them. They found it yesterday. So that's plan. Education tomorrow after the floor, first part, and then Tuesday, second half. And then we vote. Any other questions, Lynn?

[David Yacovone (Member)]: Will they be in one

[Robin Scheu (Chair)]: big bill when we vote on Tuesday? Yes. Yes, it'll all be together. And it may all be don't know you know that they'll all be together. Ways and Means is not doing a strike ball. They are doing instances of event.

[Brynn Hare (Legislative Counsel)]: So that'll actually be easier to talk about.

[Robin Scheu (Chair)]: Look, if it's on the floor, it'll all be together. So by Tuesday, we may have something altogether.

[Wayne Laroche (Member)]: The vote is a calendar Wednesday, floor action Thursday.

[Robin Scheu (Chair)]: Thursday, Friday. It'll be voted out of this body next Thursday and Friday. That's the plan. Body. Remember that we could have some long floor days next week. We're we're also planning on another field trip on Wednesday morning, so keep you posted on that. Alright. What