Vermont Legislature SmartTranscripts:

[Kirby Keaton (Legislative Counsel)]: Good

[Emilie Kornheiser (Chair)]: morning. Good morning.

[Unidentified Committee Member]: The city. We just don't have a lot of care.

[Emilie Kornheiser (Chair)]: Well, here we are in Ways and Means on Thursday, January 15, otherwise known as second report filing deadline day, December 15 being first report deadline filing day, and almost as important as April 15. Anyway, that was just my little tax joke team. Really ready to start the day off with a bang. We're doing miscellaneous tax. Rebecca Samarov, the deputy commissioner of the Department of Taxes, what's on the agenda, she's not able to make it today. The bulk of the language we're looking at is by request of the tax department. And the tax department is not here to explain the whys of that. But in order to just proceed through in order to try to be efficient with our time, what we're going to do is Kirby is going take us through the language. Most of it's fairly straightforward and can flag which parts came from the tax department and which parts didn't. Then we'll have Rebecca or someone else from tax in another day to get deeper into some of the explanations if folks need more context on them. And then after the break, we are hearing we're going back to the issue of the federal tax and budget bill and the impacts on Vermont, including corporate taxes. So we're doing that before lunch and after lunch. And then after the floor, we are coming back here and hearing about State Aid for School Construction Working Group. Sound good? Great. Whoever, you want to join us? And there are donuts over there.

[Woodman Page (Member)]: Thank

[Emilie Kornheiser (Chair)]: you, Representative Page. They're gorgeous. Such is life and democracy.

[Kirby Keaton (Legislative Counsel)]: Good morning everyone, Kirby Keaton, Legislative Council.

[Emilie Kornheiser (Chair)]: Good morning.

[Kirby Keaton (Legislative Counsel)]: I've been sick, seems like it got to Rebecca eventually. Feel her pain. Been there recently. So we are looking at a committee bill that will be the miscellaneous tax bill, an act relating to miscellaneous administrative and policy changes to the tax laws. In section one, we start off with some corporate income tax trivia. Did you know that Vermont currently and since the mid-90s has not allowed an S Corp to take a credit for taxes paid to other states. But LLCs and partnerships and sole proprietorships, they do. They are allowed to.

[Emilie Kornheiser (Chair)]: Do you know how that happened in the 90s?

[Kirby Keaton (Legislative Counsel)]: I was busy playing Street Fighter II. But so, no, I haven't been able to dig into that. You know, on the surface, it appears that S corps were probably seen at the time as having too favorable tax treatment.

[Emilie Kornheiser (Chair)]: I think Rebecca will have a great story that she share with us when she gets here.

[Kirby Keaton (Legislative Counsel)]: Does she?

[Emilie Kornheiser (Chair)]: She does, actually.

[Kirby Keaton (Legislative Counsel)]: Wish I knew that. Section one is repealing that. Section two deals with the transfer tax, the property transfer tax, and those of you that have been here a little while, or at least as long as I have, will remember a couple of sessions ago, there was a new higher rate created for the transfer tax that was targeting sales of second homes. It's a 3.4% rate, is almost a couple percent higher than the regular rate. And it applies to residential property that is fit for habitation on a year round basis. That will not be used as the principal residence of the transferee. And for which the transferee will not be required to provide a landlord certificate pursuant to section 6,069 of this title. Now, this originated back then out of the Senate, and I do recall telling Senate committees at least, landlord certificate is thirty days. Are sure you don't want to make it longer? They're like, It's fine. It's fine. I was like, Okay. As it turns out

[Unidentified Committee Member]: Trevor, you were right.

[Emilie Kornheiser (Chair)]: Of course. Would make some industry frightening. This

[Kirby Keaton (Legislative Counsel)]: loophole has gotten popular with law firms in Vermont, and they are holding themselves out with, Hey, come to us. You won't have to pay the higher transfer tax rate. We will set this up, you rent it to a family member for a month because loan certificate, you've got to file one if it's rented for thirty days, and then you're good, you don't have pay this rate. Another way that you could get around this landlord's ticket issue is set up an LLC. Have the LLC buy the property, rent it to yourself. There, it has a landlord certificate, no transfer tax or no higher rate for the transfer tax. The tax, So by the way, these first ones that I'm going through are all from Department of Taxes. I would not have, unless without getting their permission in most cases, what I developed this particular solution, which is kind of work intensive for them, but they're, they're suggesting it. We're adding a provision here saying if a transfer would have been subject to the tax rate under subdivision for the section, that's the higher rates. But for the transferees filing of a landlord certificate of rent for which there is no bonafide landlord tenant relationship between the parties, the commissioner shall assess tax at the rate under subdivision four. To make this determination, the commissioner may consider whether the transferee and tenant are related parties, whether the transferee charges the tenant fair market rent, whether the transferee is an entity with a business purpose other than the avoidance of property transfer tax, and any other factor the commissioner deems relevant. So this gives the department some auditing power here to look into these things. The reason I said I would have been scared to do this is because it's work intensive for them, but that's what they are suggesting. And it might be because, I mean, what else are they going to do? I would say that originally I thought you would keep most people from playing games if you just made it a longer period of time that you had to have the landlord's certificate. But this is definitely a way to go about it. So that's what they've suggested. Section three deals with, this is the miscellaneous tax bill we're going for. Corporate, transfer tax, now we're in current use. Section three.

[Bridget Burkhardt (Clerk)]: Do they present language like that?

[Unidentified Committee Member]: Do they present the cost benefit of doing this as opposed to just extending for thirty days?

[Bridget Burkhardt (Clerk)]: I mean, what I worry about is the complexity of the task, is cost,

[Emilie Kornheiser (Chair)]: in time and time. You can ask some of the questions.

[Kirby Keaton (Legislative Counsel)]: And I didn't bring up what I brought up to criticize.

[Unidentified Committee Member]: No, no, I know. It's something you're seeing across the entire state government. It's not unique to my thought.

[Emilie Kornheiser (Chair)]: Okay,

[Kirby Keaton (Legislative Counsel)]: so we're on page four. We're at the bottom of page four now. Under the land use change tax statute, is the land use change tax, for some background, is when land is developed, it's enrolled in current use, and then it's developed, and of course there's a definition for development, land use change tax becomes due. It's 10% of the fair market value, so a fairly steep price because it's meant to be an incentive to keep land in current use for a long amount of time. Just for more background, when you withdraw your land from current use, you don't have to pay land use change tax, but you do when you develop it later. So it is tied to the development. The issue that is being addressed with this change is that the municipality has to be the entity under the law to value the land that's developed to determine the fair market value and to know how much land use change tax is due at that time. For some municipalities, that can be tricky because they are busy and they don't always have a lot of staff. So there's this problem of people having developed land, enrolled land, and then having to wait a very long time to know how much tax they owe. So this first part says, if a municipality does not establish a fair market value in thirty days, PVR will establish the fair market value within thirty days. So again, this is an instance of the department taking on some work, but to try to help solve a problem.

[Woodman Page (Member)]: Thank you. That's interesting. This is a generic question. I'm not trying to poke a finger at any way, but are we confident that PBR can come up with a quality fair market value?

[Kirby Keaton (Legislative Counsel)]: I mean, it's definitely a question for them, but I mean, PVR has district advisors on their staff who are the ones who can train a lot of the listeners and assessors. They have very qualified people.

[Woodman Page (Member)]: Basic comparative basis, they have a rational basis to come up with. They would have a rational basis to come up with a fair value.

[Kirby Keaton (Legislative Counsel)]: I'm not sure exactly what they have in mind, but I

[Woodman Page (Member)]: know they have very qualified people. I'm not overtly skeptical. I'm just wondering.

[Emilie Kornheiser (Chair)]: When Rebecca comes in, you can answer again, but they do do this kind of thing.

[Kirby Keaton (Legislative Counsel)]: Yeah, good,

[Emilie Kornheiser (Chair)]: thank you. This may also be a Rebecca question, but are we talking about municipal tax or school tax, or both?

[Kirby Keaton (Legislative Counsel)]: When it comes to land use change tax? Yes. It's its own tax.

[Emilie Kornheiser (Chair)]: It's now due because they developed it.

[Kirby Keaton (Legislative Counsel)]: The land use change tax will actually get to that language where a portion of it goes to the ad fund and portion of it goes to general fund. It does not go to the municipality.

[Emilie Kornheiser (Chair)]: None to the municipality.

[Kirby Keaton (Legislative Counsel)]: Well, except up to $2,000 can go to the municipality, which is what we were about to get to. Currently up to $2,000 but no, we're there, so we're going to do it. Up to $2,000 can go to municipality when they do the fair market value determination. This language though does state that if PVR has to come in and do it, then the municipality will not keep their cut, because they didn't do it.

[Emilie Kornheiser (Chair)]: You can go represent everybody. My concern about that is that

[Unidentified Committee Member]: the municipality really is

[Emilie Kornheiser (Chair)]: The second thing is, how many properties does this impact every year? I don't know if you know this. Those think are both great questions for Rebecca. Represent both sides. Okay, perfect question. The way this is written for the thirty days and then the thirty days, failing on the termination of

[Woodman Page (Member)]: fair market value by the

[Emilie Kornheiser (Chair)]: local assessment office in thirty days. Are

[Kirby Keaton (Legislative Counsel)]: we talking

[Emilie Kornheiser (Chair)]: about sixty days, or is it instantaneous once that?

[Kirby Keaton (Legislative Counsel)]: It could be as long as sixty days. It could be where you waited for the town for thirty days, then PVR takes over, and then they have thirty days. Another thing that's in here is there's a lot of thirty days going on. What's not explicit here is that the appeal period is usually fourteen days from one of these determinations, but that's also being changed to thirty days. So we're just thirty days all over the place. So thirty days to have to make an appeal, which

[Emilie Kornheiser (Chair)]: Thirty days from the municipality failing to do it, thirty days from lying? Or

[Kirby Keaton (Legislative Counsel)]: No. It's it's it's except that the owner shall have thirty days to appeal the determination to the municipality or to the director as applicable under the section. That would be after receiving notice of the determination of the fair market value determination. This language is from tax and they feel good about it.

[Bridget Burkhardt (Clerk)]: Represent Berkeley? So forgive me if I have not had a chance to read those in detail yet. So if they can appeal to the municipality or PBR, and you're in a situation where the municipality hasn't put the value on it, why would they be able to appeal to municipality? Should they have to appeal to PBR? And then you're creating work for municipality then that they're not getting paid for because they force on their

[Kirby Keaton (Legislative Counsel)]: So under current law, the municipality is supposed to make is supposed to determine fair market value, and then you would appeal to the municipality because they're the ones making that determination. One thing that happens, I'm aware of this, and I'm sure tax will come in and say the same, is that people aren't sure sometimes who they're supposed to appeal to, especially considering when they enrolled in current use and so forth, they did it through the state, so they'll appeal to the state, which is not the right procedure. As far as I know, tax tries to forward that on municipality. There's not Kafka esque bureaucracy. Think they try to be good. This change actually has it written in that an appeal to PBR counts. So that is one aspect of this change that we're talking about. So after this language would take effect, what would happen would be either the municipality or PVR, depending on how things go down, in terms of market value, appealing to either one of them counts. It is fine. And it's up to the municipality and PVR to coordinate together the appeals process.

[Bridget Burkhardt (Clerk)]: That still doesn't get to the point that the municipality made it in a situation where it's having to go through whatever work it has to do to respond to an appeal, but they're not really getting paid to do that work, is it possible for the municipality to just say, you put the value on it, so you're going to have to deal with the appeal?

[Emilie Kornheiser (Chair)]: Or how does that work?

[Kirby Keaton (Legislative Counsel)]: I imagine somebody who saw these may respond that way. So you'll have to talk to PBR about how they're envisioning this.

[Emilie Kornheiser (Chair)]: Thanks for what you said about the first time you've seen this, because I want to do a little, what are we going to do with this bill? Announcement that I should have started with. Thank you. So miscellaneous tax, it's gonna basically sit around until the week of crossover, at which point we will vote it out. Probably two weeks before that, we'll do a straw poll on each section separately. And likely, after we hear from Rebecca, we probably won't look at this language again for another month, unless someone wants more testimony on specific pieces of it. And probably we'll find some other paragraphs over the next month that we want to add to it. But it's a catch all. If you have, and this is not a call for a brainstorm, but if you have something that really is administrative miscellaneous that is revenue neutral and low on the fiscal impact scale, this is the place for it. And so, maybe some of the language about our conversation with Fish and Wild yesterday might go in here, that kind of stuff. So that's sort of like, that is the path for this delightful bill. Last year, we actually did not have a miscellaneous tax bill. We farmed out all of the miscellaneous tax bill portions into special home for each of them. But we don't usually do that. And we did it because it felt like a year to have as few vehicles as possible floating around where they can make friends. But I think we're probably just gonna try to move this bill this year. Yeah, for Prunam Masland.

[Woodman Page (Member)]: Thank you. And this is a question for us to sort out as we work our way through this, but it's interesting that there's two different routes to get to a goal line in this, which is an unusual way for us to work here. We usually try to establish a process and stick with it. So I'm just putting that out there for us to consider as we work our way through. Yeah.

[Kirby Keaton (Legislative Counsel)]: I I I really well, I really do think that in this case, though, it's trying to be taxpayer friendly and that allowing you know, if you reach out to the wrong entity, then they'll still accept it.

[Woodman Page (Member)]: And thank you for that explanation.

[Kirby Keaton (Legislative Counsel)]: Sure. Okay. So the language here deals with the appeals that we talked about. In subsection d is the $2,000 town keeps up 2,000 if land use change tax is determined, the fair market value is determined by the municipality. And then starting around line 15 is if the municipalities local assessing officials fail to timely determine fair market value of the withdrawal portion of the parcel pursuant to subsection C of this section, the municipality shall forfeit any tax paid. And we talked about that. And we also talked about three quarters of the tax goes to the Ed Fund, one quarter goes to the General Fund, which how it is currently done.

[Emilie Kornheiser (Chair)]: Yes, Representative. Thank you. Was it you? It sounds like you might have put in the thirty days for the appeal to tell them what you've dated. Yeah,

[Kirby Keaton (Legislative Counsel)]: we haven't gotten into anything that I've done yet.

[Woodman Page (Member)]: Thank you.

[Kirby Keaton (Legislative Counsel)]: I am speaking very confidently about it, I have something to do with it, aren't I?

[Emilie Kornheiser (Chair)]: So

[Kirby Keaton (Legislative Counsel)]: in section four, this ties into part of what was going on about this is the thirty day appeal period for fair market value determination. I would just say for background that the current fourteen days, that is about as short of due process as the oversee the state law.

[Emilie Kornheiser (Chair)]: My point was, I don't even think thirty days is the amount of time. You get this, you don't like it. Now, uh-oh, you have to sign a lawyer. Uh-oh, the lawyer has to come up to speak, uh-oh, and has to file an appeal. I don't even know how you do that. And we do not have many lawyers in the state. That's a great thing to talk to Rebecca about when she comes here. I just thought since you brought

[Kirby Keaton (Legislative Counsel)]: down. I think it's a good thing to think about. As legislative council, think thinking about not just the tax context, all through the building. Think about that. So with section five, starting at the bottom of page six, we are still the current use. This is one I'm not going to be able to BS. Don't Pax is telling me going explain this.

[Emilie Kornheiser (Chair)]: I can explain a little bit on this one.

[Kirby Keaton (Legislative Counsel)]: Oh, really? You know about

[Emilie Kornheiser (Chair)]: I constituent. Have

[Kirby Keaton (Legislative Counsel)]: Raising rides on a per head basis.

[Unidentified Committee Member]: You're too sheepish now.

[Bridget Burkhardt (Clerk)]: Oh, good. That was better than yesterday's. I

[Emilie Kornheiser (Chair)]: like that one.

[Kirby Keaton (Legislative Counsel)]: Do want me to set you up with what part we are looking at? Sure. We are looking at to qualify to enroll land, ag land, in current use. If you have more than 25 acres, it is relatively easy to enroll. If you have less than 25 acres, there are some additional requirements, additional hoops. One of them is it is owned by a farmer as part of an overall farm unit, another is is used by a farmer as part of the farmers operation under written lease for at least three years. And another way to qualify would be, this is it being the land here. It has produced an annual gross income from the sale of farm crops, and the addition here is or grazing rights on a per head basis in one of two or three of five calendar years proceeding. And then there's these income requirements in addition to that, that are not enormous. So the chair is now set up to explain the grazing

[Emilie Kornheiser (Chair)]: So my understanding of their intent is essentially, often you have a farmer who is essentially grazing their cows on their next door neighbor's land regularly, especially newer farmers who might not be able to buy as much property as, say, a longstanding family farm is able to. And so they use their neighbor's land for grazing. And this allows that to happen. But Rebecca can get deeper into it.

[Unidentified Committee Member]: No, I'm just curious, can the same sheet be used for multiple properties? That's a really good question for Rebecca. In our area, they actually rotate us So around the

[Bridget Burkhardt (Clerk)]: does everybody qualify in

[Emilie Kornheiser (Chair)]: the neighborhood? No, let's find out.

[Kirby Keaton (Legislative Counsel)]: How it's written, can go to how it's written, it's about the sale of grazing rights. So the number of

[Unidentified Committee Member]: So the same 15 sheep could qualify the entire neighborhood?

[Kirby Keaton (Legislative Counsel)]: As long as they're being paid for in each case.

[Unidentified Committee Member]: Can I ask one more question about 2,000? If the land is in, say, the farm, the grazing pasture is in, say, trust and the owner of maybe an adjacent homestead pays the trust $2,000 for the maple syrup produced on the trust land. Does that count as $200,000 in agricultural proceeds?

[Kirby Keaton (Legislative Counsel)]: In your hypothetical, this land has produced an annual gross income, as in because it's selling maple?

[Unidentified Committee Member]: Let's say I own 25 acres and there's a maple stand on it, and I produce syrup and I pay that farmland, for that I pay the trust that owns the farmland $2,000 for all the maple syrup, and then I just give it to my neighbors. Does that qualify for agricultural status in current use?

[Kirby Keaton (Legislative Counsel)]: Trust owns the land?

[Emilie Kornheiser (Chair)]: Hypothetically, the trust

[Kirby Keaton (Legislative Counsel)]: made the $2,000

[Unidentified Committee Member]: Correct.

[Kirby Keaton (Legislative Counsel)]: Then it sounds like it would have received $2,000 for a gross income from the sale of farm crops. Yes.

[Unidentified Committee Member]: And then I could just give away to make the syrup.

[Kirby Keaton (Legislative Counsel)]: But that would have, you know, is not a one time thing. Is to continuously. Who applies for this? To pay with the sheep or cows or whatever, or his neighbor that he's using the land from? The landowner.

[Unidentified Committee Member]: I thought you asking if the sheep were making the application.

[Emilie Kornheiser (Chair)]: They don't need to, just

[Bridget Burkhardt (Clerk)]: do the same one for every task.

[Unidentified Committee Member]: Do you

[Bridget Burkhardt (Clerk)]: have anything?

[Kirby Keaton (Legislative Counsel)]: I don't.

[Emilie Kornheiser (Chair)]: If a person thinks that that's too big of a loophole, what would they do? To meet with Kirby and then say I would just encourage them to first meet with Rebecca and understand the whys and hows of this language being developed. And since this is also about current use, would encourage them probably to also talk to the ag committee about it, and then talk to Kirby and get some language that I've taken for the poll. But definitely let's understand the why before we I think it's Absolutely. Yeah. Know that's why. Yeah. I don't like none of this is my language either. I'm just And it's not sitting on the table.

[Unidentified Committee Member]: I'm just Yeah. Totally.

[Kirby Keaton (Legislative Counsel)]: Okay. Section six on page eight is a change to the municipal grant list stabilization program, which is new from Act 27 of 2025. The background here is there is a municipal grant list stabilization program, it reimburses municipalities for property tax revenue lost when flood prone property is acquired by the municipality through a voluntary buyout. The municipality must keep the property undeveloped in this program, and municipalities are reimbursed for lost property taxes up to ten years. This changes how the reimbursement is calculated to mirror more of how pilot payments are calculated, is based off of the proceeding year. I'm sure there are technical reasons why that's probably more convenient for the Department of Taxes that they could speak to, but that's in a nutshell, what they're pitching here is to base that calculation off of municipal tax rate in the preceding year. It sounds like a timing convenience thing. Section seven deals with communications property, which I believe you were refreshed on recently. It's the budget adjustment. Section seven is making some tweaks to law that will not be in effect until 07/01/2026. It won't logged off yet. Communications property is to be valued by PBR, which I think you've recently heard about. The change here is setting a penalty for not timely submitting an inventory to the department. So this is if the communication service provider fails to submit the inventory on April 15, and in the form prescribed, they may find the provider not more than $100 for each violation, unless the provider's failure is due to factors beyond the provider's control. The next bit here says that PVR may use the best information available to determine value. So that is when if the inventory submissions were lacking in some way, like how the department would do audits in certain situations where if a business did not keep very good bookkeeping, they may have to fill in the gaps with some estimates. And it also states down here that the taxpayer will lose appeal rights if they don't comply with the inventory requirements. Okay, so section eight. We have finished all of the department's items, and we are getting into this stuff per view. Section eight. This a this is a change to how a CLA is determined the year after a mastery appraisal was done.

[Emilie Kornheiser (Chair)]: This was something that Jill at PVR requested, but didn't make it into the

[Kirby Keaton (Legislative Counsel)]: This is the chair showing mercy and adding some additional requests. So what we are looking at is, like I said, how the CLAs determine the year after mastery appraisal, this is for the purposes of education tax only for that year. Under current law, it has the department divide the April grand list value by the January equalized grand list value, equalized being the one that CVR came up with, and then setting the CLA that way. And if there was just a mastery appraisal was done recently, in theory those should be pretty similar, but they're not going to be exact. So, there's this extra math and the CLA won't exactly be a one or 100% CLA, the CLA has no impact. Right? This extra step, this extra math means that it's not necessarily going to be of 100. What this language does is it changes it to say, look, if you just had a mastery appraisal, we're just going set the CLA at 100, we're not going do this extra math, and we're just going to go from there.

[Bridget Burkhardt (Clerk)]: So you're talking about it as usually the math works out when CLA is less than 100, but in a lot of cases, CLA is over 100.

[Kirby Keaton (Legislative Counsel)]: I said it should be similar. I think that's the assumption. What I'm trying to explain is the assumption of how current law is, is that it seems like the assumption is that when you divide the April grand list date would be the new value after the reappraisal. And then that's divided by the January equalized, like the most recent equalization study value. The equalization study is based on recent market sales, so it should be close.

[Bridget Burkhardt (Clerk)]: It's been strange in recent Recent years. Years.

[Emilie Kornheiser (Chair)]: That sounds reasonable in this language.

[Bridget Burkhardt (Clerk)]: It's changed. But then, so for example, I had stuck in

[Emilie Kornheiser (Chair)]: my head because I was on school board at

[Bridget Burkhardt (Clerk)]: the time. The last time we did the reappraisal in South Burlington, it was 113%, which has a significant impact positively for South Carolina taxpayers in that first year. So this would say, too bad it's 100 in that year. But that also then protects folks who would find a CLA of 90, even though they just did a max reappraisal would have their tax

[Emilie Kornheiser (Chair)]: rate. Maybe it's clear in sections 5,406 A and B, if the

[Unidentified Committee Member]: director of property valuation and review certifies that

[Emilie Kornheiser (Chair)]: the municipality has completed a time lag reappraisal, do you want to say within a certain amount of time?

[Kirby Keaton (Legislative Counsel)]: This is written in the context of like in the current year.

[Emilie Kornheiser (Chair)]: Alright, so A and B make that clear? Yes.

[Unidentified Committee Member]: Sorry to jump in last Do

[Emilie Kornheiser (Chair)]: you want context? Piggyback, I'm sorry? Do you want any context or do you? Well, maybe to piggyback on what you had just talked about, because we just went through your appraisal as well,

[Unidentified Committee Member]: and our new coming out of the appraisal is 103% I believe. But you're saying, so it would just be for one year that that 100% would

[Kirby Keaton (Legislative Counsel)]: It's only for education tax purposes, it's not going to change grand lists or anything like that. It's just for determining the education tax for that year, for the year that the master appraisal is completed.

[Emilie Kornheiser (Chair)]: Miscellaneous Okay. Thanks. Tax, Rebecca Samaroff isn't able to make it today. And so we're walking through all the language with Kirby, and then Rebecca will come in when she's able. And the bill's gonna likely sit here until crossover, when we'll vote it out, and we'll probably do a straw poll two weeks before that on each section, and probably add more sections after today.

[Kirby Keaton (Legislative Counsel)]: Okay, so the next two sections are extending the health IT fund sunset. This is the healthcare claims tax and the fund that it pays for. Healthcare claims tax is a tax of 0.999% on health claims paid by insurers and it goes toward paying for information technology that's used in the state. As far as what the fund pays for, that's not my area so much, so I'm not that helpful, unfortunately. But that's the gist of it. This was set up to sunset when it was first put into law, and the sunset has to be extended if the General Assembly wants to continue to have this. So in this case, it's being extended for two years. It was set to sunset in 2026. We see it's being changed to 2028.

[Emilie Kornheiser (Chair)]: This is one of those sunsets that we just push off two years every two years. If folks want testimony from Nolan on it. Do you want a testimony from Nolan? Yeah. Should figure

[Unidentified Committee Member]: out what we're doing with this thing. Great.

[Emilie Kornheiser (Chair)]: Rosha, did you hear that? I did.

[Rosha Lamphere (Committee Assistant)]: Sorry.

[Emilie Kornheiser (Chair)]: It's Okay. Can we schedule some time with Nolan on the health care IT on sunset? Thanks.

[Kirby Keaton (Legislative Counsel)]: Section 11, at the bottom of page 10, is a change to there's the Vermont credit, or I'm sorry, credit for Vermont Higher Education Investment Plan contributions. This would be Vermont's version of the 05/29 plan. And what I included just for the context, the entire section for you there, but we're adding a new subsection. To give you some context, under the Secure two point zero Act, it's a federal law from a few years ago, That act was mostly about retirement and giving more options in federal law for retirement plans. The Fed started allowing people to roll over unused amounts from a five twenty nine plan into a Roth IRA for the same beneficiary. Roth IRA is the type of IRA where when money is contributed to it, it's taxed then, but when distributions are made later, it is not taxed. In this case, you would receive a credit for the contribution of the five twenty nine plan when it's so it would be taxed, but then you would get a credit in the short term, and then in the long term, the Roth IRA would not be taxed when there's distribution. So that's something that was allowed at the federal level the last few years, last couple of years, And this provision here allows for the Vermont version of the five twenty nine plan to also allow people to not have to suffer the penalty for improper distribution when they roll over into a Roth IRA following federal law.

[Emilie Kornheiser (Chair)]: And this one is not from the tax department, this was another member who asked me if we could include it.

[Kirby Keaton (Legislative Counsel)]: A note I'll make just from my experience working in taxes in the state is compliance with how people use their funds from the five twenty nine plan is limited. There's difficulties with tracking that as it is. I would highly doubt that anyone ever gets called for using 5.9 Plan funds incorrectly.

[Emilie Kornheiser (Chair)]: Just yesterday, we were talking about what it meant to have a law on the books that no one was interested in helping people comply with.

[Kirby Keaton (Legislative Counsel)]: So, this kind of thing, people want to do this thing, but they may voluntarily report themselves and be like, I did a bad thing. I rolled my money over to IRA. Here, let me pay the fine for that. And then while other people are like, I'm just going to do it and see if Vermont finds out. There's an equity thing, possibly. This is all theoretical.

[Unidentified Committee Member]: For the recording, however, this still does give the department the ability to find those errors. Yes.

[Kirby Keaton (Legislative Counsel)]: It's just I'm trying to put out, it's difficult for them to do that. I am here to encourage lawlessness. Section 12, this is John Grey stuff. This is section 12. If you remember also from a couple of sessions ago, we introduced this statewide adjustment, which was supposed to, in theory, make it easier for school districts to understand the impact of the CLA on the decisions they were making by adding more math. And as it turns out, adding more math also means more problems for complications, and occasionally there needs to be some things cleaned up. So, this is cleaning up the math and determining income percentage in section 6,066.

[Unidentified Committee Member]: My understanding

[Emilie Kornheiser (Chair)]: is that the tax department and JFO have been functioning as if this language wasn't statute, essentially, because they assumed it was an intent.

[Kirby Keaton (Legislative Counsel)]: Yes. And that tends to happen with these math failures, is that we do not do catastrophic things to the Ed Fund because that thing was missing, but we are cleaning it up. So in section 13, John went through some of the panel 16, Ed spending, Ed finance sections and replaced NEEP as the inflator with NIPA as the inflator. I do know a ton about this, but I do know that NEEP is not something that is published anymore, and it is another math thing where a lot might say that, but it's impossible, so gotta use something else as an inflator. So, NIPA is the next best.

[Emilie Kornheiser (Chair)]: I think what Julia, I don't want to speak for Julia, but I'm going to, would say that this is like, this is what they've been doing anyway, and this is just updating the language to actually be with current practice. And if we pick a new inflator because of the inflation study before we vote this out, look at all that language already drafted. We could just change that one phrase. Thanks

[Kirby Keaton (Legislative Counsel)]: to John for finding all the NEEPs. That's what these next sections are. And that's what we have so far. 16 sections and section 17 is the effective dates. The effective dates as they are, the default is it will be effect on passage, because most of these are things that don't require a lot of setup. Except that the corporate income tax change, it will be retroactive to start applying to 2025, and then the current use changes would be 10/01/2026, because that coincides with a deadline for current use. And then this Section five Current Use Change will take effect on 09/02/2026, and apply to Grand List Lodge on and after April 1. I don't immediately know why they chose September 2. I'm guessing September 1 is probably a significant day and they wanted to make sure it was after that. I could easily find out what that is, but I don't know that right now.

[Unidentified Committee Member]: I believe it's when we have to file for an application for September 1?

[Kirby Keaton (Legislative Counsel)]: Is that September 1 or October 1?

[Unidentified Committee Member]: I think it's September. I may be wrong in that regard.

[Kirby Keaton (Legislative Counsel)]: It's something along those lines, the department shows those.

[Emilie Kornheiser (Chair)]: So thank you so much, Kirby. Any other questions for Kirby? So far, the only request I have for further testimony, other than the tax department, is no Lynn.

[Unidentified Committee Member]: On the current use of we probably wanna hear from somebody in

[Emilie Kornheiser (Chair)]: the forestry or the bank? Committee? Yeah. We'll send that over to them. Yeah, I had a question about whether we could hear from municipalities like BLCT or somebody about that whole process for forfeiting the $2,000 but then still they're to do work, and what their thoughts are, if any, about them.

[Bridget Burkhardt (Clerk)]: I'm sure they have thoughts.

[Unidentified Committee Member]: I guess I have some constituents.

[Emilie Kornheiser (Chair)]: I'm sure we could

[Unidentified Committee Member]: bring some in to talk about the difficulty of complying with thirty days. I have one that would be anxious to speak.

[Emilie Kornheiser (Chair)]: Seeing no one else, we're gonna take a break until our next witness at

[Kirby Keaton (Legislative Counsel)]: ten