Vermont Legislature SmartTranscripts:

[William Canfield (Vice Chair)]: Good afternoon. We're at the Miles Ways and Means Committee. It's 02/19/2026. Chair Cohen and Hydro will be with us in a few minutes. We're going to get started on an act relating to creating non homestead residential tax classifications.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Is Robert here?

[William Canfield (Vice Chair)]: Jake Feldman.

[Jake Feldman (Vermont Department of Taxes)]: Yes. Hello, everyone. Trying to do my second stuff. I'll just kinda Jake Feldman, tax department. And I will say that Kirby sent over draft 2.2 of the of the bill that which is posted on your website, and we didn't quite have time to fully digest it all. So I my testimony is on Direct 2.1, which is very similar. I think we can speak to the changes in 2.2, but we just got them maybe forty five minutes ago. So, there's a little bit of lumpiness there. And, usually, I'm already connected to Zoom, so I'm, like, more ready. But There you go. Okay. So I have a short PDF that sort of I think under my name. Possibly. Does that mean?

[Charles Kimbell (Ranking Member)]: You yourself.

[Jake Feldman (Vermont Department of Taxes)]: Okay, got it. Sorry. It's under my name on the committee page. And it's a PDF version of what I'm about to show. Am I sharing my screen?

[Rebecca Holcombe (Member)]: No, I'm not sharing

[Jake Feldman (Vermont Department of Taxes)]: my screen. Alright. A little bit slow right now. There we go. Okay. Great. Okay. So as I mentioned, we're we're responding to draft 2.1, but 2.2 is mostly similar. And Abby Shepherd, who's our executive policy advisor and is a lawyer, is online. And she can help with this definition of employee housing, which our understanding is that the committee would like to consider that a long term rental arrangement, so not have it be taxed as a second home. If UVMMC has some housing that they're providing to their employees as part of working or a farmer, housing. So so Abby and Kirby have been kind of going back and forth on a on a definition for that, and they can speak to that in a second. That's a little bit beyond beyond me. I do have a couple things about the just defining the the non homestead residential tax base. Again, we do think that at least at first, commercial apartments should be excluded. And I'm gonna explain why in a few minutes. And then we had another question for the committee where we the department kinda needs some clarification on how land value would be apportioned, which you've been talking about. And then I'm going to talk about penalties a little bit. I'm going to talk about the timing of this new form, which would replace the homestead decoration and be even more encompassing. It would be like, if it's your homestead or anybody who has between one and four dwellings has to fill it out. We're going to talk about why we think that should start in 2028, not 2027. And then this last point, I don't have any slides on it, in Act 73, there were a few contingencies that were put in place to make the new tax contingent on some things happening. There were three of them, and it looks like all three are back in version 2.2, so we appreciate that. The big picture there is that, as you probably have not imagined, the administration is locked in to add new revenue to the Ed Fund. So this was part of a grand bargain. It's like, if these other things can be put in place, second homes tax could happen too. And a little detail from me is that it could, you know, it is definitely strategic to have all the tax revisions in the bill happen at the same time, and not different times. Because if you started the second home tax a year before, the other things, you might get a situation where all of a sudden people's taxes go down and then the following year they go up. And that is problematic. Whereas if the things are starting at the same time, they can be used to offset each other. So we hope that that continues to be the case on timing, where all whole the package starts same at time.

[William Canfield (Vice Chair)]: Representative Waszazak has a question. Yeah, so from a,

[Edward "Teddy" Waszazak (Member)]: I appreciate the frankly political points that you just brought up around Act 73 and the grand bargain and the reluctance of the administration to go forward with tax classifications. But I feel like in some areas from the tax department, we're hearing, slow it down, walk, don't run. And then in this case, we're saying save everything so it all changes at once. And I feel like those two things are in conflict. And for the regional assessment district, we're having a conversation about should they be tied to new school district boundaries? But I don't see any practical reason why we need to delay the tax classifications to increase taxes on second homes, which is something we hear about all of the time from constituents. Are there any practical reasons outside of the political grand bargain of X-seventy three why we shouldn't go forward any faster?

[Jake Feldman (Vermont Department of Taxes)]: Yeah, I mean, it's discussed in the second part of the report on second homes, which I know you read. Thank you. I think it's looking like in Act 73, you're gonna have communities that could potentially have a higher homestead tax rate than they do now. And those would be lower spending communities because in Act 73, it's imagining a uniform tax rate around the state, and this also has a homestead exemption. So so I guess what I what I maybe didn't say clearly before is, like, if you introduce the second homes tax first, you could have a year with a bunch of new revenue, which could make people's taxes go down. But then the following year, you'd be picking potentially up in that low spending community onto this higher track, and then they go back up. So that feels like it could be problematic. So I think there is an opportunity to kind of smooth everything out at once.

[Edward "Teddy" Waszazak (Member)]: Yeah, and I think we've all been very clear that one of the reasons we're moving in this direction is to provide stability to our properties. But we already don't have that stability now. It's definitely a fair concern, but we already don't have that stability. So when we have the opportunity to capture some new revenues from second homeowners to reduce the taxes of those who are primary residents filing homestead declarations, I think we should be moving in that direction as fast as possible. You.

[William Canfield (Vice Chair)]: Representative Ode.

[Carol Ode (Member)]: No, no, go ahead. I heard the beginning of what you said that new revenues from second home taxes come in in the first year if we changed this before '73 would come in. But what was the second part of that?

[Jake Feldman (Vermont Department of Taxes)]: So adding room to that fund could lower people's taxes, right? So you might get a low spending community, say it's very city, very town, at 1.1 If you just pump in a bunch of new revenue to the Ed Fund, maybe their tax rate goes to, I don't know, 90¢ or whatever. So they would go down a bunch in that year. But then the following year, the Act 73 homestead rate would end up potentially higher, so they would go back up.

[Carol Ode (Member)]: Why do you think it would be potentially high?

[Jake Feldman (Vermont Department of Taxes)]: Because, I mean, it's unclear exactly what it would be, but it's going to be a new landscape where everyone in the state has the same base homestead rate. This is what was passed in Act 73. So in that base rate could, when we looked at it at like 25, it would have been around a dollar 30. So it's getting a bit technical, but there's all these moving pieces. And so I think from a besides a political point, which is not my main forte, there may be some financial fiscal reasons to have them happen together.

[William Canfield (Vice Chair)]: Representative Holcombe, do have a question?

[Rebecca Holcombe (Member)]: I'll actually just hold right there. Last question, would we get testimony about that, what the numbers are on that? But the numbers, this isn't the numbers, this is the policy.

[Jake Feldman (Vermont Department of Taxes)]: Good question, we'll take a note on that. Thank you. Okay, so on that note, we're going to talk about this definition of employee housing. And Abby Shepherd, I think, is online and it gets kind of into the legal realm. I'm gonna hand it over to her.

[Abby Shepherd (Executive Policy Advisor, Vermont Department of Taxes)]: Yes, I'm here. Thanks, Jake. I hope everyone can hear me. My name is Abby Shepherd. I'm the executive policy advisor at the Department of Taxes. And thank you for letting me jump in on this really quickly. I have been emailing with Kirby because I see there is a new draft. So this presentation that we put together actually responds to the draft that was shown previously and is now a little outdated. But just to sort of give you the the overview of why we were suggesting a change, our understanding, we appreciate the committee taking up one of the recommendations in our report to address farmworker housing and to look at employee housing more generally for the second homes classification. When we were looking at the definition that was drafted in the previous draft, we noticed that it wasn't linking in any way to the housing being provided by the employer. The new draft that is posted under Kirby's name does address that, so we're happy to see that that's explicit. The other concern we'd had is that the previous draft didn't link in any way to current use. So we thought it would just be simpler to make the definition really succinct and just say it's employee housing, meaning a dwelling used by an employer to house the employer's employees. It would be that six month requirement, like, for all other long term housing. Doesn't need to be consecutive. And it would be farm employee as defined under Title IX. That's that is a definition that current use uses for farm worker housing to determine if farm buildings are eligible for current use. But regardless of any connection to the current use requirements, this would be a new definition. So we wouldn't be really looking at any of our current use enrollment data. So hopefully that makes sense to just simplify it and make it a little bit more succinct, and I'd be happy to answer any questions about how current use currently treats farm worker housing as well.

[Charles Kimbell (Ranking Member)]: Abby, it's Charlie Kimbell. Perhaps you could just briefly go over that, how current use currently treats farm worker housing. That would be helpful.

[Abby Shepherd (Executive Policy Advisor, Vermont Department of Taxes)]: Great. So under current statute, there is a reference to this Title IX farm worker or farm employee and farm employee housing. But the treatment currently is that as long as a farm worker housing is used for a twelve month period as farm worker housing, then it can be treated as a farm building for current use purposes, and farm buildings are valued at $0. So if there is a farm building enrolled in current use, it's already not being taxed. So just to make you aware, there's already that treatment. So whether the classification is as a non homestead residential or as a non homestead nonresidential, it would not be taxed under current statute and overlaying this classification structure. So our concern here is regardless of that existing treatment, what's being created for the classifications has a different level of condition there. It's a little more open, so we wouldn't be looking at current use to make these determinations.

[Charles Kimbell (Ranking Member)]: Is it your opinion then that we should be silent in this draft on farm employee because it's already covered under current use?

[Abby Shepherd (Executive Policy Advisor, Vermont Department of Taxes)]: That would certainly be a different policy direction. My understanding is you were, looking more at employee housing in general and trying to include that as a type of long term rental. And then when you dug into that Kirby had flagged that farm workers aren't required to have unemployment insurance reported for them, so they needed kind of a separate treatment to be called out there. So that's why I got a little more weedy and and went down these other sort of rabbit holes. They're also pharmaceutical use. I'm sorry. I couldn't hear you.

[Emilie Kornheiser (Chair)]: Oh, I'm sorry, Abby. And hi. Sorry. I was late. I was saying that there are firms that do not enroll in current use. Correct.

[Abby Shepherd (Executive Policy Advisor, Vermont Department of Taxes)]: So that's also why let's we were suggesting let's not try and use current use here. This is sort of a different definition altogether. And we had sent some updated language. This here was talking about the current draft doesn't speak to the housing being provided by employer, but we see that the new draft is updated to include that language. So we'd be happy to send, an updated updated version, for your consideration.

[Emilie Kornheiser (Chair)]: Thank you.

[Abby Shepherd (Executive Policy Advisor, Vermont Department of Taxes)]: Thanks for letting me be remote. I apologize for the not being able to be there in person.

[Emilie Kornheiser (Chair)]: I mean, it's fine to be remote. And you're if it makes you feel like you're very, very tiny on the screen because of the screen share. So great. Yeah. Hi, Jake. Hi. Where were we?

[Jake Feldman (Vermont Department of Taxes)]: Where were we?

[Emilie Kornheiser (Chair)]: Do you have more to say?

[Jake Feldman (Vermont Department of Taxes)]: A few more things. Great. Okay. So let's see. It sounds like the employee housing is coalescing, which is great. The point that I brought up in the report and also I think maybe a couple of times when I was here earlier is that the department is recommending that at least at first commercial apartments are excluded. Commercial apartments already are separated out in the grand list, and that's apartment building with it should say five plus, not four plus, but it's five or more dwelling units. So the reasons that we think, at least at first, commercial apartments should be excluded are that we have data that about 2,000 apartments in the state are short term rentals. And the question is how many of those are actually in these bigger apartment buildings? We know, like, Burlington doesn't even allow it. And of those that are in the bigger apartment buildings, what share of the tax base is it? So the question is, you know, is the juice worth the squeeze here? It's gonna be a pretty small population probably of dwelling units. It would definitely represent a significant increase in the work for local officials to identify these apartments. And they would have to know and they don't currently, they would need to have the apartments number and its square footage. So this is like a major new item, and it's it's part of that phase one of implementation. So we think that it would be quite a bit of work. And then in with regards to

[Emilie Kornheiser (Chair)]: this Sorry. By quite a bit of work you do for the landlord

[Jake Feldman (Vermont Department of Taxes)]: Local officials.

[Emilie Kornheiser (Chair)]: Local officials. Okay. Okay.

[Charles Kimbell (Ranking Member)]: But don't I mean, representative Higley, in essence, but on a list of current currently, isn't the square footage for apartments already broken out?

[Emilie Kornheiser (Chair)]: We do have the listeners joining us testimony.

[Jake Feldman (Vermont Department of Taxes)]: Yeah, that's a good question for them. Data server. They're also gonna need to know the apartment number, which I don't think they have. So like, because remember, this is relying on landlords filing and dwelling use at the station. And if a landlord says Apartment Number 12, I rent short term, The town needs to know which one is Apartment Number 12. Right? Otherwise, they can't put the right square footage. They can't do the apportioning correctly. So there's a lot of work there. And as far as, like, dwelling use attestation, you know, this this means that a landlord of a bigger building would potentially have to go through all their units and, you know, check the boxes. It's gonna be a lot of work on that end too. So the question really is, is the juice worth the squeeze at this point trying to get this thing off the ground? Okay. A question that we are pondering or we may need some clarification on is in the draft, it says that in mixed use cases, to apportion the land value based on the square footage. Well, is that total square feet or finished square feet?

[Emilie Kornheiser (Chair)]: That's fun question.

[Jake Feldman (Vermont Department of Taxes)]: A fun question and a good question for Vala. We think that it's possible that only the second thing, finished square feet, is available and reliable. We do know that the auto track, but not total square feet. Like, if you think of, like, a, you know, awesome second home in Stowe, 5,000 square feet. But then it's got a

[Edward "Teddy" Waszazak (Member)]: A horse barn? Yes. Unfinished A horse barn example.

[Jake Feldman (Vermont Department of Taxes)]: The theme of the The equestrian break, which is, let's see, 15,000 square feet. So what do you do with the land value in that case? If you did it based on total square feet and if the town knew that the equestrian indoor thing was 15,000 square feet, then it would be three quarters goes to nonhomestead, nonresidential, and one quarter goes to nonhomestead residential because the house. But if you did it based on finished square feet only, it would be 100% of the land value would go to the non homestead residential. So that is something to clarify.

[Emilie Kornheiser (Chair)]: Representative.

[Mark Higley (Member)]: I mean, have we really decided? I know that we talked, but I didn't know that we had actually decided that that's what we were gonna do.

[Emilie Kornheiser (Chair)]: I don't think we've decided anything at all, representative Higley.

[Mark Higley (Member)]: It can Basically,

[Emilie Kornheiser (Chair)]: trend.

[Mark Higley (Member)]: I'll try to get on that would be just keep all of them in regards to whether it's got an Airbnb. Example

[Jake Feldman (Vermont Department of Taxes)]: that

[Mark Higley (Member)]: we used last time was a bakery in the Airbnb, 25%, 75%. I mean, to me, as a lister just use a whole acreage as non residential.

[Jake Feldman (Vermont Department of Taxes)]: It's non residential.

[Mark Higley (Member)]: Not break it out, non you said residential. Don't know, is there any way, Jake, pass it? No, I was gonna say a difference in the amount of money that it would be statewide for breaking that out.

[Jake Feldman (Vermont Department of Taxes)]: I mean, it's really hard to do estimating on this right now because the data doesn't really exist. So, you know, not in any good way. We have thought about that. I think what you're saying, and my question sort of playing devil's advocate is if you had a second homeowner who knew that their land value could go all to non homestead, non residential, if there was a commercial component on the land, would they say, Hey, I've got this little small shack of some kind, and I use it for whatever. So it's a pottery studio, don't know, it's tiny. And when they say, this is a non homestead, non residential building, and so that means my entire land should be taxed, non homestead, non residential. It would be like a loophole.

[Emilie Kornheiser (Chair)]: And I you know, I the scale of some of the properties we're talking about is pretty extraordinary.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. So

[Emilie Kornheiser (Chair)]: it's not sometimes I can yeah.

[Edward "Teddy" Waszazak (Member)]: I don't think it's minor detail either.

[Emilie Kornheiser (Chair)]: Yeah. Representative Holcombe, you had.

[Jake Feldman (Vermont Department of Taxes)]: Okay. Okay. Let's see. We looked at draft the draft, and we were thinking about what the right penalty levels are. Right now, as written, it's a 100% penalty, which makes it sound like you take whatever you owe and double it, maybe. But maybe the penalty should be smaller in the first year of implementation and maybe get bigger. And also, the heaviest penalty should be in cases of like, real cases of fraud. By the way, fraud is really hard to prove, whereas I think what you're gonna get is a ton of just regular mess ups. You're going to have landlords who don't really know what they need to do, and they're going to not fill out the dwelling use attestation. And so the question is, do you want to really penalize them or do you want to kind of ease into it? There's gonna be a lot of that. Even just a few years ago when we did rent a credit reform in 2018 or '19, whatever that was, we made it so that landlords had to file if they had just one dwelling unit, whereas before it had been two, and all these landlords were like, What the heck is this? We didn't know that we had to file it, and what are you doing to us? That's just a minor case, but this is significant tax difference. And so I would recommend kind of easing into the penalties and maybe separating out fraud if the tax department can really prove it as the worst penalty. And then I drew a crude

[Edward "Teddy" Waszazak (Member)]: the picture.

[Emilie Kornheiser (Chair)]: Really excited about the picture. Don't want to get distracted by it for a second. How does this compare to other penalties for similar things at tax?

[Jake Feldman (Vermont Department of Taxes)]: There's penalties on the books for homestead, like homestead, non homestead.

[Emilie Kornheiser (Chair)]: Do you have any sense of how often they're?

[Jake Feldman (Vermont Department of Taxes)]: Rarely, very rarely. And it's a bit messy. And so, you know, in in this new three classification environment with potentially much different tax rates, you there could be way more of this act activity. There's a question about how would data be shared between the tax department and towns because in in the draft, it has towns assessing the penalties. So remember, Vermont has this bizarro Isosceles triangle that doesn't exist in other states where taxpayers report their homesteads to the tax department. Then the tax department tells the town and then the town sends the bill. In other states, interact straight with your, it's usually your county assessing office to do this stuff. So we have this inefficient sausage triangle. So it's possible, it's likely that once the year is over, the tax department will be in possession of data on apartments that weren't rented out long term. I think we could detect those and homes that the person said they were gonna be homestead, but they didn't end up being a homestead. So maybe the tax department can know that, but it's gonna be the towns who have all the tax bill details. So, you know, there's a question of whether the tax department should do the penalties or the town should. I think what like, as I thought about it at lunch, I think what a way it would have to be is, like, the tax department sends a file to the town that says, here are some spans where we think, you know, this was not right, and then the town would have to do some penalizing at that point. But it's a little bit funny with the with the loop of information.

[Emilie Kornheiser (Chair)]: Isn't this a challenge under current law?

[Jake Feldman (Vermont Department of Taxes)]: Yeah. But it's only for homestead, non homestead, and there's very little of of this activity.

[Emilie Kornheiser (Chair)]: So how do you handle it?

[Jake Feldman (Vermont Department of Taxes)]: I'm not an expert on this, so I know what I've heard, but I think tenants try to tell us sometimes that they think that some property is not a homestead, and then we maybe investigate to some extent. We do a little bit of, like, auditing at the at the end to try to at the end of the year, to try to detect homesteads who weren't really homesteads. But in a lot of cases, there's legitimate reasons for whatever happened, or they forgot to withdraw their homestead declaration. There's really not much of this.

[Emilie Kornheiser (Chair)]: Are you saying that we need further clarify the statutory language on this?

[Jake Feldman (Vermont Department of Taxes)]: I'm not sure on this. As I thought about it because it says are gonna assess for penalties, and I was, like, thinking about what we really should assess for. Okay. Think. Maybe it could be towns, but I think

[Emilie Kornheiser (Chair)]: But it might make more sense for the state. Maybe

[Jake Feldman (Vermont Department of Taxes)]: the state should be doing the fraud. Okay. I don't I'm not really sure, but but I'm just trying to think about how this how this is gonna work for us operationally. It could be that we have to send towns a file or something. Okay. So we

[Emilie Kornheiser (Chair)]: Sorry. One more question, Jake.

[Jake Feldman (Vermont Department of Taxes)]: When do

[Emilie Kornheiser (Chair)]: you think you'll feel clearer on how you think it should work?

[Jake Feldman (Vermont Department of Taxes)]: Soon. Maybe yeah. I don't know. Yeah. Sorry. There's a lot of thinking

[Emilie Kornheiser (Chair)]: I know. Happening. I agree. There's a lot of thinking. Yeah. Yeah.

[Rebecca Holcombe (Member)]: You said soon?

[Jake Feldman (Vermont Department of Taxes)]: No. Soon. Soon. Okay. Thanks. Okay. Next week? Okay. Okay. We would like the new dwelling use attestation, which is an important form in this process to start in 2028, not 2027. Here's why. This is a big change, and we are going to need some time to do outreach during 2027 about the new requirements, we're going to have to develop this form. And we're also going to have to build the background information technology to kinda handle all the data. So I'm not sure that it can even happen between May and January of next year. So that's one reason. As you guys have drafted here, the $20.27 grand list is gonna have dwelling unit counts, which is a new thing. And so that means that tax or towns can go ahead and contact the owners who have dwelling units and say, this is what you need to do in 2028. But if you require it in 2027, there's no way to reach out to them and say, this is what you need to do. You'd have to take a guess at it. It just wouldn't be very, very clean. If did start in 2027, it would be pretty confusing to taxpayers to have to do a new form that is what we call in the text world informational, meaning it doesn't matter. Mhmm. So it would only be used to try to, like, get a sense of what the tax base is. It doesn't have any real purpose.

[Emilie Kornheiser (Chair)]: That seems like a real purpose, Jake.

[Jake Feldman (Vermont Department of Taxes)]: But it's unusual. Like, I'm not sure that

[Emilie Kornheiser (Chair)]: It is unusual.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. So that that's a I think we would get a lot of calls on that. And then without these other things in place, the outreach and the dwelling identification and the IT system, I don't think the data collected in 2027 would even be particularly high quality.

[Emilie Kornheiser (Chair)]: So if we were gonna move from this problem statement to a solution, if you develop the forms in '27, we collect the forms in '28, we then set the base in '29 and apply it for '30? Is that what you're saying?

[Jake Feldman (Vermont Department of Taxes)]: The new classification should start when the new funding formula starts.

[Emilie Kornheiser (Chair)]: Or should.

[Jake Feldman (Vermont Department of Taxes)]: Which currently is contemplated for FY '29.

[Emilie Kornheiser (Chair)]: I know, that's why I'm

[Jake Feldman (Vermont Department of Taxes)]: Right? Yep. So, I think So, as far as providing data for GFO and setting the base, I don't see a major improvement by collecting it one year earlier. It's not going to be very high quality. If we did it on this timeline, getting it for 2028, we can still get a good estimate of it. Looking at using landlord certificates to work backwards, I think the apartments and the mixed use cases are going to be a lesser component of it. So I think it would be worth it to wait. Yes. We could also talk about, I mean, yeah, we did it

[Edward "Teddy" Waszazak (Member)]: in 2027, it wouldn't be the best data, but it would still be more data than we have now, and I know we talk a lot about taxpayer behavior too, so I think that the first year rollout of pretty much anything is going to be a little bit messy the first time you do it, so I think that there is some merit to starting it earlier so that the taxpayers can get used to filling out the

[James Masland (Member)]: forms that they're going to have.

[Jake Feldman (Vermont Department of Taxes)]: Potentially. I mean, you're going to wonder what it's for.

[Edward "Teddy" Waszazak (Member)]: I think most normal people who aren't in this every day think they fill out a bunch of useless paperwork already. Yeah. I mean,

[Jake Feldman (Vermont Department of Taxes)]: my other point there

[Chris (Fiscal Analyst, Joint Fiscal Office)]: is a

[Jake Feldman (Vermont Department of Taxes)]: real computer aspect of what we need to do. In an ideal world, the tax lawyer would do a full outreach and even contacting an individual parcel owner saying, Hey, we know that you have between one and four dwellings, so you need to make sure to file this form. That would be ideal rather than it's just kind of dropping.

[Emilie Kornheiser (Chair)]: I'm not pushing back on the need for the extra year. I'm more just sort of wondering how the extra year fits into the other pieces of the timeline in your imagination.

[Jake Feldman (Vermont Department of Taxes)]: I think if FY twenty nine is the target date for the package, then I think that it could still work very well and maybe even better with the extra year on the dwelling new satellite station.

[James Masland (Member)]: Teddy had a break. I wanna tell you about getting people used to something. You'll find it amusing. Is relevant to this, but not. I I appreciate the idea. You know?

[Emilie Kornheiser (Chair)]: Back to you, Jake.

[Jake Feldman (Vermont Department of Taxes)]: That might be it. Okay.

[Emilie Kornheiser (Chair)]: Thanks. Are you gonna hang out for Yeah.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Of course.

[Emilie Kornheiser (Chair)]: I don't wanna keep you from your other work too. You're used to us, though.

[Jake Feldman (Vermont Department of Taxes)]: Thank you. Yeah, no worries.

[Emilie Kornheiser (Chair)]: Vickery, hello inside the computer.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: I'm gonna alright. How's that? Is that better?

[Emilie Kornheiser (Chair)]: Nice to see you again.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Nice to

[Emilie Kornheiser (Chair)]: you. As good an angle as yesterday, but probably more comfortable for you.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. My my camera's a little low. We actually we were planning on coming down, but we kinda got sidetracked. And then I didn't realize it was 01:00, 01:15. I thought it was three. So

[Emilie Kornheiser (Chair)]: It's we're glad you're here. It's no problem, and I'm sorry for the trouble.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Well, no. Luckily, Sorsha was able to email me, I but thank you for having me, and I I represent VALA. I really appreciate you reaching out to us and having us here. And, again, I apologize for not being a 100% prepared, but just tell you tell you what's going on. We are in the middle of a reappraisal here in Colchester, and I've got values coming in. I've got the head appraisers coming in out of my office all week this week and last week and next week. So because they're doing a review. So we're we're right in the thick of it right now. So just to start, you know, when this first was brought out, Vala had some concerns with how assessing would work, And we were concerned that we would have to change the assessment practices for different properties based on the use of the property as opposed to the highest and best use of the property, which is how we we want to be valuing property as a benchmark for a fair and equity. So what we did was we looked at what was just released. I believe the draft we have is 1.5. So I will go right through that similar to what we did yesterday. And the first thing we were concerned with is the actual grand list in the room on the grand list when we're looking at listing all the buildings on the grand list. I believe the draft right now says listing the number of dwellings, and I'm not sure if that is, you know, if there's 10 dwellings, you just list 10. Or if you list the each individual building and the use of the building or the percentage of the use of the building. I don't know how that would work. So right now we have certain things we have to put on the grand list. Owner name, parcel span number, brief description, which would include building and acreage, homestead house site, and real value have to be put on the grand list. And that leaves a certain amount of room per list. And one of the reasons we have concern of this is that we have to put create a hard copy of the grand list and record it in the town land records, which gets into goes into the vault and is there forever. And so we have these grand list books that are stored in the town vault for every year that we've been running a grand list. So as we increase the amount of data that we have per parcel on that grand list, we would actually be increasing the size of the book. So there is some concern about that. I know, right now it doesn't seem like a lot, but given ten years and you're, you know, increasing that size by x percentage of the size of the book, it does take up space.

[Emilie Kornheiser (Chair)]: Is that called book?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yep. Yep. List it's here in here in Colchester, we actually have, these file holders that hold the grand list. I'm not sure how many other towns have it like what we do, but it is it is a substantial pile of papers that are all connected and and run as a as a full grand list. And, you know, those have to be kept forever according to statute. So we we are concerned about the size of of data that are in the is is in that book and taking up that space. So, that is one concern we have. Let's see. The other concern we have is we run the grand list using Nimmerich. Most towns do, I believe, when they print the grand list. This would mean that Nimmerich would have to make some changes to the software as far as the export data to that printing to include all the buildings and the building uses and how they're categorized. The other thing that has come up is the definition of parcel and contiguous parcels with this particular revision of the bill. VALA has always maintained, and we've advocated for years now to not have contiguous parcels under one ownership, to put those on the grant list as separate listings. There's several reason reasons for that. The first reason is it's confusing to property owners. Not all towns actually list one listing for contiguous parcels. We have many subdivisions in some towns, like, for instance, Colchester, where we have to we'd have to list, say, it's a subdivision of 50 properties. We have one listing, one tax bill. Every time when those lots sell, we have to prorate those taxes, and then the developer has to bill charge that property owner the difference in taxes. And it can get quite confusing if you've got a, you know, 50 lot subdivision and six lots sell one year, the next year, another six lots. So you're you're constantly adjusting how that's just distributed between the the buyer and the seller and what they're paying in taxes, and it makes it very confusing. We end up getting a lot of calls that way. So it's much easier for subdivisions to list each individual lot out separately even though they're under one ownership. That's one reason. The other reason, would be you could have contiguous parcels, and each parcel could have different highest and best use, which would mean that you're approaching the valuation differently for each one. If you have them all under one grand list parcel, that could have an effect, and in what you're assessing that property for.

[Emilie Kornheiser (Chair)]: Can a I ask question about that? Sure. This is a concern that you have concern and request you have with regards to current law as well?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. So in this particular draft, which is part of the current law, the definition of parcel means all contiguous land under one under the same ownership.

[Emilie Kornheiser (Chair)]: Oh. And you're saying that, like, even if we did nothing else, you would want that changed? Yes. Okay. Thank you. I just wanted to clear make sure I was understanding you.

[Jake Feldman (Vermont Department of Taxes)]: And I know

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: and just right now, this is how it was explained to me. One of the reasons why is because current use, when you have a farm, they have multiple lots on the farm. They do one current use application. And so those get combined for, the current use. And I don't have a problem keeping that that way, but it for us, it makes more sense to have each parcel being individual lots as they're subdivided and as they're deeded, as opposed to having multiple, parcels under one ownership on the grand list. So that's that's was just in this, language here, so we thought I should bring it up. So the establishment of the grand list to include one or more tax classifications for each parcel. Again, one thing that we were concerned with is when you classify different parts of that parcel separately, based on the use and not their highest and best use. We were concerned with how that's gonna affect the valuation process. You know, typically, look at the highest and best use of a parcel, not the property owner's intended use or what they're actually using the property for. We wanna look at a straight benchmark for everybody.

[Emilie Kornheiser (Chair)]: We've been we've been trying to be quite clear through this entire process that these are two separate.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. Right. Yeah. Right.

[Emilie Kornheiser (Chair)]: And have no intention of interfering with the actual valuation property. Yeah.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: So one thing

[William Canfield (Vice Chair)]: trying to just try to catch where I am at.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: So we do agree with and we do think that this this is something that's gonna move forward, that we should be having, the tax department, people when they fill out their homestead, making that filing with the tax department. The reason is I don't believe the municipalities have the capacity to actually go out and collect this information and make a determination on how a property is being used. So we do agree that it should be sent to the tax department and when people file their homestead, how that's gonna be worked, how that's gonna be the tax department's gonna notify people that they have to do this now. That's the tax departments. What they're gonna have to do, but validly is that municipalities do not have the capacity to actually go out and collect this property information. And that we would want the state to tell us how it's they're being filed by the property owner. I think it's hard enough for us to get into properties anyway. You know? And people don't want us to coming around as it is. So if the tax department can collect that information, that's great. The next issue I think we're concerned with is the tax billing, and how that's gonna fill out. You know, currently, we have, on the tax billing, two different columns, one for homestead and one for, non homestead. We have columns or rows for current use, the currently use allocation, and veterans exemptions. You know, this would add a column. I can tell you that many property owners get confused by this. We also have some confusion when we download information from VTPi into the tax billing software, which is Nimmerich, and send those off to the printer. Not all the information gets through. There could be a issue in the process of the person who's doing the downloading. There could be an issue with the data being converted or being sent across where we have errors. I can tell you that just as an example, just two weeks ago we had a person who owns a farm here in town come in and they were doing their prop they were doing their income taxes. They wanted to know what the value was or the taxes were for their apartment house. He brought his tax bill in. The tax bill was not allocated correctly. That could have been an error on our side, with loading that information. When I went into the VTPI, the state software, it was correct, and it didn't match what was on this tax bill. So when we add layers to this, we need to be aware that there's a possibility that this is gonna add greater chance of error on the tax bills. We did go through and took us about an hour to to figure it out, and we were able to generate a new tax bill, which saved him about $2 a year in taxes. So that was nice.

[Emilie Kornheiser (Chair)]: Hey,

[Rebecca Holcombe (Member)]: Yeah.

[James Masland (Member)]: Yes. You said the error that you uncovered recently was having to do with the software or stuff entered incorrectly. And is that a big deal? Or you said it was only $2 a year or something to that.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. For this this arrow is only $2 a year. I can tell you that in VTPy, it was entered correctly. Because I could go into the software and look at it and see it correctly done. The tax bill that was printed did not print off the correct allocation. So there could have been an error in the data being pulled from VTPI into the tax billing software. There could have been, it could have been that the tax bill he was showing me was a earlier tax bill from it was mailed out in July, and he didn't have the most updated tax bill. So it could have been any number of things that could have happened in that process.

[James Masland (Member)]: Are you aware that sorry. Mean, could that happen very often or just once in a while? What's the incidence of error such as that?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: I I couldn't tell you, and I wish I knew off the top of my head the number of revised tax bills we send out per year, but we do send out quite a few. And we ran a report after we found that error and we found nine other tax bills that were, whether the download didn't come through or but had the same error. So there was nine, and we have, you know, 7,300 parcels in Colchester. So nine out of 7,300

[Chris (Fiscal Analyst, Joint Fiscal Office)]: is not bad.

[Mark Higley (Member)]: So

[James Masland (Member)]: Thank you. Yep. Appreciate it.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: So that's that's the concern is that the confusion of the tax bills and potential errors on the tax bills. The other question I had or concerns we had, has to do with the percentage of the underlying land. From my understanding, the if a parcel has 30% short term rental and 70% commercial use, the value the tax on 30% of the land would be separated out and tax on 70% of land would have a different tax rate rather commercial tax rate.

[Edward "Teddy" Waszazak (Member)]: I

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: I'm not sure how that would work with the land scheduling that we use. Typically land values in Vermont are done on land schedule which is based on economies of scale. The first acre is typically the highest valued and then the acres go down to value past that.

[Emilie Kornheiser (Chair)]: Can I interrupt you for a second to sort of clarify in order to clarify the terms in order for your question to maybe work? I think in the context of this legislation, we're not looking at value. We're not looking at changing value at all. We're just looking at changing rates.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Right.

[Emilie Kornheiser (Chair)]: Okay. Right.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: So

[Emilie Kornheiser (Chair)]: the property can be valued in any way whatsoever, totally separate from the rates that are applied.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Okay. So that so my question or my concern is is when you're looking at the land value, you have a two acre house site value and then the rest of the land. Are we separating out 30% of the two acres and the rest of the land? Or are we just dividing that total land value by one third or 3070% on the tax bill?

[Emilie Kornheiser (Chair)]: I believe it's the latter.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: So the the entire land value would be divided for the tax rates. Okay. Alright. So that was a concern we had. We weren't sure, if it was gonna be the end of the land, beginning of or the overall. So then we can look at concerns with the use value. You know, we understand that it's not gonna affect the use value at all. But one thing we're looking at or one thing that has been brought up and that we're concerned with is the purpose of current use is to keep land open and working. And if we're going to be applying a higher tax rate because a farmer has Airbnb on their property and they're going get a higher tax rate, we're just concerned that that might defeat the purpose of current use to keep the land working and open. So that's another concern that we just wanted to have raised and to think about. And one thing that we were wondering, and and I know that the it talks about mobile homes is actually travel travel trailers. The state currently state statute is if the travel trailer is on a site for more than a hundred and eighty days, it gets taxed as real estate. There is a lot of travel chillers that are considered personal property. If somebody's renting that out in a short term rental, are they including that in the square footage of the overall square footage if it's personal property? That's a concern we had. Some towns assess yurts or other temporary structures that are rented out. Colchester does not.

[Emilie Kornheiser (Chair)]: Some towns do and some towns don't.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: That's right. Yeah. Yeah. So here in Colchester, we don't we don't assess yurts. We believe it's personal property. We do look at the structure that's attached to the ground. So if it's a poured slab or a deck, we would assess the deck but not the actual yurt considering the canvas to be a temporary structure. So some towns do assess that. And if they're leasing that out or renting that on a short term rental, how does that affect the percentage of square footage on a total property? I guess that's that's a concern we have. So if you've got a a farm and you've got two yurts on the property and you add up to two square footage of the yurts and that would be

[Charles Kimbell (Ranking Member)]: I I think in our thinking, wouldn't fit the definition of dwelling. If it is inhabitable three hundred sixty five days a year,

[Mark Higley (Member)]: we

[Charles Kimbell (Ranking Member)]: go with temporary structure like a yurt, then it wouldn't be included for tax classification.

[Mark Higley (Member)]: Know you should heat

[Charles Kimbell (Ranking Member)]: and plumbing it so at that point

[Jake Feldman (Vermont Department of Taxes)]: it would be as well. Indeed it would. Okay so

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: that actually

[Mark Higley (Member)]: A lot of yours are Yes. Time message.

[Emilie Kornheiser (Chair)]: I we definitely that's a good index card.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Sorry. Back to you, Robert.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. Good. And that actually brings up another question. Seasonal rentals or seasonal camps, how does that fit into the definition currently?

[Emilie Kornheiser (Chair)]: They don't count as dwellings, so they're

[Jake Feldman (Vermont Department of Taxes)]: very

[Emilie Kornheiser (Chair)]: explicitly excluded from

[Jake Feldman (Vermont Department of Taxes)]: Alright.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Alright. So that's that's good. And I guess that brings us to our concerns. I think, you know, we're just concerned to how that's land value is gonna be separated out as far as but it seems to me that you've looked at that and then the implementation of software and how that's gonna work and how we're gonna adjust for that. Right now we do homestead house sites, So it would be to add a layer to that. And then the actual room on the grand list and the tax bills and how it's gonna fit into a tax bill.

[Jake Feldman (Vermont Department of Taxes)]: Thank you. Okay.

[Charles Kimbell (Ranking Member)]: Well, can I ask you a couple of questions? On the list of cards, it's not the same as the grand list, which you print out, but on the list of card, if you have a apartment building that is four units, what level of detail do you have on the four units on a list of card?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: That's a good question. We don't separate out the square footage per unit. We look at, so if it's a 4,000 square foot building of livable space and you've got four units and each unit's a thousand square foot, we don't put that on the list of card. We don't break it down that kind of detail. We have the entire building as far as living space and and growth space is how we would do it. I don't know if that's the case with other municipalities. Our software doesn't allow us to necessarily break down per unit. Interesting.

[Charles Kimbell (Ranking Member)]: Okay. Because then just thinking about the database is maintained by fire departments that have separate units as on their 911 listing that doesn't mesh with yours necessarily.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Right. Yep. Yeah. And if we do break down, say, a warehouse space and office space. So if you've ever a warehouse and x square footage of office space in that, we do break that down because we wanna assess those different spaces at different rate. But for apartments, we do not break the individual units down.

[Charles Kimbell (Ranking Member)]: Okay. Also by number then you wouldn't do that. Four units, one a, one b. Correct.

[Mark Higley (Member)]: Okay.

[Charles Kimbell (Ranking Member)]: Second question is just in terms of room, you're talking about a room in your land records. If all that additional data had to be printed out and then reported. Could you talk about the state of digitization in your own land records and just trying to create more digitization of land records so you didn't have to report everything in the paper records?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. Quote adjuster is very good. We the prior town clerk, we actually hired people and she was very forward in thinking about getting everything scanned and recorded and getting them on a searchable base where people can search for land records at home. And that happened a long time ago, which was one of the first towns in the state to do that. I don't, I believe the statutes are that we still have to keep the paper records for the grand list, for the deeds, so you still have to have that paper record. And as far as our list of records, we do keep paper copies. I'm not sure whether we need to keep it whether paper copy or we can keep it digital. We do both here in Colchester. We have a digital copy of the list of records as well as paper copies.

[Charles Kimbell (Ranking Member)]: Yeah. It just seems like a solvable solution if you're talking about digitization and modernization.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. I know. Think this let's just say we keep a paper copy, and we believe that's that's according to statute. I'd have to look up the specific statute to find out if you could digitize and keep the digital record of the grant list. I I haven't seen that change. So

[Emilie Kornheiser (Chair)]: We can look into that. Thanks.

[Charles Kimbell (Ranking Member)]: Yeah. K. Wondering about your example of a farm where you have an Airbnb on it because that use of the property does change then. Right?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: If if if I'll give an example of a farm that was just sold to the Vermont Land Trust a few years ago. That is only a farm building. There's a barn on it with a couple other barn buildings, farm buildings. No dwelling on the property. If somebody were to pull in and put a travel trailer or a tiny home on that property, it wouldn't change the use of the property. That would probably would still be used as the highest and best use as a farm because of the large structures, because of the soil types where it is, and where it's located in town. I'm thinking the property I'm thinking of is on Pine Island, down off Mouse Bay Avenue. But if someone were to put a tiny home, that wouldn't change the and rent it out as a short term rental. That wouldn't change the use of the property. It would still be farm property.

[James Masland (Member)]: Do think I

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: do know that if you were to have it in current use, you would have to withdraw probably two acres around that tiny home.

[Jake Feldman (Vermont Department of Taxes)]: You,

[Mark Higley (Member)]: Robert. Jerry, if

[Emilie Kornheiser (Chair)]: I could, could you go

[Mark Higley (Member)]: over one more time? I didn't quite understand your explanation. I know when it comes to individuals that have multiple lots, deeded lots, we combine them. We use a calculated weight average. If so many lots are a lot poorer than the original lot, One span number. So we combine all that acreage. So they may have five, ten acre lots, but it's in our frame list, it's 50 acres and way we assess it at that calculated grade, what are you suggesting as far as keeping those five lots separate? Or I guess I don't quite understand and we are talking about those lots that are hidden in our plan that's bringing those forward.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. So right now, if you have five lots that are deeded separately, 10 acre lots, 50 acres, that is one span number, one grand list entry. The way they're typically assessed would be you're gonna assess each lot as if they were separate, and then you would reduce the value based on on the number of parcels and the holding cost and any infrastructure costs as well as what what you call a developer's discount or what the profit is if that person were to sell it to a developer. So for instance, one ten acre lot could be a $100,000 and you got five of them, you know, that'd be $500,000, on an open market if they were sold separately. But because we have to assess them as if they're sold as one, being one parcel, we reduce the value based on what the holding cost is for selling those five properties, what a developer who would buy those five properties together, and what their profit would be as they would want to make when they sell the property. So you may have $100,000 value on each lot, but they may only be listed at $60,000 a lot given all the other costs to the develop developer. So if you sell do them separately, you're still assessing that that 60,000. But at least when they do sell, you don't have to send out a new tax bill. You don't have to make any adjustments for the next year. People aren't calling you asking you to adjust their tax bill. I can just tell you that when a developer sells a lot, they call the town clerk or the town treasurer or the assessor's office and they ask what taxes are on that one lot and then they want you to prorate it. So if they sell that lot in November, they're responsible for the taxes up to November, but then they want you to give a value or what they pay wouldn't pay in taxes from November on on that one lot. And so you have to do that calculation for them. They sell two of the five lots, the one in November, and then they sell another one in December. You have to prorate that sec a lot from December for them. You don't have I mean, technically, don't have to. They should be doing that on their own, but they do call. It creates a lot of confusion. Then you have the property person buying the property calling, asking to make sure that the developer's proration was accurate. It does create a lot of confusion if you have those lots listed separately. It makes it much easier for the town, much easier for the developer to actually get those tax bills out correctly and to distribute the taxes.

[Mark Higley (Member)]: Thank you. And if I can just say, madam chair, and we may be doing it wrong, but ever since I've been doing it, what we do is if there are contiguous parcels, one by the same individual, then we include if it's a 50 acre parcel combining those five, ten acre parcels, we will use the 50 acre land schedule to assess that property. So that's a little bit different than what's explained here, quite a bit different because the huge difference with a five acre, 50 acre at the 50 acre schedule. So anyway, that's And then if it so happens that they can easily sell one of those because it's deeded separate but it's still under their name. I mean, there's one little difference that, you know, the wife's name is not on one and all that, then we have to keep it separate. But again, so we have to go through all the work afterwards to figure out how much that 10 acres is that they're trying to sell. So that that's a difference there too. So

[Emilie Kornheiser (Chair)]: I I think those are good questions to ask Jill next time she comes in and have a conversation about maybe in the context of the couple changes that we have in miscellaneous tax, but less about this language.

[Mark Higley (Member)]: Great. The other thing while I'm just thinking about it too, and maybe this would be good to hear, Vickery too, but I know a lot of times when assessors come into our town and want to reassess, let's say it is a 10 acre empty miscellaneous person. They want to put a two acre value on beforehand and we haven't allowed them to do that and maybe that's another issue. But I'd be interested if you folks do that as well. If there's a vacant lot you consider that it could possibly be a building lot, do you include a two acre building site on it?

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Yeah. We assume that all property is buildable. So unless they can unless it can be proven otherwise.

[Emilie Kornheiser (Chair)]: Okay, thank you.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Thanks.

[Emilie Kornheiser (Chair)]: And these also all seem like important questions in the Regional Assessment District context as well. Thank you so much for your testimony today. Really appreciate your time. Thanks

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: for having me.

[Charles Kimbell (Ranking Member)]: Kill from 50 miles subdivision. We would kill from 50 miles subdivision. Just doesn't happen.

[Emilie Kornheiser (Chair)]: We have Peter and then Julie. Does that work for you two? Okay. Great. And you just moved because of Vibes, or do you have to go?

[Jake Feldman (Vermont Department of Taxes)]: Okay. Great.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Great, well, thank you for having me back today. I'm Peter Tucker. I'm the Director of Advocacy and Public Policy for the Vermont Association of Realtors. And every time I see Representative Kimbell, think back forty years ago when I moved to Vermont with four little kids to be in the ski areas. I was a sales rep for different ski companies for twenty some odd years that went into real estate, sold real estate primarily in ski resorts and that sort of thing. And I say that just so you understand why I'm so attached to the second home marketplace really recognizing the economic value they bring in the state of Vermont. So I had some bias, but at the same time, we work with a government affairs committee that represent different realtor associations around the state. And I can tell you that universally, we are all in lock steps in terms of our opinion on the benefit of second homes to the state of Vermont and kind of what they bring to us. Even before then, way back, at some point, probably in business school, I picked up a book called The Wealth of Nations. It was produced in 1776. The author was Adam Smith. I don't think they had economists in that day and age because he was a Scottish professor of moral philosophy. But, you know, you remember certain things out of like a 500 page book. I've read it a few times now. But the thing that has always stuck with me is kind of his story of the pin factory. And, you know, the Scottish and the British, in the 1700s said, We should not have to buy champagne from France. We should just grow our own grapes and make our own champagne. Problem was, none of those islands are really very conducive to growing grapes for champagne. Smith's point was that, you know, while really not really a great place to grow champagne grapes, the British did have this knack for building pins, and they could build more pins faster than anybody else. And his point was, do what you do best. And, you know, when I look at the second home industry, the outdoor recreation industry in the state of Vermont, that's our pin factory. We do nothing better than than have all the natural resources of the state of Vermont, attracting tourists and and and outdoor recreation, to our state. You know, I was in Denver a couple of years ago at a housing conference and they had the mayor of Denver, come, you know, gave a speech to us. And he said, Look, we sell lifestyle. We attract all kinds of employees to our state who value our outdoor recreation. They wanna be here, they wanna live here because while they will work, they also will be close to the things that they really truly value, the mountains and that lifestyle. We can do that in Vermont. We are so attractive when it comes to those natural resources. I don't know that we take full advantage of it. The vitality of Vermont's economy is driven by the outdoor recreation industry and tourism. Every second homeowner starts out as a tourist. They come here, well, you know, I can't say everyone, but, you know, certainly the the the vast majority come here and visit the state, enjoy our natural resources, they come to ski, whatever. And then they decide, hey, this is a place that I want to come to more often, and I want to own a property here, and they make that investment in Vermont. They pay property taxes. They hire Vermont based property managers to plow the driveways, mow the lawns, provide maintenance and upkeep to their properties when they are here. These Vermont property managers employ Vermont workers. They engage with, you know, the landowner property owners engage with Vermont contractors to make improvements to their properties. And those contractors are all Vermont based with Vermont employees. They support the outdoor industry, purchasing equipment. And from my point of perspective, because I am a real avid skier, they purchase a heck of a lot of ski passes. They purchase groceries, gas, anything else they need while they are here in residence. They support the food and beverage industry, generating great tax revenue. You know, and if you're ever in Chillington on a Saturday, you know, you watch the bar, every $14 beer generates $1.4 in tax revenue for the state, and it is not insignificant. It is pretty amazing. Many second homeowners utilize their homes to generate some rental income help them carry their cost of ownership. You know, I have worked with many over the years that that calculus is really what gives them the confidence to be able to purchase a property here. If second homeowners rent on a short term basis, they provide significant rooms tax revenue to the state, plus the 3% surcharge, that was just imposed, recently. They employ local cleaning and management services to support their rental property. Now, if I can do this correctly, sharing is not turned on.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Oh, sorry. Yep.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: So I wanted to take a look at X-seventy three, and also some information from the excellent report that Mr. Feldman created from the tax department. I have read it several times.

[Mark Higley (Member)]: Is a

[Emilie Kornheiser (Chair)]: really good report, isn't it?

[Jake Feldman (Vermont Department of Taxes)]: Pardon me?

[Emilie Kornheiser (Chair)]: It is

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: really good report. Excellent. Excellent.

[Jake Feldman (Vermont Department of Taxes)]: Are we there?

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Okay, good. So, first things first. Oh, I got a little of these guys somewhere, but I won't be able to see. There we go. Act 73, you asked the tax department to recommend a multiplier set that would ensure any new tax revenue derived from the non homestead residential classification would cover the cost to the education fund created by the homestead property tax exemption, right? That was a charge, did an excellent job of, of, reviewing that. You know, and then, you know, so then I took a look at the, you know, the tax classification or the, the homestead property tax exemptions, here they are, know, under $40,000 you would get a 90% credit on your property tax, you know, and it goes down to $115,000 having the lowest credit. And then this is the chart. Sorry, I copied and had to kind of get it lined up again.

[Emilie Kornheiser (Chair)]: I'm just making my math face. It's not about you.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Okay. It's my math. I did my math at home before I came, so I didn't have to do it on the fly. Hopefully, don't have

[Jake Feldman (Vermont Department of Taxes)]: to do it on the fly.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Mr. Feldman, when he made the presentation, used CET1B as an example. You know, there's all these different kind of, you know, rate per 100 of equalized property value, But I just tried to stay with that just because it's the example that had been used previously. So then I looked at a property taxpayer of a homestead property. Somebody who, you know, earns $39,999 you know, is in that, gets a 90% property tax exemption. So, you know, keep trying to keep the property values equal. I use $200,000 you know, if that is the case and they get a 90% exemption, then their taxable value is $20,000 you know, back up to the chart above, their rate would be, 1.2 per 100. So when you do all the calculation, work that out, their property tax would be $240 on their home, because they are getting a 90% exemption. It is a big, big, big one. For that same second home owner, let's see, is this? Oh, it's not on yours. Okay, good. All the names of everybody on the screen is here, Boston thinks for me, but

[Emilie Kornheiser (Chair)]: it

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: doesn't show up for you guys. So for residential non homestead, a second home, dollars 200,000 value, if I use that tax set 1B, their multiplier is 1.96. Once again, it's per 100, so you divide by 100, by 1.96, and their property tax bill is $3,920 let me just get this guy out of the way. So, you know, in my head, doing the math, you know, I say that, you know, the homestead property tax is $2.40, the non homestead property tax, 3,920. When you divide that, it's 16 times greater, the second home tax, than that base property tax payer, residential property tax payer in Vermont. Just doesn't seem fair. When property taxes increase, property owners reduce spending. They will cut their lawn once a month, put off improvements, and reallocate resources so they can pay their property taxes. Increases in property taxes eventually have a negative impact on property values. Not right away, but eventually owners will sell at a discount based on the increase in their taxes. This not only impacts second home prices, but the entire, marketplace. When property values decline, brand list values decline, leading to a reduced tax base, and then all taxpayers that remain will have to pay more to make up the difference. Second homeowners receive virtually no benefit from our public education system. Yet if enacted, this proposal will significantly increase their property tax over the residential rate. Our hope is that this committee will find a path that's fair to all property tax payers. And, you know, I mean, we certainly have voters in your communities, who are residents. But in your community, have all taxpayers. And I think that being respectful of all of those taxpayers is important. And then, you know, really the fairest tax policy assesses the smallest incremental tax increase across the broadest base of taxpayers. And we are hopeful that the committee, as you work through all of this, will be able to find a way to be fair to all those taxpayers.

[Jake Feldman (Vermont Department of Taxes)]: Thank you. Thank you so much for Yeah, good.

[Emilie Kornheiser (Chair)]: Representative Ode?

[Rebecca Holcombe (Member)]: Thanks. Do you have data that shows income levels of taxpayers, the different income levels of taxpayers who own second homes?

[Jake Feldman (Vermont Department of Taxes)]: Well with

[Rebecca Holcombe (Member)]: $40,000 income a year.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Well, that's for the resident. I just picked that residential category for the analysis. For the non resident, you're asking me for the second homeowner, right? Exactly. Yeah, mean, don't pay income taxes here, so there's really not a great way to look at that. Let's remind me of just one other point, and that is that while I use $200,000 for a homestead property, and $200,000 for a non homestead residential property, a second home, if I did go into the market and really look at what is the median home price of a second home versus the median home price of a primary home, the second home obviously would have a much higher value. So while I'm saying this is already 16x greater than what that second home taxpayer would pay, if their assessed value is much higher, you know, the number gets even broader over time. But I wanted to use apples and apples, so yeah.

[Jake Feldman (Vermont Department of Taxes)]: Just curious, do we know how many

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: second homeowners are actually homeowners? I don't. I don't. But I think that second homeowners, well, if they're I'm say Vermonters. Vermonters live here. Exactly. Just thinking about it, certainly seasonal properties.

[Emilie Kornheiser (Chair)]: We're not talking about seasonal properties.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: I know, but I think that would be the biggest chunk. There would be some Vermonters who have said, Look, I'll buy a second home so that I can rent it, so that I can generate income. I don't think that's Also, visitors. Right, exactly. Yeah. But, yeah, I think that the majority of second homeowners are from out of state. Think

[Rebecca Holcombe (Member)]: you have second homeowners or people who are residents of Vermont.

[Emilie Kornheiser (Chair)]: Or you said the opposite.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: Or from of state. I'm sorry. Yeah, yeah, no question.

[Charles Kimbell (Ranking Member)]: We have a number of communities in which the tax rate for primary for residents is higher than it is for second homes. And that is, you know, I recognize the theory behind why the system was set up that way, but most find that unconscionable.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: I guess I don't really understand the theory of why it is set up that way, but I do think that if you want a fixed tax policy, maybe that would be a good place to start.

[Charles Kimbell (Ranking Member)]: Just in your example, you used the most generous exemption for the value on there, 90%. I think in most cases, if you really look at going over the 115 in income and then compare that to

[Jake Feldman (Vermont Department of Taxes)]: a second homeowner, then that's probably a better thing. Everyone's

[Emilie Kornheiser (Chair)]: talking and only one person can talk for any of this to work. Thank you. Okay, great. Represent Mesland.

[James Masland (Member)]: Yeah. Thank you, Peter. So two different directions here. One, thank you very much for your help. I'll need to study it because it's very, very helpful to us to work through your examples and see where we are. But I disagree with where you started out, at least you don't agree with many things in between. You seem to start out to see what we do best, which is build second homes. I've been a little Oh, I see. A little flip with your words, I guess, or something like that. But I'm also I mean, I grew up here, essentially, the river, but here. And I recognize we have limited resources to make available, and I'm I'll say be sarcastic for for other people. And so, I thank you again for your homework, but where you're headed doesn't make me feel good about what we're trying to do on balance. We've got a lot of work to do, as we've recognized, and I'll just stop there.

[Emilie Kornheiser (Chair)]: Thank you, Peter.

[Mark Higley (Member)]: Thank you.

[Emilie Kornheiser (Chair)]: Appreciate your time today.

[Jake Feldman (Vermont Department of Taxes)]: Thank you all. Thank you.

[Emilie Kornheiser (Chair)]: Maybe we'll see you tomorrow too, who knows? Julie, you want to join us? Yes. Thank you.

[Charles Kimbell (Ranking Member)]: So

[Emilie Kornheiser (Chair)]: sorry. Do you need some or you have water? Okay.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Went a little old school and I had a handout.

[Emilie Kornheiser (Chair)]: I would love if you sent them to Sorsha for us.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Can definitely do it.

[Emilie Kornheiser (Chair)]: And I'll give the handouts to Sorsha. Thanks.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: I know it can be helpful to have numbers written down and in front of you rather than hearing them. Did you submit them

[Emilie Kornheiser (Chair)]: to SourcH already? No. Okay. This is all very

[Charles Kimbell (Ranking Member)]: I won't.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Nope. They're just one feeders.

[Emilie Kornheiser (Chair)]: We try to be a non paper committee whenever possible. Thank you. Sorry, Sorcha. Also, while we're handing stuff out, NCSL dropped off pens and a bunch of other goodies for everyone in their

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Oh, that's cool, if you want them later.

[Jake Feldman (Vermont Department of Taxes)]: Yeah, thanks. All

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: right. Well, thank you. Afternoon, Chair Kornheiser. Thank you for bringing me in today. For the record, my name is Julie Marks. I am the founder and the executive director of the Vermont Shore Tremantal Alliance. We are an association that represents over 300 DuPain members, representing hundreds of homeowners and property managers across Vermont. So I am here truly representing members from every single county in the state across a wide income spectrum from both sides of the aisle and from people who vote here and people who don't vote here. A big portion of our membership is these local property management companies who employ hundreds of Vermonters to take care of vacation rental homes and manage the rentals, as well as Barb's stay host, which has been a subject of conversation here this afternoon so far. And then both residents and non residents who enjoy renting out their properties to visitors. I want to start by just sharing a little bit about the vacation rental market, which has been really rather unstable in the past couple of years. Things change, happen, and the market is really substantive to a lot of external factors, such as the economy. We've seen huge disruption in travel and tourism in Vermont in the past year. Climate related disasters can suddenly make a property uninhabitable. I guess my point is that a home that's fully booked as a vacation rental one year maybe go to personal use or long term rental the next. And there's a lot of change in variability in the use of a property that engages in the vacation rental activity for that very nature and purpose of flexibility. So as it was kind of mentioned earlier, because property use can change quickly or from year to year, we are wondering what mechanism will be in place to allow for owners to clearly appeal or revise a designated tax classification if the use changes. But additionally, I've got basically three main requests or comments to make regarding to the bill. I also was only aware of version 2.1 coming into this. So my comments are based on that version. Perfect. The first so I'll go through them high level and then revisit Okay. Thanks, Emily. Because we've lost our interruption I've lost my own interruption. So first off, from the perspective of our members who are residents here in Vermont and have a homestead and are operating a short term rental on their homestead property, we feel that homestead properties should be taxed as homesteads in full and not portioned out. The reason that homesteaders often offer rents rentals on their property is to supplement the property taxes. And so, adding to the cost of owning and living in Vermont feels counterintuitive in the pursuit of affordability. Secondly, from the perspective of our non homestead properties, we recognize the desire to bring online more workforce housing. And so we would recommend the committee include a three consecutive month rental period that would qualify non homesteads into the nonresidential category. And then lastly, from the perspective of our non resident homeowners, we're asking for consideration around the property's overall economic contribution to the communities through the generation of meals and rooms tax, visitor spending, etcetera, before it be considered or taxed as otherwise vacant or underutilized. So going back to the homesteads, again, the perspective from our primary resident members, this really feels kind of punitive. This is current tax policy already. And I'm not exactly sure when it changed, but I did notice a couple years ago, my tax bill go up based on a prorated rental activity from the accessory dwelling building that that we built on our property. My husband and I have been renting a guest suite in our house since 2018. And the reason that we started doing so was to our property taxes. So for us, we started doing out of necessity, turned into something we really loved. And that motivated us to convert kind of an old falling down shed on our property into a 700 square foot mother-in-law. The plan was pretty simple. We designed it so that it could be accessible to one of our aging parents when when, if we needed to, house them and take care of them in the future. But in the meantime, we could pay back the investment through rental activity over the next ten years. However, five years later, that ten year plan has just become a real big risk and uncertainty for us. So again, adding to our property tax bill doesn't improve our affordability, nor does it encourage us to stay. In my personal situation, it's certainly not unique. In the handout, you'll see this might be here, and I could maybe go back and forth on the data. But from our intel and what we see, we expect that about 50% of Vermont short term rentals are owned by Vermonters. And many have created accessory units or have started renting out rooms in order to afford to stay here. So if a property is a homestead, we ask that it be taxed as a homestead in full, regardless of any on-site rental activity. And so we would respectfully request that the language be revised for a subset. Regarding non homestead properties, again, if the intent is to encourage underused second homes to contribute to workforce housing supply, the definition of long term rentals here could reflect the modern tenants and the current demands for that type of housing. So while this is technically a little bit outside of our jurisdiction, since we focus on short term rentals. But 80% of short term rental hosts also offer medium term rentals. And this is not a legally defined term. But medium term in the industry or in the market tends to be one to three month rentals at a time.

[Emilie Kornheiser (Chair)]: This has been I'm interrupting, but the travel nurses, etcetera.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: The travel nurses, the professional laborers who are on contract when FEMA came for six weeks, etcetera. Remote working is huge. We see this demand highly for people who are relocating to the state, but looking for furnished rentals for a couple of months at a time. So while they technically fall under landlord tenant, they function more like a vacation rental because of the expectation that they're furnished, the owner covers all the utilities, and it's for an even shorter kind of seasonal period of time. But it a high demand need for housing. So we think that if you include a three consecutive month definition to the long term rental, you might encourage some folks And maintain finally, I want to acknowledge the perspective of our second homeowners who do rent their properties. We don't represent second homeowners who don't rent their properties. As you can see in the handout, there are about fifty thousand second homes. But and that's about 15% of our housing, but short term rentals are 3% to 4% of our housing. And again, that's split across homestead and non homestead. So these homes that are shared regularly contribute greatly to our state economy, our education budget. As Peter mentioned, vacation rentals now pay 12% meals and rooms tax compared to hotels that only pay 9%. And they support local jobs, including the more than 100 local property management businesses that are based here in Vermont and employing Vermonters. So they are occupied. They're contributing and supporting local livelihoods. So we, again, we just asked, is it fair to classify those properties that are generating economic activity for our communities as vacant? Those are our primary concerns. But I guess my final comment, which is kind of when we look at this bill in consideration with all the other policy initiatives that are on the table right now, the objective feels a little weird. I can't really tell if the goal is to raise revenue or if it's to influence the real estate market. I think second home properties, as Peter mentioned as well, contribute so much funding for our education while contributing nothing to the cost of it. They're not putting those kids in the school system. Does the math work if we were to flip the equation? So again, as an association, we're primarily concerned with property rights, affordability, and enabling economic opportunity. We'd love to support this bill if our requested changes can be made.

[Emilie Kornheiser (Chair)]: Thank you. I really appreciate how clear and actionable your concerns and suggestions are. Thank you so much for that. That's really a gift these days. Any questions or thoughts for anything?

[Jake Feldman (Vermont Department of Taxes)]: Just one? Yeah. No, we'll get started.

[Charles Kimbell (Ranking Member)]: Thinking about the new system where you try to dwelling use attestation form, which we have to change the manual. No.

[Emilie Kornheiser (Chair)]: You just really hurt Jake's feelings.

[Jake Feldman (Vermont Department of Taxes)]: He's over here. But

[Charles Kimbell (Ranking Member)]: with that, it assumes that you can predict how you're going to use the property in the coming year. With your example of three month rentals to employees that have a need for a short term, medium term, as you said, how predictable is it for you in looking at predicting who's going to occupy that space for what period of time?

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: For me, in my personal example, so we have our ADU at our home that is available on that medium term rental market. We have guests through the end of this month, and the rest of the calendar is empty. And that is just the state of the rental market right now. We are seeing really only last minute bookings for short term and medium term travel. So it's really hard to predict. It won't be empty the whole year. I guarantee that. But I do not know what it's going to look like in terms of the division of those monthly rentals versus those week long rentals. Every year, it kind of plays out differently. Some years, it's rented more on the medium term than the short term and sometimes in reverse. And so it's really just market dependent. It's hard to predict.

[Charles Kimbell (Ranking Member)]: Thank you for that. And your other example was if somebody rents for three months, so you could have somebody renting your accessory dwelling unit as a vacation home for three months versus as a place where they're living as a permanent resident type of thing.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Yeah, it happens both ways. Last summer, we had an elderly couple living there for three months over the summer. And at the end of it, they left because they decided to buy their own house. So they weren't working. They're retired. But we've seen it all. Yeah, every scenario.

[Charles Kimbell (Ranking Member)]: Just trying to think about how it all fixes in on your example of your tax bill going up. Was that because of the value that you invested in the property and then a portion of it was I'm

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: not sure. It says rental

[Jake Feldman (Vermont Department of Taxes)]: point

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: two like 20% or something.

[Charles Kimbell (Ranking Member)]: Oh yeah,

[Jake Feldman (Vermont Department of Taxes)]: okay right. Thank you. Yeah,

[Charles Kimbell (Ranking Member)]: I know it's really technical questions but

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: yeah Yeah.

[Emilie Kornheiser (Chair)]: Thank you very much for your time today. I really appreciate it.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Chris, I think we're going give it a go, if that's okay with you. Okay. Our

[Emilie Kornheiser (Chair)]: gen I didn't lose anyone for this last for tax classifications. We've gotten to everyone. Okay. Great. There are sort of people from yesterday's testimony block that are coming today and then all kinds of things, but we also have a budget letter that we want to send to appropriations. So we're squeezing Chris in. It's very possible we won't finish the conversation. We're gonna give it a go without Jim, and that'll be okay.

[James Masland (Member)]: Be right back.

[Emilie Kornheiser (Chair)]: Okay.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: Just accusing you, Jim.

[James Masland (Member)]: Yeah. Yeah.

[Emilie Kornheiser (Chair)]: I think we've seen most of this language, but Chris will take us through it.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Good afternoon, everyone. Chris from JFO. Sorsha was kind enough to post a document under my name today that I'm going to share and walk you through. It feels like it was six months ago at this point, but it was only last Thursday that I was here talking to you about some of the language in the governor's recommended budget for FY '27. Yeah. That looks legible. Right? Can everybody see that? So I attempted, like I have in past years, to take the conversation from last week when we went through that big chart of all the different sections of language that were relevant to this committee's jurisdiction and attempted to start a process with your chair of putting words to paper to give you all something to react to. These are certainly not my words or my thoughts. I don't speak on behalf of the committee. I am just trying to facilitate this process for you all. So the letter or the memo, rather, which the appropriations committee is hoping all the committees will send to them by tomorrow, Kicks off very similarly as last year with pleasantries and platitudes at the beginning. And then some comments on the proposed appropriations. And then on the next page, I have some specific comments here about language sections. So if anything here is not clear or if it's not capturing the committee's intent, we should talk about that. So I just wanna go through this and give you a sense of what's here. So the first item here, again, we're just looking at the proposed appropriations, the base appropriations. So it's the appropriations to the tax department and all of the property tax relief programs and the pilot payments are all included in this one bullet. I didn't hear anybody in the committee raise any really specific thoughts, So this language speaks to

[Emilie Kornheiser (Chair)]: And, folks, every sorry. I should have said this at beginning. Sorry to interrupt because every committee does this differently. A few years ago, the previous chair actually just read the letter, I don't even know if the rest of

[Edward "Teddy" Waszazak (Member)]: the committee saw

[Emilie Kornheiser (Chair)]: it. It's like not that long ago. So times change. And then some committees sort of straw poll and wordsmith every section of it and then vote the whole thing. Some committees do it as an FYI. Some committees draw a poll. And then if it's a mixed vote, it's noted on the thing. Some committees have a spreadsheet, some don't. I think what I'll say is if anyone has a big pushback on one suggestion, we can note it on the letter, but we don't need to make a formal process of this. Back to you, Chris.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: All right. So, are there any questions on the first item, the base appropriations? Alright. The second item here is a request for an appropriation. Those of you who were on the committee last year will remember the volunteer income tax assistance program that is funded through a contract that is managed by the office of the state treasurer. This is the program that helps income qualified taxpayers file their taxes and take advantage of the various credits and benefits that the tax code provides them. There's $400,000 in the treasurer's base budget to support this program. Last year, you all had requested an increase in base funding of a $148,000. The budget approved that $148,000 increase, but as a one time, not as a base increase. So, this paragraph contemplates requesting an increase in the base funding by $150,000 to bring the program to a total of $5.50.

[Charles Kimbell (Ranking Member)]: We're not suggesting where it should come from.

[Peter Tucker (Director of Advocacy and Public Policy, Vermont Association of Realtors)]: It comes from the general fund.

[Emilie Kornheiser (Chair)]: We bring the money in.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: That makes sense for everybody?

[Jake Feldman (Vermont Department of Taxes)]: Okay. Fair enough.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: The next item on the top of page two is, I don't know if you all know this, but every ten years, JFO does a comprehensive deep dive of Vermont's tax structure. It's called the ten year tax study.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: And it's so good.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Is very thorough. It's a huge lift for our office to do. And the last time we did it was approximately nine years ago. So if you are wondering how we plan to spend our off session in JFO this year, this is going to be the major focus. So, the upcoming ten year tech study would be due next January. And in the past, we have used some third party consultant support to help us with this effort because it is a huge lift, and we only do it every ten years. So the request here would be for a one time appropriation of $100,000 to JFO to fund that consulting and analytical support as needed.

[Emilie Kornheiser (Chair)]: And we would put the actual language from tax studies, the miscellaneous tax bill, and have it put that in hand.

[Rebecca Holcombe (Member)]: Just a question about when that will evolve, will this also include some analysis of tax bills? And will there be a parallel investment in benefits?

[Edward "Teddy" Waszazak (Member)]: Do you know how much

[Rebecca Holcombe (Member)]: we spent last time? Anyone?

[Mark Higley (Member)]: Was We had

[Emilie Kornheiser (Chair)]: a very different staffing structure at JFO.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Yes, it was a little less than this, but we had a different staffing structure. We had a data analyst who then moved on to the next department, who was doing a lot of this work at a rate that we probably would not be able to hire someone with similar skills at. We had an accounting firm hired to run some sample returns for different family configurations. We also hired people to help us with graphic design and layout and editing and things like that. It is a it is a very, very big project for our office to do. And we also had Joyce doing a lot of the work, and that was one of her first really deep dive projects. And we asked if Joyce was willing to do this. She was not as excited to talk about this project as I'm excited to talk about it. So I wish her well in her retirement. She continues to be an amazing resource for Yeah.

[Robert Vickery (Representative, Vermont Assessors and Listers Association; Colchester Assessor)]: Does the study look at ways in

[Edward "Teddy" Waszazak (Member)]: which the tax structure could be improved, or is it just an analysis of what it is now?

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Sometimes it does. Every time we've done this, I went back 30 and found the last three, and the charge of the study is a little bit different each time.

[Emilie Kornheiser (Chair)]: And folks, we can talk about the charge in the miscellaneous tax bill. This is just a paper

[Jake Feldman (Vermont Department of Taxes)]: round. Okay.

[Charles Kimbell (Ranking Member)]: It's not to conflate it with the tax structure commission. Totally separate. Totally separate.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Big part of these studies in the past have been a 50 state comparison, and it really looks at everything. And how do we compare to not only neighboring states, but the nation as a whole, who pays tax incidents, things of that nature.

[Edward "Teddy" Waszazak (Member)]: Sorry. Sorry. No. Tag me. This isn't on this bullet is not on the document that

[Jake Feldman (Vermont Department of Taxes)]: we have

[Edward "Teddy" Waszazak (Member)]: here, so I don't have furlough cast.

[James Masland (Member)]: It might be your IT.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Sorsha, could you post the version that I sent, like, two hours ago? The ten year text study was not on the version this morning. I was like, oh, should that be on here? And then I put it on here. So there'll be a revised version instead.

[Jake Feldman (Vermont Department of Taxes)]: Yeah.

[Edward "Teddy" Waszazak (Member)]: I don't have big feelings about that.

[Jake Feldman (Vermont Department of Taxes)]: Was just

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Thank you for flagging

[Edward "Teddy" Waszazak (Member)]: that. Okay.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: So, that's the appropriations section. Now, I'm switching over to the sections around language and policy in the bill that were within the committee's jurisdiction and that House of Approach had asked you all to take a look at. So the first one speaks to the appropriation in the tax department's budget that funds the grand list maintenance, litigation assistance, reappraisal, things of that nature, the $3,410,000 line item that the FY '26 BAA and the FY '27 gov rec proposed funding out of the pilot fund. So company is comfortable with that commentary. We can continue moving.

[Mark Higley (Member)]: I just guess I need a little more explanation as as to why would we be holding off. You're saying that Approach is not including that currently in there? Approach has included this construct in the twenty sixth BAA. Yeah.

[Emilie Kornheiser (Chair)]: But that was the first time.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: That was the first time. So the governor is proposing this construct in the FY '27 gov rec. That was really the first time it was proposed. The BAA began the concept in the current fiscal year. So this is speaking to whether or not that construct should continue in FY twenty seven and beyond by funding those costs at the pilot fund.

[Emilie Kornheiser (Chair)]: Updated now. Thank you. And so the caution is about the fact that, like, the pilot fund is sort of a contentious topic these days. So we're adding caution. Alright.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: The the next item speaks to the 114,900,000 general fund transfer to the Ed Fund. So to refresh everyone's memory, 10,000,000 of this $114,900,000 total was intended to offset the impact of shifting $10,000,000 of purchase and use tax revenue out of the ed fund and into the t fund. The other $104,900,000 would be buying down rates. Take a look at this verbiage and

[Mark Higley (Member)]: Yeah, I'm not supportive of that. Which

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: one? I'm so sorry, I walked away for a second.

[Charles Kimbell (Ranking Member)]: Was that specifically about the $10,000,000 for the purchase and use tax?

[Mark Higley (Member)]: Right. I mean What's that?

[Rebecca Holcombe (Member)]: We still get the $10,000,000

[Mark Higley (Member)]: But from where?

[Emilie Kornheiser (Chair)]: Wait. So, wait. Mark, you're okay with the first paragraph and not the second paragraph? Right. Okay. And so, from the second paragraph, it's that instead of moving 10,000,000 to the education fund from the general fund and then moving that same $10,000,000 from the education fund to the transportation fund, we're saying, let's just move the $10,000,000 directly from the general fund to the transportation fund, instead of stopping off in a third fund for forty five seconds.

[Mark Higley (Member)]: I just know, I thought there was, at some point, some talk about backfilling that into the fund with some more general fund money.

[Emilie Kornheiser (Chair)]: Yeah, that was So originally, the governor's proposal was to move the money from the Ed Fund to the Transportation Fund and cover that money taken out of the Education Fund by the General Fund. And so this is still moving $10,000,000 out of the General Fund and $10,000,000 into the transportation fund. It's just saying, why are we stopping off in the education fund?

[Mark Higley (Member)]: I'm still losing $10,000,000 in the education fund.

[Jake Feldman (Vermont Department of Taxes)]: Nope. Nope.

[Emilie Kornheiser (Chair)]: So in both scenarios, the education fund was gonna be whole seems like a ridiculous statement for the education fund. But it's just that it's not doing a little loop de loop.

[Mark Higley (Member)]: Okay. It's coming to me now.

[Edward "Teddy" Waszazak (Member)]: Thank you.

[Emilie Kornheiser (Chair)]: But, yes, the transportation fund needs money. Thanks.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: All right. The next item speaks to the health IT fund. This essentially just says, instead of putting this tax provision in the big bill, the committee would prefer to put it in a separate bill related to tax policy?

[Emilie Kornheiser (Chair)]: And it's in our miscellaneous tax bill right now. It's just like, please don't put tax policy in the big bill because it's ours.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: E five sixteen and five sixteen point one relate to the purchase and use tax, and this sort of dovetails into what we were just talking about. I'll let everybody read it.

[Mark Higley (Member)]: It's representative

[Rebecca Holcombe (Member)]: Branagan in the doesn't really matter, but I'm just curious about the choice of the last sentence, implies a policy decision, but at a future time. And I just wonder if you on the side of parsimony in the lettering.

[Mark Higley (Member)]: I guess this is the place that I probably wouldn't approve of. This is basically saying that we aren't going to go forward with the $10,000,000 every year for next four years after this, correct?

[Emilie Kornheiser (Chair)]: Yes. So this is where your disagreement is?

[Rebecca Holcombe (Member)]: Were you asking me that when I understood it will be in this question?

[Mark Higley (Member)]: Understanding of this language here is we don't approve of the recommendation to have $10,000,000 a year for the next five years taken out of the Ed fund and put back on the transportation fund.

[Emilie Kornheiser (Chair)]: Yes, this disagrees with that notion and saying that we should stabilize the education fund before we start doing other things.

[Mark Higley (Member)]: Don't agree with that.

[Emilie Kornheiser (Chair)]: Appreciate appreciate that.

[Mark Higley (Member)]: On the fund because of the match money that's possibly valuable. That

[Emilie Kornheiser (Chair)]: makes sense. Anyone else? K.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Alright. Next section has to do with the estate tax, because we continue to talk about the estate tax this year. You all remember that the GovRec proposes shifting excess estate tax revenue out of the higher ed trust fund and into the school construction aid special fund. You also likely remember hearing testimony that those windfalls do not show up every year. They do not show up most years. It is, in fact, unpredictable when they do show up, and when they do, how much. So this language essentially says due to that variability, school construction giving, as important as it is, perhaps needs a more sustainable funding commitment.

[Mark Higley (Member)]: I guess on that one, have we really heard enough testimony in regards to that?

[Emilie Kornheiser (Chair)]: I feel like we have, but if you don't feel like we I mean, we can bring in more info.

[Mark Higley (Member)]: So, what was the amount of money that was maybe even projected to go into that year?

[Jake Feldman (Vermont Department of Taxes)]: We have

[Emilie Kornheiser (Chair)]: no way of projecting it.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: We can't project it, because the only And that's a great question. What triggers this is you have to have estate tax collections that exceed a 125% of the January revenue forecast. So we inherently can't predict when that happens. And when you go back and look at the Higher Ed Trust Fund and their annual report from 1999 to the present, there were only, like, two years in the last ten years where anything substantive materialized from this into the Higher Ed Trust Fund.

[Mark Higley (Member)]: That's a

[Chris (Fiscal Analyst, Joint Fiscal Office)]: great way to describe it. Blumpy and inconsistent at best.

[Mark Higley (Member)]: At best.

[Emilie Kornheiser (Chair)]: I like sporadic and highly variable and difficult math.

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: It's really three thirteen.

[Emilie Kornheiser (Chair)]: I'm so sorry to the ANR team. Thank you.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: We're on the last piece here.

[Emilie Kornheiser (Chair)]: I know, but we still have plenty of VLCT.

[James Masland (Member)]: Yes, Jim. As a still trustee until the March 1 of the state colleges, I'd be in favor of not moving money even on an unpredictable whatever it is. The state colleges need as much trust fund, excuse me, scholarship money as they can avail themselves of it. Workforce development is as much a partial of advancing our economy as anything else we do. So, that's my 10¢ for the decade. Thank you.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: Alright. So there's one more item on here, and it's probably the most controversial one you'll ever debate. The transportation fund interest provision. The language in the gov rec had proposed, that the t fund keep interest earned on the t fund. When we looked under the hood at this a little bit with some folks in the administration and the treasurer's office, we realized that if this were this proposal were to go live for fiscal year twenty seven, it would have an adverse impact to the general fund, and it would be cleaner to if people agree with this policy shift to make it effective in f y twenty eight.

[Jake Feldman (Vermont Department of Taxes)]: Thank you.

[Chris (Fiscal Analyst, Joint Fiscal Office)]: And this is not a large amount of money. It's about a million bucks.

[Emilie Kornheiser (Chair)]: Okay. I'm going to note where there was disagreement, and then we'll just sort of send it around to everyone and then send it to a purpose a little

[Edward "Teddy" Waszazak (Member)]: bit after that. Thank you.

[Emilie Kornheiser (Chair)]: That will happen tomorrow, so if you wanna talk to

[Edward "Teddy" Waszazak (Member)]: me about anything before tomorrow, please do so.

[Emilie Kornheiser (Chair)]: Thank you very much, Chris. Oh, thank you. And we are pivoting back to our inner brains to yesterday, where we were talking about regional assessment district. And maybe we even talked about regional assessment districts today. Nope, that was mostly yesterday, right? You're squinting at me, but it was yesterday, right? I'll mention

[Jake Feldman (Vermont Department of Taxes)]: not that.

[Emilie Kornheiser (Chair)]: Okay, great. And so

[Julie Marks (Executive Director, Vermont Short-Term Rental Alliance)]: League of Cities and Towns was not available yesterday.

[Emilie Kornheiser (Chair)]: They're available today, so we're jumping back into that topic. Hello, Samantha.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Hello, thank you. For the record, my name is Samantha Sheehan, the Municipal Policy and advocacy specialist for the Vermont League of Cities and Towns. And thank you for accommodating, my schedule, so that we could, discuss this issue with you. So I'm hoping to be brief, I'll remind folks that VLCT has not adopted a position on the regionalization of property valuation. This affects our member communities in very different ways and they were unable or in the wisdom of our members they chose not to take a position in favor or against the regionalization effort that you've all been working on for several years now. That said, we are happy to contribute expertise and input so that whatever the legislative outcome is, is most possible to comply with and use at the municipal level. And I participated on the Act seventy three stakeholder working group that looked at the question of executing regional appraisal. And I also want to say first that it was a great process. Hopefully you've heard that in prior testimony. The state officials from the Department of Taxes in particular, Jill and Rebecca facilitated a really good process. The folks who volunteered their time and expertise on that came up with some really good practical ideas that we hope informs your work on the bill this year. So there's three topics of the draft bill that I want to hopefully cover. One is the change from May to shall for inter municipal cooperation or inter municipal contracting. The second is the topic of regional BCAs for appeals of property valuation and then the third is the cost or the proposed changes to the per parcel payments to municipalities. So on the subject of inter municipal agreements, we advise against making this a requirement. And the reason is because the barriers to inter municipal contracting otherwise in state law in Title 24 have not yet been addressed. So, there is an existing municipal authority called the Intermunicipal Agreement, which is a relatively straightforward process and opportunity for two towns to work together to do one thing. And that is what this framework would sort of use to make it possible for municipalities to meet this requirement to joint contract for a reappraisal vendor. However, there's good evidence that there's barriers in the law to actually executing that type of inter municipal agreement. And I say good evidence because four years ago when about a third of municipalities triggered reappraisal requirement under the old law, municipalities did not coordinate or enter into joint contracts at that time. Although many small neighboring towns and in some cases towns that even already share a lister were forced onto the same reappraisal schedule. That's because there is a cost and a liability that is borne by the individual municipality in their reappraisal, mass reappraisal and setting of the grand list. They hold those costs and liabilities individually, not through the inter municipal agreement. And because they bear those costs and liabilities individually, they must also have individual enforcement of the contract with the vendor. Samantha,

[Emilie Kornheiser (Chair)]: I was just talking to TACS about this exact problem, And I'm wondering if you have any suggestions of legislative fixes for it.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Yeah. So one is that you would have to enable the municipality to obligate its own future budgets. Because the timeline for the reappraisal contract is so long and the municipal budgets are authorized by the voters. So that's one problem. Because town A may not want to contract with town B without knowing that town B can obligate the money for their share of the contract. So that's the first thing. And then I don't have a specific legislative suggestion, the second thing is the pain penalty on the lister in the certification of the grant list. The third thing is the date change, which is really good. So that will also help facilitate these type of agreements and cooperations from April 1 to January 1. So it's like time, money, and liability on the town are the three barriers. I also just want to say we do have time to kind of figure that out and hopefully will, and this will help municipalities coordinate in more effective ways for all sorts of public services.

[Mark Higley (Member)]: So

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: if the implementation date stays in 2029, we have time to sort that out, but we would still like in between now and then just in case it to say they may cooperate and we work towards figuring out how they will cooperate in a shared contract.

[Emilie Kornheiser (Chair)]: Anything you could send that approximates legislative language regarding shared contracting, think would be because even between now and 2029, it might make a big difference if this was possible.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Okay. Thank you. We will work on that.

[Emilie Kornheiser (Chair)]: Feeling very actionable suggestions oriented this week, and I think it's

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: I'll move on to appeals.

[Emilie Kornheiser (Chair)]: There

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: are good policy reasons to regionalize appeals, which we acknowledge and I'm just not going to repeat them. You've heard lots of testimony over many years on why Vermonters may benefit from a regionalized appeal venue for reappraisal. What I want to focus on is feasibility for that new regional BCA that's envisioned in this law. So you may remember in my testimony last year I said assume a low rate of confidence and a high rate of appeal. And in the stakeholder working group that theory was broadly held. There's broad agreement that there will be a much higher rate of appeal than what we see in other states who have long used regional appraisal and regional appeals systems. And I think so the IAAO, they report in their survey a one to 5% rate first rate of appeal. We know that Vermont municipalities who have done mass reappraisal using some of these new and innovative approaches to reappraisal such as eliminating site visits, using GIS data, etc. That the real rate of appeal is much higher. And in Burlington in 2021, was over 6%. And I was recently talking to a colleague I used to work with in Burlington and they reminded me of this sort of fun fact, which is that even in situations where the property owner had a downward adjustment on their valuation at their first round of appeal, they still took it to the BCA. So when they met with the employee of the reappraisal firm to say, don't have three bathrooms, I have two. I don't have a finished basement. It's an unfinished basement. Whatever their ground for the appeal was. Even when the contracted appraiser lowered their property value, the homeowner still often took the appeal to the BCA. So we're saying a regional appraisal, the point of that, a regional BCA will be a relatively small number of municipal volunteers navigating a relatively high volume of appeals at the regional level, regardless of how the lines are drawn. If we're going for at or around 10,000 parcels that will be hundreds of appeals that they have to hear. So the bill right now proposes a makeup of that BCA that's basic as I understand it, please correct me madam chair if I'm wrong it's one member per municipality and then plus one member per thousand parcels. There's a second provision that says each appeal hearing will be a panel of three members not from the town where the property appeal is originating from. Our recommendation, my recommendation is to not have both of those provisions because in the to be determined RAD boundary slash school district. It will happen many times over throughout the state that there is one very large urban area, urban municipality with other small lower sized grant list municipalities. So, the overall size of the membership of the BCA will be weighted because of the per thousand parcel provision. And then the requirement on the sort of minority membership of the BCA, if you want to think about it that way, to hear appeals for that municipality will be, they'll be disproportionately burdened. So the members representing towns with a thousand parcels or under will be sort of disproportionately obligated in their time to hear appeals for the larger municipality that has more appeals happening at the regional level. That makes a

[Emilie Kornheiser (Chair)]: lot of sense. Thanks for that flag.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Cool. Okay, great. Moving on. So on the cost, sorry I'm at my friend's apartment using their computer setup and it's very disorienting.

[Emilie Kornheiser (Chair)]: I'm admiring the kitchen and I'm disappointed it's not yours.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Oh yeah, this is the coffee bar. Actually when I arrived here they live in New York and they were like they immediately wanted to talk to me about vacancy rate and second homeowner property tax rates and I was like oh my god can we not can we just order Thai food? But it's a hot topic here in Brooklyn. So on the cost of reappraisal and grainless maintenance, You know, I'm gonna be honest, I don't have a better idea than what you propose for the compensation for the cost of reappraisal. That I think probably seems workable and of course we'll hear right away if it's not. If we hear more feedback, we'll continue to engage the committee and the legislature on that. However, on the per parcel payments for grand less maintenance, we I do have some more information for the committee to consider. Part of this is confused. There's a variety of ways that listers and assessors are compensated in hourly rates or salary or through contracts or not at all. Some listeners are totally volunteer and they receive no compensation. So, it's hard to understand what the cost of the professional time is for grantless maintenance. However, we can be more specific about the hard cost. So the cost of the Canvas software, the equipment, like time and travel that the listers book and other hard costs that happen inside of town hall that create the workplace that the listers use to conduct grand list maintenance throughout the year. And so, when we went to listers and assessors last year in trying to understand this, what we found was that there's basically a $10,000 floor for the annual cost to a town to just, like, have a board of listers and to do any grand list maintenance at all.

[Emilie Kornheiser (Chair)]: So I'm sorry. I'm, like, interrupting you and rushing you because we're supposed to be on the floor, and I'm really interested in what you're saying. So Okay. Yesterday, tax said some said they actually think that the $8.50 that used to be for both things because of inflation would really just cover grand less maintenance. And I hear you're saying we also need some sort of small town minimum. Yes. Is that right? Okay.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Yep. That's it.

[Emilie Kornheiser (Chair)]: Will you tell us what the number is for the small town minimum? 10,000 a year. Is that what it is? Okay.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Yeah. And I would say like to be fair, you could even two thirds it because we're a third of that is for the municipal rate. Okay. So in the range of 7,500 to 10,000 we think is a reasonable minimum.

[Emilie Kornheiser (Chair)]: Okay. Thank you.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Okay, that's all.

[Emilie Kornheiser (Chair)]: Great! Thank you for your time and for your testimony.

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: Okay, thanks so much.

[Emilie Kornheiser (Chair)]: Take care

[Samantha Sheehan (Municipal Policy and Advocacy Specialist, VLCT)]: and we'll see you soon. Okay, bye.