Vermont Legislature SmartTranscripts:

[Speaker 0]: Good afternoon, Ways and Means Committee. It is Thursday, February 26. And we are picking back up and actively leading to miscellaneous administrative and policy changes to the tax laws. One piece of this that folks were interested in learning a little bit more about was a section regarding a piece of HR1, the federal law, that was a tax credit for certain educational expenses. And so we have Jessica Levin, a national expert from the Education Law Center, with us to tell us a little bit more about it. Flora, it's yours. Thank you for being here.

[Jessica Levin (Education Law Center)]: JESSICA Thank you very much for inviting me to offer testimony to this committee about the Federal School Voucher Program. My name is Jessica Levin. I'm the Litigation Director at Education Law Center, a nonprofit organization that pursues justice and equity for public school students. I also direct Public Funds Public Schools, a national campaign to ensure that public funds for education are used to support and strengthen public schools, which are the cornerstone of our democracy. It is our contention and that of a great majority of public education supporters that states will not benefit from opting into the federal voucher program, as it is clear that voucher programs have numerous devastating effects. The best course of action to protect students, schools, communities, and taxpayers writ large is for states to decline participation in this harmful program and concentrate on ensuring their public schools provide the high quality educational opportunities that all students deserve and are guaranteed them by law. Let me begin by saying that the program of tax credits for contributions to scholarship granting organizations or SGOs, which was enacted as part of the federal budget bill last year, is certainly a school voucher program. Indeed, approximately 20 states use this credit method to fund existing state voucher programs, and the fact that public schools and public school students theoretically can receive some of the funding does not change the fact that the vast majority of the funding can and almost certainly will go to private education providers. There's a myth that the federal voucher program would not burden taxpayers and is, quote, free money for states. But vast empirical evidence demonstrates that voucher program costs increase over time and the burden on taxpayers rises. A report examining voucher programs in seven states found that from fiscal years 2008 through 2019, each state dramatically increased expenditures of public funds on vouchers with growth in Georgia, for example, reaching 883%. Florida's now universal voucher program cost almost 4,000,000,000 in 2425 and created budget crises that set off school closures and mass layoffs in districts across the state. The federal voucher program is predicted to cost the US Treasury many billions of dollars each year with the Institute on Taxation and Economic Policy estimating that that it could very well reach over $50,000,000,000 annually. That is money that should be supporting the essential public goods the vast majority of Americans rely on, including public education. As voucher programs cause funding losses for public schools, taxpayers feel the effects either as cuts to school programs and services or increased state and local taxes to fill school districts' budget shortfalls or both. In addition, the federal government has indicated that the voucher program will likely require the states themselves to take on the administrative and financial burdens of verifying information about SGOs. Moreover, the federal voucher program includes no meaningful accountability standards. Like state voucher programs, it will invite waste, fraud, and abuse of public funds. Thus far from the claim that the federal voucher program represents free money that states cannot afford to pass up, in reality, it comes at a great cost to public schools, students, and taxpayers. Like everyone interested in the future of education in this state and across the country, we are awaiting regulations from the federal government that may flesh out details of the voucher program. But all indications so far, including documents issued by the federal government when requesting initial public comments on the program, point to the fact that individual states will likely not be able to tailor the program to ensure meaningful support for public school students or high need subgroups to focus the voucher funds on public education or to safeguard students' rights. The recourse for protecting public schools and students is to not opt in to the federal voucher program. Because so many states have been operating voucher programs for years, we know the range of devastating effects on students, public schools, and states, and there's no reason to think the federal voucher voucher program will be any less harmful. There's a large and mounting body of data and research showing that vouchers divert public funds away from the public schools that welcome all students to private entities that don't produce better educational outcomes, have very little accountability to the public and often blatantly discriminate. Public school students then face the loss of critical educational resources while states and their taxpayers face ever increasing costs. Public schools receive funding largely based on the number of students they enroll. When students take vouchers and exit their local district to attend private school, public school funding decreases, but fixed costs remain, leaving students in those schools with fewer resources and educational opportunities. This may include reduced teachers and staff, increased class sizes, and cuts to essential programs and services. In some cases, public schools are even forced to close altogether as a result of funding cuts due to voucher programs. What's more, because private schools often discriminate against higher need, more costly to educate students, these students become concentrated in public schools with fewer resources available to serve them. Of particular concern for Vermont is the danger that vouchers pose to rural public schools. Rural districts can't take advantage of the same economies of scale as denser, more populated districts, and they have fewer resources to pay for fixed education costs. For example, one study found that the per people transportation expenditure in a rural district is nearly double that of an urban district and 50% higher than that of a suburban district. Thus, even a fairly small loss of enrollment and funding can easily overwhelm a rural school district, leading to cuts in programs and services and even closures. Such effects are proliferating in states with broad voucher programs and significant rural populations, such as Arizona and West Virginia. In rural areas, school closures mean longer commutes for students, disruptions in learning and in relationships between students and educators, and reduced involvement in after school activities. Moreover, public schools are often the backbone of rural communities playing a pivotal role in social and economic activities. Can

[Speaker 0]: I interrupt you for a second? I am it's just right after lunch, and if you could speak a little bit slower, I think I would process what you were saying

[Woodman Page (Member)]: a little

[Jessica Levin (Education Law Center)]: bit I certainly can. I certainly

[Speaker 0]: Thank you so much. I'm a little slow right now. I appreciate it. Thank you.

[Jessica Levin (Education Law Center)]: So let me just talk a little bit about how public schools are the backbone of rural communities, playing a pivotal role in social and economic activities. When money is diverted from them due to voucher programs, public schools have fewer resources to provide community members with crucial services like health care and food. And because schools are often a main employer in rural areas, school closures can trigger unemployment as well as a loss of civic and social opportunities. Vouchers' negative effects on rural schools can impact the stability and well-being of the entire community. Despite claims to the contrary, vouchers are not truly a tool to increase educational access and opportunity. Vouchers frequently don't come close to covering the full cost of private school tuition, let alone other essentials that are provided for free in public schools. Data from multiple states shows the majority of vouchers are used by more affluent families who are already sending their children to private schools and not the low income families they purport to target. For example, in New Hampshire, it was reported in 2022 that eighty nine percent of voucher students had never attended public school. The federal voucher program has no prior public school enrollment requirement and is open to families earning up to 300% of the area median gross income. In some places, that's close to half $1,000,000. This program will not actually provide opportunities that would otherwise be out of reach. In reality, it's a subsidy for the wealthy and those already in private schools. But vouchers don't even help the students who use them. In fact, those students suffer several harms. First, the data show that academic outcomes for voucher students are dismal. Study after study in places like Louisiana, Indiana, and Ohio demonstrate that students using vouchers perform worse in subjects such as reading and math when compared to their prior achievement or to their peers who remain in public schools. Seven out of nine large scale studies conducted between 2015 and 2019, some of them spearheaded by voucher advocates, found detrimental effects from voucher programs, while the remaining two showed no statistically significant effects. And the federal voucher program is even more extreme than many state voucher programs in that it is completely devoid of curriculum requirements or other quality standards. Professor Josh Cowan of Michigan State University has explained that the negative educational effects of vouchers are, and I quote him, on par with what the COVID nineteen pandemic did to test scores and larger than Hurricane Katrina's impacts on academics in New Orleans. Conversely, a body of research conducted nationwide over many decades provides compelling evidence that increased public school spending leads to improved student outcomes. Second, students who take a voucher to attend a private school, particularly LGBTQ plus students, students of various religious faiths, and other vulnerable groups, risk losing civil rights protections that they are guaranteed in public schools. Unfortunately, many private schools discriminate in policy or practice, and under the Federal Voucher Program, the organizations granting vouchers, the SGOs, can also discriminate against students, even those students who may seek a voucher for public education expenses, thus creating two layers of potential exclusion for vulnerable student groups. And finally, vouchers harm students with disabilities who lose most of their legal rights under special education and disability laws when they use vouchers to attend private school. Voucher students with disabilities have no right to the specific programs and services they need to make educational progress, and they lose IDEA and Section five zero four protections against unfair discipline and segregation from non disabled peers. And parents lose their right to receive notification, provide input, and seek judicial remedies regarding their child's special education. Parents are often not made aware of the loss of these rights. A seminal GAO report found that eighty three percent of those using vouchers specifically for students with disabilities were in a program that provided either no information or misinformation about changes in IDEA rights. So for all these reasons, states should not opt in to the federal voucher program. Like all private education vouchers, the federal voucher program is part of a broader assault on public education and an effort to privatize this keystone common good underpinning American democracy. State and federal efforts should instead continue to support and adequately resource public schools, which serve the vast majority of students, and ensure these schools provide a high quality, equitable, and non discriminatory education that's open to all children. For more information on this, I encourage you to visit the Public Funds Public Schools website at pfps.org. I really thank you for your time, I welcome your questions.

[James Masland (Member)]: -Thank you.

[Speaker 0]: Any questions from anyone on how the federal tax credit works? Representative Page, What FACE is doing? Do you have a question?

[Woodman Page (Member)]: Obviously, you have an opinion on the voucher program. Do you have anything positive to say about the transfer program? I mean, you're one-sided obviously.

[Jessica Levin (Education Law Center)]: Well, it's not just my opinion though, it's the evidence. So it's the vast empirical evidence and data that unfortunately we're able to gather from so many states that have been running voucher programs for years. I don't have something positive to say about this voucher program because it is the wrong way for us to concentrate political efforts and our limited financial resources for education.

[Woodman Page (Member)]: And this is a fairly new program, correct?

[Jessica Levin (Education Law Center)]: This is a newly enacted program in the Budget Reconciliation Bill last year in Congress, but voucher programs themselves are not new.

[Woodman Page (Member)]: So we really don't know how this federal program is really going to affect things yet, other than what you know about voucher programs.

[Jessica Levin (Education Law Center)]: That's right. We know we can draw on data from years of studying state voucher programs and there isn't any difference in the federal voucher program that would lead us to believe that the effects would be less negative. In fact, the federal voucher program goes further than many state voucher programs in its lack of accountability, transparency, quality standards, anti discrimination standards. It's it's almost devoid, completely devoid of those things.

[Unidentified Committee Member]: Anyone else? So parents have all kinds of reasons for sending their children to a particular school. And some are able to pay for it themselves if they choose to send their child to a private school and the public schools are supposed to make sure they meet the needs of all kids but don't often. And so what should we do about that if we're taking away that option for parents who don't have a lot of money and need this voucher to help send their children to the school that, in their opinion, we need?

[Jessica Levin (Education Law Center)]: Well, what we should do is concentrate our efforts on making sure that public schools have the resources to meet all students' needs rather than funneling a significant amount of those limited resources to private schools. So public schools certainly need improvement in many ways. No one, I don't think, is claiming that public schools are perfect or nearly so. But it is only in public schools that students have rights and protections to an adequate and non discriminatory education and that's where we should concentrate our efforts in making sure they fulfill that promise rather than diverting those resources to a small number of students in private schools where none of that is guaranteed or protected.

[Unidentified Committee Member]: So do

[James Masland (Member)]: you have any idea like how many students at these private schools have had problems with discipline and their special needs being neglected?

[Jessica Levin (Education Law Center)]: Well, I don't have numbers for you on it. We could look at a particular voucher program, but here is some of what I can tell you. I am also a special education attorney. I've represented many families in vindicating their students' special education rights, so I'm not at all disagreeing that that happens in public schools. Again, though, that's the only place these students have that right. Private schools, on the other hand, can and often do discriminate based on disability, either in admissions or in discipline or in just choosing not to provide special education services. Are also no discipline protections for students in private school, to answer the other part of your question. So, in public school, again, we need to keep working to ensure that rights are vindicated, but public schools are the ones that have anti bullying laws, student discipline protections, and due process protections for students in discipline, both students with disabilities and students in general education.

[Speaker 0]: So I guess I want to offer to the committee that we certainly do not have time nor jurisdiction to get into all of the consequences of public, private, and charter schools. Thankfully, we have another committee that focuses on that. What I'm offering is usually, and as a rule, tax credits and conversations about access to tax credits and availability of tax credits for Vermonters is a decision that the legislature makes, not the decision that the administration makes. And we have many other places in statute where we do not delegate that of power. And we were just talking about delegation of power this morning. And so wanted to make sure that as the rulemaking rolls out for this, if we are not in session, any decision on the part of the administration to join or not join this program is one that's made by the legislature and not by the administration by itself. Because these are really important debates that we all need to work through. Thank you very much.

[Unidentified Committee Member]: Did you have something? Were you? No, I was

[Charles Kimbell (Ranking Member)]: just kind of persnickety. Maybe. Just you for that. It was interesting in your testimony,

[Michael Grady (Legislative Counsel)]: you

[Charles Kimbell (Ranking Member)]: talked about the diversion of public funds. But these it's really only if people that receive the private vouchers through the scholarship granting organizations choose to go to a private school and the public school doesn't get the allocation that they would normally get for that student. Is that what I'm hearing you correctly?

[Jessica Levin (Education Law Center)]: That's correct, but there is a misconception that if money follows the child, so to speak, then the public school doesn't suffer. That's not true because of the many fixed costs that go into providing education in our public schools. So facilities maintenance, transportation, as I talked about, food, libraries. If a couple of students leave from a classroom, you can't, you can't have no teacher in that classroom. And so the fixed costs remain. The higher need students are concentrated in those public schools because private schools often won't admit them or won't serve them. And that's why it's not, you know, a zero, that's why it's not an equalizer for a student to leave and the money to leave. When the money leaves with the student, there are fewer resources for all the students who remain in public schools, which are the vast majority of students, even with a voucher program.

[Charles Kimbell (Ranking Member)]: But I think in this specific case with scholarship granting organizations, it's not public money necessarily that's going for the student, it's private money. So it's not really diverting public money, but it's impacting the school if those students don't attend the public school.

[Jessica Levin (Education Law Center)]: No, I have to respectfully disagree. It is public money. Tax credits are money and this is a 100% tax credit, not a deduction. So it is money that would go into the public treasury if it was not diverted to the scholarship granting organizations to do completely as they wish with it. And our contention is that money should stay in the public treasury and serve the public good.

[Charles Kimbell (Ranking Member)]: Fair enough.

[Speaker 0]: Thank you very much.

[Jessica Levin (Education Law Center)]: May I clarify one thing about the tax credit that you were mentioning? Absolutely. The opt in or opt you know, or or decline to opt in choice, controls whether there will be allowed to be SGOs handing out vouchers in the state. It doesn't, to our understanding, control whether people in the state can obtain the tax credit. So, I just want to make that clear that that's only about the voucher side, which is not connected to the people who contribute to the scholarship granting organizations. Thank you very much. Really appreciate your time today. Thank you.

[Speaker 0]: So I think we're going to start going through section by section of miscellaneous tax, which, as everyone knows, is fairly miscellaneous. Kirby, if you want to come join us, would love to close out sections that feel closeoutable and identify final witnesses we will need for that.

[Unidentified Committee Member]: Just saying that this is a thing of art. You may

[Speaker 0]: say that to Kirby, absolutely. Appreciate this.

[Kirby Keating (Legislative Counsel)]: I'd like to build great skills at things like that.

[Speaker 0]: I know, but it makes my life

[Kirby Keating (Legislative Counsel)]: Waning a little bit. Hanging in there. Kirby Keating Legislative Council, we're here to review the Miscellaneous Tax Bill Draft 3.1. Would the chair like me to go through the summary or the bill itself?

[Unidentified Committee Member]: I think we've gone through

[Speaker 0]: the bill itself quite a bit. So let's start with the section by section, then we can go to the bill if needed. Thank you.

[Kirby Keating (Legislative Counsel)]: So you should see posted this updated version of the section by section summary. From when you looked at this last time, there are only two changes, since I went through the summary, I'll hit every section, to remind you what's in there. So, section one is a tax department request to repeal the denial of tax credits for S corporations. There's a history there. You'll probably remember Section two grants the department authority to investigate. Section

[Speaker 0]: one. Is that okay with everyone? Great. Onwards.

[Michael Grady (Legislative Counsel)]: Okay. Piece

[Kirby Keating (Legislative Counsel)]: by piece. Got it. Number two is the giving the apartment the authority to investigate whether a bonafide landlord tenant relationship exists for purposes of applying the higher property transfer tax rate. If you remember, a new high rate was created a couple of sessions ago aimed at sales of second homes, except the way it's drafted intentionally, not the draft or fault. That higher rate applies unless there's a landlord certificate associated with the property. The catch being that a landlord certificate is required for only required if there's a thirty day stay. So there's been some instances where, to avoid that higher rate, there's been some gaming. So basically, what this language does is it lets the department look into the actual transaction to make sure that it was an actual bona fide landlord tenant relationship happening and not just something set up on paper to avoid paying transfer tax.

[Speaker 0]: So the tax department requested this.

[Kirby Keating (Legislative Counsel)]: That's our request.

[Speaker 0]: In order to close the loophole. Is this okay with everyone? Yep. Yes.

[James Masland (Member)]: Sections

[Kirby Keating (Legislative Counsel)]: three and four. My note is not actually giving me enough reminder about three employees.

[Speaker 0]: Oh, this is when the town there's like when the town has not conducted evaluation in enough time, sometimes PVR can jump in and help.

[Kirby Keating (Legislative Counsel)]: Exactly. So this is current use relating to land use change tax. The way the land use change tax works when a portion of a parcel is being unenrolled is that there has to be evaluation done on that portion in order to know how much land exchange tax is due. So this change is that if the municipality is unable to do it within thirty days, PVR can step in and it has thirty days to do that valuation.

[Speaker 0]: That's okay with everyone.

[Unidentified Committee Member]: Section

[Speaker 0]: five. Section five, we got an email about today from the organization called Rural Vermont. And we invited them in for testimony, and they have not replied yet.

[Unidentified Committee Member]: In the building.

[Speaker 0]: And they're in the building. So I'm just gonna have us hold on this, because what they said in the email made sense to me, but I don't really know very much about grazing. It's a document they posted. And they posted a document. So let's just hold on this section for now.

[Charles Kimbell (Ranking Member)]: I've got ahead of ourselves.

[Speaker 0]: Okay, let's move on to section six.

[Kirby Keating (Legislative Counsel)]: We're still all the things we covered so far were Department of Taxes requests and we're still in those. Section six changes the calculation for payment to municipalities for municipal property taxes lost due to flooded or fund from properties taken off the grant list. This change is to the calculation so that it now uses the previous year tax rate instead of current year rates. And it's changing it so that the calculation is the same. That's what's used for pilot.

[Woodman Page (Member)]: Yeah.

[Kirby Keating (Legislative Counsel)]: Section seven, add provisions addressing cases where a communication server provider fails to submit an inventory to PVR for property valuation. This is just giving the tools to PVR in case they ever have difficulties in taking over the valuation of telecommunications property. It's not based off anything that's happened. It's just something that could happen that they won't be prepared for.

[Michael Grady (Legislative Counsel)]: I think we had

[Charles Kimbell (Ranking Member)]: a question, maybe we answered this. I can't remember. It was a fee of a $100 per violation, and we're trying to think of was that per municipality in which property was located?

[Speaker 0]: That is what Joan said. Okay. Just want

[Charles Kimbell (Ranking Member)]: to make sure I remember that correctly.

[Kirby Keating (Legislative Counsel)]: Yeah. That's what I recall from Jay's testimony. Her And testimony was also that this was taken from the existing law and is unchanged.

[Charles Kimbell (Ranking Member)]: She said also that they are very good at submitting their inventory on time.

[Kirby Keating (Legislative Counsel)]: Yes, my takeaway was that she wasn't too concerned about having to use. Section eight clarifies the treatment of CHIP sites to be the same as TIP districts for purposes of the equalization study.

[Speaker 0]: Opinions about CHIP aside, is this okay with everyone?

[Unidentified Committee Member]: We're just doing it the same as we do for TIFs. Don't like either of them, but I think this is alright. Did you not know that I don't like eating? Didn't know that. Really? It's nice. I

[Speaker 0]: don't know. It's a really afternoon in here.

[Kirby Keating (Legislative Counsel)]: Section nine is a change so that for purposes of the equalization study requires PBR to use a 100% CLA when determining tax rates for municipalities that just completed a master reappraisal. The current calculation requires COA to actually be determined even though the Master of Prejudice was

[Speaker 0]: just that first year.

[Kirby Keating (Legislative Counsel)]: It's only for equalization study purposes. It's not a far reaching impact.

[Speaker 0]: The other one? Great. At us. We're up to 10.

[Kirby Keating (Legislative Counsel)]: Actions ten and eleven extend the Health IT Fund Sunset for five years.

[Unidentified Committee Member]: Yep. Because

[James Masland (Member)]: I need the money.

[Speaker 0]: Okay. Seeing no objections. This is my favorite one. I know what we saw in the report. It's coming. It's coming.

[James Masland (Member)]: Before we

[Kirby Keating (Legislative Counsel)]: get to your favorite one, I will note there is something missing. Former Section 12 is gone. It was the 05/29 plan tax credit with the Roth IRAs. That's removed. I think the testimony was B SEC was interested in studying things and that this could be part of that.

[Speaker 0]: If someone is coming back next year to remember to think about it again next year, I would super appreciate it. Am fully ready to come in. I

[Unidentified Committee Member]: was gonna say between you

[Woodman Page (Member)]: and Amy, it is.

[Speaker 0]: We're in Hawaii and can we visit? Yeah. Exactly. Okay.

[Unidentified Committee Member]: Thank you. Everyone's okay with Neep to Neepa? Yes.

[Speaker 0]: No. I think we need the report. Before we just change the statute because a word doesn't

[Charles Kimbell (Ranking Member)]: It was NEPA NEPA.

[Speaker 0]: Well, I

[Jessica Levin (Education Law Center)]: think we just

[Speaker 0]: need to ship, but I'm assuming that we're gonna get the report, so this might not look the same in a week. So, I think there's two different definitions. There's two different questions here. There's, are we moving in statute to NEPA because we've been using NEPA anyway and the statute is wrong? And then there's a second question about, should we use NEPA or not? Right now, I see this as a decision about just, Are we conforming to practice?

[Unidentified Committee Member]: Well, that, but it would

[Speaker 0]: be great to see the report. Yes, the right Yes. I'm also very excited about the report. If we would all just not talk to Julia Richter for a week, she would finish the report for us.

[Woodman Page (Member)]: Good luck with that.

[Speaker 0]: Yeah, I've seen the Senate. Okay.

[Jessica Levin (Education Law Center)]: 16.

[Kirby Keating (Legislative Counsel)]: 16 allows a This is the taxpayer advocate request that allows a personal or a property tax credit to be calculated using 100% of the property tax liability of the party to a separation or divorce who is living in the homestead. Even if the other party is still an owner.

[Unidentified Committee Member]: I don't remember how this works.

[Kirby Keating (Legislative Counsel)]: Yeah, I know. Can be So, if you are in the process, let's say a person is in the process of getting a divorce, and there hasn't been a court order yet dealing with the property from the marriage. You could have a person living there who is only half owner, and the way that

[Speaker 0]: the But they're living there by themselves.

[Kirby Keating (Legislative Counsel)]: They're living there by themselves. The other person in the divorce is living somewhere else. The way that our property tax credit is calculated is that if there's multiple owners like that and someone is not living there, then you don't get the full credit. So under current law in that scenario, the person living there would get half the credit because they are half owner. But this change addresses that there's not anything they can do until the court system works out the divorce. So treat them like they're the full owner for now. Just the taxpayer advocate because Presumably because people have been in this situation and have reached out to the taxpayer advocate to say

[Speaker 0]: think My understanding is that when this happens, the tax department is actually making individual exceptions for it. Because it sort of makes sense with the intent of the law. Under

[Kirby Keating (Legislative Counsel)]: extraordinary relief, that the taxpayer advocate can do.

[Speaker 0]: They would rather just have it happen by default.

[Woodman Page (Member)]: And they're still using the combined income, though, right?

[Speaker 0]: The combined income of the household, but the owner is not in the

[Woodman Page (Member)]: household It's important to understand that the combined income is still being used for that tax credit, right?

[Speaker 0]: It's the income of whoever's living in the house.

[Woodman Page (Member)]: Oh, yeah.

[Speaker 0]: So there's one person living in the house, and that one person's paying all the bills, but they only own half the house.

[Woodman Page (Member)]: Yeah, well, makes more sense.

[Kirby Keating (Legislative Counsel)]: Sections. Oh, did you?

[Speaker 0]: I see an okay from, I got a lot of nodding, so I didn't say it all out. Thank you for reminding me to say it all out. Is that okay with everyone? Yes. Great.

[Kirby Keating (Legislative Counsel)]: Section 17 aligns a state tax filing threshold with the tax liability threshold. So the taxpayers are not required to file a return when no taxes due. No taxes due.

[Speaker 0]: This was from the department.

[Kirby Keating (Legislative Counsel)]: This is from the department.

[Speaker 0]: I think there's some limited benefit to the data, but tax really wants it, and I'm letting it go personally. Like, you're welcome to not let it go.

[Charles Kimbell (Ranking Member)]: This is why in statute it says you have to pay with $28,000,000, 2,850,000, but that's, you have to report when your estate is over that, but you're really not paying unless your estate is over $5,000,000 So why do you have to report if it's less than $5,000,000

[Kirby Keating (Legislative Counsel)]: Presumably it is so the department would have some notice that, hey, there was a big estate and then they could look into it to see if everything's legit. But they're saying, we don't want all that. We just want the returns for the people who owe us money. The estates to those.

[Speaker 0]: Would you like to hold on that? I'm happy to hold on it. I don't want it in here anyway.

[Woodman Page (Member)]: I don't want

[Unidentified Committee Member]: to think about this, but everybody else is shaking their heads. Let's see if it's alright.

[Speaker 0]: They're nodding their heads or they're shaking their heads? Nodding their heads. Onwards.

[Unidentified Committee Member]: I just can't see, because I reminded myself this morning about reminding my people on town meeting day to file an income tax form, whether they

[Speaker 0]: made any money or not,

[Unidentified Committee Member]: because then they file out the income sensitivity.

[Jessica Levin (Education Law Center)]: And lots of people are

[Speaker 0]: eligible for tax credit.

[Unidentified Committee Member]: Right, though they didn't earn anything. And I was wondering, that's why I'm hesitating, is there a benefit to these folks that No. Okay, forget it.

[Speaker 0]: I would say that's the right Just from having to settle the state and another state, even the estate that was in the red had to do a final. That's more. I'm going to keep it open. Clearly because I want to. Okay, onwards. Thank you for that help.

[Kirby Keating (Legislative Counsel)]: Section 18 extends the down payment assistance program to 2031 and also increases the maximum total award amount for first year credit allocations from $250,000 to 350,000 And I'll also note, we're not looking at the language, but the only other change besides taking out section 12 is there was a change here where the language was moved down into its own separate subsection based off of testimony from our colleague.

[Speaker 0]: How about everyone on this?

[Charles Kimbell (Ranking Member)]: I guess I'd like to know the full fiscal impact at the end. Okay. I think that's more important.

[Unidentified Committee Member]: Room. I don't tend to

[Charles Kimbell (Ranking Member)]: do the full amount.

[Speaker 0]: Room to make it smaller?

[Charles Kimbell (Ranking Member)]: Yeah.

[Unidentified Committee Member]: Is this gonna budget? It doesn't matter, actually. Doesn't matter.

[Speaker 0]: We'll do a fiscal note on this when we get to finishing. Sorry. No. It's fine. Yeah. Kirby.

[Kirby Keating (Legislative Counsel)]: Sections nineteen and twenty are the sections on SGOs that you just heard testimony about.

[Speaker 0]: Skip that for now.

[Woodman Page (Member)]: Okay.

[Speaker 0]: Am I correct that there's not grand agreement on that one? Okay. Thank you.

[Kirby Keating (Legislative Counsel)]: You ask me about it if you have legal questions, by the way. Okay. So section 21 amends the definition of parcel for purposes of grand list so that it means a separate and sellable lot or piece of real estate, but only for purposes of mapping and per parcel fee payments. There was the attempt to fix in Act 73 where it wasn't quite right at this point. The mapping folks and state government and the tax folks and those council were all. We all have realized with this language like this is, this is what they want done. This language allows data to be collected in a way where mapping can be done to identify separate parcels, but it's done in a way in which it's not going to affect valuation from how it's done under current law.

[Speaker 0]: Always

[Unidentified Committee Member]: nice to meet the GA, I thought I was happy.

[Kirby Keating (Legislative Counsel)]: Sections 22 through 24 are the Department of Fish and Wildlife Fee Setting Authority parts. It removes the statutory fee setting authority and replaces it with a report back next year. So so it doesn't immediately repeal that fee setting authority, but it but it does starting next year and has a report back for 07/01/2027 for the general assembly to put the piece in the statute.

[Woodman Page (Member)]: Are we gonna take a bunch more testimony on that? I

[Speaker 0]: also thought that I was waiting on an email from the department about a narrowing of scope and I don't know if I lost the email or if I never got it. So I will find that out.

[Kirby Keating (Legislative Counsel)]: Another small note, in this 3.1 version, is something added there

[Speaker 0]: And then we were gonna hear from Bradley Shoman. That's his name? Okay. About the rural authority. We heard from the department already. Is there anyone else we wanted to hear from?

[Woodman Page (Member)]: No, but I thought when the department was here, we were gonna maybe consider some bifurcation of the whole

[Speaker 0]: Yes, okay, that's the language I'm looking for. Okay, yes, agreed. Okay, but there weren't other outside people with Can

[Charles Kimbell (Ranking Member)]: you put words to the

[Speaker 0]: It was like a I think it was a narrowing of the repeal.

[Unidentified Committee Member]: A bit of respect, ability to create fees around certain.

[Kirby Keating (Legislative Counsel)]: The is the conforming changes to move the grand list date from April 1 to January 1. This is somewhat related to the RAD stuff and the classification stuff and the Act 73. It's all together part of the same move. But it's a miscellaneous tax, because why not?

[James Masland (Member)]: So does that include the COD date? Coefficient of dispersion. Yeah.

[Woodman Page (Member)]: What date though?

[James Masland (Member)]: It was April 1.

[Charles Kimbell (Ranking Member)]: Just like

[Kirby Keating (Legislative Counsel)]: Oh, like as of April 1 is when it's set.

[James Masland (Member)]: That's now. If I'm understanding your question,

[Kirby Keating (Legislative Counsel)]: the parts of the law that establish things as of April 1, far as the grant list would, yes, would change to as of January 1.

[James Masland (Member)]: Right, so it's not just the grant list. It was a separate paragraph I pushed you on at COD April 1. You said that was only there until we make the change.

[Kirby Keating (Legislative Counsel)]: That sounds right.

[Woodman Page (Member)]: Yeah. Are

[Kirby Keating (Legislative Counsel)]: you asking if the language is in there? I'll have to go through and check.

[Unidentified Committee Member]: Did you hear from the top groups on this? Aren't they the ones that submit the brainless to do that?

[Kirby Keating (Legislative Counsel)]: Related to the listeners and assessors and the work they do. You've heard testimony about this move, this session and last session. I haven't heard anyone oppose it. The substantive point of it is to give more time to do all of the processes that Illusters and Assessors and Department of Taxes need to do on Gram List work. It's basically giving more time, including a longer period of time to work out appeals that happen based on the evaluations that are done. If those evaluations are done on January 1, then that's a few extra months to work out any disagreement over the valuations.

[Woodman Page (Member)]: Okay. And we'll try to get all our work done prior to months. For me it's kind of a tough spot because that's how we usually do it. I get So

[Unidentified Committee Member]: this would move out at one point. Well,

[Woodman Page (Member)]: it could, I mean, could still do it, but it's just what Kermit says, it gives you more time. Gives us more time to, from January 1 all the way.

[Speaker 0]: I think the effective date is helpful too.

[Kirby Keating (Legislative Counsel)]: It's 2031 to line up with some of those other changes that are happening. I'd say it relates to the classifications and the RAD stuff because that's making changes to the whole brand list process. And this move helps enable making because some of that creates more work. So giving this extra time helps enable those other things.

[Unidentified Committee Member]: Is this okay, Leroy? Yes. Go ahead. Great.

[Kirby Keating (Legislative Counsel)]: Section 50 is new. I think I said that there were only two changes, but I forgot this one. This was a tax department ask that had been previously left out. And then the last time they testified, they asked for it again. It removes the statutory language empowering the director of PVR to supervise the collection of delinquent taxes by municipalities. The department has said they do not do this. It's not part of the work that they do now. And that is a vestige of a time when PVR was basically its own department and was doing other roles that it doesn't do anymore.

[Speaker 0]: And just so folks know, there's a conversation happening in the Senate about tax delinquency and some sort of report desires and things like that that might wind up over here that's sort of related to this. But my understanding from tax is they have not actually done this for a very long time, and they would it's just hanging out in statute.

[Unidentified Committee Member]: Is this okay with everyone? Mhmm. Okay.

[Speaker 0]: And then the section that's not in here but would go in here is all of the federal conformity and nonconformity that we talked about yesterday. That would go in here, yes. It would. But obviously, we need to talk about that more. Ultimately, by crossover time, that's just Yes. Yeah, this is where that would live.

[Kirby Keating (Legislative Counsel)]: I prepared a summary of that.

[Speaker 0]: Okay. Will you share that summary with Sorcha, and we can post it along with this? Sure.

[Kirby Keating (Legislative Counsel)]: I think

[Speaker 0]: it should. Great. Thanks. Okay. Like we looked at it yesterday. Sent it yesterday after we all talked?

[Kirby Keating (Legislative Counsel)]: I didn't send the whole group yet.

[Speaker 0]: Oh, great.

[Kirby Keating (Legislative Counsel)]: I'm just saying it exists. Cool. Thanks. Okay.

[Speaker 0]: That would be section 50. Section will that be once we add it?

[Kirby Keating (Legislative Counsel)]: I don't remember how many sections there are, but it's multiple. And so for effective dates, a lot of these things that are the technical smaller minor changes are effective on passage. The credit for taxes paid in another states are effective so that it would apply to tax filings this year. The current use so when you change tax change is 10/01/2026. The current use qualifying income change, which I think that's the one you said you putting on hold for now, would be 09/02/2026. The grand list definition for parcel is 04/01/2027. So that would be, you know, for grand list for next year because we there would still be the April 1 date at that point. And then Department of Fish and Wildlife fee setting authority takes effect 07/01/2027. We just talked about a minute ago. And then the grand list date moving to January 1 is 07/01/2031. And we had talked about the department wanting to push some things back two years when it comes to RADS. I'm not sure whether that affects this or whether the department would have an opinion on this date changing or not, but I've not heard that they do.

[Speaker 0]: Yeah, don't think they do, but they'll let us know. That all look okay, everyone? Great. Oh, that was very satisfying. Thank you.

[Woodman Page (Member)]: It's called Tabs. The TAB bill. Our web page is called the

[Unidentified Committee Member]: TAB bill. It's popular. It's one we

[Woodman Page (Member)]: just looked at. It's not the TAB's bill, it's the TAB bill.

[Speaker 0]: Ah, I thought you guys would take that.

[Unidentified Committee Member]: This is the latest tab.

[Woodman Page (Member)]: This is latest tab bill. If you wanna change it to tab bill.

[Unidentified Committee Member]: I think maybe by doing that,

[Speaker 0]: we could bring back tab. You seem like a tab drinker, really do. Yes. This is the perfect segue because next we're going to talk about extended producer responsibility of beverage containers. I'll give that to Thank you, Kirby. Wow, she doesn't ever roll quite that well. Michael, would you like to join us? I actually did not receive an updated set of language from the attorney at Fish and Wildlife, so I'm going to follow-up on that. I did not lose an email in case anyone's wondering about me. I know you should.

[Charles Kimbell (Ranking Member)]: Yeah, she doesn't come back next

[Speaker 0]: it's It's sort of like bad form to assume you'll be back. Right?

[Unidentified Committee Member]: I just want to know what it is. It's not picked yet.

[Speaker 0]: That's what next week is for. Just going to sit at home in Vermont, imagining my future in Hawaii. What It's

[Michael Grady (Legislative Counsel)]: would you like me to put on

[Charles Kimbell (Ranking Member)]: the screen?

[Speaker 0]: I think the whole section, but I don't I've honestly not looked at it yet. Michael, what do you think you put on the screen?

[Michael Grady (Legislative Counsel)]: It's considerably shorter than it was two years ago, but it's still twenty seven pages long.

[Speaker 0]: Let's start with the section by section.

[Michael Grady (Legislative Counsel)]: Okay.

[Speaker 0]: I don't I don't know if we're making any changes to the types of containers, but

[Unidentified Committee Member]: we're No. I'm not making changes. I'm just wondering.

[Speaker 0]: I do not know. I do remember spending many hours of my life on TetraPaks many years ago. I think this fellas the first time we ever talked, Michael.

[Woodman Page (Member)]: It's strange.

[Speaker 0]: Not not to try to define milk, and you were right. I

[Michael Grady (Legislative Counsel)]: tried. You did it anyway.

[Speaker 0]: You're right. You were right. So

[Michael Grady (Legislative Counsel)]: this is Mike Grady with Ledge Council. I'll walk you through the section by section on page nine fifteen as passed out of the committee on environment. This bill generally amends the beverage container redemption system to make some, some significant changes to the underlying chapter, but to also require that there be an extended producer responsibility program established by which the manufacturers and distributors of beverage containers subject to the bill set up a stewardship plan for the collection and, management disposition of, empty beverage containers. There are, fiscal consequences aspects of the bill. It does not raise the deposit on beverage containers. It does raise the handling fee that is paid to redemption centers, retailers who redeem for non commingled beverage containers. It, transfers from the Clean Water Fund to the Waste Management Assistance Fund for four years money that would be available for grants to the stewardship organization for setting up the program, setting up the producer responsibility organization. Those are those are the big fiscal aspects of it. I'm gonna let Jeff Ode address it in more detail. But moving through substantively, you're in title v s 10 BSA chapter 53. It's the chapter related to beverage redemption. There, is a change to the definition of container, but there is no change to the scope of this program. Those of you who were around a couple of years ago, the program would have expanded in scope to pretty much every type of beverage container. That is not happening. It is still limited to those traditional beverages, beer, malt beverages, mineral waters, mixed wine, soda water, and carbonated soft drinks. So both the definition of container is being amended to clarify that it's basically any type of material that contains one of the regulated beverages. There is going to be a size limitation for carbonated beverages. So those that are three liters or more would not be part of the program. It's just because the equipment cannot handle them. There is no size limitation for non carbonated because they are not covered beverages. Non carbonated beverages are not regulated by the program. There is a definition of distributor and manufacturer that I included on the section by section. They're not changing, but they're very important because that's who is going to set up this producer responsibility organization. So the distributors are those who engage in the sale of consumer products and containers to a dealer, and the manufacturers, every person bottling, candy, packing, or otherwise filling containers for sale with beverages. Now the deposit for beverage containers and for liquor is not changing, but there is a clarification to the deposit for beverage containers that aren't liquor. Right now, it says the deposit is of not less than 5¢, which confuses people and thinks that it gives ANR the ability to raise the deposit on their own. So that language of not less than is being struck, and now the deposit said it's clearly just 5¢ for beverage containers that aren't liquor. Now the handling fee. Does everyone know what the handling fee is? Okay. So when a consumer goes to buy, a beverage container subject to deposit, they pay the the retailer the 5¢ from the beverage container. The retailer has already paid the manufacturer, the distributor 5¢ for that. When the consumer comes back to get their deposit, they get their 5¢ back. The retailer redemption center takes the container back. When the manufacturer, distributor comes to pick up that container, they pay the retailer the 5¢ that the retailer gave the consumer, plus 3 and a half cents for certain types of containers and 4¢ for another type of container. That's current law. And make 3 and a half census for those containers that are part of a commingling program. It's basically this program where you agree that your containers can be mixed in with other brands and manufacturers' containers, and they will be sorted out later. If you know if you've heard of Tamara, Tamara's the company that runs the commingling program. If you're not a commingled program, that's when your redemption center, your retailer has to pick out each brand and separate it and sort it from each other so that each manufacturer distributor who's not part of that commingling program comes and picks it up. To enhance or incentivize manufacturers participating in a commingled program, which reduces the number of sorts, reduces expense, time, etcetera. The co mingling the the handling fee for non co mingled containers is being increased from 4 to 5¢. Beverage deposit stays the same. Consumers aren't being charged anything additional, but the the redemption centers are getting an increased fee for the non commingle. Paid by the distributor? Paid by who? Paid by the distributor or the manufacturer depending on who's the one, engaged with the redemption center. But when this producer responsibility organization is set up and a stewardship plan is implemented, that handling fee is gonna go away. Because the producer responsibility organization is going to negotiate compensation with the redemption centers that are part of its program. And I'll talk about that more in a little bit. But the handling fee ultimately goes away.

[Speaker 0]: Is tax money? Where

[Unidentified Committee Member]: would that 5¢ come from?

[Michael Grady (Legislative Counsel)]: It comes from the manufacturer. The 5¢, the deposit is that's right. That's your money. Okay. 5¢ being paid to the for the redemption of the non commingled, that comes from the distributor or the manufacturer. Well, they recoup it through cost, but yes, it's their responsibility to pay the handy fee.

[Unidentified Committee Member]: So it's not Vermont taxpayer money?

[Michael Grady (Legislative Counsel)]: It's not revenue.

[Kirby Keating (Legislative Counsel)]: Thank you.

[Unidentified Committee Member]: Good. So can we do that? That's directing a business that they have to pay somebody else an amount of money.

[Michael Grady (Legislative Counsel)]: Well, that's how this container system has worked since 1972.

[Unidentified Committee Member]: Wow. Okay.

[James Masland (Member)]: Great. Did.

[Michael Grady (Legislative Counsel)]: Yeah.

[Unidentified Committee Member]: And the SG, it's one of the first things I learned in 01/3534.

[Michael Grady (Legislative Counsel)]: Yep, we'll talk about the sheets in a minute. Alright. I'm calling them the unclean beverage container deposits. Some people can't understand me when I say sheets.

[Unidentified Committee Member]: I would tell.

[Michael Grady (Legislative Counsel)]: Under section fifteen twenty three, there's requirements for the manufacturer distributor to pick up, and they cannot refuse to pick up. Although there are a couple of exemptions for, retailers and redemption centers if they're small, less than 5,000 square feet, and there's a stewardship plan in place, they can refuse to redeem. And if you're a manufacturer that's selling directly to the consumer and your location is less than 5,000 square feet, you can refuse to redeem. There are requirements for labeling beverages that are subject to the to the deposit. They're being tweaked a little bit. I don't know if we've seen there's a lot of aluminum bottles being produced these days, and it's hard to put all the label information that's required on top of an aluminum bottle. So they're allowing that label information to go on the side of the container or other place that ANR approves that information to be placed. And in addition, to make sorting easier and to make the PRO ultimately much easier to to implement, every container will need a UPC code and barcode, in order to be sold in the state. So it can be scanned either by equipment or by a location redemption center. Now section fifteen twenty seven, it looks like it's all new language, and it is all new language, but it's not an all new requirement. So liquor redemption is run by the Department of Liquor and Lottery. How they run their program is not transparent in statute. So this puts the transparency of the requirements that they that they use to implement their program in statute. It doesn't change anything. The deposit for liquor is 15¢. That's not changing. The handling fee for liquor containers is 3 and a half cents. That is not changing. The the, retailer cannot refuse to redeem liquor containers if they're selling them. And DLL, who runs the collection, cannot refuse to pick up the liquor container, refund the value, or pay the handling fee. Now one thing that the bill does that is new for liquor, it allows them to effectively coordinate and negotiate with the PRO. Once the PRO's plan is up and it has all the collection system that it's required to have under the plan, will it make sense for DLL to negotiate with the PRO to collect liquor bottles for DLL? So instead of DLL running its own separate program of collection and and and disposition and management, does DLL just negotiate with the PRO to do that for the state? And so that's authority. It's not mandatory. It's just discretionary authority that DLL would have. DOL needs to report to ANR annually the tonnage that it collects and whether it's meeting redemption rates. In 1529, the requirement that a redemption center must participate in an approved commingling program if it redeems more than 250,000 containers per year is repealed because, honestly, it's just not enforced. Then you come to the creation of the producer responsibility organization and the requirements of the plan. First thing so first requirement of any EPR program, there's a sales ban. You can't sell your product in the state if you're not participating in an approved producer responsibility organization. And so that's the first thing, 1531A. By 01/01/2027, the manufacturers and distributors had to submit a plan to, ANR for the producer responsibility organization. It has to be a nonprofit. It has to have the capacity to administer the program, and it can create unreasonable barriers to others joining. So if there's new manufacturers coming in, they can't the the PRO can't say, no. You have to do this, or you have to pay this exorbitant fee in order to join. They have to allow new people, new manufacturers to join. They have to have a website that names their contact information for the PRO and each beverage and container that's part of the PRO. If they don't meet the stewardship plan, ANR can dissolve the entire PRO. They have the ability to just dissolve the whole thing. And if the PRO chooses not to submit a plan, to form the PRO, ANR can form its own, charge the manufacturers and distributors for the cost of administering that plan, and then assess a 10% assessment on top of that, for the effectively for the condition of ANR running the program for the manufacturers.

[James Masland (Member)]: Then We have a question.

[Speaker 0]: Just a quick question. It I I may be misunderstanding this, but it says a manufacturer shall apply to the secretary to form a PRO. So the manufacturer is a company. Right?

[Michael Grady (Legislative Counsel)]: Yes.

[Speaker 0]: But the PRO is a nonprofit. How does that governance work with this related?

[Michael Grady (Legislative Counsel)]: Well, basically what happens, and I'll use Connecticut. They just formed an extended producer responsibility program for tires. They formed a nonprofit corporation made up of the manufacturers and distributors of motor vehicle tires. And from that, those members, they formed a board that represented those manufacturers and distributors. And then they spun off subsidiary just for Connecticut because they contemplate that more states will do this. They're gonna have to insulate themselves from liability on a national level. They have the national PRO, and then they have the state specific subsidiary. And so you could see something similar to that where the the board is formed by the members of the PRO.

[Speaker 0]: And with that, are those PROs likely to be faulty state nonprofits? There

[Michael Grady (Legislative Counsel)]: are some other states that are moving towards either full packaging, extended producer responsibility programs, ones for beverage containers. I mean, it's possible that they do that.

[Charles Kimbell (Ranking Member)]: In those examples, is any chance PRO forms and then contracts with an existing distributor to carry out their work? Is that how it happens?

[Michael Grady (Legislative Counsel)]: But we've gotta get to the requirements of the plan, and you have to see what's in the plan. And so the contractors say it is Tamara, the one that's already doing the commingling program, they're gonna have to meet all those requirements. So that is a possibility, yes. So let's just move to the minimum requirements for the plan. They have to submit a plan by 04/01/2028, and it has specific mandatory requirements. First is convenience. It has to ensure that consumers have convenient redemption. And that means at least three points of redemption per county, at least one of which provides an immediate return of deposit to a consumer. In addition, at least one point of redemption per municipality with a population of 7,000 or more that provides immediate return. And then the plan will take reasonable efforts to cite, points of collection in areas with high population density. With all of that said, if ANR is reviewing the plan and seeing that there's duplicative redemption in certain areas, it has the ability to reduce the number of redemption sites within an area to pen provided that it doesn't fall below three per county and one per 7,000, population towns. There has to be fair operation and compensation to redemption centers. This is what I referenced earlier when I said the handling fee would be going away because the PRO is going to negotiate compensation with its redemption centers. That may mean compensation on a per container basis that's less than 3.5¢ per container or could be more than 3.5¢ per container. It will depend on the site, the location, the volume at a redemption center, what the manufacturer, the PRO is going to pay. But that is how the compensation is going to be provided for. ANR has to approve this compensation plan. This is not just the PRO going out and negotiating whatever it wants to pay. ANR has to approve it. It has to have fair compensation. It has to describe how it's going to manage the sorting of containers, and it will describe how the materials will be picked up and redeemed. Plus, they have to maximize the use of the existing infrastructure. So those redemption centers that are already there, they're supposed to maximize the use of that infrastructure. They also have to have location standards. It has to be safe. It has to be securely lighted. It has to be, providing expeditious service, and it has to comply with all environmental laws, collection, transportation, and disposition. The plan also has to describe how it's going to educate consumers and retailers and others about the program. And there has to be consultation with stakeholders in the development of the plan, including submitting the plan for comment, review on comment. The PRO reports to ANR annually. It reports where all of its redemption centers are. It reports what it collected, how it was recycled, into what products it was collected. It reports carbon impacts. It reports the cost of the plan. It reports improvements it made to increase convenience. It provides the information on environmental impacts, how it tries to improve environmental outcomes. It gives examples of its educational materials and strategies and any additional information required by ANR. Within ninety days of proposing the plan, ANR within ninety days of keep the PRO proposing the plan to ANR, ANR has to approve or deny the plan. If they approve, approval is for up to five years. Once the approval is issued, the PRO has nine months to implement the plan. Now if if the PRO reports that it's not meeting the redemption goals, that it's not meeting its redemption responsibilities, ANR can require it to do additional education, provide additional redemption, or provide additional redemption opportunities. I just want to stop there. Like, additional redemption opportunities. There are multiple alternatives beyond what you may know as redemption. And so there's different machines. There's different ways that you can just do a backdrop and have that scanned and you get an invoice. And so there's different opportunities than just your local redemption center that you know well. There's, with every EPR program, there's two audits. One is an audit of how the program is working, and that's done every five years. It has to be done by an independent third party. And there's also a fiscal audit that's done every year, and that, is done by an independent third party. The results of those audits are submitted to ANR. Then you get to the beverage container redemption rate goals, 1534. By 2029, the goal is for 75% redemption. By 07/01/2032, it's 80%. There is no automatic escalator. In the previous bill, if you didn't meet your goals, there was an automatic escalator of the deposit. No automatic escalator. ANR will report annually about the redemption rates, and they will recommend whether the deposit should be increased or not. But you would need to take legislative action in order to increase the deposit. No automatic escalator. ANR has general rulemaking. There's an antitrust exemption from state antitrust laws. These producers and manufacturers are literally working together and have an organization organizing their working together. In most instances, that's collusion that could violate antitrust laws. So you give them an exemption from that, but they can't price fix. They can't dictate where products are sold. That exemption does not apply in this situation.

[Speaker 0]: A little bit. I'm sorry. The containers that they're reporting on, how will they know what the redemption rate if those are not know?

[Michael Grady (Legislative Counsel)]: The Venice beverage container needs to be struck. That is not Oh. That is no longer being subject to the deposit.

[Unidentified Committee Member]: Okay. Cool.

[Michael Grady (Legislative Counsel)]: That is

[Speaker 0]: Just catching the detail.

[Michael Grady (Legislative Counsel)]: My mistake. I put this together

[Speaker 0]: about Okay. So it's not in the bill as it came to us. It's just in the summary?

[Michael Grady (Legislative Counsel)]: Yeah. It's just left over from the last time I did this.

[James Masland (Member)]: Okay.

[Unidentified Committee Member]: Thanks.

[Michael Grady (Legislative Counsel)]: ANR needs to follow standard notice and comment. They will follow what's called, type three, which does allow for a public meeting and public comment period. Then you come to the Clean Water Fund. Over four years, you are authorizing the movement of money from the Clean Water Fund to the Waste Management Assistance Fund or the Solid Waste Management Assistance account. In FY 2030 and 2031, you're moving 1,000,000. In 2032 and 2033, you're moving $7.50. In October 6618, in the waste management assistance fund, you are authorizing ANR to enter into grant agreements with the PRO to reimburse the cost of equipment and and improvement to infrastructure to implement the PRO. You are helping the PRO stand up this plan with its redemption and convenience requirements, and the new equipment, as I referenced earlier, that it intends to use to meet those convenience and redemption requirements. And then section six just repeals the requirement that ANR certify redemption centers, because once the PRO's up, the PRO's gonna be negotiating with its redemption centers and who's going to do redemption. ANR doesn't want to be involved in that. And then the act takes effect 07/01/2026, but the other dates, the important dates for implementation are built into the bill, including time frames based on when ANR approves the plan.

[Speaker 0]: They're very straightforward questions for you. So as someone who's spent some of my legislative time on extended producer responsibility programs for beverage container bills, I just want to clarify, this bill does not increase the types of containers being redeemed nor does it increase the redemption

[Michael Grady (Legislative Counsel)]: house. It increase the beverages that are subject to the deposit. The containers, will you define? Generally, the answer to your question is no. Doesn't increase the scope of the bill. It doesn't increase the deposit of the bill. One of the things it does is it takes away a potential loophole to say that your container's biodegradable, so you're not subject to it. That is taken away. So that does technically increase the scope of what's a container. But really, what's gonna be subject to the deposit is not changed.

[Speaker 0]: Folks, we have so much less jurisdiction over this than usual. Representative Canfield.

[James Masland (Member)]: I have liquor and lottery on board with the changes for them.

[Michael Grady (Legislative Counsel)]: I have not actually heard directly from them. ANR brought the language from DLL and proposed it as DLL's proposal.

[Speaker 0]: I'll ask, Brenda. Too.

[Unidentified Committee Member]: The Clean Water Fund, you know, a nice little speech about all the importance that that fund has done over the last twenty years. What's gonna happen to that and those purposes that have been

[Michael Grady (Legislative Counsel)]: Well, I'm sure Ted will tell you what the fiscal impact will be on the Clean Water Fund. But

[Unidentified Committee Member]: We'll wait for him?

[Michael Grady (Legislative Counsel)]: Sure. I think he will have the actual numbers, but the the percentage of the bond will it's gonna I I would say if he's gonna be impacted by less than 10% on an annual basis. And so I think that that's

[Unidentified Committee Member]: So a lot of people will still get some money. They have put that money to really good use and has cleaned up a lot of water in Northern Vermont and other places. So, thank you. Okay. Take your word for it.

[Woodman Page (Member)]: Well, take Ted's word for it, Phil. Jerry Michael, if I could. Redemption centers, was there any testimony from them in regards to concern? Because I've heard some concerns.

[Michael Grady (Legislative Counsel)]: They are concerned that in a couple of different instances. Remember that ANR can reduce duplicative redemption. They're concerned that that might lead to them not being approved as a redemption center under the plan. There's also concern that the fair compensation might lead to some redemption centers trying to drive down the price in order to become the major redemption center in an area. But remember, there has to be three, at least three per county and at least one per 7,000. So you're never going to lose that standard of redemption. But there is some anxiety about ways that compensation could be competitive.

[Woodman Page (Member)]: And then last question, what was the vote out of committee?

[Michael Grady (Legislative Counsel)]: It was nine-two.

[Woodman Page (Member)]: Thank you.

[Unidentified Committee Member]: Thank you.

[Kirby Keating (Legislative Counsel)]: Hello everyone, Ted Barnett joined fiscal office. So since this version of the extended producer responsibility program for beverage containers build does not dramatically or does not really change the scope of beverages that are subject to deposits in that regime. The main fiscal impact is the transfers of money from the Clean Water Fund to the Waste Management Assistance Fund in years 2030 through 2033, the first two years, 2030 and 2031, up to $1,000,000 could be transferred from the Clean Water Fund. And in fiscal years 2,032 and 2033, dollars 750,000 could be transferred, and these are for grants for equipment and infrastructure at redemption centers to help improve the system. I will note that the $3,500,000 that could be transferred over those four fiscal years means less money in the Clean Water Fund.

[Ted Barnett (Joint Fiscal Office)]: I will talk a little bit later about the overall magnitude of the Clean Water Fund and how this fits into it. It is, as Mike McGrady said, relatively small

[Charles Kimbell (Ranking Member)]: compared to

[Ted Barnett (Joint Fiscal Office)]: the scope of the fund, but yes, you're reducing the amount of resources in that fund to pay for clean water projects. In addition, since the bill is designed in some capacity to improve convenience for people who are redeeming beverage containers, they may redeem beverage containers at a higher rate, And so you may see a reduction in unclaimed bottle deposits. What do you call this?

[James Masland (Member)]: Test sheets. The sheets. Test sheets. That's why I say

[Ted Barnett (Joint Fiscal Office)]: unclean bottle deposits. Right. I've only read that word many, many times, but I've never said it aloud. Yes, until now. Scheats. And so, yes, those could reduce reducing the amount of money to the Clean Water Fund. I will say that following ANR had a contractor produce a report on modeling different versions of producer responsibility programs, they didn't model any changes in redemption rates. I am following in that tradition. I think it's very hard to understand whether more convenience translates to greater redemption. So leaving that alone for now.

[Charles Kimbell (Ranking Member)]: So on that score, can you point to any other jurisdictions, any other states where the redemption rates may be different than what we experienced because things are more convenient?

[Ted Barnett (Joint Fiscal Office)]: That's a good question. I know Maine has expanded their operations, so I'll take a look and see how redemption rates have increased by that information to y'all.

[Charles Kimbell (Ranking Member)]: There's probably an upper limit as to what the redemption rate will be able to be.

[Ted Barnett (Joint Fiscal Office)]: I know, yes, and I know in the report, the modeling of the report, they modeled a 72% redemption rate and the goals in the bill start out at 75% and increase to 80%. So it's rough, current state is in the ballpark of, yeah, I would say these are for non liquor bottles. DLL reports a lower redemption rate for liquor bottles, but it's a benefit of an aberration more recently. But I can summarize all that up in an email and go ahead to y'all.

[Speaker 0]: Representative Lamoille?

[James Masland (Member)]: Yeah, just briefly. Thank you. On behalf of constituents who are concerned about redemption rates and various other sorts stuff, I would just reemphasize from Charlie's question. I've heard a lot of concerns about adding this and adding that, all kinds of things, which I guess the committee looked at it and decided, I guess not. I could just use contemporary language. Thank you.

[Ted Barnett (Joint Fiscal Office)]: Will also note, this is less of your jurisdiction, but for the two state agencies that are implicated in the system, there would be, right, for ANR, depending on the version of producer responsibility organization that does come to fruition. A and R would be able to get reimbursed for their costs and it would be different depending on whether a manufacturer led producer responsibility program or organization is implementing the general system versus whether they're doing that implementation and oversight. So do wanna note that they are able to, as part of their budget process, receive reimbursement for those costs, and we don't know what they are yet. I did email a little bit with the Department of Liquor and Lottery about how they look at potential changes in the bill. They don't see very much, but if the newly formed producer responsibility organization is able to provide services, they currently contract with a vendor to work with redemption centers and manage liquor bottles, if the newly formed producer responsibility organization is able to do that more cheaply, they may be able to realize some cost savings. I do have some general information on unclaimed bottle deposits and the overall sources of revenue for the Clean Water Fund, if the committee would like to hear it, or it could just be for reference on the fiscal note. So this is, generally speaking, SG revenue, annual SG revenue is between 3.5, dollars 4,300,000.0, it's about $4,000,000 per year within the Clean Water Fund revenue sources, so it's one of four, there's the Clean Water surcharge or the property transfer tax. They are receiving some interest income on the fund, SGTs,

[Charles Kimbell (Ranking Member)]: and

[Ted Barnett (Joint Fiscal Office)]: then the meals and rooms tax. The clean water surcharge and meals and rooms tax revenue is much larger than our SJIT revenue. In total, these four revenue sources, as built into the draft clean water budget for fiscal year twenty seven are estimated to generate $31,700,000 Various clean water projects also receive funding from the capital bill, and that amount is $10,000,000 in the capital bill that's been enacted. So in total, with some one time funds that they haven't spent down from the pandemic, the draft clean water budget is $45,200,000 in fiscal year twenty seven, so framing the million dollars or $750,000 is transferred out would be even smaller than 10% of that total.

[Speaker 0]: How have the other sources grown

[Ted Barnett (Joint Fiscal Office)]: Good question. Meals and rooms, the meals and rooms percentage had the trajectory of crashing after the pandemic and then responding really strong. The clean water surcharge is slightly, if you remember in ACT 01/1981, there were adjustments to the clean water surcharge rate from 0.2 to 0.22%. It is slightly higher than That change was designed to be revenue neutral. It is performing a little bit better than that revenue neutral estimation and in line with a relatively strong real estate market. Those revenues have been strong. So for the Clean Water Fund more broadly, they received a lot of revenue post pandemic. Meals and rooms recovered. Real estate market was really strong. They're receiving a lot of pandemic era funding. And so they had a lot of they were carrying forward a lot of one time revenue to expand their pot. I will note, though, that their draft budget in fiscal year twenty twenty seven is below the statutory goal of fifty to sixty million dollars spent on clean water projects annually.

[Woodman Page (Member)]: Mhmm.

[Unidentified Committee Member]: Really, please can remind me how we get the $2,000,000 from the interest? Is it $2,000,000

[Ted Barnett (Joint Fiscal Office)]: I'm going to give my general understanding is that the treasurer based on overall interest rate, because there's no funds aren't necessarily cleanly delineated. And so the treasurer is saying based on the amount of money that is associated with your particular fund, we're apportioning some part of our interest income to the specific funds that are receiving it. So, yes, it's kind of a process in that way.

[Unidentified Committee Member]: Anything else? Thanks.

[Speaker 0]: Commissioner Knight is gonna send her written testimony that she gave in resources to. Anyone need to hear anything else

[Unidentified Committee Member]: else? Bill?

[James Masland (Member)]: I want this with Norman.

[Speaker 0]: Do you guys want to vote on it? Do you want to wait until

[Unidentified Committee Member]: the day? Wait until tomorrow. Are you happy to do that? Sounds great. Yeah, I thought probably. Since

[Speaker 0]: no one had anything to say, was like, Maybe we could do it now. Who knows? Let's fulfill tomorrow. It'll be so fun. Yeah, represent Masland.

[James Masland (Member)]: Just FYI,

[Charles Kimbell (Ranking Member)]: some

[James Masland (Member)]: institution, Probably very disappointed that we're not adding all kinds of other beverages to this. It is what it is. The committee did its work, that's where we are.

[Unidentified Committee Member]: I'm

[Speaker 0]: sure the issue will come up again next biennium. It will. Yeah. It's not interesting.

[James Masland (Member)]: Understood. I'm just expressing the expression.

[Speaker 0]: I appreciate that. I guess with that, we are did I

[Unidentified Committee Member]: lose? We're done. See you tomorrow. K.