Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: Morning. Good morning. It is Friday, February 27, 9AM. Our plan for the day is to hear about two bills from our colleagues, both related to the Education Fund. And then after the floor, we're going to have a conversation about the yield bill based on all of the modeling that we've seen on past Tuesdays. So I encourage you to take a minute to relook at that before we have our conversation. And then at eleven we are going to return to five eighty eight for a vote, return to nine fifteen for a vote, and then work on H775 with a very, very possible vote. I do not have anything We don't have anything scheduled for this afternoon. However, anything outstanding from this week, I would really appreciate hearing from everyone, because we'd love to tie as many things up with bows when we return as possible. So and I'm gonna be very available all week. Please give a call if you're thinking about something that once we have some time, the thoughts flow more easily. I think that is it. Representative Galfetti, you wanna join

[Rep. Olson]: us? Sure.

[Rep. Emilie Kornheiser (Chair)]: Thank you, madam chair.

[Rep. Jimmy Galfetti]: Thank you, committee. Jimmy Galfetti, for the record. And I'm here regarding my bill for a three year property tax freeze, h seven seventy four. It's a pretty simple, straightforward bill, and it would prescribe the legislature to cap education, well, even cap, freeze education funding the rate, the property tax rate, for the next three years, and any overage would have to come out of the general fund. And that's pretty much it. It's a framework. It's the only bill in the House right now that addresses property taxes this year. I brought it up with Representative Houghton early on and was hopeful that the committee would take it up. It is certainly not a perfect bill, but the idea is for it to go through the committee process and figure out a way to make it the best bill that it could be. That was the intent of the bill, and hopefully you guys will be able to take some testimony on it and come up with something that can deliver tax relief this year for Vermonters, like we were sent here to do.

[Rep. Emilie Kornheiser (Chair)]: Thank you. I think there are a number of bills that address property taxes this year, and certainly we always have a committee bill, the Yield Bill, that is entirely focused on property taxes for this year. But my question for you is, by freezing rates, there's actually a very high chance that many people's bills would go up. And I wonder if that's And that's been a big fallout. A number of states have done this in the past, frankly, like in the aftermath of some of the political fallout that we've had here in Vermont around property tax bills. And what happens when we freeze property tax rates and then values are different all over the state isn't a reduction in spending. It's just an increase in people's bills in

[Rep. Jimmy Galfetti]: a way that's even less fair than what might be happening right now. Yeah, that's exactly why I wanted to make it a very simple bill that could have been a strike all and amended and worked on to figure out if we needed to target certain demographics, freeze rates for folks that are 65, or use it as a vehicle and contend with all of those pieces of it to get the targeted tax relief that we need. I think that it's so simple that the language of it gives you a lot of latitude to make adjustments so that that wouldn't happen, that you wouldn't have the increases, and that at the end of the day, the increases in spending should come out of the general fund. And of course, you can't prescribe what the appropriations committee would do, but I think a cut across all spending from the general fund to supplement education funding until we get that under control is something that Vermonters really can't live without.

[Rep. Rebecca Holcombe]: Other questions? I have to echo that. I mean, this is very similar to something the administration proposed about ten years ago. They were proposing to freeze for five years. And when the analysis was done on it, it actually quite significantly raised bills, tax bills, especially given expected increases in grandness growth. And so I have pretty severe concerns about this, because frankly, I don't think Vermonters came forth as kind of increasing bills right now.

[Rep. Jimmy Galfetti]: Yeah, I I think that's something that's debatable, that certainly if you took testimony on, you could drill down and find out whether or not there was a way to do this effectively so you wouldn't see an increase. The rate freeze, certainly with the increases in spending that we've had, doesn't necessarily translate into an increased cost. And I think that if you do your due diligence and your research, that you could have shaped this bill into something that would prevent increases like you're talking about.

[Rep. William Canfield (Vice Chair)]: Madam Chair, I've mentioned in this committee before, and talking about the yield bill that whether it's a bill like this or the bill that may be coming over from the Senate, it's hard for me to address what we have in the yield bill, something like this is gonna come out. And again, I think it's something that we should maybe look at and we may have to be looking at it, but as I said, it's a hard thing for me to address some of the conditions or some of the situations that we're looking at in the ill build, when something like this could change all that. Go ahead.

[Rep. Rebecca Holcombe]: Can we let the previous research that was done by GFO the last time was proposed?

[Rep. Emilie Kornheiser (Chair)]: Sure, if you wanna find that and send it around, that would be great. I think one of the huge challenges that this committee has been facing is that we've been doing really everything we can to keep property tax bills as low as possible for Vermonters. And There is no simple solution. If there was a simple solution, we would have passed it already. I think everyone at this table is really committed to keeping property taxes low. All of the iterations that we're looking at of the yield bill are really about keeping property taxes low, about the exact transfer from the general fund that you're talking about. But any freeze, especially a property tax rate freeze, but a lot of other freezes, they just create more spending for higher taxes and higher tax bills for Vermonters somewhere. And so it's one of the real big, big challenges in the way our system is constructed now, and it's one of the big reasons we made all of the tax policy changes we did in Act 73. Yes, certainly,

[Rep. Jimmy Galfetti]: and I'm sympathetic to that. I just felt like by taking the money out of the general fund and making the cuts there, it would be felt universally across the board. And at some point in this state and in this body, we need to understand that we're going to have to make changes and cuts. That's just the reality that all Vermonters are living in, every Vermonter in their household, managed budgeting is having to make hard choices right now. And it's time for the legislature to start making some of those choices too.

[Rep. Emilie Kornheiser (Chair)]: Thank you. I imagine if we talk to anyone in the Appropriations Committee right now, they would say that they're making some very hard choices this year and grappling with that. Of course. Thank you so much for your time. Great.

[Rep. Jimmy Galfetti]: Thank you, Thank you, committee.

[Rep. Emilie Kornheiser (Chair)]: I think we're gonna take a two minute break while we wait for representative both of Okay. Representative Olson, thank you for joining us.

[Rep. Olson]: Well, thanks for having me. I I appreciate being here. Have a little bit, and I think I'd like to talk about it a little bit. I'm not gonna tell you anything that you don't already know about some of the things that, you know, are facing school boards and stuff like that. This bill around the yield thing comes out of a I call it a cri de coeur bill because

[Rep. Emilie Kornheiser (Chair)]: I don't think I know what that means. Yeah.

[Rep. Olson]: It means in French, from the heart, crying, maybe in the wilderness sometimes.

[Rep. Emilie Kornheiser (Chair)]: Wow. Come up for a Friday morning.

[Rep. William Canfield (Vice Chair)]: Yeah. Hi.

[Rep. Olson]: But but that's good stuff. Anyway, so I can't tell you the frustrations that school boards have. They try to build a budget responsibly. They do the best they can. I'm actually a member of a school board, my local school board, so shoot me now. Okay? So and trying to build a budget, we took about, I don't know, six, eight months prior to voting on our budget in January to try to figure this stuff out and what, you know, what's sensible, responsible, and came up behind a pretty good budget, you know, two and a half percent spending increase. Yet we didn't know what the revenue was. And I understand there's a tax letter that comes out in December, but my experience is that's simply the first salvo in a in a debate. And you don't usually find out what the actual revenues and therefore what the tax rates are gonna be until way, way further in the process. And we wouldn't do that. I mean, we, for a long time, had a consensus revenue type of process, you know, July, early early session. You know, here's the revenue that we, as legislators, need to know when we're trying to build our budgets. And it's no different, you know, how so that that's the issue. I don't have any particular solution because you folks know so much more about this than I do. I'm hoping you'll figure out a solution to that. I'm not I'll leave you maybe with something about, we're talking real big picture issues around educational transformation. I'm not telling you anything new that the details really matter on that. And that's tough. I don't have the expertise. You guys have the expertise. But the details really do matter if this is going to work. I think this is an issue. I don't think it necessarily will be solved with the foundation formula, frankly. I could imagine the same sort of dance that might occur with the foundation formula. Someone will use the calculations in the statute, come up with a base number, and then let the fun begin. And so I think it's important whether or not we're in our existing system or whether we're moving to the foundation formula. Two other kinds of issues that I think is similar in terms of detail. I've talked about the CLA kind of thing. That's especially important, I think, in some rural, small rural towns where the look back period, I think, is about three years. And there might be just very small number of transactions. And that skews, I think, the results. Just from an analytical kind of standpoint, I'm not a financial analyst, but I think small numbers, you don't have as much credibility. The other kind of detail so that's a detail that I think is important, and that will, I think, continue to be an issue no matter what we do in terms of education transformation. The other issue has to do with, local we're shifting it can go to a foundation form, though. We're be shifting from having the local districts build the budgets in terms of what they think is necessary and stuff, to a system where the state is going to be saying, Here's your base amount. And I think maybe you folks have already and the community's already been thinking about this stuff. It just seems to me that we need beef up our ability to look at education spending in the same sort of detail that, say, a local board does. Right now, I don't think we have that analytical capacity. Maybe you folks are thinking about how to build that, but I think it's a real key element. Think of what we do when we're trying to build our budget. We've the got committees of jurisdiction, we've got the appropriations committee. We're going to need to build back. That's a detail, I think, that needs to be taken care of as we move forward. So, there we go.

[Rep. Emilie Kornheiser (Chair)]: I am really excited to say that I think we've solved at least two of your problems that you're bringing forward to us today. And so the problem of not knowing the yield when districts are budgeting is, yes, of course, a very long standing problem. And in Act 73, partly because we're sort of stabilizing the growth in spending so it'll be more predictable, and working on increasing reserves so that we actually would have a yield far enough in advance that districts, when they were building in their budgets, would know exactly what they were building with and what the tax rate would be for any supplemental spending.

[Rep. Olson]: Yeah, think the reserve issue is probably key, so you can do that.

[Rep. Emilie Kornheiser (Chair)]: Yeah, so that's super exciting. That felt like a really big piece of work we did last year. And then the second thing is that all the work we're doing on regional assessment districts, which we are sort of finishing up in the next few weeks, and reappraisals should significantly reduce both the scale of the CLA impacts to communities, but also really change the challenge of having a very limited sample size when calculating that. So I really wanted to get you in before town meeting, because your bill was about town meeting, so

[Rep. Olson]: you can

[Rep. Emilie Kornheiser (Chair)]: even go home and see these grand ideas and stuff.

[Rep. Olson]: I'm hold that into my little hat with constituents. Yeah. Know, I haven't dealt you know, I've talked to Charlie a little bit about this, and I I confess I, you know, I haven't looked at that piece of our regional assessment.

[Rep. Emilie Kornheiser (Chair)]: Oh, You

[Rep. Olson]: know, there's only so much. Yeah.

[Rep. Emilie Kornheiser (Chair)]: It's really it's d it's

[Rep. Olson]: And we got I got a whole week that I can study things. So I'll I'll I'll I'll note on that.

[Rep. Emilie Kornheiser (Chair)]: Thanks. Anyone else? Thank you so much for coming in.

[Rep. Olson]: Well, it's fun. I'm on the penthouse floor here. That's great. That feels good.

[Rep. Emilie Kornheiser (Chair)]: Folks, we are back here after the floor.