Vermont Legislature SmartTranscripts:

[Patrick Walsh (Joint Fiscal Office)]: Good

[Rep. Emilie Kornheiser (Chair)]: morning. It is Thursday, March 12. We are going to start our day looking at H-nine 17 and Act Related Military Affairs that we received from the Government Operations Committee. And then we are going to continue our work on miscellaneous tax bill, including the federal link up, until lunchtime. We need to vote that bill by the end of the day tomorrow. We have certainly looked at all of the sections of it five ways to Sunday. But the federal link up stuff is sort of ever changing. And so we're going have some updates on that and trust me from the tax department. And then this afternoon, we are looking at regional assessment districts and the tax classifications again. But if we need more time on the federal link up, we can take up some of that afternoon time for that. That's where we are. Don't have any bills on the floor this afternoon. Oh, I guess we have a third reading on animal cruelty, but I can't imagine there's gonna be a physical question on that one. Mine's on. No. It's 588. Okay. And so we'll do that tomorrow. Great. Okay. With that, Sophie, welcome. Hi.

[Sophie Sedatney (Office of Legislative Counsel)]: Hello. Good morning. Sophie Sedatney for the Office of Legislative Council. So again, we're here on h nine seventeen. This was an omnibus military affairs bill, so it actually pulled together four different bills that were in front of house gov ops. So it's a long bill. So unless you're really interested, my suggestion would be to skip skip the first forty secondtions, because really what those do is essentially correct from being the adjutant and inspector general to being the adjutant general. So historically, the two roles were confined, then over time, it was too much, and so the duties got separated. And right now at the National Guard, there is a separate inspector general. So it's just it's just a cleanup. But because the reference is in so many sections, it takes up a lot of the bill. So, if that's okay with you, I would suggest we skip ahead. Hate doing this on screen in case anyone gets sort of queasy, but just don't look at it for a second. The one other thing that that that section does, section five, is it just contains a cross reference to the election for the adjutants in general. So right now, all that's dealt within title 20. But under the general assembly votes, as you know, on the adject in general, so that's in title two. So there's just a cross reference to make sure anyone that's interested in running can actually find the language in section in title two. So in section five, that was the only other substantive piece in that. Okay. So I'm on page 21, section 40, gold star family member. So there is no single federal definition of a gold star family member. Historically, it tends to be both families who have a member of the family that was killed in combat, but each state can define a gold star, how, you know, how they choose to do so. And so this is a request to add a definition for Vermont, and it expands it just from those who died while serving to those who also died from a service connected illness or injury. And this is proposing putting it in title one where there's a whole list of how statutory terms, you know, words are to be interpreted.

[Rep. Emilie Kornheiser (Chair)]: Does that phrase US Armed Forces include all of the All the branches. All the branches. Yes, it does. Postcard. Yeah.

[Patrick Walsh (Joint Fiscal Office)]: Okay. Space Force. Space Force.

[Sophie Sedatney (Office of Legislative Counsel)]: Space Force as well. Yes. So the only place currently in Vermont statute that references Gold Star is actually to do with number plates in title 23. And so right now, the way it works is you can have a gold star plate, again, if your family member was killed in combat, or a next of kin plate if they die from a service connected illness or injury. So, by broadening the definition of gold star to include service connected injury and illness, you kind of remove the need for the next of kin plates.

[Rep. Emilie Kornheiser (Chair)]: So,

[Sophie Sedatney (Office of Legislative Counsel)]: that's what this section does in Section 41, is it's taking away the next of kin plates, because now that's going to be part of the broader gold star plates.

[Rep. Woodman “Woody” Page (Member)]: I have a question regarding the verbiage where you stated gold star member means, and it goes on to say, who died while serving. While serving is different than died while in a combat situation. And I realize that the state has a different definition. But it seems like if you die while serving on active duty during the guard, I don't know whether that's justification for awarding a gold star to a parent. Do you see where I'm going with this?

[Sophie Sedatney (Office of Legislative Counsel)]: Yeah, so the request for this definition came from folks on the Governor's Advisory Council, I forget what the name is, and this is sort of modelled on what Massachusetts, the definition Massachusetts has. So this came from the military community, this language. So that's really all I can

[Rep. Emilie Kornheiser (Chair)]: on that.

[Sophie Sedatney (Office of Legislative Counsel)]: I mean, was debate around it in terms of how specifically to do it. There were a couple of different versions, but this was the version that the committee ultimately landed on.

[Rep. Charles Kimbell (Ranking Member)]: If you're working in a warehouse down in Guantanamo, then Well, yeah,

[Rep. Woodman “Woody” Page (Member)]: and you have a heart attack while just doing your And I'm not saying that isn't important, but a gold star, think of somebody dying in combat. But that's just me.

[Rep. Emilie Kornheiser (Chair)]: Yeah. And I feel like this is wading pretty deep into the other committee's jurisdiction, so I wonder if you wanna take it up with them. Yeah. Representatives.

[Patrick Walsh (Joint Fiscal Office)]: So I'm looking at it,

[Rep. William Canfield (Vice Chair)]: and I think it addresses those who come home from Afghanistan and then suffer from burn pits. Right. So that would cover them here. Service connected illness.

[Rep. Woodman “Woody” Page (Member)]: Yes. Towards that end of that sentence or from a service connected illness or an injury. It's just a comment.

[Rep. Bridget Burkhardt (Clerk)]: Right.

[Sophie Sedatney (Office of Legislative Counsel)]: So section 41, again, just deals with the next of kin plates. Section 42 is a hiring preference for military spouses. This is specifically for state employment, not the want you know, but government employment in the state. And so what this does is, right now, in title three, there are rules around when you're looking to hire somebody. And so this provides that after the requirements for an applicable collective bargaining agreement have been satisfied, after compliance with subsection three twenty seven a three twenty seven a provides that any vacancies in state government should be you try and fill them internally first. And then consistent with applicable state or federal standards for affirmative action, it then provides the state shall make a diligent effort to recruit, interview and hire. And again, this is the current language, is veterans, spouses of veterans who, if the veteran receives disability compensation. And then what's being added here is the spouses of personnel currently serving in the US Armed Forces. So that's step one. And then step two is, under this subdivision two, veterans and spouses of personnel currently serving in US Armed Forces. This is for any open competitive recruitment that involves a point based examination. As long as the person passes, they then get an additional five points added, and then some other folks get an additional 10 points added. The Department of Human Resources confirmed that the only competitive examinations that this would apply to is currently for law enforcement. The state as a whole doesn't have civil service exams, generally. So again, there's two places here where you would provide a preferential hiring. And that's one is for vacant positions, again, once you've gone through all the other requirements, and the other is the additional points on point based examinations.

[Rep. Bridget Burkhardt (Clerk)]: Question, did they check what the scale was under that? You mean five points is kind of arbitrary?

[Sophie Sedatney (Office of Legislative Counsel)]: No, it's five points for, again, they have to pass the exam, and they get the extra five points, and then other folks get an extra 10 points. But, yeah, there was no testimony specifically on that, just that the only place where this comes up currently is either through the police academy or, you know, other hiring of law enforcement officers. So I don't know how meaningful that is, right, if it's on a scale of 20 or 100 or 200, right, it

[Rep. Bridget Burkhardt (Clerk)]: makes Well, a change the test in the middle.

[Sophie Sedatney (Office of Legislative Counsel)]: Right, right. So yeah, there wasn't any additional information on that.

[Rep. Woodman “Woody” Page (Member)]: Data follows federal guidelines as well. If you're applying for a federal job, you meet the qualifications and you're a veteran, you automatically get five points added. And there has been a promotion to also include military spouses as well for federal positions as well. The reason for that is on active duty, you're constantly moving around and your partner or spouse is not able to maintain a job because her or his spouse is moving.

[Sophie Sedatney (Office of Legislative Counsel)]: And that was the policy reason behind us.

[Rep. Bridget Burkhardt (Clerk)]: Yeah. I

[Rep. William Canfield (Vice Chair)]: would say at one time, I'm not sure if it still applies, postal service, US Postal Service, or, like, General Electric and Rutland, they get federal military contracts.

[Rep. Emilie Kornheiser (Chair)]: What else do we have in here?

[Sophie Sedatney (Office of Legislative Counsel)]: Right. And so the last section is parking for disabled veterans. I think this is the section why Yeah. See it. Very much. Right. So what this does so this was not originally my bill, but I will do my best to answer any questions you may have on it. This is to basically, to provide this is in the section where it lists out what the powers of municipalities are, and it provides a vehicle with disabled veteran plates issued by any state shall be permitted to park at a parking meter without fee. So that's really what this provides. As far as I can tell, to obtain a disabled veteran plate here in Vermont, have to meet the same criteria as you would to receive a regular disability plate. So there's not really changing. If you're a disabled veteran right now and are eligible for a disability plate, you would be able to have a disability plate and park. It's more the issue by any state. Each state has different requirements for what level of disability you're required to meet to be a disabled veteran. But this is simply providing that individuals with disabled veteran plates are able to park.

[Rep. Emilie Kornheiser (Chair)]: So under current law, if you have a disability plate, regardless of veteran status, you can park at any parking meter without a fee?

[Sophie Sedatney (Office of Legislative Counsel)]: So that's a different statute. So that's three zero four a, and there is language on that in

[Rep. Emilie Kornheiser (Chair)]: the actual letter. I don't need to see it. It's that if that is vaguely true, then that's gonna

[Sophie Sedatney (Office of Legislative Counsel)]: be. So I think it is slightly different. So for disabled plates, they can park in disabled spaces, and they can park for up to ten continuous days, regardless of timing on that. I think there is a difference here.

[Rep. Emilie Kornheiser (Chair)]: I just wanted, municipalities have some idea about this already being a thing. That's really mostly what we're Right, right. Thank you. And that's it. Chris, is there any fiscal impact to the state?

[Chris Rupe (Joint Fiscal Office)]: Chris, we do not see any fiscal impact to the state or any meaningful impact to the development of motor vehicles as a result of the change. There are not many of just for perspective, I think there are fewer than 300 disabled veteran plates out there, and not every municipality has metered parking, so we wouldn't do an estimate for this going back to municipalities, we can't imagine this would be significant to any individual municipality.

[Rep. Bridget Burkhardt (Clerk)]: Thank you. Any more questions? You. Did you have one?

[Rep. Charles Kimbell (Ranking Member)]: Only for Chris. The 300 is only Vermont issued or Correct. This applies to any state.

[Patrick Walsh (Joint Fiscal Office)]: And it's fewer than 300. So

[Rep. Charles Kimbell (Ranking Member)]: this bill applies to issued by any state.

[Rep. Emilie Kornheiser (Chair)]: So do you know how many disabled veteran tourists they might learn from anybody?

[Patrick Walsh (Joint Fiscal Office)]: I have the opportunity explore that question again, Madam Chair.

[Rep. Emilie Kornheiser (Chair)]: Do you imagine that would probably

[Patrick Walsh (Joint Fiscal Office)]: be a design of support? I would imagine so.

[Rep. Bridget Burkhardt (Clerk)]: Great, thank you Sophie. Okay.

[Rep. Emilie Kornheiser (Chair)]: Anyone new want to make a motion on the bill? Pitch that up, team?

[Patrick Walsh (Joint Fiscal Office)]: Madam Chair. No, I'm a woody, buddy.

[Rep. Bridget Burkhardt (Clerk)]: You should go woody.

[Rep. Emilie Kornheiser (Chair)]: Representative Page, would you like to make a comment? I

[Rep. Woodman “Woody” Page (Member)]: move that we approve H917 enact relating to no interpretive figures.

[Rep. Emilie Kornheiser (Chair)]: Wonderful. Thank you. Representative Page moves that we find H917 favorable. Representative Holcombe. Second. Nationality discussion. Seeing none of the quick, could you please call the roll?

[Rep. Bridget Burkhardt (Clerk)]: Representative Branagan? Yes. I'll vote yes as Representative Burkhardt. Representative Higley? Yes. Volcombe? Yes. Representative Kimbell?

[Rep. Charles Kimbell (Ranking Member)]: Yes.

[Rep. Bridget Burkhardt (Clerk)]: Representative Masland?

[Rep. James Masland (Member)]: Yes.

[Rep. Bridget Burkhardt (Clerk)]: Representative Ode? Yes. Representative Page?

[Rep. Woodman “Woody” Page (Member)]: Yes.

[Rep. Bridget Burkhardt (Clerk)]: Representative Waszazak? Yes. Representative Canfield? Yes. Representative Kornheiser? Yes. Your vote is available, eleven-zero-zero.

[Rep. Emilie Kornheiser (Chair)]: Thank you, everyone. Mark, are you interested in reporting this?

[Rep. Mark Higley (Member)]: I've got enough on my plate.

[Rep. Emilie Kornheiser (Chair)]: I have your lips, so I'm glad you referred to someone else. Good to give Representatives the opportunity. Thank you so much, Sophie. You're welcome.

[Rep. Mark Higley (Member)]: All right. I get that a lot.

[Patrick Walsh (Joint Fiscal Office)]: Okay.

[Rep. Emilie Kornheiser (Chair)]: Let us switch gears. We are going to discuss the federal link up a little bit more. I have a slightly different proposal for the committee after some conversations I was able to have with the tax department and accountant. And I'm gonna have Pat kick us off, if that's okay with you, Pat.

[Patrick Walsh (Joint Fiscal Office)]: She's very excited about it.

[Rep. Emilie Kornheiser (Chair)]: Yep. We're gonna take a brief freezer, because we're running three months ahead of schedule.

[Patrick Walsh (Joint Fiscal Office)]: Guess you gave my laptop three minutes to do its thing. Okay. Let's take a three minute break. Oh, it is finally. Oh, you're not I saw you didn't go. Alright. What's the next second big jump, Kirby?

[Rep. Bridget Burkhardt (Clerk)]: I feel like

[Rep. Emilie Kornheiser (Chair)]: will be Kirby's language will be easier to follow if we start with Sure.

[Patrick Walsh (Joint Fiscal Office)]: I'll keep it simple, it'll get really complicated on you. I should probably say I'm Patrick to make the joint physical office. Well, while I'm logging in, there are slides under my name on the committee's website. Going to walk the committee through just the revenue changing provisions that are in the language that Kirby will share with you, and I'll summarize what those changes are. Some of them will look familiar. I've talked about some of these HR1 provisions that are flowing through the state, those things that are sort of at the top of line and affecting state revenues, particularly if you all opt to conform. And when I do get in, I think maybe I'll actually with showing you or reminding you what it looks like if the state were to normally conform, you know, as as, you know, Vermont does in many years. And what that impact sort of means for both the budget that is currently being worked on and the budget for the year that we're currently in. You know, the one that you all passed last year that you just had a budget adjustment for.

[Rep. Emilie Kornheiser (Chair)]: We just signed.

[Patrick Walsh (Joint Fiscal Office)]: Yep. And, you know, all of it is and very, like, sort of fluid situation as we and the tax department have. So I'm going to skip to words again. Okay, so this is with normal conformity, sort of the situation that you all are looking at. If you were to just move the tax year that we're linked up to up one year, which can conform me with HR1, you can see that in the tax year, the fiscal year that we're currently in, JFO, in conjunction with the tax department, are estimating that that would result in about a $21,000,000 shortfall. So just sort of mechanically how that sort of works is Tom and Jeff come out with a consensus forecast for fiscal year twenty six. You build a budget based on what the fiscal year twenty six estimates are. Once you get into So that passes, then you get into when the session starts back up. You have budget adjustment, and this is after Tom and Jeff have updated the January forecast. And the budget adjustment will true up to the updated January forecast estimate for fiscal year twenty six. So that has come and gone. As we've gotten more information from other states, from federal report releases, and actually talking to a lot of the accountants, have we gleaned some additional information on cash flow for a lot of businesses. We've been able to update with the additional information that we've been able to get. So that's where we get to this unhappy surprise of, well, there's about $21,000,000 in uncapped report revenue that has not been captured in the fiscal year twenty six budget or in the Budget Adjustment Act. And so that is sort of the starting point or the situation that you're facing and gives context for some of the decisions you need to make. So there's

[Rep. Bridget Burkhardt (Clerk)]: a 21,000,000 loss that we didn't realize.

[Patrick Walsh (Joint Fiscal Office)]: For fiscal year twenty six, yes. If we conform. If you were to conform. Right. So that's where you need to be making active decisions on what things you might want to conform to, what things you might want to decouple, other areas of state tax law where you might want to make some adjustments to account for that.

[Rep. Emilie Kornheiser (Chair)]: So the governor's recommended budget did not account for this loss of $21,000,000

[Patrick Walsh (Joint Fiscal Office)]: Yeah, so just like the legislature, the administration didn't have this information at the time that they were operating. So that's talking about fiscal year twenty six. You can see that the budget you're building right now for fiscal year twenty seven, if you were to fully conform, that's a $33,000,000 potential shortfall if you were to fully conform. So these are just kind of two areas where you have some decision points and your appropriations colleagues will be very interested to see what you pass along to them.

[Rep. Emilie Kornheiser (Chair)]: And so, Pat, since the budget adjustment already passed and signed into law, if it is fully conformed, that $21 would basically be carried over into FY27, so we would have a $50,000,000 hole in the FY27 budget?

[Patrick Walsh (Joint Fiscal Office)]: I'm not quite sure exactly how the math on that works, although I do know that there was a 70,000,000 carry forward in the budget adjustment. Although, you're hoping to use that to spend on things, but I think that sounds right.

[Rep. Emilie Kornheiser (Chair)]: I just wanna take a brief moment here to make sure like, we've gone through this a lot, but we're we need to vote on this tomorrow. And so I wanna make sure folks understand the impact of full conformity and how much it was not accounted for, because it was information that no one had through no fault of anyone.

[Patrick Walsh (Joint Fiscal Office)]: So with that, I'm just gonna

[Rep. Bridget Burkhardt (Clerk)]: Everyone's gotta get slow on this, but no, that's

[Rep. Emilie Kornheiser (Chair)]: why I paused. Do we know why we didn't get his accounting for it? I think basically no one knew because it was brand new law, but Pat can explain it

[Rep. Bridget Burkhardt (Clerk)]: in a

[Patrick Walsh (Joint Fiscal Office)]: little greater depth. Yeah, so when Tom and Jeff create their consensus forecast, they're basing it on current law. So in Vermont being a static state, technically speaking, although it can operate in a rolling way, Vermont being a static state, the current law would have been pre HR1. So any decision to actively link up or decouple is considered an active legislative action. So that would not be considered current loss as a basis that they're working with this current law as a starting point. In terms of how information is sort of rolled out, a lot of what we're talking about here is business and corporate, which kind of operates often on a bit of a lag. They're making estimated payments. They're making decisions based on either what Vermont current lies or expectations of what Vermont law is going to be. And really the other piece of the whole thing is that we really have a dearth of information in terms of what we can see from because a lot of these changes are happening above the line before the starting point for Vermont, corporate income tax and other business taxes. So, we really don't have that insight into the specific IRS data of these things that are changing that would flow through to Vermont. So, it's kind of like fumbling around in the dark a little bit with some of it. But as we got through the 2025 and some corporate estimated payments coming through then, we got through the first we're getting through the 2026, Again, we're seeing sort of behavior of businesses and their estimated payments coming through. I think that's them reacting to HR1 in real time. As we've gotten some of that new information, the receipts that are actually being collected and how that's comparing to what Tom and Jeff forecasted based on current law, I think that's where JFO and in conjunction with the tax department have really been able to feel a bit more confident about updating some of these numbers and looking at Well, the JFO can't do this, but the tax department can. Looking at some of those returns and the cash flow and when money is actually being remitted to the state and what the magnitude of some of these potential changes are starting to look like. Does that answer your question? Yes. And the other last thing real quick is just that corporate tax in and of itself is typically very volatile and can be very unpredictable. Just it's a unique tax type.

[Rep. Mark Higley (Member)]: Thank you. Looks like your slide 11 is going explain this, but I want to make sure I understand it. That deduction for domestic research and experimental expenses, isn't a full pullback from the Fed's, it's based, small businesses are still going be allowed to take it.

[Rep. Emilie Kornheiser (Chair)]: That is like what we're about to do. So

[Patrick Walsh (Joint Fiscal Office)]: my goal is I'm going to give sort of a summary of everything that's in Kirby's language that has tax revenue implications. Kirby will hit you all over the head with the nitty gritty details. Okay,

[Rep. Emilie Kornheiser (Chair)]: thanks. And that question is sort of the core of what we're going spend time.

[Rep. Mark Higley (Member)]: Yes, well, I'm just looking at the bottom line. Yes. Okay, thanks.

[Patrick Walsh (Joint Fiscal Office)]: So I guess before we jump in, R and E proposal you see here is vastly different than the one that I was in here talking about last time I was in on this subject. Okay. Some of these changes are gonna look familiar. Just as a quick summary, there's sort of three buckets I consider in terms of revenue changes in this field. One is areas where on things that will flow through, the language you'll see is proposing to link up to federal treatment. The second bucket are areas where the language is proposing to decouple in certain ways. And then third is adjusting or altering existing state policy, not necessarily connected to federal treatment of anything.

[Rep. Emilie Kornheiser (Chair)]: I think the annual cap is one.

[Patrick Walsh (Joint Fiscal Office)]: Sorry for the Village Center. No, I said Yes, slide later has that correction. That was one thing I missed for Sourci this morning. Sorry about that. So starting with areas where we're linking up, the federal government changed the phase down for the Child Independent Care Credit. Previously, it was set at 35% reimbursement rate for expenses. It was the same regardless of filing status. Phased down to, I think it's 25%. This new change for lower income filers and claimants increases that reimbursement rate to 50% of expenses. So these are all things that are happening to a federal credit, which is typically below the line and would not affect Vermont, but we often set up in a way with this credit and a couple others where we take a percent of the federal credit, we're at 72. And so that way, this change is flowing through. So really what this is doing, and maybe if we look at the next slide, you can see how the treatment changes. These lines show you the reimbursement rates both for pre HR1 and post HR1. The green refers to TCJA treatment, while the blue and orange refer to HR1 treatment. So, you can see that up to about $15,000 those individuals can have their childcare, dependent care expenses reimbursed at 50% rate. And then that scales down and has different plateaus based on your filing status. But you can see that it really effectively what it is doing is making reimbursement rates at lower incomes more generous. So that's something you'll see the language is proposing to have flow through.

[Rep. Bridget Burkhardt (Clerk)]: Before we move on to the next one, I just want

[Rep. Emilie Kornheiser (Chair)]: to say there's a few things. One, we proactively increased that a few years ago. And in an ideal world, the study, the ten year tax study, would be done in advance of this federal flow through decision having to be made. But it not because the world is very much not convenient like that lately. And so I hope that whoever's at this table next year takes the time to check back in on this and to see how it overlaps with all of the other pieces. Because Representative Holcombe, even bringing that up regularly, I think you have a really good point. Leaving the flow through out of this bill seems unnecessarily Feels unkind to me, actually, is probably the best way I could explain it. But I think it's worth doing more analysis of how all of our tax credits overlap for that population. I don't disagree. And

[Patrick Walsh (Joint Fiscal Office)]: maybe Kirby could expand on this if he wants to, but I think that would also be something technically difficult to not let put through because we're at a flat percentage of the federal calculation. Yes. Okay. So the second piece in HR1, there was an amended limitation on business interest deduction. Essentially, at its root, what this did was increase the amount of business interest that can be deducted from 30 to 50%. There are some limitations on how much overall business interest you can deduct, but essentially the core change there was increasing from a 30% rate to a 50% rate, the amount of business interest paid that can be deducted. So you'll see that the language is proposing to perform Vermont with this federal treatment. Second, was an HR one, there was limitation or a change in the limitation on expensing for depreciable business assets. This is specific mostly for small businesses. And rather than depreciating these assets over an extended period of time, what this would allow them to do is expense some greater portion of that upfront. What it's doing is increasing the cap that can be expensed right away from 1,000,000 to 2,500,000.0. And you'll see that the language is proposing to conform with this federal treatment. There's the

[Rep. Emilie Kornheiser (Chair)]: Sorry. I wish I had said I was kidding. So we're gonna look at this deep all morning. We're gonna have a chance to touch it again this afternoon if folks want to. And then we're gonna look at it again tomorrow morning, and then we're voting tomorrow afternoon. I did not give my usual public service announcement that we might we're gonna work tomorrow afternoon. It's a crossover week. I assume that everyone had already assumed that, but just wanna sort of say that. And so if anyone has planned and this is my second public if anyone's planning on being absent tomorrow or for any minutes at all next week, please do let me know because we're scheduling boats, obviously. And you all know that you've been around. So, okay,

[Rep. Bridget Burkhardt (Clerk)]: back to you.

[Patrick Walsh (Joint Fiscal Office)]: And I do know I'm moving a little bit quick. My goal right now is to give a higher level summary, which Kirby will then expand on. If at any point I'm going too fast, please let me know. Okay, so that is for expensing for depreciable assets. HR1 also did make some changes to prorated share rules What this does is change the treatment of controlled foreign corporations. Just as a quick reminder, CFC is a foreign corporation that has at least 50% of the voting power or value of the stock owned by US shareholders. HR1 is doing is saying that each US shareholder must include in their gross income their pro rata share of the CFC's passive income in that tax year. So in effect, what this says is that taxpayers who hold stock in CFC would have seen an increase in the gross income that they have to report on their tax return. And this is something that the Feds would be capturing. It would go into your AGI calculation and flow through to Vermont. And you'll see that the language is proposing to conform with this treatment. So again, that would be flowing through to Vermont. Charitable deductions for corporations. Previously, you could deduct up to 10% of your taxable income if you're making those contributions. What the HR1 is doing is setting a floor where you have to make charitable contributions above one percent of your taxable income. And you can deduct that amount between 110% of your taxable income, whereas previously it would have been between 010%. So, it's just basically taking a percent off the bottom of the range for the amount that you can deduct from your taxable income. And so you'll see that the language is proposing to conform with federal treatment on that.

[Rep. Charles Kimbell (Ranking Member)]: Assumptions assume that it won't encourage corporations to increase their donations to more than 1% in order to deduct

[Patrick Walsh (Joint Fiscal Office)]: which is reasonable. So I think I understand why it was structured in the way it was rather than saying you can only deduct 9% because it does require that you make those charitable donations to get into the range. So now we'll get into the most substantial change from what you all saw last and getting at some of your questions. But as quick background, so HR1 changed how corporations calculate their R and D expenses deduction amount. So starting in 2022, TCJA said that these expenses were required to be amortized over a five year period. Prior to 2022, corporations and businesses could fully deduct those expenses in the year that they were incurred. So you went from a regime where you could fully deduct these expenses in the year that they were incurred to then in 2022 having to amortize over a five year period. And so now what HR1 is saying is that we're going to go back to the pre TCJA treatment, which means that meaning that you can fully deduct these expenses. If you remember from the very first table that we looked at, that is probably the most significant cost drivers to the state if we were to link up to that fully. In fiscal year twenty six, that was, I think, a $19,000,000 negative revenue. And also, part of why it's so expensive is that it's also acting retroactively where any amortized or capitalized expenses going back to 2022 that a business has incurred, they can go back and claim all of those now. So, it's just changing to full expensing for this year, it's saying you can go back and anything that you haven't claimed yet, you can claim all that right away too. So in effect, what that does is it really front loads the cost of this. And there would be a front loading of the cost of this, regardless of whether it was retroactive, just because of the nature of it. But it's one of those things that in the long term, ultimately it ends up being sort of a net, we're back at baseline, it doesn't cost us more than it used to. But during that transition phase, that's when this linking up to that proposal would be really costly to the state. And it really is driving some of those big numbers that you saw in that very first table I shared with you.

[Rep. Bridget Burkhardt (Clerk)]: Sorry. The upper word is that they can, not have to. Is there any sense that all businesses are going to front load everything? Because people manage their deductions and their expenses to minimize revenue exposure just generally. So is there a sense already of how people are responding?

[Patrick Walsh (Joint Fiscal Office)]: Well, yeah, so we've looked at some other states and how their corporate revenue collections have been looking. And one thing that stood out is that rolling conformity states, those who link up automatically, have really been seeing corporate revenues declining or not hitting forecasted amounts. In states where they have a static regime, one particular example I saw was Wisconsin, so they're not automatically picking this up. They're chugging along like they normally would expect. So there does seem to be some link there. And if you're a business or corporation, if there is something you can do right away to lower your tax liability, you're gonna wanna do that.

[Rep. Emilie Kornheiser (Chair)]: So you're doing it another year by design, right? Yeah. And I think, particularly in very economically unstable I'm just wondering what the leading indicators are. And this fall, we saw those revenue drops, and we just didn't wasn't entirely clear yet what it was from.

[Patrick Walsh (Joint Fiscal Office)]: We're gonna see a lot of things going on. Indeed. So that's the background. What the actual proposal on the table is, the language would do two things. So, it would conform Vermont to federal treatment, so the full expensing in the year these costs are incurred for small businesses only. On the other hand, it was decoupled from HR1 treatment, so the full expensing and go back to the sort of stay static to the five year amortization treatment that previously businesses had been used to for large businesses. So there is a definition for what a small business is. It's defined in federal code as a business with average annual gross receipts over three years. So it's the average over those three years not exceeding $31,000,000 So this language would allow these small businesses as defined to fully deduct R and E expenses, and they would therefore no longer have to do the five year amortization schedule. On the flip side, this is not a large business or just maybe not non small business. These would be So these businesses not defined as a small business would have to maintain the pre HR1 treatment. And so for just their tax returns, sort of the net revenue impact is zero for the large businesses because that's our existing law. And so it's continuing Vermont existing law treatment for these large businesses. And so for the small businesses that you'll see in the table that I have coming up, that represents a revenue decrease to the state because they are being able to fully take advantage of deducting all of their R and D expenses. So one piece of the same proposal is neutral, other one is decreasing revenue a little bit.

[Rep. Emilie Kornheiser (Chair)]: Do know

[Rep. Mark Higley (Member)]: the numbers of small businesses compared to the Americans?

[Patrick Walsh (Joint Fiscal Office)]: I do have that number, but not on my notes right now, so I'll send that to you Thanks. When we're

[Rep. Mark Higley (Member)]: Follow-up to Mark Higley's question. Do we know about the relative impact of small businesses versus large?

[Rep. Emilie Kornheiser (Chair)]: Can you start that question again? I just

[Rep. Bridget Burkhardt (Clerk)]: didn't hear

[Patrick Walsh (Joint Fiscal Office)]: you. Alright. Do we know

[Rep. Mark Higley (Member)]: following up on Mark Higley's question, do we know about the relative fiscal impact of small business?

[Rep. Emilie Kornheiser (Chair)]: What do you mean by fiscal impact? What do you mean by fiscal impact?

[Rep. Mark Higley (Member)]: Well, if it's going to change revenue to the state based on how businesses treat deductions and this sort of what's the impact that we're concerned about in this committee?

[Patrick Walsh (Joint Fiscal Office)]: Well, I think you'll you'll it'll that but the answer to that question will be illuminated a little bit in the summary table that I have in a couple of slides. Okay. But you'll see that large businesses have a much bigger revenue impact on this. Okay. That's that's good. Thank you, Patrick. Makes sense.

[Rep. Mark Higley (Member)]: Couldn't we determine that by your previous slide that you said had the full vote decoupled and then the new slide. Yeah,

[Patrick Walsh (Joint Fiscal Office)]: can definitely make that comparison. Okay. So that is Sorry, this last one is the first instance where we have a part link up and decouple. So we've gone through the areas where you'll see in the language it's proposing to link up to federal treatment. The next few or next couple I'm going show you are areas where the language is proposing to decouple from federal treatment. So in HR1, there was a new bonus depreciation introduced for a flock light production property. So rather than depreciating the cost of that property over a thirty nine year period, it's saying that you can claim that full bonus depreciation right away upfront. And this applied to certain properties bought, filter, bought after 01/19/2025. Don't ask me why it's such a specific date. So what the language is doing is proposing that Vermont decouples from this treatment and requires businesses to do that thirty nine year depreciation, so spreading it out over a longer time period. And this is consistent with other areas of Vermont law when it comes to bonus depreciation. And actually, think that was some of the justification why the tax department came in and requested this change. So the next piece is decoupling from the exclusion on gains from qualified small business stock. So there's kind of two parts to this. So HR1 increased or basically made larger the type of business that could qualify in terms of their aggregate assets. Made it so larger businesses could qualify to be a qualified fall business stock and also increase the amount that could be issued for issuer. And so on top of that, it also previously, if you held that qualified small business stock for five years, you could exclude all of the capital gains from selling that stock. The new language sort of faces it. So if you hold it for three years, you can exclude 50% of that capital gains, four years, 75, then again, five years, 50%.

[Rep. Emilie Kornheiser (Chair)]: So we still have all of the capital gains preferential treatment?

[Patrick Walsh (Joint Fiscal Office)]: Yep. There's the, you have the capital gains exclusion, yes.

[Rep. Bridget Burkhardt (Clerk)]: I mean, in this case, I assume some of the investors are also picking up set the value of those shares. So are there any rules or transparency around how the initial valuation is determined?

[Patrick Walsh (Joint Fiscal Office)]: I'm not sure I'm in the best position to answer that question, but I can

[Rep. Emilie Kornheiser (Chair)]: Did I send you the Did I send everyone that really long report or just

[Rep. Bridget Burkhardt (Clerk)]: Did I send that to you? So

[Patrick Walsh (Joint Fiscal Office)]: in terms of setting the initial value, I guess I'm not quite sure the exact answer to that question. HR1 is expanding sort of the businesses that could qualify in the amount of the stock that can be sold per issuer. But what you'll see the language is doing is it's not just decoupling from the HR1 treatment, it's decoupling from the preferential treatment of these capital gains altogether.

[Rep. Emilie Kornheiser (Chair)]: So, they'd be treated like regular capital gains.

[Patrick Walsh (Joint Fiscal Office)]: Right. So, one thing to

[Rep. Emilie Kornheiser (Chair)]: remember Which gets preferential treatment. And

[Patrick Walsh (Joint Fiscal Office)]: just one thing to remember when thinking about it, and I only bring this up because I always want to harp about single sales factor and how that matters. This is not single sales factor, but what matters in terms of who's paying this is the domicile of the taxpayer. So if you were a Vermont taxpayer and you owned qualified small business stock in a company in New Mexico and you saw that, this change would affect you if you were someone in New Mexico with stock in a small, qualified small business stock in Vermont and you sold it, it depends on what New Mexico is treating that income like.

[Rep. Bridget Burkhardt (Clerk)]: Do you think this might dissuade Vermatra from investing in startups and Belmont, or in any startups, because it matters where they're going, where they're investing.

[Patrick Walsh (Joint Fiscal Office)]: I mean, suppose there could be some behavioral change. It's not something we've really modeled out, though.

[Rep. Bridget Burkhardt (Clerk)]: I'm just thinking that you don't like the policy, okay, but Vermont investors are disadvantaged from making this kind of investment because they're domiciled here, but if you're domiciled anywhere else in the country, you'd want to make this investment. I just wonder if we really want to make it tougher for a lot of domiciled people to make this kind of investment, especially if they're looking at to reinvest one day in July and investment, I shouldn't have said the name, but there are places that try to help people who are starting up companies in Vermont and that might appeal to a Vermont investor.

[Patrick Walsh (Joint Fiscal Office)]: I think I'd sort of say that that's kind of a policy discussion for you all to have, and continue to think about perhaps. I

[Rep. Emilie Kornheiser (Chair)]: see the point of trying to think I do. We're still leaving preferential treatment for capital gains, which is a lot of

[Rep. Bridget Burkhardt (Clerk)]: an assessment. To me, that's not the question. I hear that. Yes. We're allowed down in policy discussion.

[Rep. Emilie Kornheiser (Chair)]: I'd rather we all actually understand what we're talking about before we have a policy discussion, because this continues to be slightly confusing to me, and I've run through it every day for a month now. So maybe it's just me. So let's all get our hands on what the proposal is, and then we can discuss it.

[Patrick Walsh (Joint Fiscal Office)]: So yeah, I'll just say again, this is fully decoupling from any preferential treatment of these capital gains and treating it like regular capital gains and the Vermont tax code. So the section two fifty deduction, the language you'll see is proposing to decouple from this deduction entirely. And you may also remember, this is something that when Carl Davis came in and talked about HR1 impacts, this was something that he also put on the table for you all as a recommendation. So what HR1 did was adjust the amount of foreign derived deduction eligible income or FEDE, the Mexican corporations could deduct from 33.34%. And then the net corporate or CFC, tested income or necktie, as he called it, changed that to 40%. This is the thing we've talked about before. On one hand, HR1 was expanding the base of this foreign type of income, and then while they're expanding the base, reducing the deductions to try and make administration of it a little bit simpler for them, but also not really try to dink corporations too much. And one thing that's important to remember with federal treatment of this income is that they provide credits to corporations for foreign taxes paid, and so they rely on that as a way to offset that and the deductions to offset some business activity that might not be specifically domestic, while also making sure that they're taxing this foreign income in light of I think the narrative that you hear a lot is that corporations will set up a subsidiary in Ireland, park all their intellectual property there, and essentially charge the parent corporation, the domestic corporation, royalties for use of the patents. It's sort of like the anecdotal narrative around some of this income, but maybe to help you remember what the kind of income we're talking about here. And so just to quickly define the two different ones, today is that income earned by domestic corporations for exporting property or services for use outside of The United States. NECD is the aggregate of a US shareholder's income from all of their CFCs. That shareholder can be a corporation and often is. So think of that kind of as their foreign subsidiaries. And it's all part of the unitary group, which Vermont is very clearly defined. And the last time we've shaped, we very much reviewed corporate income taxes. And so, part of the sort of proposal that was put forth when Carl was here was that Prabhat doesn't have these credits for foreign taxes paid. This income If you remember the apportionment equation that I've shared with you all in the past, basically, you're selling to you're For today, you're selling out of country to a foreign country. When you think about the single sales factor, your total sales in the denominator is gonna increase, but sales into Vermont, it's not going to. Right? So that part of the equation is not changing. So what does change is the total net income by removing the deduction increases, but you're also seeing an increase in the sales factor sorry, a decrease in the sales factor because the denominator is increasing, making the allocation smaller. So really, the argument that was put forward to you when Carl wasn't here was, let the single sales factor do the work of apportioning this, don't rely on deductions, especially when you don't have the foreign taxes paid credits that the federal government offers to these corporations. So the language is decoupling saying these deductions no longer allowed. It's putting the full weight of all this income into the apportionment schedule and letting it be apportioned sort of regularly that way. So that's that's foreign income. The next change was just I know you're all familiar with this, but there's currently a $3,000,000 cap on the amount of credits that the Vermont Downtown Development Board can award any any given year. This language is proposing to increase that amount by 1,000,000. And again, credits are issued to people who are doing the project, but they're often sold to banks or insurance companies. They can be claimed to offset personal income taxes for the person's issue to, but more often they're sold banks insurance companies. It can also provide capital for the project being undertaken, which include things like historic rehabilitation, facade improvements, code compliance and flood mitigation.

[Rep. Bridget Burkhardt (Clerk)]: Just to be clear, this has nothing to do with H1, this is our policy decision. Oh, yeah, It's just there was a trend. And just given the conversation that happened yesterday, was there discussion in appropriations of the merits of that credit versus an annual appropriation? So

[Rep. Emilie Kornheiser (Chair)]: we're sort of going to the full miscellaneous tax bill here. Pat and I did some math with all of the ups and downs from last fiscal the fiscal year we're living in, next year, and the year after to try to make the full miscellaneous tax bill revenue neutral. And so that's why this was a million. I think we originally talked about 2,000,000 in committee.

[Rep. Bridget Burkhardt (Clerk)]: I thought we were going up 3,000,000.

[Rep. Emilie Kornheiser (Chair)]: We're going up from I three think we were previously talking about adding 2,000,000, but in order that would make the bill revenue negative. I'm not understanding that. I'm just like,

[Rep. Bridget Burkhardt (Clerk)]: that was a whole other thing I hadn't

[Rep. Emilie Kornheiser (Chair)]: thought Oh, about okay, cool. Because we're using, and maybe you

[Rep. Bridget Burkhardt (Clerk)]: told, I don't understand, I'm just trying to figure out why there's a federal makeup or not, but we have to do it separately. Separately, we have a village in downtown tax credit program. My question was, was there conversation with appropriations about the merits of using tax credits versus annual appropriations at the same time? For tax credits. And because they've accomplished the same thing, one has the entire world, give the contributions a broader perspective on what state revenues they're managing, And then you introduced a whole other piece that I hadn't thought about, which is, are we changing the bill to tax credit because we think it's a good policy change, or are we doing it to make a revenue neutral miscellaneous ed bill? In which case, I don't understand the logic of that.

[Rep. Emilie Kornheiser (Chair)]: So we all thought We talked about the Downtown Village Center Tax Credit here. I think we put it in our letter to ropes, maybe. No? Okay. But it's been in here already. Yeah. Thank you. Okay. Brought it down from sort of the $2,000,000 that wasn't here to the 1,000,000 in order to make this bill not be negative. Appropriations has historically This is one of the tax credits that everyone's been comfortable with and seen as a good thing to do. Congress, to my understanding, also put this in their letter to appropes. I'm hoping that in future years, and I started a conversation with other chairs about this, that the process of appropriations letters, we could have somewhat of a parallel process with revenue letters. That committees, policy committees would have, frankly, mostly the Commerce Committee, but partly the Human Services Committee, would have a regular chance to evaluate the tax credits that benefit their policy areas, instead of thinking, of forgetting about them to fund the grave.

[Rep. Bridget Burkhardt (Clerk)]: Yeah, well, I think that's my concern. And it's not a judgment on the value. These are valuable programs, just to be really clear. But I think when they come in as credits as opposed to appropriations, it's very easy to lose track of our total spend.

[Rep. Emilie Kornheiser (Chair)]: And also, you don't pay attention to whether they're achieving what we think they're achieving. This one, in my experience, gets fairly regular annual check ins from us and from commerce. And I told Representative Ode that we weren't going to talk about the policy merits of each section. We were just going to understand what's in here. Then I I'm sorry. I'm sorry. She forgives me. I understand

[Rep. Bridget Burkhardt (Clerk)]: you want to make this revenue neutral, but I think it's such an important thing that how would we go to show older revenue control to put more money toward it?

[Rep. Emilie Kornheiser (Chair)]: I would love that if we could get a bill to appropriations that they're not going amend once they get it. That's one of my goals for our committee.

[Rep. Bridget Burkhardt (Clerk)]: You, is this their feeling is if it's revenue neutral, they're really gonna leave their hands off it? There are

[Rep. Emilie Kornheiser (Chair)]: no promises in this world. Well, I think that they're much more likely to leave it alone if we do that. For an extra million. They're looking for like $10 right now down there.

[Rep. Bridget Burkhardt (Clerk)]: It's just that our rural towns, the GATT towns.

[Rep. Emilie Kornheiser (Chair)]: That's what I'm saying. Agreed, I think it's actually a huge step forward that we're increasing this $5,000,000. They've been asking for that for a long

[Rep. Bridget Burkhardt (Clerk)]: time. Okay. I mean, I'm okay.

[Rep. Woodman “Woody” Page (Member)]: I'm just gonna say one more million won't matter, to be honest with you.

[Rep. Emilie Kornheiser (Chair)]: I mean, I know it's a lot

[Rep. Bridget Burkhardt (Clerk)]: of It's very helpful.

[Rep. Woodman “Woody” Page (Member)]: Sorry to say that.

[Rep. Bridget Burkhardt (Clerk)]: No, I am.

[Rep. Emilie Kornheiser (Chair)]: I hear you. Let us move on to the next one, because it seems like everyone understands this tax credit.

[Rep. Bridget Burkhardt (Clerk)]: Yeah, this is a fun one.

[Rep. Emilie Kornheiser (Chair)]: I think it's lots of fun in here.

[Patrick Walsh (Joint Fiscal Office)]: Just to ease any of the confusion from before. So we went through the link up sections, we went through just a couple of sections. Everything else we're talking about next is sort of additional stuff, things affecting existing law. The second one, and I know you had more Collins in here to talk you through their request, but this is basically allowing HFA authorizing them to issue three or sell $350,000 in total first year credit allocations. And this supports the loans that they provide for the down payment assistance program as they had authorization for $250,000 in these credits through fiscal year twenty six. And so what you're doing is, what you would essentially be doing by including this language is extending that program out to 2031 and increasing the amount of the credits that can be allocated to 350,000. I think the easiest way to understand the fiscal impact of this is this chart that Laura has created. And it just shows you, so in blue, you see the current commitments that was the credits that were allocated by the HFA at the $250,000 level, you can see that they're spread out over five years. They have this tail effect to them. So, you can see in the blue that in 2026, those credits that have been allocated will be sort of ending in fiscal year 'thirty. But by including this language in the green here, you can see that they still will have the ability to continue allocating these credits going into the teacher at this different level. So the single year impact for fiscal year 'twenty seven, you'll see that first year that the green sort of shows up right here. The fiscal impact based against current law there would be $350,000 Because they're allocating these credits each year, that does increase over time with the tailed effect of these credits. And you can see that in fiscal year thirty one, that revenue impact would peak with the net difference being 1,750,000.00. So it's something that does grow over time because these credits have curtailed effect. But really, what this is also doing is just extending a program that's currently happening. And there are credits that have been issued that will continue to go towards this fiscal impact until 2030. So there's one more proposal on the table in front of you, and then we can look at everything together in one table. So Vermont currently has a state research and development credit, and it's equal to 27% of what the federal credit allows for eligible research and development expenditures. Specifically, these expenditures have to occur within Vermont, so the R and D has to take place here. You don't have the liability to offset with these credits, you can carry the value of the credits forward up to ten years. So, if you don't have the tax liability to offset, it's not like you just lose the credit. You can still carry that amount forward up to ten years. One thing that is important to note about this credit is it does kind of require that you have to have increasing R and D expenses over time. So what you can do is that So the credit is equal to 20% of these eligible expenses, but it's the difference between the four year average of what your R and D is. So, sorry, let's take a step back. Think of a five year window, the fifth year being the one that you're in. In years one through four, you would take those R and D expenses and get the average amount. In year five, you're comparing that to the previous four years average and the difference, the amount over that baseline amount, that's the amount that's eligible for the credit. So that if you're gonna be persistently claiming this credit over time, that sort of dynamic is why you would have to have sort of increasing R and D expenses. And that in and of itself is already a bit of a simplification of the credit, but the crux there is it does sort of require increasing R and D expenses over time. So the language that you'll see is proposing to increase the Vermont state level credit, which again is only for activity in the state from 27% to 75%.

[Rep. Emilie Kornheiser (Chair)]: My understanding is in doing this, we'll have the highest one in the country. That's correct.

[Patrick Walsh (Joint Fiscal Office)]: Okay, everything put together.

[Rep. Charles Kimbell (Ranking Member)]: Could you go back to slide?

[Patrick Walsh (Joint Fiscal Office)]: Differentiation on smaller, large businesses on this slide. Can you speak up?

[Rep. Charles Kimbell (Ranking Member)]: Just thinking guess we'll wait to the next slide.

[Patrick Walsh (Joint Fiscal Office)]: Sorry. If you are curious what businesses claim this credit, the tax department does publish a report every year saying specifically which ones do claim it. I know personally when I looked at it, I saw a lot of familiar names.

[Rep. Charles Kimbell (Ranking Member)]: You shared with us a list before.

[Patrick Walsh (Joint Fiscal Office)]: Yes. I did share a credit.

[Rep. Bridget Burkhardt (Clerk)]: Does the tax department have the same on the people who qualify for the small business shares credit?

[Patrick Walsh (Joint Fiscal Office)]: Are you talking about the

[Rep. Bridget Burkhardt (Clerk)]: That's going back to the federal one, the qualified small business share. I

[Patrick Walsh (Joint Fiscal Office)]: know that the deputy director of the tax, certainly, is here, and she won't be able to The follow-up business

[Rep. Bridget Burkhardt (Clerk)]: stock gain exclusion, the ones affected by that. Do we know who those businesses are? In Vermont.

[Rep. Emilie Kornheiser (Chair)]: We can ask her when she comes up. But I will say that one of the reasons Having this list has been really helpful for policymaking to expand this credit. And the list exists because when the original credit passed, it included a provision to publish that data, which is really remarkably unusual. And I think it's interesting. I think generally when that kind of data is requested, there's sort of an assumption they'll be used to do something nefarious, and we are using it to increase the credit. And so I just think it's an interesting lesson for us all that I'm now gonna Sounds

[Rep. Bridget Burkhardt (Clerk)]: like good thing for not bad. Sure, it might just be a

[Rep. Emilie Kornheiser (Chair)]: good thing for us to remember to request that data be

[Rep. Bridget Burkhardt (Clerk)]: published Maybe in the even look at tax expense. Yeah? Shall we go to the next one?

[Rep. Emilie Kornheiser (Chair)]: Before everyone looks at this number, I need to say the full bill that we're looking at, the full miscellaneous tax bill, is gonna include those now, as drafted, includes those purchase and use changes. So the total bottom line of

[Rep. Bridget Burkhardt (Clerk)]: the bill will be different than this. And

[Patrick Walsh (Joint Fiscal Office)]: I know for tomorrow, we'll have the fiscal note, which will have that all sort of put together for you. Perfect. Everything with the P and E and all that stuff. So this is everything that I just summarized. You can If you think back to a table for fiscal year twenty six, instead of a negative 21,000,000, you've got about a negative 4,000,000 there. For fiscal year twenty seven, instead of a negative, I think it was $35,000,000 This actually becomes net revenue positive come fiscal year twenty seven. This is the breakdown of how those different changes flow

[Rep. Emilie Kornheiser (Chair)]: through. I continue to struggle to understand what revenue loss looks like and the budget adjustment is already passed. And so I just want to refresh my brain on it. I should be thinking of this more I should be subtracting that 3.96 from the 14.25 to think about what FY27 really is. Okay. Yeah. So the net change there, it's about 10,300,000.0. Which is right around what that purchase and use loss to the general fund is. It's kinda magic. That's kinda magic.

[Rep. Bridget Burkhardt (Clerk)]: Couldn't have called it that.

[Rep. Emilie Kornheiser (Chair)]: Any questions for Pat? Yes? I'm gonna have to

[Rep. Bridget Burkhardt (Clerk)]: go through this all again. We have this recorded somewhere and then it'll be

[Patrick Walsh (Joint Fiscal Office)]: on our data.

[Rep. Emilie Kornheiser (Chair)]: Do you mean the YouTube videos?

[Rep. Bridget Burkhardt (Clerk)]: I mean the records

[Rep. Emilie Kornheiser (Chair)]: maybe. It on the obstruction? Yeah, it's all everywhere. Okay. First, can send

[Rep. Bridget Burkhardt (Clerk)]: it to

[Rep. Emilie Kornheiser (Chair)]: you. Can't get it all in one shot. Me either. Yep. Okay. Yep. I don't know

[Rep. Mark Higley (Member)]: if this is a question or who, but what about all the other provisions that were in our miscellaneous tax bills? What are those?

[Rep. Emilie Kornheiser (Chair)]: So we're gonna finish talking, Carrie from Pat, understanding this, that we're gonna go through the miscellaneous tax bill with Kirby, including the section by section. And then we're going to hear from the tax department about the whole thing.

[Rep. Bridget Burkhardt (Clerk)]: Thanks. Anything

[Rep. Emilie Kornheiser (Chair)]: else for Pat?

[Patrick Walsh (Joint Fiscal Office)]: I'll be hanging out Thank if something comes

[Rep. Emilie Kornheiser (Chair)]: you. We're going to take a five minute break before we hear from Kirby for our brains and