Vermont Legislature SmartTranscripts:

[Rep. Emilie Kornheiser (Chair)]: And here we are, as always, the means committee for the I don't even know her name after John on the web today. Are see, it's 03:30. It's March 19. And we are going to look at the yield bill with numbers in it and words and just a nice complete yield bill. If you could join us, John.

[John (Office of Legislative Counsel)]: Good afternoon. Morning, Gray, Ledge Council. Less beautiful today, but the yield bill itself remains beautiful. So get ready to see that. There we are. Okay. So this will look familiar, but there are some updates beyond just the insertion of figures because there is now a reserve. And you're gonna see that updated in the statement of purpose, the highlighted language. Bill also proposes to reserve monies within the Ed Fund to offset property tax rate increases with the following year, fiscal year twenty eight. And so the updates are really on page two itself. Section one, we now have a property yield of 9,170, the income yield of 12,576, and a non homestead rate of 1.698. Sure you're gonna hear more about that, but you've also seen these figures before, just not in the form of the yield bill. And then section two is the insertion of reserve. This is taking half of the I think, 104,900,000,000.0 applying to this year and then reserving half. So in fiscal year '27, 52,450,000 shall be reserved in the Ed Fund to offset education property tax rate increases in FY '28. Commissioner to assume that that, 52,450,000.00 is reserved under this section is unreserved and unallocated applies to the calculation of the f y twenty eight yields non homestead rates. That's just part of the assumptions that people made as part of the yield determination when making the recommendation required pursuant to title 32 on or before 12/01/2026. That's your December 1 letter. So it's saying reserve this amount, and then commissioner, make these assumptions when you're determining the yields for the December 1 letter, and the reserve is considered an authorized use of Ed Fund monies pursuant to the Ed Fund statute. And that is it. Everything else remains the same aside from renumbering the sections to account for this new section two.

[Rep. Emilie Kornheiser (Chair)]: In, I guess I'll say, one of the more boring political compromises ever made. Some people wanted one year. Some people wanted three years. And so the bill I'm putting in front of us for a vote is two years. I understand that it is imperfect for everyone in that forum, and that is where we are. Do folks want to hear from Julia before or do we have questions explicitly for Josh? I didn't question that.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Okay, there's no way. Yep, please.

[Rep. Rebecca Holcombe (Member)]: So we're carrying a current unallocated unreserved balance of '22. So you're saying it's '52. Is this assuming that we're putting a third into this year and reserving a third to add to that '22 to make '52?

[John (Office of Legislative Counsel)]: I think it's assuming half, but I will not be best positioned to answer this.

[Rep. Rebecca Holcombe (Member)]: So maybe Julia could explain what happens with '22. Other questions for John?

[Rep. Emilie Kornheiser (Chair)]: Julia, do you have time? Quick. Do

[Rep. Rebecca Holcombe (Member)]: you to sit there? I I think so. Okay.

[John (Office of Legislative Counsel)]: Seems normal for me.

[Julia Richter (Joint Fiscal Office)]: Afternoon. Julia Richter, JFO. Do you me want to go ahead and share the outlook, or do want me to just talk through the answer to

[Rep. Rebecca Holcombe (Member)]: the question? I can do.

[Julia Richter (Joint Fiscal Office)]: Let me go ahead. Sorry. No apologies necessary. Then I'm just going

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: to go

[Rep. Rebecca Holcombe (Member)]: ahead. Pull that up.

[Julia Richter (Joint Fiscal Office)]: The Outlook is on the committee page under my name. This is the same Outlook that I presented last time I was in here. I know it's very small. So what we're looking at here is What was included in the language that John just walked through is the modeling that you see here in column B. So this is using half of the 104,900,000 of one time general fund to uniformly lower property taxes and reserving the remainder of the 104,900,000.0 for the purpose of going into that reserve he just walked through. I believe, Representative Holcombe, you're asking about the 22,000,000 here that's estimated to be unreserved and unallocated education fund surplus at the close of fiscal year 'twenty six. And that $22,000,000 is being used also to uniformly lower property taxes in this scenario. So the half construct is half of the one time general fund monies, but the entirety of the education fund surplus is used to lower FY '27 property taxes. So total, we're doing a one time buyback of 72. 75. 52.5 plus 22.3. Great.

[Rep. Emilie Kornheiser (Chair)]: Yeah. And folks represented Page join the Zoom, is lovely. Hello,

[John (Office of Legislative Counsel)]: everyone.

[Julia Richter (Joint Fiscal Office)]: Hi. I

[Rep. Woodman “Woody” Page (Member)]: think I haven't missed anything.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Nope. Nothing.

[Unidentified Committee Member]: Nothing going on here.

[Rep. Emilie Kornheiser (Chair)]: Representative Waszazak, you had a question.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Yeah. So

[Rep. Edward “Teddy” Waszazak (Member)]: one of the more compelling reasons that I've heard to split half and half or to use less than 105,000,000 out of the general fund is to give the appropriations committee a little bit more breathing room for all the pressures that are on the general fund. But because we would be reserving the other half of 105, this wouldn't actually do anything to alleviate any pressure on the general fund, is that correct?

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Yes, assumes- So taking the 105 out

[Rep. Rebecca Holcombe (Member)]: of general.

[Julia Richter (Joint Fiscal Office)]: Assumes the full transfer of 104,900,000.0 from the general fund to the education fund. And then it's in the education fund. And then the question is, how is it used? And in this construct, half of that monies are used for FY '27, and then half are still in the Ed Fund within that tax rate offset reserve for FY '28 or whatever the general assembly does next year.

[Rep. Emilie Kornheiser (Chair)]: Really with a very clear desire to absolutely maximize the amount that we are able to lower Vermonters property taxes and keep Vermont as affordable as possible this year and next year, because we know that budgets will be even tighter next year. We want to make sure that we are not causing an undue burden next year either. Just a point. Do we have other questions for Julia? Then we're gonna have a committee discussion about it before we vote. Yeah.

[Rep. Woodman “Woody” Page (Member)]: So Julia, just to point out the balance of the 104.9 is the 52.5. It's on line 29, right?

[Julia Richter (Joint Fiscal Office)]: Yes. So the half of the general fund money that's going into reserve, you see that transfer to the additional reserve in line 29, but it's negative. And then you see that it's going into that tax rate offset reserve in line 35.

[Rep. Emilie Kornheiser (Chair)]: For Julia? Yes. Okay, great.

[Rep. Rebecca Holcombe (Member)]: So if we're using $75,000,000 this year to buy down tax rate using one time money again, what is that likely to do to next year's tax rate right out of the gate, assuming spending is zero increase?

[Julia Richter (Joint Fiscal Office)]: If there is not the same amount of one time money, then we will see. If you'll recall that testimony, it's like pushing the increase forward one more year. And how much of a spike ballparking is that if you're using 75,000,000? I don't know. I would have to follow-up with that.

[Rep. Emilie Kornheiser (Chair)]: So

[Rep. Rebecca Holcombe (Member)]: our average

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Holmstead property tax rate would go down a penny or so, a penny and a half. And the average tax rate on household income, that would go up a nickel. And then the uniform homestead property tax rate, So, if I'm reading on the right line here, that would go down

[Rep. Rebecca Holcombe (Member)]: a penny.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Maybe not quite. Do you know, I guess you don't know what would happen to those rates next year because you don't know what the school spending would be.

[Julia Richter (Joint Fiscal Office)]: You mean in FY '28? Yes, I'm sorry. Yeah, I just Correct. And we don't know what school spending will be. And there's also the other pieces of the education fund that impact property tax rates, like the performance of non property tax revenues. Like the performance? Like the performance of non property tax revenues. Oh, yes. Right. And to your point, think you are, when touching on the change in rates, I'll remind you and the committee that this seems counterintuitive, right? Looking at the change in rates, that average homestead rate is decreasing, but we're seeing the average bill increase, estimated to increase. And that's because the base against which that rate is applied to is growing. So the rate does not need to be as high to raise more money. And that's why we look at the average tax bill rather than the change in rates, because the rates are only just telling one side of a two part equation.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: And Julia, I'm sorry, I should know this statewide adjustment on line J. What is that?

[Julia Richter (Joint Fiscal Office)]: That's the average statewide CLA. So that's from a few years ago. That's what the CLA is adjusted by. It makes it so that the equalized rate, the rates that we're looking at here end up being closer to the rates that are showing up in people's property tax bills. So this means that the average CLA in the state of Vermont is 70.3% estimated to be in FY '27.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: I think my last question has to do with ones B in resources. That goes down quite a bit. So this online number three, under sources, isn't that the money that some people get back? I mean, we're always saying that 60 or 70% of Vermonters who apply for this on their tax return and they get that money back. So the total amount of what those folks get back is going down by 6,000,000 or

[Julia Richter (Joint Fiscal Office)]: so. The property tax credit, that is what you're seeing on line 1B. You do see that it is forecasted to decrease from 26 to 27. We see that property tax, fewer households qualify for a property tax credit just because of the way that the property tax credits are calculated. You have those fixed parameters in statute of the house site limits, that four twenty five and two twenty five, and the income limits. And because property values are growing faster than income, it just naturally brings that break even point lower and lower, meaning that it's increasingly cheaper for more Vermonters to pay based on property than on income, which is why they wouldn't qualify for a property tax credit.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: So that's a market question that we can't really fill, right?

[Rep. Rebecca Holcombe (Member)]: What can we fill with it?

[Julia Richter (Joint Fiscal Office)]: The parameters of the property tax credit are policy decision. If there were to be an intent to change it for fiscal year twenty seven, you would only be able to change the property tax credits that have already been earned because that property tax credit is on a lag. So changes to the property tax credit writ large need to be done a year or two in advance so that they will then show up on the property tax bills after accounting for the lag.

[Rep. Emilie Kornheiser (Chair)]: And changing it creates that balloon problem, which is one of the reasons that we really sort of took apart the whole, that whole structure and put it back together in X-seventy three, so that it would be able to change it in the future and be more sort of sensitive to changing economic conditions.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: So Julia, I think I know the answer to this, but can you tell us all who benefits from this tax wise, the property tax? Who's getting a lower rate this year than they got last year?

[Julia Richter (Joint Fiscal Office)]: Who's getting a lower rate this year than they got last year?

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Well, I'm living in the future. Who gets a lower rate next year than got this year? Is it the people who paid on the homestead property tax or the average tax rate

[Julia Richter (Joint Fiscal Office)]: for household income people or the uniform non homestead people? So thinking about fiscal year twenty twenty seven, the average tax bill is going to increase across homestead, non homestead and income by 7% if the yield constructs that John just walked through and what we're looking at here in column E are passed into law for fiscal year twenty twenty seven, and we have no further updates. Of course, we will have more updates.

[Rep. Emilie Kornheiser (Chair)]: And in every scenario that we have in the yield bill, the average bills are going to go up. Just spending went up. Even though spending came in lower than we expected, spending went up faster than the other revenue sources grew. And the property tax is sort of the one way that we pay for education that is able to be more various, even though it's a big responsibility for Vermonters.

[Julia Richter (Joint Fiscal Office)]: The other piece I would also add is that this is an average. So it's not going to be that everybody's property tax bill is going up by 7%. You will see folks who experience a deep I'm just assuming. You're gonna see folks that experience a decrease or a very small increase that's lower than 7%. And you'll also see folks that are experiencing an increase in their property tax bill that's larger than 7%. Because of all of the intricacies within the Ed Finance system in Vermont, it's hard to get into how each individual taxpayer is going to be impacted, which is really why we're looking at an average. And it really is just that, an average.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: So I remember before Christmas time, you and I had several long conversations and email exchanges, and I really tried not to contact you between Christmas and New Year's. But we figured out, or maybe I finally got it through my head that thing that my district could do to lower their tax is to reduce their pupil cost, a big number that they vote on or stop losing pupils because our student population goes way down. This year they lost 38 children and nothing, nobody was mad, they just moved out of town for jobs. And we have a pattern in our town that when the students get into high school, the families tend to move to the town because we don't have a high school. They move to the town where the kids have gone to high school. So typically we lose students. And because people are having fewer babies, there's fewer little kids coming up. So our student population goes down. So anyway, I remember that. And I think of that every time I look at this sheet here, okay, they could reduce their, you know, their student spending and if we could have people move into town, that would help. We here can't control that here in this bill and this from '25, or can we? Is there anything we can do to help either of those things?

[Julia Richter (Joint Fiscal Office)]: Is that That's beyond me. No.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: This is really in the hands of the voters, the people who be attacked.

[Rep. Edward “Teddy” Waszazak (Member)]: People who go up with their feet.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: I might slip it into my Northern Vermont vernacular. I know, I heard myself say that. Stop

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

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: That was helpful, thank you Julia.

[Rep. Emilie Kornheiser (Chair)]: Further questions for Julia?

[Rep. Rebecca Holcombe (Member)]: For the When we're going to start seeing potential impacts of ChIP on revenues? If they appear.

[Julia Richter (Joint Fiscal Office)]: I don't know. I'm wondering if John knows. Otherwise, I would need a phone Ted.

[John (Office of Legislative Counsel)]: Don't know when that would start out. Can't be.

[Rep. Rebecca Holcombe (Member)]: I just don't know

[Rep. Edward “Teddy” Waszazak (Member)]: where the

[Rep. Rebecca Holcombe (Member)]: approvals begins and for what. I assume the first one is for next fiscal year. I don't know.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Did you say Chip? Yes. Okay, I know the answer to that. Because I've been asking Ted about it about every two weeks, because I've been watching how much money is being spent out of

[Julia Richter (Joint Fiscal Office)]: the Exxon, being diverted from

[Rep. Emilie Kornheiser (Chair)]: the Exxon. We can get an update on CHIP in the next few weeks from Pepsi.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Thank you. Any other questions for Julia?

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

[Unidentified Committee Member]: I'm not sure of the number, but the last estimate that we got, there was eight school districts that haven't sent in their budget yet. It doesn't really matter. I guess my point is whatever that number is, let's say, how much would it have to go up or down, not necessarily down, up to make a change in this, that affect that dollar amount for the non homestead right off the bat?

[Julia Richter (Joint Fiscal Office)]: Well, about 14,000,000 is a penny on both the homestead and non homestead rate. That said, in theory, every dollar impacts things. In reality, because the education fund is so big, that once we start to get into a million or more, that's when we start to see a potential impact. The reality of the situation is, when you look at us solving for the yield, and we've been asked to solve for uniform average bill change, what you see here down on the very bottom line is how close we can get to zero without having the education fund in deficit. So technically, in column E, we're estimating about $830,000 unreserved and unallocated in the education fund. And that's just because there's nowhere to put them and maintain a uniform average bill change. I will also say that with respect to the school budget updates, the information that we're looking at here is still the budget data from February 21 from the Agency at Education. And that's because this is what we do every year around when this committee starts really thinking through yield build decisions, we freeze the data so that you can look at different scenarios and not try to keep up with how data has changed. So, it doesn't have the data updates that I have received since 02/21/2026. When this bill makes it into the Senate, the first thing that I do in the Senate is I come in with the updated data, and they see the impact or lack thereof. Is

[Rep. Emilie Kornheiser (Chair)]: one why every yield bill, except for last year, I think in the history of yield bills, be had set back here and or go to conference. And then the districts that we hadn't received the budget data yet, there was still an amount booked for those, right?

[Julia Richter (Joint Fiscal Office)]: Yeah, thank you. So we are including an estimate of all school district budget data here. What's captured in the 2,075,000,000.000 that we see in the education payment. What we're taking here is the school budget data that AOE received and shared with us as of February 21, or the December 1 letter budget projection.

[Unidentified Committee Member]: Thank you.

[Rep. Rebecca Holcombe (Member)]: You're welcome. If, hypothetically, we were going to use the 75,000,000 to home reserve for construction,

[Julia Richter (Joint Fiscal Office)]: what would that look like? How would we carry it? Instead of using For a buy down. So that would be We don't have that on this sheet. The closest would be what you see in column B that assumes no general fund one time money.

[Rep. Rebecca Holcombe (Member)]: Or any number. Where would it be carried? How would you specify that? I'm sorry. Wasn't clear.

[Julia Richter (Joint Fiscal Office)]: Oh, like if you were to put money aside for school construction within the education fund, I would make a number, a new line number 36, that would say whatever the reserve structure was titled. That said, what we're not seeing here is the school construction, a special fund or whatever it's called, that was created in Act 73. This is showing dollars that have sort of been fenced within the education fund.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: So, you could also I think

[Rep. Rebecca Holcombe (Member)]: what you're saying is you could also just put it into the construction special fund that is created. Yes.

[Rep. Emilie Kornheiser (Chair)]: Any other questions for Julia?

[Rep. Woodman “Woody” Page (Member)]: Yeah. So Julia, where

[John (Office of Legislative Counsel)]: Which row

[Rep. Woodman “Woody” Page (Member)]: assumes the full 104,900,000.0?

[Julia Richter (Joint Fiscal Office)]: So column C is showing the if the $104,900,000 of one time general fund were to be used in its entirety to lower property taxes in fiscal year twenty twenty seven. So you see that uniform average bill change of 3.8%. And that also uses, all of these columns use the 22,330,000.00 in EdFund surplus to uniformly lower bills as well.

[Rep. Edward “Teddy” Waszazak (Member)]: Thank you.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: That's column C. Yes.

[Rep. Emilie Kornheiser (Chair)]: Any other questions for Julia?

[Julia Richter (Joint Fiscal Office)]: Thank you, Julia.

[Rep. Emilie Kornheiser (Chair)]: I just want to I mean, there's no one here. I have no idea if anyone's even watched the film. But just want say, we get really lost in the numbers and the columns and the rows and the impact on property taxpayers. And the yield bill represents a pretty extraordinary thing that Vermont does, right? We trust local communities to figure out how much they need, and then we fund it. And that money goes to support our kids and their education, and in doing that, our democracy and our economy. And almost all of this money gets spent in our communities locally, and that's also an extraordinary thing. And so I think whatever decision we make, and I imagine that everyone is uncomfortable with all of the directions of the decisions on the table today. And I don't want speak for y'all. Say I am. I don't think there's a perfect path forward here. But the money we're spending is some of the best money we can spend, as hard as it is for many of our taxpayers. Yeah.

[John (Office of Legislative Counsel)]: I agree.

[Rep. Emilie Kornheiser (Chair)]: So I think maybe we should take a three minute break, and then we can come back and vote if folks are ready.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: Okay. Woody,

[Rep. Emilie Kornheiser (Chair)]: Woody, are you okay are you okay with a three minute vote a three minute break?

[Rep. Woodman “Woody” Page (Member)]: Yes. I can. Okay. I'm going to call probably Mark to talk to him briefly.

[Julia Richter (Joint Fiscal Office)]: He could

[Rep. Emilie Kornheiser (Chair)]: even leave you all in the room and we well yeah. Okay.

[Rep. Woodman “Woody” Page (Member)]: No. No. No.

[Rep. Emilie Kornheiser (Chair)]: We're gonna We'll we'll go up live and take a break, and you hang out, Woody.

[Rep. Woodman “Woody” Page (Member)]: But I I need to know, Mark immediate. If the number to call you

[Rep. Emilie Kornheiser (Chair)]: You Woody, you just stay there for just a second. Okay? We're gonna leave the room.

[Rep. Edward “Teddy” Waszazak (Member)]: We can leave the room. That's one way to do it.

[Unidentified Committee Member (likely Rep. Carolyn Branagan)]: That's what

[Rep. Woodman “Woody” Page (Member)]: No. I can

[Rep. Emilie Kornheiser (Chair)]: call