Vermont Legislature SmartTranscripts:

[Emilie Kornheiser (Chair)]: So here we are in the Ways and Means Committee. It's Wednesday, March 25, quarter to two. We have a number of amendments to adhere. And before we do that, I'm going turn over to Representative Branagan.

[Carolyn Branagan (Member)]: Well, don't often get more comments here in the committee, but we have a lovely thank you note from the state treasurer. He says, I can't thank you all enough for your support of H577 and for your good work repeating it on the House floor this afternoon. I know this will do a lot of good for Vermonters and your support was appreciated. My office really enjoyed the opportunity to work with your committee, and we all look forward to more opportunities in the future. Thank you all. Thank you for all you've put on and help us make it a better place. So all the best for future.

[Bridget Burkhardt (Clerk)]: Introduction on Brandon. Yes. So

[Emilie Kornheiser (Chair)]: the first amendment sponsor is our own representative Kimbell. I believe I co sponsored this amendment with And it's partly a technical amendment, so I'm going ask Kirby to cover the whole thing.

[Kirby Keane (Legislative Counsel)]: Good afternoon everyone. Afternoon, Katie. Last one. Kirby Keane, Legislative Counsel. I'm sharing with you a foreign amendment for today for H. Nine thirty three that is being offered by Representatives Kimbell and Kornheiser. There is three instances of amendment here. The first two relate to the same topic And that is, if you will recall when we walked through this, I had worked with the tax department to put together decoupling language while we were working through it. I think I had mentioned in my walk through that the department had asked, do they want language to decouple from This goes to decoupling from the qualified small business stock change at the federal level. And so the department asked, well, what about Vermont's 40% exclusion of those gains?

[Rep. Tagliaferri (first name unknown)]: And

[Kirby Keane (Legislative Counsel)]: we didn't really know, but the department followed logically. I don't want to say that they were trying to make any kind policy pitch, because they weren't. I want to be clear about that. They thought it followed logically to have language in there to not allow for a modest 40% exclusion for those gains. So that was the language that we put in and we came in and we went over in committee. I do recognize that that was in the middle of, that was section 55 of 60 something sections and I went over a lot of things. So Representative Kimbell pointed out that, hey, I am not sure that we have paid enough attention to this. So asked that I put together an amendment to allow the Vermont 40% capital gains exclusion for those gains. So different than what was passed out of here.

[Emilie Kornheiser (Chair)]: And I just want to say, I remember saying on the record that our intent was to treat it like any other capital gains. And so I want to apologize for my oversight on this as well.

[Kirby Keane (Legislative Counsel)]: That is what we are doing. These first two instances of amendment are removing the language that was proposed to be added to the 40% exclusion. It says that this amendment would strike out that underlying language. That underlying language is the part that would not allow the 40% exclusion for gains from qualified small business stock. So that is being removed from the bill with this. And then third is, I had asked this

[Charles Kimbell (Ranking Member)]: One of reasons why I have the two different sections. One is personal income and other is trusts on the states. Is correct.

[Kirby Keane (Legislative Counsel)]: Division 21 is the definition of taxable income for individuals. 28 is the definition of taxable income for estates and trusts returns. Whenever we're decoupling from individual personal income tax, we have to do it twice in the other definition also. So third is just recommendation from me that I change the effective dates to be super sure that there is no confusion whatsoever about when things take effect. This part that I highlighted had originally been 2025. I had originally slotted in with this first part of the effective date. What this does is, so there is three parts of the effective date when it comes to the decoupling and the link up. The first part is the statutory language in the link up, which gives its specific date. The second part is when it becomes effective. And the third part is this last part of the provision that says shall apply to taxable years beginning on and after 01/01/2025. So considering the statutory language is very specific, the last part of this provision is very specific. Threw this in originally and with the other thing, is actually to take effect 01/01/2025. From my point of view, I do not think that there is any legally significant difference when it becomes effective, because the other provisions are very clear about what is happening here, but to make sure that the door is all the way closed on anyone trying to argue that we are somehow coupling up to a version of federal law that didn't exist yet, 01/01/2020 I went ahead and gave it its own effective date with that date specific to 01/01/2026, to make sure that we are just completely airtight on effective dates. Me and Abby and Will of tax department are maybe three of the only people who care much about this.

[Emilie Kornheiser (Chair)]: I really appreciate you caring about it. I know that's one of the hardest things about conformity and the link up is getting the effective dates right and the continued dispute about that. So I really appreciate your diligence on this. And I also really appreciate, again, the incredible collaboration with the tax department for this. Questions for Kirby?

[Bridget Burkhardt (Clerk)]: Any questions for Charlie? I'm gonna start to go to Marcia. Thanks Kirby.

[Emilie Kornheiser (Chair)]: Pat, there is some fiscal impact of this correction, right?

[Pat (Joint Fiscal Office analyst)]: Yeah, a little bit. It's going to reduce the positive revenue impact stuff decoupling from the federal treatment and making it so that if it's eligible for the capital gains exclusion and overall for the end of the net impact based on Candidates 15 this year twenty six-twenty seven, that change is going be about 300,000.

[Emilie Kornheiser (Chair)]: And appropriations is already accounting for this?

[Pat (Joint Fiscal Office analyst)]: Yes.

[Emilie Kornheiser (Chair)]: Great. Any other questions for Pat?

[Carolyn Branagan (Member)]: This money is interest that we won't be earning. What is

[Charles Kimbell (Ranking Member)]: Capital gains, really.

[Bridget Burkhardt (Clerk)]: Okay. Is this the 1.67 line? Are we still planning for the qualified small business?

[Kirby Keane (Legislative Counsel)]: Yes.

[Bridget Burkhardt (Clerk)]: Okay, and I remember in year one I don't, there's a change and then there was one point something and 1.67, so you're just removing 300 from each of those years? So

[Charles Kimbell (Ranking Member)]: maybe it would help us actually.

[Mark Higley (Member)]: So being updated for school months. So

[Pat (Joint Fiscal Office analyst)]: this seems to be mine right here. So you're only expecting from Decublin to start receiving additional revenue starting in 'twenty seven and into 'twenty eight. What we did was look at overall capital gains and losses and what portion of that is typically excluded from the tax calculation. And so overall, the sort of net impact came out to be about a 10% reduction in the estimates.

[Bridget Burkhardt (Clerk)]: Thank you. Thank you.

[Emilie Kornheiser (Chair)]: Any other questions for anyone? Yes, Rebecca Holcombe.

[Pat (Joint Fiscal Office analyst)]: 10% reduction. So by applying the capital gains exclusion to allowing this capital gains type to be eligible against the capital gains exclusion, that lowered the estimate that you saw last time by about 10%. And so overall, the net impact between fiscal years '26 and '27 is about $300,000 less. Thank

[Bridget Burkhardt (Clerk)]: you. Any

[Emilie Kornheiser (Chair)]: other questions about

[Bridget Burkhardt (Clerk)]: this? No,

[Charles Kimbell (Ranking Member)]: all good to go.

[Bridget Burkhardt (Clerk)]: Okay. Can someone use a representative Kimbell's amendment? This is stressful. We don't need to unload this. All those if you can watch me think in real time in front of you all.

[Emilie Kornheiser (Chair)]: All those in favor of Representative Kimbell's amendment say aye, raise your

[James Masland (Member)]: hand. Aye.

[Bridget Burkhardt (Clerk)]: All those opposed? Sorry.

[Rep. Cole (first name unknown)]: You were I'm sorry.

[Bridget Burkhardt (Clerk)]: Our struggle is favorable, but unzero. Thank you. Back 1.2.

[Emilie Kornheiser (Chair)]: Representative Logan, did I lose an amendment from you somewhere? Okay, great. Good. Good to know. Lots sprang up today. Okay, so I think next up we'll have Rep. Tagle of Villa. We're still on miscellaneous tax, folks. Welcome back to Ways and Means.

[James Masland (Member)]: Thank you. Madam Chair

[Rep. Tagliaferri (first name unknown)]: and Ways and Means Committee, thank you for hearing my amendment. Try not to take too much of your time. I'm presenting amendment to h nine thirty three, if I could. It's a it strikes out sections eighteen and nineteen, federal tax credit for SGO contributions in their entireties, and inserts in lieu thereof new sections eighteen and nineteen to read as follows. Subsection 24, governor's list of scholarship granting organizations. Annually, on December 1, the governor or designee may elect to provide a list of organizations to the US secretary of treasury for purposes of making the federal qualified elementary and secondary education scholarship tax credit available for Vermont taxpayer contributions to Vermont scholarship granting organizations under 26 USC subsection 25 f. It shall be resumed that an organization listed in the previous year will be listed in a subsequent year unless the governor finds that the organization has failed to meet the requirements of 26 USC 25 f, and section 19 will be deleted. I present this amendment because, especially in these hard economic times, if there is a vehicle, number one, for Vermont taxpayers to take a deduction, I'm all for it. And more importantly, I like the idea of the students of Vermont having a little bit more advantage. This would, in my mind, I just think about, when I think about this, and the idea that students, especially because of their the, if students at the 300% or lower of the household area gross median income would be able to take advantage of this. So in the interest of equity, in the interest of heeding the yard sign with that we see when we're up we have school budgets, support the students, that's why I present this amendment. So it's a very short spiel, but that's my spiel. I'm not sure if anybody has any questions for me.

[Emilie Kornheiser (Chair)]: Thank you. We certainly discussed this at some length in committee. And while we might have a many disagreements within the committee about whether this type of thing is a good idea or not a good idea, sort of two pieces that I think are separate from that question are,

[Pat (Joint Fiscal Office analyst)]: one,

[Emilie Kornheiser (Chair)]: usually tax decisions are the purview of the legislature and not the governor. And so that was sort of one reason why we had this language. The second And is that the federal rules have not been set yet, and so we're nervous about opening this up and then being in conflict with federal rules and law. And so, like, punting the whole thing to next year seemed like a good legislative decision. So I'm curious of your thoughts on those two things.

[Rep. Tagliaferri (first name unknown)]: First, with with respect to the governor being the one making decision, whether the governor or the legislature makes the decision is if we could keep this tax credit, I'm happy. That that language is I'm fine with changing. And what was the other part of your credit? Oh, the

[Rep. Cole (first name unknown)]: Federal rules.

[Rep. Tagliaferri (first name unknown)]: I'm a little bit new here, but I've seen plenty of legislation where we set we approve statutes, and then we go into rulemaking afterward. And if we've made that precedent, why not find a way to do it for this?

[Emilie Kornheiser (Chair)]: Oh, so I think it's, when we do that, we are so lucky to have two members of LCAR on this committee. I know more about the rulemaking process than I thought I would if not serving on LCAR. I'm grateful for their services, because I don't ever wanna serve on LCAR. I'm talking about the federal rulemaking process. And so we don't want the federal Usually, our state rulemaking process has to follow our legislative intent, but the federal rulemaking process certainly does not. And we could wind up in a direct opposition, and I'm nervous of that.

[Rep. Tagliaferri (first name unknown)]: Well, since I don't know know a lot about tax policy, maybe someone here can answer my question. Is there a way to put and in this language so when when the bill does eventually pass that if there could be a retroactive look back so that there would not be a wait for the next session so that beginning 01/01/2027, this would already be in effect, and once the rules came about, it hit the ground running. Is that possible?

[Bridget Burkhardt (Clerk)]: Do you have any ideas on the policy? You couldn't make that an effective date and just say this only becomes effective on such and such date depending on what the feds say.

[Emilie Kornheiser (Chair)]: I think the problem is we still wouldn't be able to set our, know how we would set our own rules to

[Bridget Burkhardt (Clerk)]: add guidance That's on true. But we would start a fake new process later.

[Charles Kimbell (Ranking Member)]: Mike, there were discussions about could we put bumpers around how the money could be used from the SGOs? And so the question is, we didn't feel like we could do that in advance of the federal rules coming out, which would preempt the state rules. So that was part of the discussion we had.

[William Canfield (Vice Chair)]: The other question that I've got and we talked about this a little bit. My understanding is that some of the rules are already promulgated at the federal level. Maybe not all of them, but enough so that I don't know as though we necessarily need to adapt those rules to Vermont. I mean, it's a federal program based on what they're considering.

[Pat (Joint Fiscal Office analyst)]: And I

[William Canfield (Vice Chair)]: think we have enough knowledge now to know what it might be like. Anyway, and I guess the next question would be, if we were to allow it to go through with this way or whatever way it might be, we can next year adjust it if we wanted. So that's another point to be made. We could go this route, not exclude it, not get people all yanked up about how we're not allowing them to take advantage of some scholarship money for a host of different reasons, whether it's scholarships, books, after school programs, you need it. So again, I just think of a perspective thing as well. So anyway, that's work.

[Emilie Kornheiser (Chair)]: I hear that. I imagine that people would also get yanked up if we I really like that phrase.

[Bridget Burkhardt (Clerk)]: If we changed the

[Emilie Kornheiser (Chair)]: rules halfway through the game too.

[Bridget Burkhardt (Clerk)]: There are rules, it would have been reported in the Federal Register. You I

[Charles Kimbell (Ranking Member)]: think you must have counseled

[Kirby Keane (Legislative Counsel)]: the IRS has not issued even proposed rules at this point to review, let alone Donald Trump.

[Charles Kimbell (Ranking Member)]: I should guide on strict no rules.

[Rep. Tagliaferri (first name unknown)]: One last point, if I may. As far as I understand, Vermont taxpayers who make a donation will be able to make a donation this year, which would be great for them tax wise, but Vermont students, unfortunately, this year without some language would not be able to take advantage of this, and that's my major concern. If anybody has any other questions.

[Carolyn Branagan (Member)]: So, is this paragraph here needed in order to make Vermont students able to take this time shifts in the entire paragraph?

[Rep. Tagliaferri (first name unknown)]: That I would need to defer to Legion Council on.

[Kirby Keane (Legislative Counsel)]: Your language that you're seeing is a pretty basic version that expressly has Vermont opt in to the tax credit program. If you had no language at all, Vermont is still opt in. So you do not need that language for Vermont to opt in. In both cases that language and doing nothing would result in Vermont being able to opt in. Vermont, SGOs would have to follow all of the federal statute for how to operate, but there would be no additional Vermont requirement.

[Carolyn Branagan (Member)]: Okay, so we don't need this Vermont case now?

[Kirby Keane (Legislative Counsel)]: But the miscellaneous H-nine 33 has two provisions that opt Vermont out. So this language is being proposed to replace opting out of the program to opting in the program.

[Carolyn Branagan (Member)]: That's eighteen and nineteen? Yes.

[Rep. Cole (first name unknown)]: And for whatever it's worth, I've

[Emilie Kornheiser (Chair)]: had offline, more casual conversations with members of the administration who would want to limit this if we were going to do it.

[Bridget Burkhardt (Clerk)]: The administration Very offline. Probably shouldn't even. Sorry. Well, they just testified in the Senate.

[Emilie Kornheiser (Chair)]: Oh, great. They did testify in the Senate. They asked for it in

[Bridget Burkhardt (Clerk)]: the Senate. But to limit it?

[Carolyn Branagan (Member)]: To limit it in one way?

[Emilie Kornheiser (Chair)]: Don't I don't know exactly.

[Mark Higley (Member)]: So the Senate is making changes.

[Emilie Kornheiser (Chair)]: The Senate did vote a different version of this, has language related to this same paragraph that I think at this point, think they're holding, waiting for the miscellaneous tax bill to get to them. But they do have a separate vehicle for it as well.

[Carolyn Branagan (Member)]: I think we're all hearing grief from some of our constituents that they're thinking that they won't be able to have their kids participate in this, but that's not true. And if we were working toward allowing them to do that by the end of the session, it's a different deal.

[Emilie Kornheiser (Chair)]: I think what the Senate's doing and what we're doing in committee I think that we shouldn't make any decision. We should make sure we don't do anything and don't allow this until we have all the federal rules in place. Because I don't think it's responsible to make a decision until that happens. And I think that decision should be the legislature, it should not be administration's decision.

[Charles Kimbell (Ranking Member)]: That's what H. Nine three does.

[Bridget Burkhardt (Clerk)]: Could you say that again, Charlotte?

[Charles Kimbell (Ranking Member)]: That's what H-nine 33 does. It says, under these rules, would either be the governor or another entity that would opt in, and we are, as a legislature, then passing it, saying only the legislature can opt in.

[Emilie Kornheiser (Chair)]: And that was more saying, Representative Branagan, is that I think the Senate's gonna keep this discussion alive for us.

[Kirby Keane (Legislative Counsel)]: But

[Mark Higley (Member)]: now the governor is able to opt in, but we have, as the Ways and Means Committee, The legislature still has to approve the governor's opinion in the end. Is that correct?

[Emilie Kornheiser (Chair)]: The Ways and Means Committee miscellaneous tax bill that is going to be on the floor today opts us out pending all those other things happening. Opts us out.

[Charles Kimbell (Ranking Member)]: So that we can see what the rules are, what we need to publish.

[Kirby Keane (Legislative Counsel)]: It has not stayed with the governor. It

[Charles Kimbell (Ranking Member)]: puts the governor out of it.

[Emilie Kornheiser (Chair)]: Because the governor doesn't decide tax policy. Why

[Bridget Burkhardt (Clerk)]: are we even talking about the governor chooses with everything else? The federal government has to be what we all in the house and then the senate, then maybe he'll veto it, maybe he won't.

[Emilie Kornheiser (Chair)]: Federal rule

[Bridget Burkhardt (Clerk)]: from

[Emilie Kornheiser (Chair)]: HR1, so the way the Trump administration designed this, it was governor, so opted in or out, even though most states leave all tax policy to their legislature. Yeah, that's interesting.

[Carolyn Branagan (Member)]: So here in the first line where it says governor or designee, that was from the big bill, the big beautiful bill. That wasn't what we did. Okay, and we're saying no, it's not I mean, I totally agree with that. I want to separate our responsibilities. So we've got the executive and we are the legislators. So this is the executive. They do not make this tax policy legal.

[James Masland (Member)]: Okay, for sure.

[Emilie Kornheiser (Chair)]: Any other questions for Representative

[Bridget Burkhardt (Clerk)]: Tagliafia? Thank you.

[Pat (Joint Fiscal Office analyst)]: Thank you for your time.

[Emilie Kornheiser (Chair)]: So,

[Bridget Burkhardt (Clerk)]: the purposes of your floor reporting, would you like to send a motion to not approve?

[Charles Kimbell (Ranking Member)]: I think that would be helpful, So

[Emilie Kornheiser (Chair)]: I'm going to ask for a show of hands to not find this amendment favorable. For the show of hands, it's to reject the amendment. All those in favor?

[Carolyn Branagan (Member)]: All those opposed? So we are finding the language favor? You are.

[Emilie Kornheiser (Chair)]: Okay, so this drop will rejects the tag media and then then seven to four to zero. Yes, thank you. Thank you. Representative Cole, would you like to join us? Thank you. Is Representative Priestley joining you or no?

[Bridget Burkhardt (Clerk)]: No, she's out. Okay. And Mark,

[Emilie Kornheiser (Chair)]: can you let us know that we're at Representative Cole?

[Bridget Burkhardt (Clerk)]: Just with your cellular telephone, perhaps? Oh, my, I'm a straight line. All right.

[Emilie Kornheiser (Chair)]: The floor is yours.

[Rep. Cole (first name unknown)]: Thank you so much. Thank you so much for the opportunity to speak here. I know you're all doing a lot right now, but I have to present to you something that is not unfamiliar. In fact, it sort of takes the shape of what was known as age six twenty one more or less. So I'm going to read some words. I'm going to speak on my behalf, but also try to include the voice of Monique and she, sorry, about Prieste, of course. And she had some written comments as well, so I'm going to read those too. So start with those. Chair Kornheiser, Vice Chair of Canfield and members of the committee. This amendment adds two new income tax brackets to Vermont's personal income tax structure. It increases taxes on marginal income over $500,000 by 3% and on marginal income over $1,000,000 by an additional 2%. That is it. The fiscal impact is significant. This policy would raise between $100,000,000 and $200,000,000 in state revenue annually. That is money that could fund the programs that have come before all of our committees, with needs we cannot meet at present. Due to the passage of HR1 at the federal level, the top 1% of taxpayers are receiving an average federal tax cut of $57,000 in 2026. In aggregate, that top 1% will save over $200,000,000 in federal taxes this year. The top 20% of Vermonters are set to save over $730,000,000 in federal taxes in 2026. What this amendment does on average is ask affected taxpayers to contribute back less than the federal tax cut they are already receiving. We are not asking them to give back all of it. We are asking for a portion. A few other data points worth having in front of us include the top 1% of Vermont income earners. Average income is 20 times that of the bottom 99%. The top 1% currently pays a smaller share of their income in state and local taxes than many middle income Vermonters. The top levels of Vermont's tax brackets have not kept pace with the concentration of income and wealth that has occurred over the past several decades. I'll note that this amendment is substantially, drawn from age six twenty one, which has already been developed and analyzed in session. The policy work has been done. The question before this committee is whether we choose to act on it. Thank you.

[Charles Kimbell (Ranking Member)]: I was wondering, because I was looking at the bill and it actually moves the tax brackets up as well, not just establishes the new ones, but adjusts the other ones by about 30%, more or less. So wondering why, if you could speak to that.

[Rep. Cole (first name unknown)]: My understanding of the building was that all the detail which makes the amendment look so complicated was to adjust for the inflators. Because every time you need to create a new, you change the tax bracket and of course, judge counsel and JFO would be much more eloquently able to explain this. But the only thing changing in my understanding and intention rather is to add that additional two tax credits for the $500,000 and above earners and then a million dollars and above earners. So what I think would be the inflator adjustment is what you might be referring to. The underlying law has sort of a

[Emilie Kornheiser (Chair)]: base, and then we inflate it every year. So current law is different from the

[Bridget Burkhardt (Clerk)]: current practice Is is that allowed for everybody?

[Emilie Kornheiser (Chair)]: Yeah, I'm sorry. And maybe I should have Did I Okay. Okay. Did I say it right? Yeah. Okay, I'll just say it later then. So the underlying statute has a base amount that was set in whatever year and has an inflator attached to it. So current practice, because of current law, is operating from a different bracket number than the underlying statute because of the inflator that was built in. And so when you change it, you need to sort of just name what the current inflated like,

[Carolyn Branagan (Member)]: what

[Emilie Kornheiser (Chair)]: the current practice is. I

[Rep. Cole (first name unknown)]: wish that the amendment could look more clean, because then it would be very clear, the intention of it. But I guess that is a ways and means magic that has to happen there

[Emilie Kornheiser (Chair)]: as well. That's magic in this

[Rep. Cole (first name unknown)]: regard. Yes.

[Emilie Kornheiser (Chair)]: Anyone else have any questions?

[Carolyn Branagan (Member)]: The thing that you want to do, Esmith, is the last thing here that I'm looking through to see if I can't find it again. Yes. I see over line one on page five over 250,000, but not over 500,000. Is this a

[Bridget Burkhardt (Clerk)]: percentage of 11.75 starting

[Carolyn Branagan (Member)]: at two fifty. You know, there's a lot of an honors work in that bracket. A lot of married working, siblings, parents, mom, mom, dad, both working. Absolutely. Professional careers, a lot of people fall on that drug. And okay, but here we go, over 500,000, line four, that's 13.75%.

[Bridget Burkhardt (Clerk)]: Can have my calendar back, Carol?

[Charles Kimbell (Ranking Member)]: It's the

[Bridget Burkhardt (Clerk)]: one that says Ed. The one that says Ed? Third reading.

[Emilie Kornheiser (Chair)]: I think we're okay skipping third. Is there? Okay.

[Bridget Burkhardt (Clerk)]: Does that feel okay for you, Bridget? It does. Okay.

[Carolyn Branagan (Member)]: Thank you. I understand what you're That's the props of what you want. The rest of it is just sort of the fever testing itself.

[Rep. Cole (first name unknown)]: Yes, I think so. And I've

[Carolyn Branagan (Member)]: It results in an increase in tax for those antibodies too.

[Rep. Cole (first name unknown)]: I mean, think the point of emphasis that really sifted me most is that as you all are familiar, our tax brackets stop at $312,000 we are missing in terms of equity, terms of how much proportional share of wealth people are being asked to contribute. We know that the middle income earners below that are being asked to pay a far larger share than those that exceed that highest tier, which is, in my opinion, a bit imbalanced because it hurts the middle portion far more than it would hurt that top portion. And I think we do have the power within this body to shore things up onto a more equitable slope rather, so that people aren't hurting the way that they are today relatively. And that's not to disincentivize high income earners. We love that. We want high income earners in the state, but it's just so that we don't have to overburden that middle portion because everyone is paying sort of an equitable amount in order to fund the functions of state government that we all benefit from.

[Charles Kimbell (Ranking Member)]: This would give us the highest marginal tax rate in the country. Think California is 13.3%. Maybe my stats are wrong. I'm just wondering, in that vein, if we're talking about being an attractive place for individuals to go or stay, those that have money, How does that square?

[Rep. Cole (first name unknown)]: Yeah, well, I do think in terms of record setting as well, are both in this state and in this country, we are at an unprecedented point in time where wealth inequality is just Really, we haven't been in this place since the 1920s, late 1920s, and that's huge. So when we're talking about unprecedented circumstances, we are in unprecedented times and need to respond to that too. And I think your question is kind of leaning into the question of tax flight a little bit for that top tier in particular. And my argument I go back to is I'm concerned that we are experiencing tax flight now as it exists today, but not perhaps for the portion that we are indicating as much as the lower tier who cannot afford to live here because the combination of property taxes and income is not allowing them to sustain quality of life here. Whereas being in that top tier, all is said and done, even if we are taxing them more proportionately, affording to what they can afford to pay, they'd still have more freedom and the ability to choose to live here if they want to live here. There are all kinds of reasons that people choose to live in Vermont, which I think all of us are very familiar with because we love our state. Research shows as well that it's just starting because unfortunately we don't have enough good precedent of progressive tax policy in The United States, but in states where this has been enacted or progressive at the top of the income tier, more relative taxation, people are not leaving. In New York, in Minnesota as well, which specifically applied to the personal income tax increase there. So I think the proof is in the data, but the proof is in our stories too, especially of the struggles of the people who are not I'm not to say that things aren't hard for people who are earning that much, but things are really hard for the tier earning less than that right now. And so I just think that that burden should be shared a little bit more proportionally and equitably, and so that's kind of what this sentiment is about.

[Bridget Burkhardt (Clerk)]: Yeah, Representative Buck. To answer your question, I think we also need to take a broad picture, what I'm really worried about, I think about the loss of the enhanced subsidies and exchange, for example, and we're already hearing that we have the highest health care insurance rates in the nation. And people are predicting that just the loss of those subsidies, although it's going to add four percentage points to our marketplace premium, This not backfilling for them is a tax on small business and single proprietors, and it's a double tax because they pay for their own healthcare, but they also have to pay for their employees. So that loss of those pants subsidies is anti small business. And I think whether it costs us less to that top tier to not support making sure people have healthcare, think that's something we haven't really discussed. I think we need to discuss that, because this is gonna, it's also gonna, they're also saying it's gonna affect our own hospitals in the form of bad debt and non collateral debt. People are dropping plans already. We've got the modules who are giving them health insurance and the data is accurate. The people who are leaving the state actually aren't bioremics. It's the people who are earning between $9,000 and $140

[Mark Higley (Member)]: You know, I would agree with you that there are many Americans that are making a great deal of money not paying their fair share. Vermont already has a terrible reputation for high taxes, and I'm just afraid I can't support this.

[Rep. Cole (first name unknown)]: Absolutely. If I could respond to that piece, that's great, I completely understand. Contrary to maybe perception, I'm not a fan of high taxes necessarily either, I am a fan of proportional taxes. Even though it might sound like an appealing argument to say no new taxes, I do think this is our only gateway to perhaps making the burden proportional on lower tiers. I think we are overburdening, overtaxing that middle tier that I'm referring to because we are not proportionally taxing that above tier. So it's rather like a shoring up rather than new higher taxes, but like leveling the playing field because right now there are trends that are really disconcerting in terms of how that middle portion is being treated. I completely agree. No taxes, this tax, that it's a lot. Hopefully the specificity of what I'm talking about is coming through.

[Emilie Kornheiser (Chair)]: Thank you. Doctor. Nicole, I love this policy. I was proud for this committee to pass this out last biennium and to have it leave the House last biennium and go to the Senate. Very similar policy. I don't think this session we have, and that is very much on me, have scheduled enough testimony to actually fully work through these brackets, understand the implications, understand the revenue with the people around this table right now and in this particular vehicle right now. And I know talking I often think that talking about vehicles is like, and procedure is like the weakest thing a person can do in this building. But I think in this case, this is like massively important tax policy and massively needed tax policy, and it deserves a little bit more time than we're able to give it today. Yeah. Representative Masland.

[James Masland (Member)]: Yeah. Thank you for coming in. In from a philosophical point of view, I support your amendment, And we're aware of, at the end of the day, something like this likely to get vetoed if it survives both chambers. I'm wondering where the sweet spot is, It's if not me just to pick a number, 4%, with 2% get through someday. And it's something as Chair was saying, we haven't taken enough testimony to pick our way through, what would be successful at the end of the day. And we can certainly make a statement on what we believe is fair and equitable, that's clear enough. But then what? So, I've said my 10¢, but that's kind of what I'm wondering about.

[Bridget Burkhardt (Clerk)]: Have representatives of my team. I just appreciate, I mean, feels like you are the example, the kind of person in Vermont we need to support to be in Vermont. Have a chance to make your case on

[James Masland (Member)]: the floor.

[Carolyn Branagan (Member)]: I know it's not

[Bridget Burkhardt (Clerk)]: going to pass, but it would be most important thing to

[Rep. Cole (first name unknown)]: We have a chance

[Bridget Burkhardt (Clerk)]: to make your case.

[Rep. Cole (first name unknown)]: So thank you.

[James Masland (Member)]: I'll support you in the committee. It's

[Rep. Tagliaferri (first name unknown)]: what I'd like to

[Edward "Teddy" Waszazak (Member)]: do, but

[James Masland (Member)]: that may be as far as it goes at the end of the day. I appreciate it.

[Emilie Kornheiser (Chair)]: Thank you. So I'm gonna ask us to do a straw poll to decline this amendment. All those in favor of declining the amendment. So it looks like it's a seven-four-zero

[Carolyn Branagan (Member)]: stock relative decline. You. Thank you, Rebecca.

[Rep. Cole (first name unknown)]: Thank you. Appreciate your time.

[Emilie Kornheiser (Chair)]: Folks, we are going to switch our focus, but not our gears, from H933, thank you for laughing at my bad joke, Teddy, to H949. With a brief break from one person to get tea. And Representative McCoy, if you'd like to join us, please. Thank you.

[Bridget Burkhardt (Clerk)]: Good afternoon. Good afternoon.

[Patty McCoy (Member, presenting amendment to H.949)]: Thank you for having me. For the record am I starting Yeah. You're big. You're on. Alright. Floor is yours. For the record, Patty McCoy representative Patty McCoy representing Rutland Wong, which is Pontney, Ira, and I share Wells with representative Pritchard. And I have submitted an amendment, a short amendment. I'm hoping that you have seen that on your It's up on our committee. It's on your page.

[Rep. Cole (first name unknown)]: Okay. It's under representative of Hawaii's name.

[Patty McCoy (Member, presenting amendment to H.949)]: And the amendment is pretty simple. Vermonters need more property tax relief now. They simply can't afford an average of a 7% increase after bills have already gone up almost 40% in the last five years. This amendment applies. The full governor recommend $101,105,000,000 dollars for property tax relief this year and lowers property taxes compared to the underlying bill this year by more than $50,000,000 Nobody likes using one time money to float a broken education finance system, but this should be viewed as a bridge to the new, sustainable system. I hope we're trying to build and we can get it past the finish line, as representative Kornheiser and I have worked diligently on for the last nine weeks or so. Too many Vermonters are struggling to get by. They are on the edge and don't have time to wait for education transformation to take place. And this takes a step towards providing more relief now as we continue to work on creating a better system. So I'll just briefly walk through the bill. I had help from, thank you, Attorney Gray from Legis Council for, drafting it up, and actually, Julie Richter from JFO provided the numbers for me. I am amending Section one simply by putting in the new figures that allow for use of the $105,000,000 draw directly to the yield. And I am deleting Section two, which you held half of it in reserve.

[Carolyn Branagan (Member)]: And that's really what the deal does, not these many new products.

[Emilie Kornheiser (Chair)]: So, I your commitment to changing a property tax system. I share your concern for property tax bills this upcoming year. I'm curious what you plan to do the year after if we don't reserve any. The transformation will not be done by then. Well,

[Patty McCoy (Member, presenting amendment to H.949)]: in the last three years, shelled out $270,000,000 towards this, and we're no closer to finding and that's why I'm not quite getting why we can't come to some kind of agreement in the education committee and our weekly meetings, of which we've had several, to try to fix this broken system. And, you know, it's not about, you know, I think a lot of people in education think, you know, deliver, you know, lower taxes to to residents. But my concern is actually the students, because I know my students in my district are not afforded the same opportunities as those students at CBU or larger high schools or larger elementary schools, because there are schools that can offer four and five different languages. We're lucky if my high school can offer one. And that's not equity. And until we realize that it's about the student and what we can provide, it's not how long they have to travel to school, because right now my children, if they were on the bus, would be traveling half an hour to forty five minutes just to get to my local high school in Poland. And I live four miles away. If they're bused, it's going to take them half an hour to get there. So it's not about geography. It's not about that. It's about equity and providing a great education to every student that lives here. And since we're not there right now, I don't want to lay this on the backs of taxpayers once again, and that's what we're doing. The governor recommended a $105,000,000. Last year, it was 76,000,000. The year before, it was 90 some odd million. We just we, as a legislature, are failing students because we're not changing the way we fund and deliver education. And I'm not prepared to not use every bit of money that we have available to actually lower the cost from 7% to under 4% and realize difference to every property owner in the state of Vermont.

[Bridget Burkhardt (Clerk)]: Representative Woodman? I have to say that I remember being in the House Almost thirty years ago. Before our time. And hearing, and having someone be, I'm not talking, I'm just going to say, it sounds like a lot of different language, but then you think, okay, if you require a study of non English language in high school of three years, and you have a thousand kids in your high school, then you have the ability to have, you probably might need to staff five teachers. So, you could have all five teachers teach one language. They might all teach Spanish. Or you could have one who teaches German, two who teaches French, one who teaches Latin, one who teaches something else. Because the main thing is you've got to run the classes so the kids can have three years. So that's, I remember saying that to a house committee on education, and I remember after I said it, they all turned to each other and I thought, they're not listening to me. So, I just know that, for instance, we had a German teacher who was good with the kids who were kind of foreign language was not fair to four ks at all. And she, I've been in her class, all the difficult stuff is hanging on the walls, memorizing, and they were able to do well on that. And she was also a drama teacher who put on gorgeous musicals every year in the fall, and then she put on things in the spring, they were more serious. But anyway, that's what I want to say about form language. So, it's not actually accurate. So, if you're in a bigger school, consolidated school, and you have more students, you're able to offer more.

[Patty McCoy (Member, presenting amendment to H.949)]: Believe that was representative. That's what I was saying. Oh, yes. That was my point.

[Bridget Burkhardt (Clerk)]: Yes. You want to consolidate schools. I do.

[Patty McCoy (Member, presenting amendment to H.949)]: I think we need to consolidate schools. We have eight high schools in Rutland County, Guam, eight. Okay, well, I'm- Yes. Then,

[Bridget Burkhardt (Clerk)]: gonna make up for the I just have to say, we have kids who are on the bus for longer than thirty minutes just to get to Burlington High School because they have to go to the South End, the downtown, and then the North end.

[Patty McCoy (Member, presenting amendment to H.949)]: Understand that, that's my other point. I only live four miles from town.

[Bridget Burkhardt (Clerk)]: And small. I'm okay. Wanna bring us everybody to know that. It's rock a bus even in big pipes. Yes. They do. They are.

[Emilie Kornheiser (Chair)]: I'm gonna bring us back to the yield bill. And before I do that, I'm I'm gonna make a little public service announcement for anyone who's nervous about where they're on the calendar. The, speaker is very aware that we're all here and that we are reporting almost every bill, and they will move things around till we all have the time. Back to our regularly scheduled amendment conversation. Representative Holcombe, think you're next up.

[Rep. Cole (first name unknown)]: Yeah, I

[Rebecca Holcombe (Member)]: really appreciate you. And I actually agree with you. In your area is one of the areas that the task force singled out as the most desperately needed high school consolidation. And with too many high schools, you've lost 1,000 kids. You could actually put the entire population of some of your high schools in Rutland High School. Well, we're living right here too. And this was the first one. And I think the point is that consolidation needs to happen not always where people think it does, but there are places where we have too many high schools for the kids. And I think the concern I had, and one of the reasons I actually didn't vote for the yield bill, was it can't be done without a little bit of construction money. And sometimes it's not much. Sometimes you just need to give the kids new uniforms, new face in the school and let them pick a mask up so they don't feel like they're moving into someone else's house. But sometimes this has to have a little bit of cash to help get that to happen. And my fear is we are heading into a much higher risk year next year. We're losing a ton of money. Budgets are going be much, much tighter next By kicking the can down the road on that buy down this year, we're setting people up for a tax cliff next year when they're hurting even more. And what we won't have done, we'll have taken the money we could have spent and extraction to help your area do what you're talking about, and we're giving it away. And I can educate you to help people today, but it's kind of again, it's like using your sinking fund in your business that you're trying to save money to fix your roof, and it's using it today on something that you just eat and not your ability to fix your roof down below. So I I hear you. I can't support your amendment because I fear we're creating a tax cliff that people can't afford. We have created a structural deficit in the Ed Fund that we now feel we have to plug.

[Bridget Burkhardt (Clerk)]: We're going have to rip the bandit off and figure out how to bring down costs in a meaningful way. And if we're going to do consolidations, we're going to have to have some construction to do that.

[Patty McCoy (Member, presenting amendment to H.949)]: So may I kind Okay. Respond to So I will guarantee you that every school district knows that you're going be holding $52,000,000 in reserve. And when they go to set their budgets, they're going to say, hey, there's $52,000,000 extra on the table, and they will spend it because they have spent it every single year that we've given them the money. They keep doing it. So I understand that you have to rip the band aid off, but I am not prepared to go back and tell my taxpayers that, Oh, we have the money to lower your tax bills to 3.8%, but we chose not to. We're keeping it at 7% because we want you to feel the pain. I'm not doing that. I refuse to do that.

[Emilie Kornheiser (Chair)]: Everyone, one person at a time, Rebecca Holcombe, let's let this from

[Patty McCoy (Member, presenting amendment to H.949)]: the point of I think that's what's going to happen. I mean, you know, if people are looking at I'm going to take Barrie City, 7% increase right now. And this is an average. So that means that some towns are going to be sixteen percent and seventeen percent tax increases on top of the 40% they've already felt in the last five years. I just cannot it's just not sustainable for property tax payers. It just is not.

[Emilie Kornheiser (Chair)]: I absolutely agree with you. It is not sustainable for property taxpayers. We cannot continue this way. I just want to make sure. And so I think it's really important that we are doing as much as we can this year. I just want to make sure that we're doing as much as we can next year, too, in a much tighter fiscal environment. I don't think spreading it out across three years is reasonable, but I think we need to at least have a guarantee of next year in this environment. But I totally hear where you're coming from with wanting to put everything you can on the line for this. People need to pay their bills. Yeah, Representative White.

[Bridget Burkhardt (Clerk)]: Read what you said. And there is going to be a lot of demand on the general fund next year. And there are going be many changes because of the one big beautiful bill that will then hit us very hard. So, in order for us to help taxpayers this year and next year, we need to keep, this is my opinion, we need to keep up that money, pushing that money till next year also. What will we do when the general fund can't give us anything if people can't get help here, and we're putting the hospitals under and every they can't eat. And it's just not it's gonna be really bad here.

[Patty McCoy (Member, presenting amendment to H.949)]: Well, the one thing we could do is pass Senator Rutland's bill, S two twenty. Is do what? Pass Senator Rutland's bill of S two twenty to cap it at whatever the case is.

[Bridget Burkhardt (Clerk)]: We did have it scheduled

[Emilie Kornheiser (Chair)]: for testimony, but, well, we don't seem to have any time in committee anymore these days. So I don't know when we'll get to it, but it was supposed to be scheduled. I really want,

[Edward "Teddy" Waszazak (Member)]: appreciate this, and I agree with you completely, the need for transformation. I agree with you completely that we should be using every resource the state have, because it's not just property taxes. People are feeling the affordability prices in so many different sectors, and what we're doing to the general fund is completely unsustainable and we're undercutting other very needed social services. And that's why I supported the amendment that we were just talking about with representative Cole, because I think that I both want to provide as much relief as possible to low income, moderate income working families in Vermont, but we need to find a way to replace revenue, because when we talk about cutting costs, a lot of that means cutting services, and I think that our people need our services now more than ever. So we could do a wee bit of a quid pro quo. If your caucus would help support raising some revenue from rich folks,

[Rep. Cole (first name unknown)]: then we could have a real

[Carolyn Branagan (Member)]: good conversation here, Representative Burkhardt.

[Edward "Teddy" Waszazak (Member)]: But I do hope that I think that this bill is gonna go through some changes in the other chamber, and there are some provisions outside of just the yields that are important to my community, and that's why I supported this version of the yield bill that's tasked me through the House, but I'm really hopeful we can get some changes before this thing gets signed into law. Okay, thank

[Emilie Kornheiser (Chair)]: you for your candor. Folks, I think we have well debated all the options that we had in the outlook in previous times when representative McCoy didn't have to listen to us. Does anyone have any further questions or anything they wanna add? Okay. Thank you very much.

[Patty McCoy (Member, presenting amendment to H.949)]: Thank you. Appreciate your time.

[Emilie Kornheiser (Chair)]: I'm going to offer a straw poll to turn down this amendment. All those in favor of rejecting the amendment? All those opposed?

[Bridget Burkhardt (Clerk)]: We're very

[Emilie Kornheiser (Chair)]: consistent. I love it. Okay. Falcon then not favorable 650. Nope. I think it was 74.

[Kirby Keane (Legislative Counsel)]: 74.

[Carolyn Branagan (Member)]: Oh, 74. Yeah.

[Emilie Kornheiser (Chair)]: Yeah. 74? Is everyone else? Okay. Sorry. No. It's fine.

[Rep. Tagliaferri (first name unknown)]: No. Yeah. 74 is right.

[Emilie Kornheiser (Chair)]: Yeah. You were yep. You were you were one of the seven?

[Charles Kimbell (Ranking Member)]: I was on

[Edward "Teddy" Waszazak (Member)]: the not trying to get it. Okay.

[Emilie Kornheiser (Chair)]: Yes. Great. Okay. Made sure. Yeah. Thank you, everyone, for your time. But there are other I've heard rumors of other amendments, but they have not been realized yet, so please pay attention to all the things.