Vermont Legislature SmartTranscripts:

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[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: This is center appropriations, March 18. We're going through bills, taking a break from FY '27 budget testimony. And today, we're gonna take a bill s two twenty. We have joint fiscal here with us to walk us through the fiscal note on the bill. So I'll let you introduce yourself to the record.

[Julia Richter (Joint Fiscal Office)]: Sure. Good afternoon. Julie Reich there, joint fiscal office. The fiscal note should be on the committee page under my name. I will say before even going into the fiscal note, there are no appropriations or expenses made out of this bill. So I'm not fully sure why it's here and I'm happy to walk

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: So you through

[Julia Richter (Joint Fiscal Office)]: big picture, this is S220. This is the bill that was first introduced as the education spending cap bill, and then it has been since recommended to be amended by Senate Finance. It does a few things. All of them are centered around this tax mechanism that exists in education finance called the excess spending threshold. So the excess spending threshold essentially is a school district's per weighted pupil spending, so that district's education spending divided by a weighted pupil If it exceeds a certain amount, then the amount that the school district has of per pupil spending over the threshold is double taxed for their homestead property tax rate. And what this bill does is it would amend provisions around this mechanism. So specifically, it lowers the excess spending threshold from 118, which is in current law to 112. And that percentage is applied against the fiscal year twenty twenty five average per pupil spending and increased by inflation. So essentially, what it does is it says, okay. In f y twenty five, here's what the average per pupil spending was. We're gonna increase it by inflation to the year in question, and then we're gonna multiply it by a certain percentage. Of course, the higher the percentage, the higher the threshold, the less amount over that threshold that would be subject to a global tax. So this lowered that threshold from being multiplied by 118% to 112%.

[Sen. Robert Norris (Member, Senate Appropriations)]: Do we know how many communities, how many school districts that would affect?

[Julia Richter (Joint Fiscal Office)]: Yes, so

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: This will start for next year or the following year?

[Julia Richter (Joint Fiscal Office)]: Yes, so this would be for fiscal year twenty twenty eight. So we don't know for fiscal year twenty twenty eight how many would impact because those districts haven't built their budget yet, and it's fair to assume that some districts might try to lower spending to stick below the threshold, others might eat the double tax. In fiscal year twenty twenty seven, there are we don't have all updated budget data from school districts, but using our best estimates, there would be about 12 school districts or 10 school districts that would be hitting that excess spending threshold in the current law, the 118. By decreasing it to 112, there would be 33. And I would note that that 33 estimate also includes another portion of this bill that I haven't spoken about, which is a hold harmless provision. So in addition to reducing the excess spending threshold percentage from 118% to 112%, finance also included this hold harmless provision that essentially says, okay, if a school district's education spending did not increase compared to the prior year, or if their per weighted pupil spending did not increase compared to the prior year, then they're not subject to the excess spending threshold. So essentially, if they held the line on spending either per pupil or total ed spending, regardless of their per pupil spending, they're not going to be subject to the excess spending measure.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Per pupil spending is education

[Julia Richter (Joint Fiscal Office)]: spending divided by the weighted pupil count. And education spending, you might recall, finance is a technical term, and essentially what that is is that school district's total budget minus all of its offsetting revenues, which are categorical aid, so the money they get from the federal government, special education census block grant, transportation reimbursement, that kind stuff.

[Sen. Robert Norris (Member, Senate Appropriations)]: So if I understand you, if they were over this year, but they level funded till next year, they would be held for this? Correct.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Regardless of the per pupil?

[Julia Richter (Joint Fiscal Office)]: Correct. So if they held steady on either total ed spending and or per weighted pupil spending. And then there's a third provision of that, which is that it's up to the Secretary's discretion. So if a school district if the secretary deems that the increase was for good cause or beyond the district's control, then the secretary can apply that whole harmless provision to another school district.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Is the secretary of that power now under the existing?

[John Gray (Office of Legislative Counsel)]: And is there a process or is that all the wording says? Just I would refer to John on that. That's all the third is, but I'll go over

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: it. Okay. Okay. So that that's the the reason it's here is because this affects expenditures. It's but usually, their bills are here just for the appropriations, but this is a little different. Okay. Well, we can ask other questions of the law of the Lodge Council. Does anybody have any other questions for during fiscal?

[Julia Richter (Joint Fiscal Office)]: If I may, there's one other provision that's included in the fiscal note. So we just spoke through everything that's included in Section two of the bill. Section one of the bill expands an exclusion for the excess spending adjustment. So under current law, for the purpose of calculating solely excess spending, school debt service for bonds approved prior to 07/01/2024 are exempt. So essentially that debt service is not used for the purpose of calculating excess spending. What Section one does is it removes that timing condition. So any death notice, regardless of when that bond passed, is excluded for the purpose of calculating the Any past.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Oh no, but any new bond that would also be exempt.

[Julia Richter (Joint Fiscal Office)]: Yes, exactly. So that would expand an exclusion. So that essentially would make it so that more there would be more costs in the Education Fund that would no longer be calculated in excess spending.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And the bond is there something about the bond it's not just that it's a bond vote that the bond voted on or something like that?

[Julia Richter (Joint Fiscal Office)]: So under current law, it's that bond voted prior to 07/01/2024, and this strikes prior to 07/01/2024. So it just says any bond voted. So if a school district has debt service in its budget and this were to go into effect, then that debt service would be excluded for the purpose of cascading excess spending.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: But they could have debt in the future, they could have debt, but the only thing that's exempted is if it's owed in

[Rick Segal (Office of Legislative Counsel)]: bond with

[Julia Richter (Joint Fiscal Office)]: debt. Oh, that's a great question also for John. Okay.

[Sen. Robert Norris (Member, Senate Appropriations)]: That was my question. Okay. So it's going forward forevermore and not just okay. That'll

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: be one of the questions we'll ask the council whenever they get up to the table. I'll do that. Thank you. Yep. Would you like to Yes. Yes. No. It would be great.

[John Gray (Office of Legislative Counsel)]: So afternoon, everyone. John Gray, officer of the council. I will screen share with you, but first, I'll just try to answer those questions if I can. So I think the voter approved qualifier that you see that that language is meant to be exclusionary in any broad form. That's the way that that is authorized for school districts. So you can think of this as truly just removing a temporal limitation that exists, which is there's a cutoff date of 07/01/2024. Now there's no cutoff date. Because there's other statutory restrictions on school. On the ability to go on. Exactly. They have

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: to go to a vote and they have to have a warrant and all that stuff.

[John Gray (Office of Legislative Counsel)]: And and none of those processes are disrupted by this bill, all of this and I'll show you the language. This just says, you know

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You don't happen to know. There must be a, you know, a

[Sen. Robert Norris (Member, Senate Appropriations)]: threshold. I knew this would

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: But maybe not. Maybe any debt has to be voted on by the citizens of the district.

[John Gray (Office of Legislative Counsel)]: I can check this after this, but that's my

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I don't know why they would

[John Gray (Office of Legislative Counsel)]: wanna borrow 5,000. I would wanna confirm before.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay, so I will

[John Gray (Office of Legislative Counsel)]: screen share and to the point about this would be forever going forward. The one qualification I would add to that is that is true because it is an amendment to the green book, so it's affecting the law moving forward. But the concept of excess spending would go away if the contingencies for x 73 are met and the foundation formula is codified. Because at that point, you would no longer have at spending, you wouldn't have excess spending, you would just have a foundation formula. So if the content while this is in perpetuity, if the contingencies are met, technically, the only fiscal year this would affect would be FY '28. The bill itself, section one is speaking to the last point that you guys were just discussing. This update to the definition of education spending, which is pulled into the excess spending calculation. And as you can see at the very bottom of the page, it's striking that temporal limitation, the cutoff date of 07/01/2024. And just saying outright that voter approved bond payments for principal and interest will not be included in that spending for purposes of capital and the excess spending, which means you're not subjecting to double taxation dollars that go toward that. And are you

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: allowed I guess this is similar to the question about is there a current dollar threshold to get voter approval? Are there results of any regulations on what you can spend bonded money for or voter approved? Yeah, bonded. If you can you bond for educational expenses? Could you vote for a bond to pay your teacher's salary? I don't, I will come back to

[Nolan Langweil (Joint Fiscal Office)]: you with answers on these. It's not

[John Gray (Office of Legislative Counsel)]: the way that I've understood bonding to be used in these.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I know, but you might want to to avoid the excess spending. Right. Is it a You'd acquire all this interest. Yeah. But you don't have to pay excess. If you're if you're double taxed, maybe the interest is worth not paying twice as much on your debt.

[John Gray (Office of Legislative Counsel)]: It's interesting. I mean, it's sort of an unintuitive I I get what you're saying from an incentive. I don't know

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: if anybody would do it, but you might wanna think about it.

[Sen. Robert Norris (Member, Senate Appropriations)]: That raises a question. So Yeah. For school buildings, there there is no definition of that. So if somebody wanted to do a community hockey rink and they had it owned by the school, is that in or out? Yeah. I

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: think it's the other way around. You can't well, you mean, can you transfer school property to, you know, the the

[Sen. Robert Norris (Member, Senate Appropriations)]: school if they built a hockey poo.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: On the school property.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: Yeah. I know we couldn't do it the other way because that was a big discussion with one one sixteen.

[John Gray (Office of Legislative Counsel)]: There are laws that prohibit use of municipal to bypass the school district itself and use the municipality for educational purposes. And similarly, there's a reciprocal prohibition in the other direction. So you're using the school district for educational expenses and you're using the municipal for municipal expenses. That's the current law. Right. I had

[Sen. Robert Norris (Member, Senate Appropriations)]: communities go back and forth with these things, and the sports facilities are Yeah. What they've gone back and forth with.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: They could be doable. Like, you can the school could build a gymnasium, but then allow the community to use it. So it'd be used for educational

[John Gray (Office of Legislative Counsel)]: purposes It during

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: after It that

[Sen. Robert Norris (Member, Senate Appropriations)]: has been mostly done in the parking lot. Right.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And then if you bonded to for as long as you use it for educational purposes, it would be exempt.

[Sen. Robert Norris (Member, Senate Appropriations)]: But that doesn't mean we can't use it.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You could also allow the community to rent it or use it or Yeah.

[John Gray (Office of Legislative Counsel)]: But that's Right, and just to be clear here, you're still paying for Yeah. Right, it's just that you're not being subjected to double tax settlement. So in any event, the school district is internalizing the cost of the facilities it builds is just at what rate does it do that? And what this is saying is, typically there's an incentive provided through the excess spending threshold, a compression to add spending, you're thinking is that it reduces spending because you pay double taxation on those extra dollars above the threshold. So this is just changing that for construction costs. That double taxation is the way the existing access. Exactly. And so the modification we see if we jump to section two is to the threshold itself. As you can see in existing law, this is what Julia described, excess spending is the per pupil spending amount plus capital construction reserve funds. There's a certain temporal limitation there. After five years, funds and reserve fund that haven't been used would be applied to your excess spending. But your per pupil spend that's in excess of a defined threshold in existing law that's 118% of the 2025 average district per pupil spend adjusted for inflation. And the bill that you see here is lowering that from 01/2018 down to 01/2012

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: What did you say about the five years?

[John Gray (Office of Legislative Counsel)]: For the capital construction reserve, that's

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the call out you see

[John Gray (Office of Legislative Counsel)]: for '24 BSA twenty eight zero four. If you have unused funds that you're putting into a capital construction reserve fund and I believe the cut off is five years, Those are required to be applied.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: But you could put it in a different reserve?

[John Gray (Office of Legislative Counsel)]: Technically under this language, yes.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Right. So for capital construction, but if you just have like a three days on reserves. And

[John Gray (Office of Legislative Counsel)]: this is an ongoing question as well is uniform usage of reserves across the state. We don't really have a uniform practice for how reserves are treated for school districts. So it's something that there's an ongoing effort to try to address in previous years that have been tackling AOE with rulemaking on this front to try to create reserve guidance, but that's still in the process of development. But the change here decreasing from that 118 down to 112%. And then kind of the biggest unique thing for this bill is what you see on page three. This is the hold harmless provision that Julie was describing. A school district's excess spending is zero if any of the following conditions is met. The first two are the flat spending is the way that this has been described. If your ed spending, so that your aggregate spending isn't greater than the proceeding year. So imagine for instance, what this might protect for is, let's say you have the same ed spending as the preceding year, but you have a decrease in weighted students. So your per pupil spend increases, even though your per pupil spend increased because your ed spending at the aggregate level was flat or didn't increase, you would not be subjected to the excess spending penalty. Similarly, under subdivision two, if your per pupil spend was flat or didn't increase, then you wouldn't be subjected to the increase as well. So you can think of that as you had an increase. This isn't the only instance in which this would apply, but just intuitively, if you had an increase in pupil count, so you maintained the same per pupil spend, but your ad spending at the aggregate level was greater. Even though you exceeded the excess spending threshold, you could still have better yourself of this whole. So those are the first two are flat spending exclusions. Then the third is a more discretionary piece that the chair had asked about, which is that if the Secretary of Education with the advice of three business managers and three superintendents selected by the secretary determines that the increase in per pupil spending above the threshold was for good cause or beyond the district's control that would be excluded from the excess spending penalty. And examples of those things you can see on lines eleven and twelve, emergency capital expenditures or substantial loss of pupils or offsetting revenues. I will say that this language could cause or beyond the district's control, that grants the secretary a good bit of progression, right? The examples are included to try to provide some sense of what the legislature is indicating constitutes good cause or beyond the district's control. But just note that it is a substantial amount of discretion for the secretary. And this is the full extent of the process built out. Obviously this presupposes for the secretary to make that determination that the secretary would have been provided the information on which to make that determination. So it doesn't spell out the process by which a school district would do this. But for the secretary to give the district anything you would need to provide a better permission. So that is the full of the bill. Those are your three exclusions from excess spending take effect 07/01/2026 would apply FY '28. If the contingencies were met in Act 73, that'd be the exclusive year in which you have this change. And then you have to update to the title of which.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Right. Okay, so with the sector of education or the AOE testified about process they would go through? Because they could easily get 35 of these Sure.

[John Gray (Office of Legislative Counsel)]: Requests. I don't believe so. I wasn't always in the

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: room for them. Yeah, I wasn't always in the room, but

[John Gray (Office of Legislative Counsel)]: I don't think that they did. I will just say this language, specifically the three business managers, three superintendents, and then use of the words, good cause beyond the district's control. That's the language that has been used in the past. I think it was Act 127, the tax rate review process. That's what was contemplated. That same language was used in those contexts. It was in a different context because it was about providing simp discounts to folks rates. But at least those terms could cause beyond the district's control or something that have been addressed before. Senator Watson.

[Sen. Anne Watson (Member, Senate Appropriations)]: Thank you. So suppose in the spirit of good cause, one of the things that I have a lot of concerns about in terms of when people talk about flat spending is that, you know, when people it it sounds nice and it sounds easy. Like, oh, it's not it's not increasing. But really, if you as long as you're accounting for inflation, that's really a cut. And so and it's a it's an arbitrary cut based on however much inflation actually is. And so knowing that we don't generally adjust things for inflation, I would just say that I have concerns that what you're when you say, you know, that you're held harmless if you don't if you're not in, you know, spending anymore, if the dollar value doesn't go up, we're talking about nominal dollars, right, that it's that we're we're saying as long as you have cut by the rate of inflation, assuming inflation continues upwards, that that that's okay. And

[Sen. Philip Baruth (Member, Senate Appropriations)]: Well, we're not saying it's okay. We're just saying you don't incur a penalty. Right. And you can still raise your spend by 112.

[John Gray (Office of Legislative Counsel)]: Yeah, I think it's important to say that the context in which this is meaningful, the flat spending is only those districts at the threshold, which is the point that you're making. So it's not all districts needing to make a determination of whether they're flat, it's those at the threshold.

[Sen. Anne Watson (Member, Senate Appropriations)]: Right. And I'm just saying what could be because it's it may not affect that many districts. But I guess, I mean, my my point is that it's, wanting to be clear between holding it flat versus the spirit of holding it flat. Like, we didn't add any programs. We didn't do anything new or different. We're just trying to keep, you know, service level the same that that constitutes a cut. And so, you know, it may end up with sorry. I'm a little, like, fiery about this. So anyway But,

[Sen. Philip Baruth (Member, Senate Appropriations)]: again, the the I mean, I understand what you're saying, the bill allows every district to increase their spending without penalty. It's just if you increase it up to here, there's a penalty And one of the ways that you can make sure you don't get a penalty is if you're spending.

[John Gray (Office of Legislative Counsel)]: Right. The complication to that is that if the amount by which you increase, the threshold is tied to the FY '25 historic spending. So if you were at the threshold last year, then you can't increase your spending, right? Because you're already at the threshold.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So we use 25 and then that's that's what gets

[John Gray (Office of Legislative Counsel)]: The threshold is determined on the basis of an inflated FY '25 statewide average per pupil study.

[Sen. Anne Watson (Member, Senate Appropriations)]: Anyway, I'll I'll just say I I would love to see like a just a little bit, but I I also understand that that's not normal.

[John Gray (Office of Legislative Counsel)]: You mean

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: like like it was like 118%, like, a a bigger delta between

[Sen. Anne Watson (Member, Senate Appropriations)]: Well, that would certainly be my preference too. But but even just, like, as we're comparing it, what is the to keep to keep with the spirit of, you know, that was we it was held flat or

[John Gray (Office of Legislative Counsel)]: Sure.

[Sen. Anne Watson (Member, Senate Appropriations)]: You know, what is what do we mean by that? Is that we we didn't add any new programs this year. We didn't, you know, we didn't build out anything. We tried to we tried to keep it restrained. But even with keeping it restrained

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: It could be

[Sen. Anne Watson (Member, Senate Appropriations)]: outside of our control, which it gets to that.

[John Gray (Office of Legislative Counsel)]: Exactly. So that's what I was gonna say is that Senate Finance did include the safety of Subdivision 34 instances like this where the district is doing everything that they can to keep I mean, I can't say what determination the secretary would make, but the language that you just used was beyond the district's control, which is what this is intended to be.

[Sen. Anne Watson (Member, Senate Appropriations)]: So inflation potentially could be an example of the kind of thing that they could say, you have you have done everything you can to hold flat. Nonetheless, it's more expensive. So guess guess I I'm saying that also in case there's any question about legislative intent. Sure. Like, that could be situation used.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Should drive all schools budgets.

[Sen. Philip Baruth (Member, Senate Appropriations)]: Mean Sure. It wasn't inflated, The '25.

[John Gray (Office of Legislative Counsel)]: Right. What the excess spending threshold will be is impacted by inflation.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: But it's the excess of the statewide average. Yes. Which is inflated. Which is our which every year you would think would go up just because of the spending.

[John Gray (Office of Legislative Counsel)]: It will be increased by the inflator each year assuming you have inflation, which I think we can safely assume right now.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: It's not the statewide average in 2025.

[John Gray (Office of Legislative Counsel)]: That's correct. It's dynamic in the sense that it reflects inflation, but it is not dynamic in the sense that each year's excess spending threshold reflects the prior year's statewide effort.

[Nolan Langweil (Joint Fiscal Office)]: Because otherwise all the schools would make a

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: great job. Just slowly raise it up, right?

[Sen. Robert Norris (Member, Senate Appropriations)]: Wait. Here you go. Yes.

[Sen. Anne Watson (Member, Senate Appropriations)]: Sorry. Now I'm confused. So it's if we didn't do a foundation formula, which would then take over and make this irrelevant, then every year is compared to 2025.

[John Gray (Office of Legislative Counsel)]: That's how it currently is.

[Sen. Anne Watson (Member, Senate Appropriations)]: And it could be more than basically a 12% increase.

[John Gray (Office of Legislative Counsel)]: But it's the FY '25 inflated for that.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay, there is. You're talking about making it move to x one

[John Gray (Office of Legislative Counsel)]: Yeah. '73.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Go through. Is that true?

[John Gray (Office of Legislative Counsel)]: There would no there would be no such thing as excess spending at the point that the foundation form was rolled out. So if x '73 happens with contingencies met, the only year to which this would apply is FY '28.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So because we call it something else than Act

[John Gray (Office of Legislative Counsel)]: 73. Yeah, you just each district now would receive an educational opportunity payment that's purely a function of its student count multiplied by the base plus any category.

[Sen. Philip Baruth (Member, Senate Appropriations)]: But that way you could add a certain amount of locally raised.

[John Gray (Office of Legislative Counsel)]: Exactly. And there's a possibility to spend above up to a Is there a name for that? Supplemental District. Supplemental District. I

[Sen. Robert Norris (Member, Senate Appropriations)]: know the answer to this, but I'm gonna, but it is clear that if this goes into place, it will be in

[John Gray (Office of Legislative Counsel)]: the green books. And if we fail to do anything, this goes on. Exactly. So I will say that it was an intentional drafting choice on my part to draft this in a way where it is amending the section going forward. It is not just a one like, I would put it as a session long decision that there was intended to apply exclusively to one year. I think the thinking here was the initial bill was addressing FY '28, FY '29, and was missing signal, there's gonna be cost containment pressures as I understand it for the foreseeable future with the idea of bridging to act 73. And this is saying, this is the signaling, there's cost containment. If the contingencies are met, that's it, you've transitioned to the foundation formula. And there's that kind of cost containment provided naturally through the foundation formula. But in the absence of it, this is the law. This is an amendment to what constitutes excess spending.

[Sen. Robert Norris (Member, Senate Appropriations)]: Would also say that giving the secretary urgent, I look at Burlington and say that was an emergency and they moved out. If a school had a fire, and that I'd want them to have some ability to be able to move and do things.

[Sen. Anne Watson (Member, Senate Appropriations)]: I have some further questions. So again, so relative to 2025, again, if no accommodation formula happens, then let's say a school district is increasing their spending above inflation by 2% over time, that like, over over years. So eventually, you know, in six years, you would get to a point where you're just over every If you're saying that someone is growing beyond inflation plus situated beneath the threshold, Yes, if

[John Gray (Office of Legislative Counsel)]: you assume that they continue to grow at

[Rick Segal (Office of Legislative Counsel)]: a higher

[John Gray (Office of Legislative Counsel)]: rate, eventually, it would reach a threshold.

[Sen. Anne Watson (Member, Senate Appropriations)]: And they would just have to

[Sen. Philip Baruth (Member, Senate Appropriations)]: okay. Should be double taxed. Have an excess spending in law now.

[Rick Segal (Office of Legislative Counsel)]: Oh, yes. Okay.

[Sen. Philip Baruth (Member, Senate Appropriations)]: And it it affected six districts or five last year. So this is not new. This this has been a tool that's been in use for years.

[John Gray (Office of Legislative Counsel)]: Mhmm.

[Sen. Philip Baruth (Member, Senate Appropriations)]: It's just this is this is adjusting it down somewhat, but much less than the spending caps in the original bill in terms of what they what they say.

[John Gray (Office of Legislative Counsel)]: Yes. This is certainly more flexible in terms of allowance spending than Yeah.

[Committee staff (Zoom host/tech)]: More questions. Sorry,

[Sen. Anne Watson (Member, Senate Appropriations)]: thank you. In terms of factors outside of the district's control, I just want to explore. So things like healthcare costs going up, do we have, was that a part of the conversation?

[John Gray (Office of Legislative Counsel)]: I I think that it came up. I mean, I think this line of questioning which senator Westman also was going down about the fire for instance, is like a great line of questioning. The extent of direction that I can provide is literally just the final clauses I read, which to senator Westman's hypothetical, I think is called out in the examples. Healthcare is not called out. It is something that has come up in every discussion I can recall around cost containment in these. I can't tell you what the secretary would determine.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: She

[Sen. Robert Norris (Member, Senate Appropriations)]: gave the numbers hypothetically,

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: it

[Sen. Robert Norris (Member, Senate Appropriations)]: was 12 school districts. And if this was in place, it would be 30 something.

[Julia Richter (Joint Fiscal Office)]: Yeah, so this would be if S220 were to be implemented in FY27 using the current budget estimates that we have, which are not final, there would be 10 school districts that would be hitting the excess spending threshold this year. Or in FY27, if that were to be lowered to 12%, it would be 33 districts. That said, I do wanna phrase that the amount that districts would be falling above the threshold really varies. So for instance, we're seeing in FY twenty seven, one district that would be falling above the threshold by less than a dollar, while other districts would be falling above the threshold by a lot more than a dollar.

[Sen. Philip Baruth (Member, Senate Appropriations)]: And correct me if I'm wrong, Julia, but excess spending penalty works like any penalty, like a speeding penalty on the highway. Its its main value is keeping districts voluntarily staying below it. So that 30 number would come down arguably dramatically once it became law and people knew about it. Their budgeting for that year would take that into account in the same way that they did this year with the 112.

[Julia Richter (Joint Fiscal Office)]: Yeah, think that from JFO's perspective, we don't how school districts would change their budgeting practices based off of a different excess spending threshold. We have heard testimony that school districts look at the excess spending threshold and when putting their budgets together, the field would need to speak to that. And guess what I would say to Senator Baruth's point is those 33 districts, which is about the 21,000,000 that would be above the excess spending threshold in FY27 if this were to be implemented now, I think it's fair to assume that probably it would be 21,000,000 over the excess spending threshold, but it probably wouldn't be zero, right? Like some school districts might try to bring their spending down below that, others would be double tax.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: It is the double taxation on just the excess?

[Julia Richter (Joint Fiscal Office)]: Just now over the threshold.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Some of them might be over, but it's 800 so they're not gonna care. So it's not the number of schools, but the, million.

[John Gray (Office of Legislative Counsel)]: And some additional context that may be helpful is that sometimes we talk about these things. And I think that folks may have the perception that there's additional revenue generated, but this is a self leveling thing. So the effect of having increased excess spending penalty is to decrease the rate, the other rates that

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So unlike the other thing that we're doing in '73 that I

[John Gray (Office of Legislative Counsel)]: always forget now. Something along with just

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: a simple, maybe come up with an acronym for it. So that goes in, I think we said that would go to like school construction or something or

[John Gray (Office of Legislative Counsel)]: that was talked about. It's now used to reduce following year statewide tax rate.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Same with this. What lap is with the current?

[John Gray (Office of Legislative Counsel)]: In excess spending, this is actually used in the budgeting for that year. So it's not saved for the following year. It's in that year reducing.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And my last question is the New England economic project cumulative price index. What do you wanna say anything about why they chose that?

[John Gray (Office of Legislative Counsel)]: That is the old. It's a good flag because generally we've been updating these for NIFA and we've done that moving forward, which is the regular title 16 inflator that we call out. I think at some point there's gonna be an effort to try to make uniform the inflators we use, but just waiting on a little additional information on that. So some I would expect that to be addressed in the in the house assuming that this

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: has been Okay. So what's the other index?

[John Gray (Office of Legislative Counsel)]: HIPAA. Don't actually know the national I know it's for a local consumption expenditure.

[Julia Richter (Joint Fiscal Office)]: Yeah.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: The more related

[Julia Richter (Joint Fiscal Office)]: government expenditure and gross investment. It's used to look at essentially, like, the purchasing of state and local government.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So it's more connected to the spending in schools that.

[Julia Richter (Joint Fiscal Office)]: The expenses share of the inflation of the deflator is personnel costs, so salaries and benefits.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And that's the patient we have an

[John Gray (Office of Legislative Counsel)]: inflator for transportation costs. Exactly. And the NIFA is the one that we regularly have used in title 16 and that you'll see scattered throughout tax 73. But I think it's a pause. I mean, it's a policy choice which inflator you use. So I think there will be discussions either this session or coming about best inflators. Should we change it now?

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: We could put an amendment on.

[John Gray (Office of Legislative Counsel)]: I mean, you can do what you want. I'm just telling you that people will think about this. So whether you guys wanna be the one to do it or

[Sen. Robert Norris (Member, Senate Appropriations)]: not. Well,

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I will entertain either a motion to change the index or we can trust that that will be changed later and to move the bill favorably either with that amendment or not.

[Sen. Philip Baruth (Member, Senate Appropriations)]: I would move the bill favorably leaving the question of the inflator to the house.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Gotta give them something to do. Any questions on that motion?

[Sen. Anne Watson (Member, Senate Appropriations)]: Well, will say just I have concerns, but I am also still learning, obviously. So grateful to continue to learn. I'm gonna vote yes right now, question mark. For the bill.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: My concerns are with some of the guidelines and guardrails in the bill, not with the numbers per se. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: With that, the clerk shall call the roll. Senator Baruth? Yes. Senator Brennan? Yes. Senator Lyons?

[Sen. Virginia "Ginny" Lyons (Member, Senate Appropriations)]: Yes.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Senator Norris? Yes. Senator Watson?

[Sen. Anne Watson (Member, Senate Appropriations)]: Yes.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Senator Westman? Yes. Senator Perchlik? Yes. A reporter. Does the sponsor wanna report it? I'll report it. Sure. I'm just glad we started with our quick bill.

[Sen. Robert Norris (Member, Senate Appropriations)]: Don't you aren't you the reporter for education?

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Not an education.

[Sen. Robert Norris (Member, Senate Appropriations)]: It's not okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You do the sharing.

[John Gray (Office of Legislative Counsel)]: Education meet right now.

[Rick Segal (Office of Legislative Counsel)]: Thank you, guys. Oh,

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: you weren't here either.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: Uh-oh, what happened?

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Oh, the first two bills.

[Committee staff (Zoom host/tech)]: Oh, you were here. What

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: we do with the first two? Libraries is postponed. Economic development, we will do it some other time, hopefully today. But we have much council here for 03/25. Okay. So we will take that.

[Legislative Counsel (Act 250/Natural Resources)]: Hi. I'm on the legislative council. I'm here on s three twenty five, which is called the Cigna Creation of Model bylaws, but it's actually the act two fifty bill. So how much would you like to hear about the policies in this bill?

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Really just the fiscal impact with the most of you can you can quickly tell the section, like, what they're doing and Sure. But mainly focused

[Sen. Robert Norris (Member, Senate Appropriations)]: on on the

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: policies. So Is there a fiscal note for this or is this one the ones that we've done?

[Sen. Anne Watson (Member, Senate Appropriations)]: So I did request a fiscal note on this. We do not have it. So Okay. While we're going over it today, would love to not vote on it today if possible.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yeah. Okay. So we will we'll just give the overview of the bill today. Tomorrow, we'll look at or tomorrow or Friday, we'll have a look at the fiscal note and vote on it then.

[Sen. Robert Norris (Member, Senate Appropriations)]: Great.

[Legislative Counsel (Act 250/Natural Resources)]: So draft 6.1 was voted out of some natural resources. The first few sections extend most, if not all of the dates that were established in Act 181. So there were a number of temporary or interim housing exemptions that were created in Act 181. All of those are being pushed out. So now the party housing project is being pushed out till 01/01/2028. And the other interim exemptions are going out until 2030.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Are there any states that did you the study?

[Legislative Counsel (Act 250/Natural Resources)]: I don't think so, but that's why I didn't I I don't think so, but there were quite a few dates in that though.

[Sen. Robert Norris (Member, Senate Appropriations)]: Sure.

[Legislative Counsel (Act 250/Natural Resources)]: Additionally, in the first section, the implementation of the road rule, but the road jurisdictional trigger is being pushed out to 01/01/2030 as well, as well as giving additional authority for the Land Use Review Board to make different decisions about the number and the circumstances of when active duty criteria are used for both the road rule and tier three. Tier three is also being pushed out until 06/30/2028. There are some changes related to tier one A and its administration so that municipalities do not have to enforce an existing act two fifty permits. The board and ANR will retain jurisdiction

[Sen. Robert Norris (Member, Senate Appropriations)]: over

[Legislative Counsel (Act 250/Natural Resources)]: those in tier one a areas. There is a new report on how to reduce the negative impacts of discretionary review of housing.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Can just tell me what sections

[Legislative Counsel (Act 250/Natural Resources)]: you're in? I'm already up to section 10.

[Sen. Robert Norris (Member, Senate Appropriations)]: Okay. And

[Legislative Counsel (Act 250/Natural Resources)]: that's the report from the Department of Housing and Community Development to look at impact, what are the barriers basically of discretionary review of housing projects, which is what municipalities typically do in their permitting process. The next couple of sections starting with 11, make amendments to the regional planning process to streamline the regional plan amendment process, including tier 1B area updates, so that there will be fewer public hearings required and that tier 1B area requests can be made separate from the regular regional planning process.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So there still is a still is of that review? Yes. You're just changing the number of mean? Yep.

[Legislative Counsel (Act 250/Natural Resources)]: And then there are a couple of changes after that for consistency under the state community investment program, which is the new name for the the downtown designation program, which are in sections thirteen, fourteen, and 16. There's also a session lock provision that extends any municipal plan or regional plan that is set to expire this year, extending it to 12/31/2026, so they have additional time to update their plans before they

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: expire. That's

[Legislative Counsel (Act 250/Natural Resources)]: section 15. And then, yes, some more additional conforming changes for the downtown programs in sixteen and seventeen. And then that brings us to section 18 as a small clarification for the Downtown and Village Center Tax Credit program. So with the update of the Downtown Designation Program, new town centers are now part of what was the Downtown Designation previously, which may make them eligible for the tax credits under the downtown tax credit program. However, some of those tax credits are for historic buildings only. And buildings in the Newtown centers aren't technically not young enough or technically are too young. They're not old enough to qualify for the historic tax credits. So there's some additional clarifying language in section 18 that says that those the applications for the tax credits are only for those eligible buildings eligible to be listed on the historic places register, the National Register of Historic Places. And then finally, Section 19 is the effective date. Sorry, it's not the effective date. It's the appropriation. It's the appropriation. So there's two appropriations in this bill. First, so section 19 subdivision A, there's $200,000 from the general fund to the agency of commerce and community development to develop additional model plans as part of the homes eight zero program. I don't know if you've heard about that before, but the agency has been working with consultants to develop model home plans that can be adapted and used by builders to help them go

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: through Architectural plans of the homes themselves.

[Legislative Counsel (Act 250/Natural Resources)]: Yes. To help them go through the the municipal review process very quickly because they're sort of pre vetted to align with municipal zoning requirements.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: They wanna make more of those plans, like different homes or something?

[Committee staff (Zoom host/tech)]: Yes. And

[Legislative Counsel (Act 250/Natural Resources)]: then I I don't know the details. Are there 10 existing? There's 10 existing model plans, and they would like to do some additional ones. The second appropriation is a $100,000 from the general fund to the Land Use Review Board to conduct public engagement and education on tier three areas.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay.

[Legislative Counsel (Act 250/Natural Resources)]: And then there's an effective date in changing the name of the bill so that you all know it is related to act two fifty and regional planning.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And the public engagement is particular to something that happens in this bill around tier three, Or is it just the tier three that was supposed to be done on '81 or '81?

[Sen. Anne Watson (Member, Senate Appropriations)]: So just in in general, so this is one of the requests that we heard, for example, from the rural caucus, that especially in places that, you know, tier three may be may have more effects, that there just needs to be more education and outreach about, what the bill is, what it does, and then also to, engage with stakeholders about, how to make it work, particularly for folks that it might be affecting.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: It's tier three. Tier

[Sen. Robert Norris (Member, Senate Appropriations)]: three, yep.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay, and then I have a question for JFO, but maybe counsel does too. Like, Wayne, does somebody have to request the fiscal note, Or will a fiscal note be recreated if there is a fiscal impact? Or a legislative member has to say, want a fiscal note. For the record, they

[Nolan Langweil (Joint Fiscal Office)]: can all join the fiscal office. Fiscal notes aren't automatically done. Most of time, like in committees that we staff regularly, we know that this will not need to be done. Bills coming off the wall or it's gonna pass. For a committee like yours, where we're not regularly staffing it, it's good for you to let us know

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: because we won't just know. Because you wouldn't you wouldn't know that this appropriation was in there. Sometimes what happens is

[Nolan Langweil (Joint Fiscal Office)]: that the clerk or whatever

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Committee is this. Rumor will secretary will refer to

[Nolan Langweil (Joint Fiscal Office)]: a committee and look, oh, he needs this one. So we hope we sort of rely on chairs and committee members for the community.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: We also have to inform us.

[Sen. Anne Watson (Member, Senate Appropriations)]: And so I did send an email yesterday, two days ago. Two? Two. Well, I started with Catherine Benham, and then I believe it's Ted Barnett who's gonna be in the fiscal year. Great.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You have a question?

[Sen. Robert Norris (Member, Senate Appropriations)]: We probably shouldn't get into this. So but the 100,000, will that make maps available so counties like mine that haven't seen the map will be able to see it?

[Sen. Anne Watson (Member, Senate Appropriations)]: So that's a good question. The so the maps as they are progressing, they so they've they've been changing over time. So the next iteration of maps is supposed to be due out in April. And theoretically, they they're available to anyone. But this appropriation, the intention would be to to to do outreach to make sure that people are aware of them. And and get and also, I mean, it's it's we actually use the word engagement on purpose rather than just education and outreach because we we wanted people to, take also give us feedback.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Are the maps being changed by the The Land Use Review Board. As they go through the process later on that

[Sen. Robert Norris (Member, Senate Appropriations)]: one if

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: they want.

[Sen. Anne Watson (Member, Senate Appropriations)]: So they're not they're not finalized. They're not done. And and every iteration that they've been through, the area actually has shrunk every time. I think there was one iteration that, like, covered the entire town of Woodbury. Right? Like, that's that doesn't work. And it's continued to shrink in their as they're hearing feedback and understanding what how to best, address their mission really of protecting critical natural resources, they're I think they've been able to sort of winnow that winnow the areas down.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And other apps available on

[Sen. Anne Watson (Member, Senate Appropriations)]: their website. Would assume. Yes. Well, actually, I shouldn't say that for sure. I'm wanna confirm. They I should be. I know they're I know they're out there and people can look at them. But I should confirm we're there.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. Questions about s three twenty five? We're not going to vote on it. We're gonna wait for a quick fiscal note, but appropriate to do that. Thank you. Okay. Thanks. So we now have bunch of council, councilor Chittenden here to talk us through S-one 154 and OS-one 90. Do you want to start with 154? Are we voting on this? Two we're hoping to vote on. The bill we just talked about, we're going to wait for the fiscal note. We vote for it on

[Sen. Robert Norris (Member, Senate Appropriations)]: tomorrow or Friday. Okay.

[Committee staff (Zoom host/tech)]: Good afternoon.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Thank you for joining us.

[Jen Kirby (Office of Legislative Counsel)]: Sure. Jen Kirby from the office of legislative council. Remind me or do you like language up on the screen? I have it for

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: yeah I did one

[Jen Kirby (Office of Legislative Counsel)]: right now you should have whoever joined your Zoom. I can share. Perfect. Thank you. Alright.

[Sen. Robert Norris (Member, Senate Appropriations)]: Do the screen.

[Jen Kirby (Office of Legislative Counsel)]: Alright. 154. So this is

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: There's no physical number for one fifty four. There is?

[Jen Kirby (Office of Legislative Counsel)]: I believe yeah. Yeah. There is. Yes. There's one for each.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Might not be here though. You may not be here?

[Nolan Langweil (Joint Fiscal Office)]: We're both here. No, same if you

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: have questions but I have about

[Nolan Langweil (Joint Fiscal Office)]: seven minutes.

[Jen Kirby (Office of Legislative Counsel)]: We want to do ask Nolan for information.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Do we wanna do fiscal note first? It

[Jen Kirby (Office of Legislative Counsel)]: is. It may not have context.

[Sen. Anne Watson (Member, Senate Appropriations)]: Why should I

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: to approve? Okay. Not a

[Jen Kirby (Office of Legislative Counsel)]: long This one, I think, should be pretty quick to get to the fiscal note issue. So this is s one fifty four and act relating to health insurance coverage for biomarker testing. And as recommended by the Committee on Health and Welfare, starts with with definitions, but basically it directs the Department of Financial Regulation and the Agency of Human Services to analyze the costs associated with requiring health insurance coverage and Medicaid coverage for biomarker testing for purposes of diagnosis, treatment, appropriate management, and ongoing monitoring of a patient's disease or condition when the test is supported by medical and scientific evidence. And then it talks about what those might look like, that evidence might look like and then report by December 15 sorry January 15 from the FDFR reporting to the policy committees committees on on the the estimated amount that health insurance premiums would increase if the state were to enact legislation requiring health insurance coverage of biomarker testing, including the amounts and there would be cost to the state if you were to enact the mandates and not I'll defer to Nolan on whether there's cost to do the the report. But there are a couple of pieces that would have a state cost. One is that the state is required to pay for any increased premium attributable to a new insurance mandate. This is under federal laws, so the state has to what's called defray, state defrayal, the cost associated with the increased premium for qualified health benefit plans. That's a federal requirement. Also, the state would have to pay for premium increases in the state employees health plan. And then separately, this asks the agency of human services to report by the same date on the approvals that would be needed from the Centers for Medicare and Medicaid Services. This is in order for Vermont Medicaid to cover biomarker testing and the costs to the Medicaid program if we were to enact legislation requiring that coverage. So again, this is looking at finding out how much it would cost and what would be required for Medicaid coverage. But as far as the bill itself, I will defer to Nolan Anyways, we wanna go over it.

[Julia Richter (Joint Fiscal Office)]: That's right. Yeah. Okay. For

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the record,

[Nolan Langweil (Joint Fiscal Office)]: it's all lingual, the joint fiscal office. As Jen said, it requires DFR and NHS to analyze the costs associated with requiring health insurance coverage and the Medicaid coverage for the biomarker testing. The issue is that the bill would require, the analysis that's required of AHS, they could be done under their existing actuarial plan design contracts. So they already have contracts with these actuarial firms to look at plan designs for the qualified health plans. So they can do that within their existing contract as long as it's not robust. That said, TFR, however, the way that they pay for their actuaries is through what's called bill back. So they bill back, they bill like so if they're reviewing a Blue Cross Blue Shield plan, they can then go ahead and bill Blue Cross Blue Shield for the time they spent regulating that. This is outside of that because it's not a regulatory thing, it's like go do a study. So for something like this, they would actually need an appropriation because they can't just bill because the way it works is the actuaries bill them for the time that they spend in those particular thing. And long story short for this kind of thing, DFR can't use their bill back authority for this They didn't testify asking for a meeting or They didn't testify, they told me we don't have the authority. If you want this work to be done, they need an appropriation. That's what they said to, that they don't have it in their budget to just

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: They didn't say what it would be? They did not. Okay, so right now it required them to do the study, but doesn't provide them any funding.

[Nolan Langweil (Joint Fiscal Office)]: Yeah. They're saying they need resources. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Well, since there's no resources in here, we don't need to take them out. And then if somebody else can maybe have that discussion with DFR. Senator Westman? This

[Sen. Robert Norris (Member, Senate Appropriations)]: we'll get there. Okay. Yeah.

[John Gray (Office of Legislative Counsel)]: I mean, this if this is here, we don't

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: My husband is trying to get a.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: No. You're I think you're you're talking about s one ninety, think.

[Sen. Robert Norris (Member, Senate Appropriations)]: Yeah. Yeah. Yeah. We're trying

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: to find for that one too. Yeah. This is just about biomarker. Yeah. Biomark testing.

[Nolan Langweil (Joint Fiscal Office)]: Okay. So that's the rough.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: The VFR will come back and say, based on our analysis here, here's what the cost would be for the it would be global commitment.

[Nolan Langweil (Joint Fiscal Office)]: They haven't given me a number of what it would Not

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: for the study, but give there's, us a number at some point in the process, the bill's gonna pass about what it costs to do to study, but the study would tell us what the cost would be for Correct. Our match

[Nolan Langweil (Joint Fiscal Office)]: It would tell us what the impact on insurance markets would be and how much the state would be on the hook for the frail. Wouldn't tell us about global commitment then. But

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: it would have an impact on football.

[Nolan Langweil (Joint Fiscal Office)]: Would have impact on global commitment to the extent that we required Medicaid coverage. That would be a different thing. Think to get there, I mean, that gets the whole, like, HHS has to look at like state

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: plan amendments, right? So they

[Nolan Langweil (Joint Fiscal Office)]: can't just go and do it. They have to get a state plan amendment. So this would say, this is what we need to do to get a state plan amendment. The problem we run into Medicaid is that one, it's unlikely that we're gonna get any state plan amendments under the current circumstances. And b, global commitment ends in about a year and a half. So it's not necessarily worth the time to go for a state plan amendment that by the time it's approved, we've only got five months left in global commitment. It becomes more of like, can we include it in the next waiver? Which we don't even know what that's gonna look like. So they're gonna look at that, but they'll come back and tell you what the pros and cons are. But it's not like

[John Gray (Office of Legislative Counsel)]: we're gonna you don't have

[Nolan Langweil (Joint Fiscal Office)]: to book Medicaid match for this service at this time or even next year potentially.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. Any questions? I'm gonna need them. We we had an

[Sen. Anne Watson (Member, Senate Appropriations)]: extra We did. We chatted it. Alright.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. So the bill that moves favorably, I assume.

[Jen Kirby (Office of Legislative Counsel)]: Yeah. Mhmm.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Our our vice our vice clear tested. You're back on the

[Sen. Anne Watson (Member, Senate Appropriations)]: The vice.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You don't bug anymore. You're done. I'm just gonna grab some. You're done. So there's no appropriations to this? Yeah. There's no appropriations in this at all. I swear. And DFR is likely to request an appropriation, but they could request that when it gets to the house. Or maybe they'll bring it up to the governor. Or they'll find the money in their budget under a couch cushion. Go ahead. Start. Ruth.

[Sen. Robert Norris (Member, Senate Appropriations)]: Yes. Brandon's gone. Lyons. Yes. Norris? Yep. Watson? Yes. Watson, yes. Perchlik, yes. He hesitated.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Good job. Reporter? The reporter of this bill.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: Oh, I can do it. It's another

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You know that now. Okay. So that was a success on S 154, Bar market. Now we're going to S 190. Same I'm sorry. Harvey will talk to us about that. Here is the fiscal note on s one ninety. I also have s one ninety printed out. There we are out of printouts today. But this is oh, this is the amendment. I have. Cool.

[Jen Kirby (Office of Legislative Counsel)]: He has that's his amendment.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: My amendment, not your amendment. Do you have an amendment?

[Jen Kirby (Office of Legislative Counsel)]: No. Your amendment has been active while you've been on the floor. I don't think we have a consensus. Oh. Oh.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yes. Do you want to wait to I

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: haven't seen my amendments since I looked at my amendment this morning.

[Committee staff (Zoom host/tech)]: I'll take your email. Is

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: this an amendment you want the committee to consider that you would make it a a floor?

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: I think it will be somewhere.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Or your committee to that?

[Committee staff (Zoom host/tech)]: Yeah. So

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: tell us about this one then.

[Janet Harvey (Office of Legislative Counsel)]: Alright great again for the record Janet Harvey from the office of legislative council This is S-one90 as introduced. It's an act relating to the Green Mountain Care Board reference based pricing and House Hospital outsourcing of clinical care, although the name is proposed to change at the end of this amendment. So it deals with several different sections. The first are provisions. The first is on reference based pricing, which you may remember was enacted last year to direct the Greenland Care Board to work on reference based pricing and using percentages of Medicare rates. This would add language saying that for provider contracts entered into amended or renewed on or after 10/01/2026, hospitals and health insurers need to start expressing as a percentage of Medicare or another benchmark if the board decides another benchmark is appropriate. The rates for items and services identified pursuant to a collaborative process between the board and representatives of Vermont hospitals. So provider contracts are gonna start using Medicare percentages to indicate the percentage of Medicare that the prices are that the rates in the contract are set to. Also, when making public the charges for items and services as required by federal law around hospital price transparency, each hospital has to include in its machine readable files pricing information, again shown as a percentage of Medicare rates as well as in dollars and cents disaggregated by payer and by plan. And then it specifies that for purposes of these two subdivisions, hospital may express its rates as a percentage of Medicare based on the actual reimbursement amounts that the hospital receives for Medicare or items provided and services delivered to Medicare beneficiaries until such time as the Green Mountain Care Board adopts a rule establishing the methodology for determining Medicare rates for use as a benchmark in establishing reference based prices. With that last part is all a long way of saying hospitals right now get different Medicare rates based on various factors having to do with what type of hospital they are and other things. And hospitals don't know what the board is gonna come up with as sort of the official Medicare rate for which on which the reference based pricing will be based going forward. So until the board has developed that, hospitals can report their rates as a percentage of their actual Medicare reimbursement. So the information that they have, that's what this piece is said. It also requires it also requires hospitals to apply for, obtain, and use a unique national provider identifier on plans filed after 10/01/2027 for when they are paid for items provided and services delivered in off campus department at the hospital that's different from the one used for main the main campus so that there's better ability to track where services are delivered. And this uses federal definition of campus and off campus is a facility located more than two fifty yards from the maintenance. Section two has limitations on hospital reimbursements. This piece is still I think in a little bit of a flux but as written here this is going to provide a cap on how much

[Legislative Counsel (Act 250/Natural Resources)]: a registered carrier, which is

[Janet Harvey (Office of Legislative Counsel)]: a health insurer offering plans in the exchange. So how much a exchange plan carrier can reimburse for hospital services. And that cap is 250% of the Medicare adjusted base rate for items and services for enrollees in qualified health plans. And it's got some carve out language around non fee for service basis. The reimbursement limit would be in place until the availability date. The care board will establish a reference based pricing more broadly. It prohibits hospitals from balance billing or charging or collecting from the patient any additional amounts other than the authorized cost sharing under the terms of the health plan. And the language requires the Green Mountain Care Board in its rate review, health insurance rate review for qualified health plans to ensure that these limitations on reimbursements are reflected, appropriately reflected in the premium rates. Meaning these caps on reimbursement for hospital services in qualified health plans should show up as a reduction in premium increase for the qualified health plans. Are you ready to move on? Yeah. Alright. Section three make some changes around hospital budgets and budget review as a definition that matches the definition of the previous section for Medicare adjusted base rate. And then as a new section on targeted commercial reimbursement rate reductions that direct hospitals to implement any commercial reimbursement rate reductions that the Green Mountain Care Board orders through their hospital budget review process. Through its limitations on commercial reimbursement rates that 250% of Medicare rate cap first. So if a hospital is directed in the Green Medicare Board's budget order to reduce commercial reimbursement rates, the first place that that will show up is in the rates, the limitations on the hospital reimbursement for the qualified health plans. If to the extent that a hospital is required by the budget order to reduce commercial reimbursement rates further than just what can be achieved by that two fifty percent cap, then the hospital would reduce its commercial reimbursement rates that exceed 500% of the Medicare adjusted base rate or if it doesn't have any rates that are exceed 500% of the Medicare adjusted base rate then by reducing its highest commercial reimbursement rates in relation to the Medicare adjusted base rate. If a hospital can show the board that the limitations on its reimbursement rates either for the 250% cap for the qualified health plans or otherwise under the section having a negative impact on access quality or the sustainability of rural health care services, the hospital can propose to increase the commercial reimbursement rates for one or more of its service lines such as primary care and the board must consider both the demonstrated impact and the proposed increase to rates. Section four is where we get to the appropriation. Section four is the implementation I'm sorry not this one. Four is implementation of reference based pricing for certain public employee health plans. This directs the Green Mountain Care Board in consultation with others to analyze commercial health insurance claims for items and services for active and retired members and dependents in the state employees health plan and in health plans offered to teachers and others through the Vermont health Vermont education Is that different than

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the bill we passed, whatever, last year about reference based pricing. They weren't included on that?

[Janet Harvey (Office of Legislative Counsel)]: They weren't not included. This is looking at what happens if sort of if that form is addressed in a different time frame than the the full system wide reference based pricing.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: That's what this they look at.

[Janet Harvey (Office of Legislative Counsel)]: That's what this is directing them to look at.

[Legislative Counsel (Act 250/Natural Resources)]: So look at basically, like,

[Janet Harvey (Office of Legislative Counsel)]: what it costs to provide services to those in those plans, and be high and others have to give the board access claims data. But they're supposed to determine opportunities available through the use of reference based pricing and the projected impact on Vermont's hospitals. And then report back in January with the board's findings and recommendations regarding scope, timing, financial impacts, and other considerations in implementing reference based pricing for these public employees. So they had they had been asked they had asked last year to to to go first in reference based pricing and the legislature determined to do everybody kind of equally, not pull out special a specific population. Now in this bill, they're pulling out the qualified health plans and doing some reference based pricing specifically targeted there. The public employee groups have come back and said we would also like to be part of that and saying, hold on, we're gonna look at what that would do both the benefits to the public employee plans and the taxpayers, but also what would that do to the hospitals? Because there's concern about rolling out reference based pricing too quickly and and interviewing a hospital's ability to stay open.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Because that's what I heard that people wanted wanted to have breakfast, I think, move ahead quicker, but this doesn't just for that one. Because the bill does move quick quicker for one group and studies moving quicker on the second group.

[Janet Harvey (Office of Legislative Counsel)]: Right. It moves it quicker on qualified health plans, which have very high premiums and the chair of the health and welfare committee can tell you more about that if you're interested. But yes, this this does pull out one group and start doing reference based price. Pick a percentage which otherwise has not been figured out what the right percentage is. What to base the reference on whose Medicare rate, what is the right reference for a particular hospital for particular service. This is saying we're jumping in and putting 250% for the qualified health plans for all hospital services based on their own Medicare rate.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And when are we expecting the other price pricing to kick in or is it better?

[Janet Harvey (Office of Legislative Counsel)]: Well, the language that you passed last year said as soon as practicable, but not later than hospital fiscal year 2027, at least that it would start. And that's October 1 is the beginning of hospital fiscal year 2027. So alright soon.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yeah, I know

[Janet Harvey (Office of Legislative Counsel)]: it's okay, but maybe not as soon as many would

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: like. Okay.

[Janet Harvey (Office of Legislative Counsel)]: Okay. I just don't. Alright section five is on hospital outsourcing and this is directing that for fiscal year twenty twenty seven hospital budgets. The Green Mountain Care Board direct hospitals to provide information that the board requires regarding the clinical services that hospitals the hospital outsources to external entities. And then on or before 01/15/2027, the board after consulting with hospitals and their contracted entities and assessing the impact of outsourcing on access to and quality and availability of care would provide findings and recommendations about outsourcing to the community's jurisdiction. And in addition, the board in collaboration with the agency of human services would report on the extent to which hospital outsourcing affects provider tax revenue and recommend any needed changes to those statutes to appropriately reflect expenditures for patient care at Vermont hospitals.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: These sections, if there's a fiscal impact, you can give us a very quick thumbnail.

[Janet Harvey (Office of Legislative Counsel)]: Alright. The next one has no fiscal impact. This is really carving out reference based pricing from the scope of what health care provider bargaining groups can engage engage and have a nonbinding arbitration process.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay.

[Janet Harvey (Office of Legislative Counsel)]: Section seven also no fiscal impact. This is eliminating a requirement that the Green Mountain Care Board have an administrative appeals process for appeals of its orders in addition to appealing directly to the Vermont Supreme Court. Everything is all done.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: You can still appeal

[Janet Harvey (Office of Legislative Counsel)]: well, this is requiring them to adopt procedures that provide for the issuance of a final order and the rec creation of a record that can be used for an appeal. And appeals go to the Vermont Supreme Court as

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So right now, the person could a hospital could appeal.

[Janet Harvey (Office of Legislative Counsel)]: There is no internal they there has never been an internal appeals process. There has been this language Administrative talking about an administrative appeal, but there is not there is not an official

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: It's almost like a technical or just making the statute line up

[Rick Segal (Office of Legislative Counsel)]: with reality.

[Janet Harvey (Office of Legislative Counsel)]: Yes. Making the statute line up with reality. Section eight does have a a fiscal impact, but it it kind of cover I think it addresses has its own contingency. This is directing the Green Mountain Care Board to develop and maintain a public interactive tool displaying information on health system performance and updated regularly. Section nine says, but they only have to do that if the board gets sufficient funding from the federal government or another source for this purpose. So it comes with its own contingency and I understand the language as a funding is included in the rural health transformation funding from federal government. Now we get to the piece that does have the the fiscal impact. This is the public employee health benefit authority study committee that would be established to develop and to look at opportunities to establish a state authority that would develop and administer comprehensive and affordable health benefits for all public sector employees. It gives membership of their 11 members, some of whom are state employees and others it specifies that they do not receive per diems. And it tells them to study certain topics and produce a report on the potential for establishing this authority to provide and administer health plans to meet the health and wellness needs of Vermont's municipal, state, public school, and public college employee at public college and university employees and their dependents. Looking at various things in other states. What the scope of coverage is and the various plans offered to these folks now. Lot of other information I'm happy to go into in more detail if you want, but it goes a through l. And provide recommendations regarding a detailed blueprint, the timelines for setting this up, the need if any for independent consultants or advisory personnel, and the costs of creating an annually funding this authority. The report due in February 2027 to the General Assembly and the Governor. It gives the study committee the administrative technical and legal assistance of the state treasurer's office and allows them to engage one or more consultants and firms. That's where the funding comes in, talks about the meetings, and then the study committee would cease to exist shortly after submitting its report, requires public hearings, requires people to provide access to information that would be needed. Members of the study committee, as I said, do not get per diem compensation and reimbursement expenses, but it would appropriate $50,000 to the office of the treasurer to pay for the services of one or more consultants or firms. And then we have amendment that addresses that. The act will take effect on passage.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. Any questions? Ledge counsel on all that? We have it all been right. Here is amendment that would just strike the $50,000 or say that to the extent funds are made available. So we will put it on that's all it means with, which is things that we will look at putting in the budget when we get the budget open the house.

[Janet Harvey (Office of Legislative Counsel)]: Yes. This Go

[Sen. Robert Norris (Member, Senate Appropriations)]: ahead. Go ahead.

[Janet Harvey (Office of Legislative Counsel)]: Well, this is the amendment to put it up on the screen. It would add after that language saying the committee can hire consultants that would say to the extent funds are made available for this purpose, and then it would strike out subsection I, which is the appropriation.

[Sen. Robert Norris (Member, Senate Appropriations)]: Okay. Can I ask the chair? Yeah. Do you have an amendment?

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: I don't have an amendment at this time, but I may be I'm working on a possible amendment. It's getting to be difficult to come to agreement on what might be in the amendment. And so as the bill passed the committee, it was five zero zero. And there was plenty of time for disagreement and for attention to places where people have concerns, but we're trying to resolve any final questions. So I'm still working on it. I'm gonna try and get to closure on that by tomorrow afternoon. You Jen is my right hand person. Is that tomorrow afternoon? Maybe Friday morning. I'm gonna put that way.

[Julia Richter (Joint Fiscal Office)]: Friday

[Committee staff (Zoom host/tech)]: morning. We'll see. Yeah.

[Sen. Robert Norris (Member, Senate Appropriations)]: I've heard from my hospital, and they're

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: trying I'm sure you have.

[Sen. Robert Norris (Member, Senate Appropriations)]: And I don't know the details.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: So what So so, Jen, would you mind describing what the issue is? Because I think that people are gonna hear about Medicare rates and what the hospitals can and cannot do. And we've talked about it in our committee. There is a from my perspective, it's really critically important to keep moving on reference based pricing and to have some transparency about how hospitals are charging for different services. And there's disagreement about how much hospitals can do and what they can do and what they can't do. I'll just- sure. And I'm

[Committee staff (Zoom host/tech)]: gonna just put the language up here again just to be able to

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: show you what we're talking about.

[Committee staff (Zoom host/tech)]: So this is in section two. This is on that 250% of Medicare cap on reimbursements to hospitals for people who are enrolled in qualified health plans. And the issue is this definition of Medicare adjusted base rate, which is looking and having kind of a standardized definition across all hospitals. And the hospitals are saying we don't have that information to calculate what that would be. We only know what we, you know, as individual hospitals actually receive for Medicare reimbursement. So they would like language put in section two that is similar to language that was up here in section one saying, you know, hospital can use the percentage of Medicare based on the actual reimbursement amounts they receive from Medicare until they're sort of a clearer path forward on what the Green Mountain Care Board is setting for the everybody. Everybody's using standardized Medicare definition for Medicare calculation. But this so that's what the hospitals are requesting and I think the Green Mountain government has some concerns about that that I've been fielding during the day.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: And there is language in the bill that offers some forgiveness should the conditions for determination of the of the reference based price cause harm to the hospital. So there will be some ability for hospitals to demonstrate that and for the board to say, oh, yeah. You you we'll do it a different way. So it's not like we're forgetting hospitals for this.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. That sounds like a a committee event.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: It is a committee event. It's gonna be interesting. On Obviously. And frankly, I don't know whether it's best to vote on this at this time vote the bill out at this time or to hold it

[Sen. Robert Norris (Member, Senate Appropriations)]: over

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: for

[Sen. Robert Norris (Member, Senate Appropriations)]: I would stretch her. I'm doing what and I get a chance to talk

[John Gray (Office of Legislative Counsel)]: to my local hospital in court.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: Well, the local hospital is not going to want to to do what's in the bill because they're hearing that it's going to cause harm when the reality is everyone will be doing the same thing and they'll be able to identify the payments that they have with respect to Medicare condition. It's 250% right now but there's

[Sen. Robert Norris (Member, Senate Appropriations)]: totally very clear something we've done. I just haven't had a chance to give back to them. Well, we pass it out of

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the committee the appropriate appropriation change then have a floor amendment from health and welfare?

[Sen. Robert Norris (Member, Senate Appropriations)]: Oh yeah

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: well I'm fine because it seems like this is more of a policy than

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: really is It really is. And it will know, the

[Committee staff (Zoom host/tech)]: more we move forward,

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: we haven't put we're we're very concerned about hospitals. The whole reason all of this started was we have hospitals in the red, and we want them to be in the black.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And the the amendment won't affect the financial the incorporation. I don't

[John Gray (Office of Legislative Counsel)]: think so.

[Sen. Robert Norris (Member, Senate Appropriations)]: No. There

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: won't be a fiscal impact on that.

[Committee staff (Zoom host/tech)]: That's right.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Is that okay when you are you?

[Sen. Robert Norris (Member, Senate Appropriations)]: You would rather

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: wait for him. I'd rather wait for him

[Sen. Robert Norris (Member, Senate Appropriations)]: for tomorrow.

[Committee staff (Zoom host/tech)]: But it won't matter. I mean, we'll

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: put the thing in. I think let's let's get it out of appropriations, and then we can we'll work on the amendment.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: If you if you would like to wait for tomorrow, can

[Sen. Robert Norris (Member, Senate Appropriations)]: you could. Would appreciate

[John Gray (Office of Legislative Counsel)]: it. Either way

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: is fine.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. We will we won't vote on this today. We're gonna we're gonna try to do a thank you. Thank you. Yeah. No. Think that's important that people feel good. We have the day, so might as well take it. So I'm hoping that we can do one more bill, and that is That's okay. No. $3.27. Sorry. I so we have I don't tomorrow

[Sen. Robert Norris (Member, Senate Appropriations)]: would be good.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Which council here for 03:27.

[Sen. Robert Norris (Member, Senate Appropriations)]: You.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Afternoon. Thank you for being here. Sure. Sure. And we got, you were here yesterday, right? I was We got the briefing from chair of economic development. So I don't know if there's anything else you want.

[Rick Segal (Office of Legislative Counsel)]: So Rick Segal, Office of Legislative Counsel, she did a great overview, Senator Clarkson of the bill, happy to answer questions about specific parts of the bill. But as you all saw, most of the sections are allocations of money to certain departments or agencies for specific purposes. I understand there might be some concerns about that. So happy to discuss how you wanna address those allocations of money.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: The the one question I have, which I don't know if it if it's a direct fiscal question or electric accounts. And electric accounts question is the the two tax credits. Yeah. Right? So there's the appeal of Veggie, which has been around for a long time. And is it always been the 2,200,000.0? Is that what

[Rick Segal (Office of Legislative Counsel)]: it is? So I'll defer to Pat Peterson. That was the 2023 loss of revenues of

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the state.

[Rick Segal (Office of Legislative Counsel)]: But Pat may have more information about that just passed.

[Pat Peterson (Joint Fiscal Office)]: Yeah. So I went back and looked at or so Patrick didn't do it this long.

[John Gray (Office of Legislative Counsel)]: So I back and looked

[Pat Peterson (Joint Fiscal Office)]: at several of their previous annual reports. It looks like that generally speaking, the incentives paid are You're welcome. Sure. So that from the 2025 report, 2,200,000.0 in incentives were paid in 2020. Do they have

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: a cap where they can just do as many incentives as they see? They do have a cap, 10,000,000 or 15. I'd have to

[Pat Peterson (Joint Fiscal Office)]: get the exact number, but the annual expenditure in that year was about 2,200,000.0 as a tax expenditure. I think back in 2015, which is about as far back as I went, that was one of the largest number I saw, which is about 4,000,000. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I was just wondering about what I asked Amy about earlier about the role of this committee on tax expenditures. Like we are in charge of appropriations, but we're also in charge of things affecting the expenditure, you know, affecting the budget, the way I work to see it in tax expenditures affect the budget because it's less money that we're gonna have. But since this is kind of the veggie idea, it's like an ongoing pace of preparation. But the other tax credit was changed or increased, right?

[Rick Segal (Office of Legislative Counsel)]: The Downtown Village Tax Center, that's in statute and the annual max is 3,000,000. Senate economic development raised that to 4,000,000. Senate finance yesterday lowered it to 3,500,000.0. So that was

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: their one of them that was changing that downtown tax credit to 3.5. And they did that or did they explain why they did that?

[Rick Segal (Office of Legislative Counsel)]: I think it was explained to them that the program is usually over applied to, that they would normally get more of these tax credits if they could and at a pace of the seventeen and one is the what I usually hear. I'm not sure if that's correct. That's what the politics of it are. So I think the over there, it seemed a pretty popular program that could use more support.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: But they lowered it. Well, so they've reduced it

[Rick Segal (Office of Legislative Counsel)]: from four to three and a half. So it's still up from three in statute.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: What was their rationale for lowering it from four?

[Rick Segal (Office of Legislative Counsel)]: When I was in committee, I think one member, it was a compromise. Some wanted

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: to keep the three, some The governor wanted that three. So the governor has it as a budgetary. Correct. So they they split it and did three and a half.

[Sen. Philip Baruth (Member, Senate Appropriations)]: I will just point out that Jane Kitchell, when she was here, when people quoted that number of

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: you put in a dollar and

[Sen. Philip Baruth (Member, Senate Appropriations)]: you get $17 back. She said, well,

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: we should just take the whole budget and Right. Yeah. We could put 9,000,000,000 into it. Get 17,000,000,000 back. Yeah.

[Sen. Robert Norris (Member, Senate Appropriations)]: I heard Jane say this but I also heard earlier days they smell it. We can't afford to save that

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: much money. The other thing about the bill that I have the the wording of the, they're not appropriations, but they're money taken from the allocation, I can't remember the wording, allocation made to the departments. Is there a reason it was worded that way?

[Rick Segal (Office of Legislative Counsel)]: So last year the same economic bill, the bill, at some point during the process, it was suggested that it'd be phrased in that way. So when this bill came up, I drafted the same way with these monies being allocated. It didn't really come up in the committee, the jurisdiction committee.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And did the departments or agencies mentioned testifying to those sections? I don't

[Rick Segal (Office of Legislative Counsel)]: recall any testimony about that specifically.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Like, so they came in and said, you're allocating you're taking the money that we would get allocated and spending it in the bill, but they didn't weigh in.

[Rick Segal (Office of Legislative Counsel)]: I so personally, I didn't see any. It could have happened, but I didn't hear any of that.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Did they just not testify or they testified and didn't mention that?

[Rick Segal (Office of Legislative Counsel)]: So when I was in there, most of the testimony was from, for example, sections where the small business supports, you know, you had the professionals of color come in, you had the Vermont law school come in and testify. They would be of course awarded this money. They would not be directly impacted negatively by the allocation. So I don't have heard differently. If anyone came in

[Pat Peterson (Joint Fiscal Office)]: and spoke about that. Yeah, I mean, so part of some of my understanding of the language and how it's where it came from originally is, as Rick said last year, this was some language that was used.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I believe the bill was coming out of house commerce at the time.

[Pat Peterson (Joint Fiscal Office)]: That's right. And at the time, it was actually coming after the budget. So the dollar figure amounts were already accounted for and passed by the legislature. So, and I think the committee's intent with this language this year was acknowledging the fact that ultimately this committee is going to be making ultimate funding level decisions on all these, know,

[Rick Segal (Office of Legislative Counsel)]: what can fit within the budget. Right. I think

[Pat Peterson (Joint Fiscal Office)]: the intent really was to express what they think the need is by using these dollar figure amounts while acknowledging that ultimately, here's that may not be viable.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yeah. Because I just I I feel like they should be consulted on some of these things. For example, the brownfields. It it takes $3,000,000 up the money appropriated this DVD for Brownfield, which they don't have any other appropriation in the budget for Brownfield. So maybe that's not a good example. But it takes the $200,000 per vote. It takes $200,000 out of the money appropriated to the force, and that gives it to vote. If I was the Commissioner of Department of Parks and Parks, I want to say, don't make me do this or do. It's not in the governor's budget. It's $200 So we're saying Department of Forest Parks is gonna get the same amount of money in the governor's budget and our budget. If our budget says 200,000 of their budget has to go to vote. We don't necessarily have to give them more Right. Right? That's correct. The way it's worth which weird. But there are some I don't know if I don't know if they're all that way or all the appropriations written that way. In this bill, yes. Okay. Yes.

[Rick Segal (Office of Legislative Counsel)]: It's all allocations. Again, coming from last year's economic owner bill, that was the method that we were

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I'm surprised that they didn't come into economic development or finance and say, why are you taking my money?

[Rick Segal (Office of Legislative Counsel)]: They may not fully understood the implications of the language. There's a lot.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Like like, again, like the law school, I might like the program to get $100,000 to law school, but it's not coming from the general fund. It's coming from money that was given to DD. So DD doesn't like it, the bill passes. Tosh, they gotta find $100,000 within their existing budget. Right. It just seems weird the way we would work. I mean, you did the amendment kind of go section by section, taking those out. Just strike each section. Correct. Because it's like, there's no reason to because the way the word is, you just like, we're just taking that section down. So if somebody reads the bill in the house, they would just wouldn't see those sections. They would

[Rick Segal (Office of Legislative Counsel)]: not see A lot. Money or what the money was gonna be used for. Correct. Now if you want a different type of amendment amendment that basically takes language but changes it to appropriations instead of allocations and then add that contingency section that you've been doing, that's doable if you prefer that.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So we would like to change it all to appropriations and then strike the appropriation? Right. Can we do that? Add sections and then strike it in the same amendment?

[Rick Segal (Office of Legislative Counsel)]: So well, what you would be doing if you struggle and you would basically replace these sections with appropriation language, very similar wording just Yeah. Appropriation. And you've got a section at the end that contingency language that these sections are contingent upon funding. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Well, we will think about it. So we might ask for that. I will confer with counsel between today and tomorrow. Do you have a comment?

[Sen. Robert Norris (Member, Senate Appropriations)]: I think more importantly, Amy have the list of everything we've asked for on her tracking document and most of this will consider within the context of the budget.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yes. But we will be basically taking out all the sections of the bill. So the next person that sees the bill, meaning house, I know if they're not redevelopment, would just see a bill in three sections instead of 14.

[Rick Segal (Office of Legislative Counsel)]: And I would tell them obviously what happened. Right. Yeah. And they would say

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: they could find out. They could look at it. But maybe it's fine just to do it that way where you just take out all the sections that mention the money. Although some of them, some of them are in the governor's budget. Guess they would have put it in here if it wasn't. Is there There's

[Rick Segal (Office of Legislative Counsel)]: and maybe Pat could better explain. There's a couple that have included the government recommend, like the micro business, right?

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yeah, we're

[Pat Peterson (Joint Fiscal Office)]: sure. Yeah. So I think the only two sections or pieces where you have dollar amounts that were not there was no nothing in the gov rack putting money towards those would be the law school small business law center and then the brownfields in section six. So those are two pieces that the governor did not have any money in his recommended budget amount for. But yeah. So there there's several others, and I can kinda go down the list.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: For like VORAC, they put in 200,000 more than the governor. But by taking out the section, we're not affecting that because they were just amending that to give them $200,000 They don't, We would be affecting the governor direct or what the agencies wanted to do by taking out the section.

[Rick Segal (Office of Legislative Counsel)]: Not that one. Right. So not the But so the micro business on page so I'm looking at the senate economic and the one that reports the subsection C in section three micro business support, that five ninety four. 494 is the governor's recliner.

[Pat Peterson (Joint Fiscal Office)]: Yeah, $193,493,339 dollars But the governor of

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the budget would still have that money. Right. Right. Yeah. And so if you look at the language, this

[Rick Segal (Office of Legislative Counsel)]: is pretty simple and striking language doesn't remove that program. And it doesn't change what they can do with the base base funding like that. That's under the board. Pretty sure it's based on it. So I think the intent here was to say we support the gov right plus this extra money because we disagree with the government. We think it should be higher.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yeah, just but some of the like the vorex says we're on it, was looking, you got me looking at that, That 200,000 is in addition to the appropriation from the general fund, but it's also directed to a specific study to fund a study. So that's specifically used for that as it is. Okay. So when do we are we gonna talk about that? Like, I personally have an issue with that. Okay. The use of that extra 200,000. What section is it? So like so this is the amendment that that's drafted. That just takes up the section. So if you wanted to have an amendment that changes it or changes the wording of the study, then this amendment would be helpful because this just takes the whole section out. So there would be no study, there'd be no direction at all because there's no money or No money. Okay. So if we just wanna take out all the appropriations, even though they're worded in this sort of allocated way, that's kinda what we normally do. So maybe that's just what we should do. We'll deal with it in the budget. Then we would just deal with it in the budget.

[Committee staff (Zoom host/tech)]: And Amy has the whole

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: because I guess the house, even if they got it with a different wording, it doesn't help them because by the time they get it to their budget, we'll already pass. So they're not gonna change it. So I'm

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: seeing an analogy here between how health and welfare deals with some of the other requests that we get. And we always we go through we have people come in, and they make requests. Some of the things are in the budget. Some are not. Some need more appropriations. Some nobody asked for less, believe me that. But so then we send our our prioritized list here. I'm wondering if economic development has a priority for these expenditures. So So maybe that's a better way for us to look at it. That's all.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Yeah, mean, I asked the committee chair for that and I was the committee to talk about and she gave me a list between the two bills actually, priority. It doesn't help to just have one bill. Do you have any comments about doing it?

[Sen. Anne Watson (Member, Senate Appropriations)]: So for example, the ones where there's a

[Legislative Counsel (Act 250/Natural Resources)]: base appropriation and there's an increase, if for whatever reason the house were to change the base, if you were to change the base, the bill as drafted would be very complicated to track. And so, of

[Sen. Anne Watson (Member, Senate Appropriations)]: removing it all and then looking at it as

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: a construct of the budget, I think is a good

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: We just have to remember not only, for example, the voter thing. If we wanted to have we wouldn't just add $200,000 We might also want to add the language that 03/27 have it or not. Could change it. But we would have I assume your magical list not only have dollar numbers, but references to the section.

[Sen. Anne Watson (Member, Senate Appropriations)]: I have references to the bill.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Some of these things aren't just a dollar amount. They also wanna change the program. So we'd want Good. Does that make sense?

[Sen. Robert Norris (Member, Senate Appropriations)]: Gonna call There's more to track by '24 amend. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Did you have a Just one

[Pat Peterson (Joint Fiscal Office)]: more comment just because it didn't come through

[Rick Segal (Office of Legislative Counsel)]: the the veggie repeal is not gonna be removed in this. So the the underlying bill repeals the repeal of veggie. So it lives on the side. I was getting hurt on on

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the part.

[Rick Segal (Office of Legislative Counsel)]: Yeah. So your amendment does not strike through that.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So it keeps the repeal. Keeps the repeal of their repeal. Keeps the repeal. And then what about the other one that's downtown?

[Rick Segal (Office of Legislative Counsel)]: That so that would be repealed. So the senate finance, you would override the senate finances

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And we would strike that change, but the underlying program would still exist for 3,000,000. Correct. And then we could decide later if we go to 3,500,000.0, 4,000,000. 9,000,000.

[Sen. Robert Norris (Member, Senate Appropriations)]: Okay. Gonna get back to a little high.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Any other comments?

[Pat Peterson (Joint Fiscal Office)]: Leg councilor, do you? I I would just reiterate something that Rick mentioned, you know, that the fiscal note reflects the language of the bill, but there are cases where the intent of some of the numbers are either including the governor's recommended amount or they're adding to it without referencing what the underlying governor's recommended amount is. Even I have been working on a table to track that. Hopefully by the time you get to the budget construct part of the conversation, those numbers will be clear to you what the intended full funding for these programs is coming to you from the economic committee. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And you also struck me in the small ones like the task force. Mhmm. $9,600. Yes. Okay. Okay. So senator West has moved the bill favorably as amended. Not Watson. Not Watson. I know.

[Sen. Anne Watson (Member, Senate Appropriations)]: You I just

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I just got a question on this. This is very

[John Gray (Office of Legislative Counsel)]: you all have been

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: doing this a lot longer than I have, obviously. This appears to be not quite are we to understand that the governor's recommended, and they're suggesting moving monies from other agencies to cover the the downfall of what they want or I thought we have Word is they would take money from within the agency for for the purpose that they have in the bill. But they would assume that we were gonna add money to their budget to do so. It doesn't say that, but that's kinda what they assumed. But they don't specifically say moving from other agencies. They just say find another $3,000,000 for ground fields. Has this happened

[Sen. Robert Norris (Member, Senate Appropriations)]: in the past?

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Do you entertain like this or Well, it's what they kind of

[Pat Peterson (Joint Fiscal Office)]: So, yeah, the the the sort of a unique in situation last year was that you had a similar economic development bill. A lot of those appropriations got rolled up into the budget for those programs, But it was, I guess, the house commerce felt it was important for the policy language attached to some of those dollar figure amounts to still be lived in a bill. And what was kind of strange about it was because typically the the budget goes last. Right? But this was an instance where the policy was following, like, coming out. We got

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the bill out early, so they hadn't house hadn't finished it. So they so they passed the bill just kinda referencing the the budget.

[Pat Peterson (Joint Fiscal Office)]: So referencing dollar figures that had already been conferenced and agreed to in the budget. Yeah. Just, you know, making sure that the policy associated with some of

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the money lives. Yeah. So I know what I'm doing.

[John Gray (Office of Legislative Counsel)]: So this

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: amendment takes out all the money. Takes out all the money. So we're gonna sit here and wait basically for the house to send over the budget to see before we make our next move. Right. Well It it is a way to get the documents.

[Sen. Robert Norris (Member, Senate Appropriations)]: All of these. They need the money.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So Well, you need something. It just seems unusual. The amendment the amendment takes out all the sections of the language. Any any Language that goes with the money. Any any money that had language with it in that same section. So I don't know how many sections are left we take them off.

[Rick Segal (Office of Legislative Counsel)]: Let's see. Section one, the purpose statement, which will

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: be working And the effective The

[Rick Segal (Office of Legislative Counsel)]: effective thing is always been amended. And by the way, I will take the blame for not drafting this. I I I just used last year's Sure. That makes sense. And it was working until it comes to this committee. You're like, what is this? Right. And understandably so, it's it's different,

[Pat Peterson (Joint Fiscal Office)]: but Yeah.

[Rick Segal (Office of Legislative Counsel)]: Next year, we'll work on not that every year is the same, but hopefully on

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: the Lexus community, the wisdom of this committee.

[Rick Segal (Office of Legislative Counsel)]: There three studies that are cost neutral and She's

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: not sure.

[Rick Segal (Office of Legislative Counsel)]: They're saying and the Fed review repeal is saying and

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: I think it's just the board. Four sections.

[Sen. Robert Norris (Member, Senate Appropriations)]: Okay. I don't mind you.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Okay. So does the clerk want to take back the helm because we had passed it on to the assistant clerk. Yeah. He probably did do a very good job. Yeah. I have some questions.

[Sen. Robert Norris (Member, Senate Appropriations)]: Well, you didn't get the votes.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: It's okay. He didn't even call your name. Really? Retribution. Okay, Senator Baruth. Yes. Senator Brennan, yes. Senator Lyons.

[Nolan Langweil (Joint Fiscal Office)]: Yes.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: Senator Norris. Yes. Senator Watson. Yes. Senator Perchlik. Yes. Senator Westman? Yes. I'm pleased

[Sen. Philip Baruth (Member, Senate Appropriations)]: to have your own. Okay.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: So we need a see if senator Watson Yeah. I'm Do we need a reporter? Or we do need a reporter. I guess so. Mean yeah. Does anybody want any reports? I can report it because it's weird. It is weird.

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: That's that's weird.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: What are you trying to say? Have been in

[Sen. Virginia "Ginny" Lyons (Chair, Senate Health and Welfare; Member, Senate Appropriations)]: the state.

[Sen. Andrew Perchlik (Chair, Senate Appropriations)]: And I'll have to answer the Clark comes and gets back to Italy. Clark's This is expected by me.

[Rick Segal (Office of Legislative Counsel)]: This is what