Vermont Legislature SmartTranscripts:

[Senator Ann Cummings (Chair)]: We're live. We are live. Miss Lucinda Finance, January 30. Yes. And very quickly. We're gonna continue walking through the bills. We got one more today. I'm gonna continue walking through bills and then start going through them and taking testimony. There's no way we're getting to all of them. Some of them may end up going on house bill. We haven't gotten anything from well, have gotten captive insurance, which is an H. We'll take that up after crossover. The e of our housekeeping, they were supposed to be loading that out yesterday, so or the day before, so I assume sometime next week that will be coming over again. We'll put that off until crossover, but we're gonna keep working our way through as hopefully the education committees are working their way through the ins and outs, legislative governance, and once they figure that out, we can figure out how to pay for it. We're looking at possible ways to pay for it, we will be prepared whatever it is it comes to us, whatever it is. So today, first build, just do a walkthrough, is 03:08, with Senator Brock, you're the lead sponsor.

[Senator Randy Brock (Member)]: This is something, Bill, that we have taken out before, and that is exempting military retirement from state taxation. At the time that we acted on filing this bill, we were one of only three states in The United States that did not exempt military retirement income and the state income tax issue. I think that may have dropped by one more state since then. But what we did, when we did the exemption, which was in the last session, is we made the, in 'forty five, what we did is we did an exemption that exempted everything under 120,000, was it 120,000, 125,000 from income taxation, but over that amount, it gradually fades out. The concern that I think we have, at least I know I certainly have, is from an economic development standpoint. We're desperately short of people who have specific skills. One of the ways that we can attract people at a higher level of skill, particularly from the trades, as an example, are military retirees. But when you think of, let's say, couple, a married couple that are school teachers, they're going to hit that 125,000 very, very quickly. When they look, and we've got evidence such as it is from talking to the recruiters at each of the major military installations that are attractive to us, and what they say is that when they're doing out process, when they're preparing people for retirement, and they list the literature and bring out the literature of all the states that would be places that they might relate to, that people look at Vermont and they look at the tax structure, they walk away. It's not attractive. Vermont otherwise would be a very attractive state for military retirees because of our recreational activities, because of the nature of the state is very appealing, that's particularly true for people who aren't like Vermont to begin with. When they look at the retirement income though that they're getting and they find that essentially they won't benefit from what you can get every place else, it is something that discourages people and it discourages the ability to attract many of the very people that we need. We need electricians, we need plumbers, we need people who have a lot of the CTE skills, for example, that we are paying kids to develop. We have people who are at the, not at the journeyman level, but are at the master level that were turning away. What this rule does is it simply expands what we already have to take away that limitation on the applicability.

[Senator Ann Cummings (Chair)]: Okay. Harvey, you wanna walk us through this real quick?

[Senator Randy Brock (Member)]: Happy Friday afternoon.

[Keenan (Legislative Counsel)]: The Keenan, Ledge City Council. I Yeah. Think senator properly hit the the detail here because this thing was relatively short. As the senator mentioned, last year, there was an exclusion created for some amount of military retirement income. What was passed has a phase out, though, for that exclusion between a 125,000 and a 175,000 in AGI.

[Senator Ann Cummings (Chair)]: At what rate do we exclude other pensions?

[Senator Ruth Hardy (Member)]: I don't. Sorry, I'm sorry.

[Senator Randy Brock (Member)]: I mean, just What types?

[Senator Ann Cummings (Chair)]: Yeah, if I'm a non military person, I'm a firefighter, I'm a police officer, I retire a teacher after thirty years, forty years. At what rate do we exclude your pension from taxation?

[Keenan (Legislative Counsel)]: None. None. None excluded. There's the other exclusions we have for retirement income include social security benefits, which is set at a threshold effectively if you live entirely on social security benefits, then it's excluded, and then it starts to phase out if you have other types of income. Then we have the civil service retirement exclusion. And

[Senator Ann Cummings (Chair)]: Right? Mhmm.

[Senator Randy Brock (Member)]: Yes.

[Senator Ann Cummings (Chair)]: Federal Federal civil service.

[Keenan (Legislative Counsel)]: Yeah.

[Senator Ann Cummings (Chair)]: Because they didn't pay social or some of them up until a certain date, they didn't pay into Social Security because that was loose then. Treating them the same as we treat Social Security.

[Unidentified committee member/staff (primary association)]: And we need to pull it up here. That's even.

[Senator Ann Cummings (Chair)]: But I I pulled the short is there any other group that we exclude taxing your pensions that isn't based on income? No.

[Keenan (Legislative Counsel)]: That's what you did last year. You put faith out. And what this bill does is eliminate the phase out to effectively make it so that all all military retirement income would be excluded.

[Senator Ann Cummings (Chair)]: You think that was fairly somebody's putting a boat on their roof? This is not like the weather to put a boat on you. You're a little

[Senator Randy Brock (Member)]: optimistic. Don't know.

[Senator Ann Cummings (Chair)]: Maybe they've had lost them.

[Senator Ruth Hardy (Member)]: Ice boat.

[Senator Ann Cummings (Chair)]: I don't I don't know. It's a canoe to me.

[Senator Randy Brock (Member)]: Ice breaker.

[Senator Ann Cummings (Chair)]: Not lead shield. Okay. I think we've we've looked at this one a number of times. I don't know what it does. Yesterday, senator Brock yeah. Beck. Walk us through to twelve. This was so we'd have you walk through that, and then I'd want to maybe have the tax department talk to us about

[Senator Randy Brock (Member)]: ACCD, that's Yeah. The knowledge Okay.

[Keenan (Legislative Counsel)]: But I just wanna mention, I mean, does the certification for this, such as

[Senator Ann Cummings (Chair)]: Okay. And we'll just see what kind of an impact it would have.

[Senator Randy Brock (Member)]: Yeah. Brett Brett Long used to be the source the person over there. He's retired over the summer.

[Unidentified committee member/staff (primary association)]: I'm not sure who took his. Tim Terry might be a good place to start.

[Senator Ann Cummings (Chair)]: Okay. If you can get that to Cheryl and get them in. Yeah.

[Senator Randy Brock (Member)]: So I could I could walk

[Keenan (Legislative Counsel)]: through the basics of the credit as they exist Yeah. And then move on to what the building did.

[Senator Ann Cummings (Chair)]: More minutes.

[Senator Ruth Hardy (Member)]: It got really slow.

[Senator Ann Cummings (Chair)]: Never finally going to talk to the It the immigration or financial regulation. Since I called him, we hadn't gotten his appointment yet, and it showed up in the back of the file. It was delivered and filed down here on May when I think Senator Beck and I may have still been in the building, but nobody was.

[Senator Randy Brock (Member)]: I know, got four or five of those at about that time around the June 1.

[Senator Ann Cummings (Chair)]: Yep, and we have, we also, in the same file were several judiciary nominations, so somebody filed, thinking it's in here and we didn't know about it, so we found it and he will be in it. Oh! He talked to us, so.

[Senator Randy Brock (Member)]: Six or seven.

[Keenan (Legislative Counsel)]: Oh. That happened to be the clerk of both of

[Senator Randy Brock (Member)]: the committees you're talking about.

[Keenan (Legislative Counsel)]: I don't have to talk to them.

[Senator Ann Cummings (Chair)]: Did you file things on May 29?

[Senator Randy Brock (Member)]: I don't file.

[Senator Ann Cummings (Chair)]: No. No. I have a feeling somebody in the staff just brought him down from the Governor's Office and put him in the file. The year it was on that? Yep. We were Yeah, it was the committee conference on education was going on, but Charlotte was not here on the twenty ninth.

[Senator Randy Brock (Member)]: We

[Senator Ann Cummings (Chair)]: were leaderless. Okay. And there were no formal committee meetings. No.

[Senator Ruth Hardy (Member)]: It was that chaotic end of session.

[Senator Ann Cummings (Chair)]: Yeah. So I'm hoping we can avoid that, but we owe him a confirmation. He did testify in health and welfare Yes. Couple of weeks ago. Yeah. And he's was here as tax commissioner not that many years ago. He's not a new entity to state government. I'm proud to say I'm the one

[Senator Randy Brock (Member)]: who hired him first to state government. I Well, I would say it was

[Senator Ann Cummings (Chair)]: no. Okay. He is a CPA, so.

[Senator Randy Brock (Member)]: Okay,

[Keenan (Legislative Counsel)]: we do have another bill walkthrough which is changes to the machinery and equipment investment tax credit. The way that this works is that a qualified taxpayer, which we'll get to in a second what that means, may apply to VEPSI for a machinery and equipment investment tax credit certification for all qualified capital expenditures, we'll get to what that means in a second, in the investment period on a form prescribed by the council, the council shall issue a certification upon determining that the applicant meets the requirements. So you see that Pepsi really does the screening for this. So the department, I think their role in it is going to be more of the Pepsi Okay.

[Senator Ann Cummings (Chair)]: I'm just trying to figure out if there's a financial hit where the hits gonna happen.

[Keenan (Legislative Counsel)]: We'll defer to JFO

[Senator Ann Cummings (Chair)]: Yeah.

[Unidentified committee member/staff (primary association)]: About that, obviously.

[Keenan (Legislative Counsel)]: So some of the important definitions, qualified taxpayer is an existing business on 01/01/2010 with an aggregate average annual employment, basically of having 200 full time jobs per month. Also is a c corp. Also is a business whose operations at the time of application to BEPC are located in a rural economic area partnership zone designated by the US Department of Agricultural Rural Development Authority and proposes to make qualified capital expenditures in that REAP zone. Qualified expenditures means expenditures properly chargeable to a capital account. That's just an accounting term for what you put down on your balance sheet, what you're allowed to put down, by a qualified taxpayer during the investment period, which is between 2010 and 2014, another thing that this bill is going to do is extend everything for years. Totaling at least $20,000,000 for machinery and equipment to be located and used in Vermont for creating, producing, processing potential personal property. So that's how it functions. That's three twelve.

[Senator Ruth Hardy (Member)]: What was that statutory citation you already what you just did?

[Keenan (Legislative Counsel)]: It's under 32 VSA section five nine three zero l l. It's a long list of tax credits that are all they're all under fifty nine thirty, but each individual This is Most of which of those are repealed.

[Senator Randy Brock (Member)]: Was this originally given to what company in

[Unidentified committee member/staff (primary association)]: your county? Yes. Wynton is the one I Yeah.

[Senator Randy Brock (Member)]: That's it. I remember. I remember that. Yeah. Yeah.

[Senator Ann Cummings (Chair)]: Yep. This was Yep. It was an effort to keep those. It was it's an international corporation. Mhmm.

[Keenan (Legislative Counsel)]: So what this build up is there is, under current law, a limitation on how the credit can be used.

[Senator Randy Brock (Member)]: So that

[Keenan (Legislative Counsel)]: limitation states that the credit may not be applied to reduce the qualified taxpayers' Vermont income tax liability in any one year by more than 80%. Because of that limitation, meaning you have to pay at least 20% of your liability in a year, means that there's never an instance where it could be refundable under current law because you'll never hit zero and you'll never go to the negative, that means would never be anything to refund. Idea, one idea in this bill is to make that credit partially refundable so that limitation is being removed, and instead it states that if the credit earned under this section reduces the taxpayer's liability in a year by more than 100%, the taxpayer may elect to have up to $500,000 of the excess credit amount refunded. And then if a refund election is made under the subdivision, any remaining credit can be carried forward, which is under current law does allow for it to be carried forward, just doesn't allow for it to be refunded. This credit was meant to sunset in 2030, and this is moving that out to 2030. Let me see that there's a 40%

[Senator Ann Cummings (Chair)]: income tax credit. So why wouldn't we talk to the tax department?

[Keenan (Legislative Counsel)]: Yes, so we could talk to the tax department, but I think if you have questions about the certification process, the screening, about how businesses get collected, and that would

[Senator Ann Cummings (Chair)]: be for

[Keenan (Legislative Counsel)]: the ins and outs of how a person goes about claiming it on their return, that would be the point.

[Senator Ann Cummings (Chair)]: Yeah, well I'm also interested in any impact. But

[Keenan (Legislative Counsel)]: And yeah. J JFO attacks. Okay. Alright.

[Senator Ruth Hardy (Member)]: Thanks. So this one the statute, the 32 BSA fifty nine thirty LL

[Senator Ann Cummings (Chair)]: went into effect in twenty two thousand nine. That that's what it looks like.

[Keenan (Legislative Counsel)]: It it it started in

[Senator Ann Cummings (Chair)]: 2010. Started 2010. And

[Senator Ruth Hardy (Member)]: at the time, it was supposed to

[Senator Ann Cummings (Chair)]: be a a tax credit that they could offset any other any tax they were paying

[Senator Ruth Hardy (Member)]: in corporate tax. Is that correct? Yes. Okay. And then do they do you know if they used it? Maybe that's a question we're working with Pepsi, but do

[Keenan (Legislative Counsel)]: you know

[Senator Ruth Hardy (Member)]: if they used it at any point?

[Keenan (Legislative Counsel)]: Yeah. Pepsi, tax department, or JFO. I that. I I through through hearsay, I heard that it has not been used. Okay. But I've

[Senator Ann Cummings (Chair)]: And then when did we make I think

[Senator Ruth Hardy (Member)]: it was before you were in the CHIP here, but we made the corporate tax changes. I think it was 2022.

[Speaker 5]: Yeah. Is that when we did that?

[Senator Ann Cummings (Chair)]: That's what changed. When we did this, but they make boards for I'm looking at Sandra Beck. They don't sell a lot in Vermont in anything. And when we made the corporate tax changes, we used to tax them on their machinery Right. Equipment. And And then

[Senator Ruth Hardy (Member)]: we made those changes, and we've made it on sales in in Vermont, and they don't have sales in Vermont because they sell their stuff elsewhere. Right. So that corporate tax change that we made

[Senator Ann Cummings (Chair)]: would have helped them because they wouldn't have any tax here because of the way that we calculate corporate tax, basically. Just so that so they because they have

[Senator Ruth Hardy (Member)]: no sale, even though they have equipment and payroll and property, they have to pay property taxes, but they don't have to pay equipment and payroll.

[Keenan (Legislative Counsel)]: That's correct. The way that Vermont now apportions program tax is based entirely on sales in Vermont. There's also a minimum tax, but that minimum tax is based off of gross receipts in Vermont as well. Okay. So if you're not making sales in Vermont, that will apply.

[Senator Ruth Hardy (Member)]: So they're not paying any kind of corporate tax?

[Keenan (Legislative Counsel)]: I have no idea.

[Senator Ann Cummings (Chair)]: We don't know. But honest batches, they used to. Yeah. So in 2022, the changes we made benefited them. Yes. Yes. Okay. Yes. And it benefited the reason wasn't to benefit them as much as to benefit the region. Vermont based companies.

[Speaker 5]: Yes. Yes. Yeah. I say it was specific to them.

[Senator Ruth Hardy (Member)]: Yeah. But that that change we made didn't benefit them. This bill is the proposed bill is specific to them. Yes. It's my understanding of there's no

[Senator Ann Cummings (Chair)]: other if there's anybody else that meets this criteria, it

[Unidentified committee member/staff (primary association)]: ACCD that tells the

[Senator Ann Cummings (Chair)]: answer. Yeah. We'll look back on that. Okay.

[Senator Ruth Hardy (Member)]: Just trying to understand the, there's all

[Senator Ann Cummings (Chair)]: I of mean, there is a What are talking about? There is precedent for it's

[Keenan (Legislative Counsel)]: got it. It's a small footnote. You are talking about an individual taxpayer, the Department of Tax is not gonna be able to share much information.

[Senator Ann Cummings (Chair)]: That's right. They can't tell. Taxes and check off the jail. Right. Is all confidential.

[Keenan (Legislative Counsel)]: Yep. Those are the changes, extending this four years and making it partially recoverable up to $500,000 in a tax

[Senator Ann Cummings (Chair)]: year. Okay. That's four years. Up through December 2034.

[Senator Ruth Hardy (Member)]: So, it starts this July 1. So, does it start in this tax year? No. It's changed. Oh, right. You would

[Senator Ann Cummings (Chair)]: have zone it out in '27, so

[Senator Ruth Hardy (Member)]: it wouldn't impact So this it'd

[Senator Ann Cummings (Chair)]: be '27, '28, '29, 3031, '32, '33, '34. I'm just counting on my fingers. Thank you.

[Speaker 5]: Thank you.

[Senator Ruth Hardy (Member)]: Eight years. Okay. I'm just trying to, like, do

[Senator Ann Cummings (Chair)]: the math.

[Keenan (Legislative Counsel)]: It is tied to those expenditures. So if there was a year that there were no expenditures

[Senator Ruth Hardy (Member)]: But isn't it sort of like they banked it? They banked it because they've carried it forward. So it it could be from previous years. Feature. Yeah. I mean, if this credit. If they if this went into back to 2010 and they haven't been able to use it, they could have a whole bunch of money banked. And so if it's $500,000 a year for eight years, that's $4,000,000. Up to yeah. Up to $4,000,000. K.

[Senator Ann Cummings (Chair)]: Okay. We will have ACCD. Okay. We'll do that and talk to us that we've got ACCD comes in on the sunset, the veggie sunset, so maybe we'll ask them to stay a little longer and talk about this one. So we've got that one. We have a guy coming in in a couple of minutes or the. Anybody that has any bills they would particularly like to pick up, I could go across over and let me know next week. Okay. We'll do this now if you wanna. Oh. We have that. Okay. Who did Sarah Furman answer?

[Keenan (Legislative Counsel)]: I did.

[Senator Ann Cummings (Chair)]: Ah, okay. So we have appointments at the end, but I

[Senator Randy Brock (Member)]: spoke with her over the weekend.

[Unidentified committee member/staff (primary association)]: We had a nice conversation. She's very insightful to be on through that. That's great. Okay.

[Senator Ann Cummings (Chair)]: What is she what is her background? What is she doing? She's

[Senator Randy Brock (Member)]: a commercializing.

[Senator Ruth Hardy (Member)]: She worked for a banker?

[Senator Randy Brock (Member)]: Has

[Senator Ann Cummings (Chair)]: she

[Senator Randy Brock (Member)]: been in here? I don't know. No.

[Unidentified committee member/staff (primary association)]: Has she been on the board

[Senator Randy Brock (Member)]: since, I think, July 1.

[Senator Ann Cummings (Chair)]: Okay. So Yeah. But it is a new appointment. It's not a reappointment.

[Unidentified committee member/staff (primary association)]: It's new.

[Senator Ann Cummings (Chair)]: Yeah. It's not

[Senator Randy Brock (Member)]: a new appointment.

[Senator Ann Cummings (Chair)]: She works in commercial lending?

[Senator Ruth Hardy (Member)]: Where does she live?

[Unidentified committee member/staff (primary association)]: Down south. Let me see if

[Senator Randy Brock (Member)]: I can find that. Brooklyn.

[Unidentified committee member/staff (primary association)]: Yeah.

[Senator Ann Cummings (Chair)]: 30 Allen Street.

[Unidentified committee member/staff (primary association)]: It's HFCU, so that would be the control.

[Senator Randy Brock (Member)]: HFC? HFC. It's correct. Yeah. Yeah.

[Senator Ann Cummings (Chair)]: Okay.

[Senator Randy Brock (Member)]: When do you wanna do that last year? Because I didn't have just remembering that in mind to do it.

[Senator Ann Cummings (Chair)]: I would like to do the.

[Unidentified committee member/staff (primary association)]: I'll I'll

[Senator Randy Brock (Member)]: give a shout out to

[Senator Ann Cummings (Chair)]: Okay. Let's do this one, and if you're ready with yours

[Senator Thomas Chittenden (Vice Chair)]: Oh, no.

[Senator Randy Brock (Member)]: I Okay.

[Senator Ann Cummings (Chair)]: Yeah. No. It's just this this.

[Unidentified committee member/staff (primary association)]: Sarah is the chief lending officer,

[Senator Randy Brock (Member)]: so she gets shaped everything. Okay. But she's

[Unidentified committee member/staff (primary association)]: Chief lending officer. Dad? Heritage family

[Senator Randy Brock (Member)]: Credit. Okay. We

[Senator Ruth Hardy (Member)]: can pull up her bio if you Google Heritage Family Credit Union. Sarah Sarah Berman. Sorry. Okay.

[Senator Randy Brock (Member)]: Good conversation?

[Senator Ann Cummings (Chair)]: Yeah, just, yes. Senator Beck, would you like to make a motion?

[Senator Scott Beck (Member)]: I would move that we approve the appointment of Sarah Fermat to be a proposal.

[Senator Ann Cummings (Chair)]: That's right.

[Senator Scott Beck (Member)]: Hold They

[Unidentified committee member/staff (primary association)]: say it for when. Okay.

[Senator Ann Cummings (Chair)]: We have a motion to approve the appointment of Sarah Furman of Rutland as a member of the Vermont Economic Development Authority. Is there any further discussions? If not, the clerk will call the roll. I'm not used to that.

[Senator Randy Brock (Member)]: No. Senator Chittenden? Yes. Senator Beck? Yes. Senator Hardy?

[Senator Ruth Hardy (Member)]: Yes.

[Senator Randy Brock (Member)]: Senator Brock? Yes. Senator Gulick?

[Senator Ann Cummings (Chair)]: Yes. Nice job.

[Senator Randy Brock (Member)]: Senator Mattos? Yes. Senator Cummings. Yes. That's 700.

[Senator Ann Cummings (Chair)]: I'm okay. That is 700 and the senator Beck, we're put that upstairs.

[Keenan (Legislative Counsel)]: And these are all just the videos for us. Right?

[Senator Ann Cummings (Chair)]: Yeah. And yeah. The these won't be presentations. However, our next one will be and Kai, if you've gone out enough, do you do you wanna take the hot seat? Because it could thaw you out.

[Keenan (Legislative Counsel)]: Yeah. Yeah. If only it was easier.

[Unidentified committee member/staff (primary association)]: Yeah. House health care is the place we're warm up.

[Senator Ann Cummings (Chair)]: Oh, man. We get out. We get vaccinations today.

[Senator Randy Brock (Member)]: Okay.

[Senator Ann Cummings (Chair)]: It was warm.

[Unidentified committee member/staff (primary association)]: Yeah.

[Senator Ann Cummings (Chair)]: And I apologize. We found your appointment. Okay. Somebody brought it down and put it in his file on May 29 after Charlotte had gone home. Okay. And nobody knew it was there. Yeah. So we found it. Yeah. Welcome.

[Unidentified committee member/staff (primary association)]: Thank you.

[Senator Ann Cummings (Chair)]: Sorry for any delay.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Oh, no problem, Tyson Hanson, commissioner

[Senator Randy Brock (Member)]: of DFR. For the record. For the record. Yes. And

[Senator Ann Cummings (Chair)]: I've known you in this building and in other capacities for a while, but I don't know if the rest of the committee has, so, you know, just tell us who you are and your qualifications. Okay,

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: yeah. Pat Sampson, spent most of my life in Vermont in the town formerly known as Sherburne, which legally changed its name to Lac Qui's. To have lunch. One with the knaps

[Keenan (Legislative Counsel)]: in the nineties. I think Doctor. Truth, the knaps.

[Senator Randy Brock (Member)]: Nope. Wasn't

[Senator Ann Cummings (Chair)]: that long ago, Bas. In Yeah. The nineties? Rather young. What's the interview to, by

[Senator Randy Brock (Member)]: the way?

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: It was Sherburn. Sherburn. Yeah. Yeah. Sherburn. Went to Sherburn Elementary School. And I went to the University of Vermont, ultimately got my certified public accountancy license, worked in public accountancy for a couple of years, was looking for more stability with a young family, and went to an internal audit job at Blue Cross Blue Shield of Vermont that brought us into Central Vermont. Then mister Brock was elected state auditor, and I was in the Vermont Society of CPAs meeting, and mister Brock was senator Brock was looking then auditor Brock was making a very good sales pitch to needing some CPAs in that industry. And I talked to the master, and the rest is history.

[Senator Randy Brock (Member)]: You were a good hire. Very good hire.

[Keenan (Legislative Counsel)]: Worked there for a couple years, and

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: I learned a lot in those years, and then ultimately transferred over to the Department of Financial Regulation, Bishka, at the time as an insurance. And at that time, there was even at the same pay rate, a differential in state pay that was attractive and very attractive for for our family in terms of, you know, state state wages and and kind of making go of it. Still early in my career, but so then I stayed at DFR all the way through, and so I was named deputy under the Shunlin administration. But, yeah, I was hired at DFR when Crowley was commissioner. He began counseling

[Senator Ann Cummings (Chair)]: Crowley was formerly a member of this committee.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Right, yeah. And then the Shumman administration was when I was, appointed to deputy commissioner, and that would have been, after Steve Campbell, Susan Donigan became commissioner. And then, of course, BICCA became DFR as the HCA essentially moved over to become the care board. Then the governor current governor asked me to be his first task commissioner, which I did, and that's the last time I've been in this committee in that in that role and did that for several years until there was an attractive opportunity up at National Life, which I took. So I've been up there until last April when I came back to state service. So about six years at National Life, ultimately as chief auditor. So, you know, I was wanting to be like senator Brock, you know, the chief auditor. But enjoyed that role a lot. Saw the, you know, when Commissioner Gaffney retired seeing this role open, I love regulation. I love the intersection of data analysis and policy. I love the opportunity to be involved in consequential challenges of which you guys are every day and get exhausted by, I'm sure. But when you're away from it for a while, you do miss it, believe it or not. And maybe maybe you guys miss it over this summer. Don't know. So

[Senator Randy Brock (Member)]: seeing that position open for several months and started to wonder and started

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: to think and then made a call and said, what's what's going on with that position? And, ultimately, that was the governor and and was appointed commissioner. So here I am. Okay.

[Senator Ann Cummings (Chair)]: Questions for the committee. Thank you.

[Senator Ruth Hardy (Member)]: I'm Ruth Hardy. An Attorney District. I don't know if I've actually anyone brushed this. Yeah. So, I'm curious if you have, if you could submit or send us your resume or bio. I mean, you just went through it but just having it and wondered if you could speak a little bit about your plans, philosophy, goals, etcetera about, you know, re leading now, I guess, re leading sort of, but leading anew, especially given the complexities and challenges we're seeing right now, I mean, certainly in healthcare, but also other areas.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Sure. Yeah. I'll I'll send my resume to sorry.

[Keenan (Legislative Counsel)]: We haven't chatted here. Charlotte.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: The so my number one goal, I think, for the department is really about and it sounds strange, but to increase consumer complaints. And the reason that isn't as silly as it sounds is that we have so much to offer in our assuming each of our divisions in terms of helping Vermonters deal with everyday things from an auto claim to issue with a financial advisor to questions about a banking transaction with consumer services folks in all those divisions. I know that the biggest barrier to helping Vermonters is they don't know who the heck we are and what we can offer in terms of help. And, you know, some I wonder if back in the Bishka days, if people, you know, spelled out the acronym, it was a little easier, like, okay, banking, insurance, securities, now it's GFR, we still have those divisions. So we have outreach efforts and just trying to coordinate those better. We have I'm sure this committee was was part of approving it during Pcheck's tenure as commissioner with Gavin Boyle's as general counsel, the ability to retain a certain amount of our enforcement action revenue into outreach and restitution for education and restitution fund. So we have a grant program. The grants are open, and it's today, the thirtieth, twenty ninth, and they're open till the end of the month for financial education, anti like, fraud prevention and financial literacy. Mhmm. Some of that money, the last time it was granted, went out to, you know, see the we go, office of economic opportunity. Yeah. And, you I had an opportunity to go to high school where they have a very robust financial literacy program and see some awesome presentations by high school students that was funded through the c f c c CDOEO through our grant program, some assistance, some connection there. So it's it's those type of opportunities that in the financial education realm that we wanna continue supporting or enhance our support for, but overall, get the word out on, and it starts with here and your constituents. Like, offer help. We have a consumer helpline, and in all in all sections. So that's my number one hope for the department, we're moving in that direction. In terms of healthcare, that's the number one thing I'm involved in because I started at the department as the Blue Cross Blue Shield analyst, financial analyst and examiner, so very close and long history understanding the finances of health insurance space, which means the entire health

[Senator Ann Cummings (Chair)]: services delivery, how it expresses itself. Mhmm. Yeah. So In terms of the first one, the education,

[Senator Ruth Hardy (Member)]: I actually didn't know that you did a lot of that work, and that's good for me to know. Could you send us some information about if we do have a constituent? I usually send people to the AG's office or something like that. If you're if you have, like, if you're the first step before they go to the AG or you do different, that I mean, obviously, you do financial related stuff, but

[Keenan (Legislative Counsel)]: Yep.

[Senator Ruth Hardy (Member)]: That would be helpful to know Yep. How I what we would send them to you for. And in terms of the education, one thing that we're seeing a lot more of, and I've talked to a couple people about this, is the I know you're aware of this, but the fraud that's happening particularly to seniors, but other people too, and where they're getting cyber fraud and then they're getting their bank account leaked out because of bad actors and wondering what what you're all doing in that space and, you know, if you're working with, you know, maybe the sort of, like, elderly services and all the sort of senior citizen organizations on that.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Yeah. So maybe closest to that is Amanda Smith, our securities deputy, who's been there for several years. They have a program of education, and they do focus on senior living communities and stuff like that, so they've done, they've got a fraud bingo, so there's a fun education that happens. But that's exactly the kind of things that in our grant application that we've invited people actively sent, you know, because there's only so much we can do in terms of direct outreach with our own staff, but we have this availability of funds to support those efforts for non profit schools and organizations. So we can push that out to the agencies on aging, make sure they are aware of them. So we're looking forward to see what we get back for ideas there. That's very important.

[Keenan (Legislative Counsel)]: And

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: to that question, we saw a walk in, which is great that someone steered into us and walked into our office at City Center for five years, and for what you explained, really jaw dropping, and it's a good wake up call that even folks that are educated on this might even have a background on it, but the sophistication and customization of the kind of gaslighting and manipulation is so sophisticated. And I've talked to banks who have had people come in with the fraudster on the phone, know, Mo, they're gonna tell you this, know, they're talking to tellers that they've worked with for years in a local bank, and the prosecutors have convinced that they've done that the seller is in on it. They're not gonna wanna give you your money, let me get to stay because they're in on it, they've been hacked too, and it's amazing.

[Senator Ruth Hardy (Member)]: Yeah, it is amazing. I mean, I've talked to our local banks about it, and a member of my, close member of my family just happened to the hospital. They lost their entire retirement savings.

[Senator Randy Brock (Member)]: And and so

[Senator Ruth Hardy (Member)]: It's it's like tragic what's happening to people.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: You will see coming over from the house the financial transactional legislation for people that Okay. That is essentially, and banks are all about it. Okay, good. Which essentially powers them and gives them appropriate liability, is, sorry, liability, relief protection to say, this doesn't look right. I am not giving you your entire 4 ks balance right Right now, can't do that. It's your account, but if it is so crystal clear that they're willing to do it, and the statute will back them up, which under certain circumstances or conditions of law will, so that's a powerful tool to empower our face to face, or if not even face to face, but our banks to be able to block a transaction and follow certain protocols before they release the money. It's a tough thing to do, right?

[Senator Ruth Hardy (Member)]: Yeah, it is. Talk to the people on the front lines about how tough it is. Yeah. Yeah, so that'll obviously come to our committee.

[Senator Ann Cummings (Chair)]: So, I look forward to working on that.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Yeah. So, there's a study that that was reported to police office. Yeah. This thing. They're acting. I think they're acting on it. The congress of the legislation.

[Senator Ann Cummings (Chair)]: So, I see

[Senator Thomas Chittenden (Vice Chair)]: over the next ten years, your role probably having to both adapt and adopt AI tools both internally and also adapting to an environment where it's going to continually have to be addressed through regulation, like AI agents using price collusion tools to circumvent antitrust laws and so on. How do you see AI on the current horizon? How is that going to factor into some of your priorities?

[Keenan (Legislative Counsel)]: You taking it off this role now or

[Senator Thomas Chittenden (Vice Chair)]: have you already been in it for some time?

[Senator Ruth Hardy (Member)]: Finished and some I development

[Senator Randy Brock (Member)]: came in on your it was a

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: rainfall last year, and then prior to that, six no. Eight years prior, I was deputy into insurance. So my strengths and knowledge definitely lie in insurance, and for better or for worse, that's where I'm kind of leaning in as commissioner. The AI I'm probably as fortunately, as I don't wanna say ignorant, but as unsophisticated about AI as a lot of 51 year olds, even though I am in this space. You know, from my time up at National Life, you know, I'm aware of, you know, what insurers can do with it in in a good way. Also, on the insurance space, you had a the NAIC cooperation. I'm sure you guys are all they don't speak long enough to worry about the NAIC. Yes. Okay. You know, they they draft all regulations, bulletins, laws. So Vermont, of course, did publish the AI model governance bullet. And so a lot of a lot of it has to, you know, at the highest level, from a regulatory point of view on the financial institutions is ensuring that it's not used without, human intervention. So the current view may be allude. It's not used for consequential decisions without that oversight, and the governance around it. So that's the focus at this point in terms of using it within the department. Haven't I have personal experience with that, but we have folks interested in that around certainly around financial examinations, right, large large amounts of data and just getting through it, compiling it, and and highlighting areas so that the human time is more focused. Do you have any cutting edge, unfortunately, to be honest with you.

[Senator Randy Brock (Member)]: Do you have any relationship, especially right now, with the agency digital services?

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: What do mean by that? You guys talk. Yes. Yeah. So our executive director, Mary Richter, I asked her to be the point person on all interactions with ADS. Most relevant right now is project, you know, projects that we have to update our document management system. And yeah. So she's she's our there is a point person on kind of all things that that we need ADS for. And

[Senator Randy Brock (Member)]: how long with the auditor's office?

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Well, they just completed an audit of our consumer services function, and that came out pretty well. I think just looking for they requested or they recommended some some better performance metrics and reporting and were absolutely increased.

[Senator Ann Cummings (Chair)]: Okay. Thank you. Okay. I am not. Any other questions? Anything else you think we should know? I have one more question. One more? Okay.

[Senator Ruth Hardy (Member)]: Health insurance. You mentioned insurance but are are you also, I can't remember that the details of it but it's DFR involved in the sort of oversight of the hospital.

[Senator Ann Cummings (Chair)]: That is, okay, that's. It's all

[Senator Ruth Hardy (Member)]: care board. Care board and isn't there some So

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: we have Blue Cross Blue Shield of Vermont as a regulated entity.

[Senator Ann Cummings (Chair)]: So Yeah.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Always have. So we submit a solvency opinion to the care board of breakthrough choice, but everything else we do in terms of sanitation and overgoing over the housing shields to make sure.

[Senator Ruth Hardy (Member)]: Okay. So you're sort of looking to make sure that they don't go under. Correct.

[Kaj Samsom (Commissioner, Department of Financial Regulation)]: Exactly. And, you know, in that role, I'm probably, and not just for that reason, but in terms of the health insurance affordability challenges and the connection between insurance, hospitals, and service delivery, you've sent them in exchange, etcetera, so the HHS, I'm on the phone or the Teams call with either Emily Brown, who's now at the care board or Ellen Foster weekly or even more. Just met with Secretary Santos, and today, we had another meeting yesterday, so we're very you know, the approach to tackling that challenge requires all pieces of that puzzle. Strong communication. Insurance is how, you know, unaffordable bill was seen by most folks. Expression of our affordability crisis. Shows up

[Senator Ann Cummings (Chair)]: to your ears. For sure. Alright. Thanks. Thank you. We're gonna move on Friday. Mhmm. I'm gonna try and get you out of here. And Laura calling us here to give us an update on the program. Thank you so much. I wasn't sure

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: when to log into the Zoom.

[Senator Ann Cummings (Chair)]: I'll do that now, I have it. Hi. Hi. Good morning.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: Hi. I'm Laura Collins. I'm the executive director of the Vermont Housing Finance Agency, and I'm grateful to be able to be here today to give you I wasn't prepared to give you an update on all things VHFA, but I was gonna give you an update on a down payment assistance program that has been funded through the sale of state tax credits for the past eleven years. And I'm honing in on that one because I think in a few months, this committee may see language in either the miscellaneous tax bill or maybe a bill that comes out of the Senate Economic Development Housing Committee that may have language around this. It's not here, and I know that, but I may not be here when that happens because I'm gonna take a little leave, and so I was hoping I could talk a little about that because this committee has been very instrumental in that program, and I wanted to tell you about it because you what I'm gonna explain to you is that you allowed us to sell tax credits to fund this program, and we stopped doing that this year, and I wanted to tell you more

[Senator Ruth Hardy (Member)]: about that. Okay.

[Senator Ann Cummings (Chair)]: Because we have been doing these tax credit programs as part of our creative financing for housing. Yes. And this is down payment assistance because when you're paying $2,000 a month in rent it's kind of difficult to save up enough to do a down payment. Yes. And that is a real,

[Senator Randy Brock (Member)]: yeah,

[Senator Ann Cummings (Chair)]: real barrier. Real barrier.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: So, always, the professor in me,

[Senator Ann Cummings (Chair)]: Senator Chittenden can appreciate, always has a start of

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: a little history, which is 1987, the feds came up with a federal tax credit. Everyone started using it. It was great. It's now the nation's fifth largest tax credit. It's the biggest source to creating affordable rental housing in the nation. It's wonderful. Love to tell you more about it someday, but it's really a federal program. In 2000, the legislature at the time, some of you were here, was smart enough to say, you know what, we should have a state version of this. So when we started selling state tax credits for the creation of affordable rental housing, and that's what you see in the top bullet there. In 2009, that was going so well, they said, why just build affordable rental housing, why not build affordable for sale homes? And so legislature expanded the program, and now we fund the creation of for sale housing through selling these credits. Then Tropical Storm Irene happened, and in 2013, the program was expanded a bit. It still falls under the homeownership creation part, but it says including the purchase that manufactured homes are eligible and we can buy them up out of the floodways or if they're very inefficient and old, and we can replace them with highly energy efficient manufactured housing. And that goes to a few different providers. The Champlain Housing Trust is the largest program of using that resource. And just a plug that this legislature was ahead of its time when it started creating a state tax credit back in 2000, because that's actually something that I'm hearing a lot about when I go to national conferences now, as states are kinda waking up, hey, this federal credit's been around since '87 and it's working well. Maybe we should have a state version of it, to which I say we've had it for twenty five years and it is working well, and let me show you the thousands of homes we've created in the state as a result of that. But it was in 2014 that the Lake Chittenden Chamber of Commerce was hearing from their employers that they wished that their workers could buy a home and really put down roots and be more stable. And so, it began in the House Commerce Committee, as well as in Ways and Means, obviously, this idea of expanding the state tax credit again so that it could fund down payment assistance. But just to remind you of these tax credits, what is that being charged against? Because it's a finance committee, so you all follow these closely. This is a tax credit that banks and insurance companies can purchase to offset it's usually banks, honestly, that's who I don't know of any insurance companies or captives.

[Senator Ann Cummings (Chair)]: We just abandoned it to insurance companies not that long ago.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: And so it's mostly banks and they're putting it against their bank franchise fee, which is the I'm gonna call it tax, their deposits. And so, say a million dollars in deposits, they have to pay a bank franchise fee on that. They can pay a little less than that because instead of paying that tax, they're dedicating that money to these affordable housing programs. And this is a five year tax credit, and I'll explain how that hits the budget at the end of my presentation that I'm gonna I don't wanna say I'm gonna lose you on it, but it makes your head your eyes bleed a little bit. So, it'll be it's a five year tax credit, meaning that they can take a little bit off their taxes for five whole years, but it means that when they buy this tax credit upfront, they're getting us five years worth of money, which makes it enough so that we can do something with it. It's a very efficient tax credit. This is very important for you to understand, is that there is a time value of money. If I can't write this $100 off my taxes for five years, then I could be doing something else with that money in the meantime, earning on it. So, there is gonna be a discount for selling a five year tax credit. But I'm pleased that for most of the years, we were getting 95¢ on the dollar for this. Now we're getting closer to 90¢ as interest rates have gone up because banks have other options for their money and earn more off it. But still, keeping this over 90¢ is a very good rate of return on So, these tax it was created, like you said, about ten, eleven years ago. What is it? You get a VHFA loan, you're a first time home buyer, you go to your lender, that can be a bank, a credit union, a mortgage company, everyone in Vermont is welcome to all these lending institutions, are welcome to be a VHFA lender. You say, here's my income, here's kind of home I wanna buy. They say, oh, you qualify for VHFA's program. Oh, you're a first time home buyer, you may also qualify for the down payment assistance, the DPA, and that's where we will give people, used to be up to $5,000 when the program began, when prices rose, we did increase that to $10,000 and they get that so that they would have, their mortgage would be $10,000 less than what it would be otherwise. And this is a loan. It's a second, silent second lien, and it's 0%, no fees. They make no payments on it, but we are giving them $10,000 up to $10,000 of the state's money to sit there quietly, not doing anything. And then when they refinance, they give it back to us. Or when they move or when they die, or whatever happens, that comes back to us. We don't do any refinancing at BHFA, so that's why it's tied to the BHFA loan. And you can combine this with other down payment assistance programs. You could be a first generation buyer, meaning your parents didn't own a home, and you may qualify for a grant through that program. Grants are different than loans, but this means that we have deployed millions of dollars that's invested in Vermont. And you can see the map here, we've helped over 2,100 households across the state, and, oh, if I had my notes with me, I think we've had two forty eight or nine towns, so I feel like we're getting geographic distribution pretty well. Oh, two forty nine towns in all counties and states.

[Senator Ann Cummings (Chair)]: I'd send it back in some questions. You need more,

[Unidentified committee member/staff (primary association)]: in that program, like what's the, so

[Senator Randy Brock (Member)]: you have basically a revolving loan fund. What's, like, much do you have out there that's waiting to come back to you?

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: $13,000,000 is pretty much out there. But let me I have a slide to say how much is still invested and how much has come back, and we're gonna get into the repayments in a second. I just wanna say why would we want people to be homeowners? I wanna be very clear, not if anyone misunderstand, just because I'm talking about this program doesn't mean that I think everyone should be a homeowner and doesn't mean that I think everyone should be a homeowner now. Okay? I'd be happy to come back and talk about rental programs. We do something at every round of the ladder to help people. And there is a value in becoming a homeowner. And one of the values is that this can address a wealth gap that we see between owners and renters. Looking at the wealth people has have gets skewed by the value of one's home. This is the largest asset that the middle class has. And so we see that homeowners, their median net worth is $400,000 compared to renters, $10,000. So that shouldn't surprise us, the value of that home is in there. But when you take out the value of the home, and you set that aside, and you just look at homeowners and renters, and the other passive income that they have and appreciating assets, we see that less than half of renters have appreciating assets, whereas 78% of homeowners have it, and we're not counting the home. Okay? And then when you bring in the value of the home, can see on this chart that the equity we have in our homes is going up and up and up. And so we know that home prices have been increasing. We know that 73% of us, I think, own our homes. And so, as we become so upset about rising home prices, we get so upset all the way to the bank where we go apply for a home equity loan and send our kids to college or invest in a small business or just have more financial security because we know that should something happen and we have to be out of work for a few months or something like that, that we have that equity there. And so Can I just

[Senator Ruth Hardy (Member)]: ask one quick And I think I read somewhere that Vermonters actually of all states have the highest amount invested in equity in their homes? There's some stat around that.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: And I can't go up the stat, but if if we're not number one, we're always, in the top five. I wanna point out that a lot of stats around homeownership and equity and things like that are racially influenced. And when you have a state that is 90% white, you often will find, like our homeownership rate actually matches the white homeownership rate nationally. So when people get very proud that we have a higher homeownership rate than the national average, when you take race into account, which we always have to do with homeownership, then that levels it out. But with equity, yes, the Northeast doesn't like debt as much as the rest of the nation. That's my take on it. A lot of the Northeast states, that Yankee frugalness still is around. And home values in the Northeast have been rising fast, and so it can help with that equity proposition. And I would say in Vermont, we have very good regulations, back to Commissioner Sampson, who was just here, to protect our borrowers. We did not see in 2008 and 'nine the same kind of predatory lending that we saw

[Senator Randy Brock (Member)]: in other states. Did not see exotic mortgages. Yes. One more question, Martine. Statistics like this, these are not income adjusted for inflation, are they?

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: Correct. These are just looking at

[Senator Randy Brock (Member)]: The actual price. So the question is, as you take a chart like that and you do it on the basis of adjusted for inflation year over year, the gap of where a person winds up with wealth would be different than what we're looking at. Have you seen any statistics and charts and so on that do that?

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: I haven't. And is the assumption there that inflation is outpacing home price appreciation?

[Senator Randy Brock (Member)]: Well, some years it is and some years it isn't. And so depending upon when you buy and the rate of increase in price, you could have very, very different results than what you're looking at. You might not be seeing the kind of trend that always looks up.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: Yes. And we know that regardless of the value of your home, dozen eggs, when those prices go up, that really hits the pocketbook in a way. Thankfully, the thirty year fixed rate mortgage that many people have does protect in But that no, I haven't seen that kind

[Senator Ruth Hardy (Member)]: of data.

[Senator Randy Brock (Member)]: I think it would be very interesting to look at because I've always been suspicious of our statistical planning on the basis of this doesn't take into account inflation. The

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: REALTORS nationally look at who's buying homes, and this year, their report made a lot of news, because the bottom orange dotted line here shows the median age of first time buyers. And for the first time, we reached out of the twenties, out of the thirties, and that was 40 years old for the median age. That's the midpoint of all the first time homebuyers. Now, ten years ago, that was 31. So it has been moving up fast after, as you can see here, many decades of pretty flat, early thirties was when people were buying a home. Now my father had some old timey financial advice for me when I was growing up, and I know that this isn't all in vogue now, but some of us will remember the rule of thumb that you would ideally try to have your home paid off before you retire because that way, that's how you can afford to live on a fixed income. You know, Social Security, whatever you could pull together was more possible because you didn't have this biggest expense probably of your home on top of it. And you can imagine that if half of our first time home buyers are more than 40 years old and they're signing up for a thirty year mortgage, when is retirement gonna hit? And what is that what is that elderly future look like when you still have that kind of debt? So having people become homebuyers at a relatively younger age, which I'm not trying to get them in when they're not ready, but is gonna be helpful. And I can show you the people I don't have data on everyone who buys a house in Vermont, but I do know about BHFA's borrowers. In the middle column, that's saying those people who got BHFA's down payment assistance versus other very worthy, wonderful borrowers who did not get it. And you can see that people who get this assistance are buying cheaper homes, so they have lower mortgages, they have lower incomes, They're borrowing more money. They have less money to put down. That's the loan to value. Their closing costs are less. I think that's because the property transfer tax is likely impacting that. A lot of other closing costs are fixed. They have lower credit scores. They're a bit younger, slightly higher household size. They do have a slightly lower student debt, and I don't know this. But when I look at that, I wonder if that's underwriting approval issue where they they may be hitting up against some kind of total debt to income ratios, and this $10,000 does count as debt because it's second lien on it, and so maybe there's some impact there, Or maybe just the results were skewed a little bit when

[Senator Ann Cummings (Chair)]: we looked at this. Because

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: this was an economic development tool originally, and employers were the ones back who were really clamoring for it, we asked if we could ask borrowers who they worked for when they closed on these loans. So this information goes back the whole eleven years of the program. And these are the types of industries who are served by our program and what percentage of them get it, and you can see what the median wage is for those industries. And there's some real variation. We also looked at the top actual employers. This shouldn't surprise us. The state of Vermont is the state's largest employer, so it's the largest one served here. But then there's also some interesting findings, you know, I'm not used to seeing Killington on a top 10 list of employers. I don't know what their full employment picture is, but I do think it goes to show that there is some water cooler talk here. And that when people know of a program and know that their colleagues or friends or neighbors are taking advantage of something, that word gets around. But you can see here that we have largely served the state's employment workforce pretty evenly and pretty well, I would say. So this gets to Senator Beck's question. We have helped over 2,100 households. And I know I know what they bought their home for, and I don't know what those homes are valued now, but I do know what appreciation has been happening in those towns between then and now. So we looked at data through the 2024, and so 63% of the people who received this money are still living in that home. They still have that PHPA mortgage. They haven't repaid it, and that's great. So I can promise you that those households are still Vermonters paying property taxes, sales taxes they go to and from. They're working in jobs. They're living in Vermont and contributing. And so, yes, they still have 5 or $10,000 in state's money, but they still are Vermonters because this is limited to primary residences. I all and those folks, from whatever they bought their home for, when we look at the average appreciation of that town specifically, we went town by town and looked at how much prices have risen, The median amount that those homes have risen is $78,000 per household. So I'm saying there's 70 so the state gave them either it was 5 or $10,000, and they, again, passive income, they've just made $78,000 of wealth for them that they can tap into, that the state will get back our investment when they refinance or move or whatever. Additionally, another 500 households have paid us back. They may still be living in that same house. They may still be Vermonters. I don't know. I don't know. You know, like, they don't tell me if they're just refinancing or moving. But I know that there's been $3,000,000 of this loan pool that has been paid back, that we've relent out. And then those folks on as the median, their homes increased by $50,000. It's probably a little smaller of a number because they were there less time. So I think I said 13. It's $14,000,000 in total is in this pool that is going out. The pool is still open. There is still I should inflate my number just a little bit more. You still can apply for this program, but what I'm about to tell you is that the amount in the pool in the revolving loan fund for us is shrinking, and I'm gonna tell you why in my next slide. But first, I wanna say that if you added up the 2,100 households that we've served, and we look at those who still live in their homes or those who paid us back and all that, we can say that if their homes did appreciate the same rate as the rest of their town, some will be higher, some will be lower, we know that the $14,000,000 of state investment, which is still available, I'm gonna keep saying it, it's not gone, we didn't hand it out and I'll get back. That 14,000,000 has generated over $137,000,000 of wealth for promoters. That means for every dollar we've lent out, people have gained $15

[Senator Ann Cummings (Chair)]: Yeah. Thank you, Maura. Just wondering, know you're gonna show us that it sounds like the pot might be shrinking. Is there enough actual stock out there for you all to reach your full potential and sort of get maximum impact? It's hard for me to say,

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: you know, like how many latent home buyers, how many renters wanna be home buyers? I can comfortably say a lot without even surveying them because of how much our phone rings and the emails we get and what we hear from the home ownership centers and just the media. I mean, I know of a lot of college graduates living in basements right now. And so I do think a lot of people want to be a home buyer. We would all probably have a different answer about are they all ready? Is it all appropriate? Is it reasonable to think that someone in their late twenties who's earning 60 something thousand dollars should be able

[Senator Ann Cummings (Chair)]: to buy a home? I think yes.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: But, you know, other people may say, no, wait till you're 40 and you're making a $100,000. And right now, that's more what it takes. So, no, I don't think we have the stock that's available. You know, housing, and I've talked about this at all member briefings in years past, Anytime I talk about one program, you're gonna hear me cheerleading for that program. It's gonna make it sound like this is the best program in the world. But I'm a mother of three, so I know better than to pick favorites. And I will say that we we have to do this and all the other things. You know, we do have to keep creating housing. I know Senator Chittenden raised another committee, you know, we also need to make sure that, you know, we have adequate rental stock and that people do want more density and they wanna live smaller and not everyone does wanna buy a home. So we can't have a single bullet to the housing problem. And I think that this one is at risk of going away, and so we should keep this one open. And it's at risk of going away because this is a chart, this is national data on the left showing that we are moving less and less. And now we're down to eight percent of Americans are moving annually, which is far below it was double that rate just twenty years ago. If you haven't read Downey Applebaum's book, Stuck, it is excellent, Just As Good As Abundance, which everyone seems to be reading these days. And it talks about how America was uniquely mobile country, and that in and you're I'm going back to the thousands and hundreds of years, but where people had to register in their town and report back to it. I'm thinking of the Christmas story where certain people I know don't know, but I had to go back and get to Galilee and, you know, do all this. That used to be the way of the world, and it was The US that uniquely allowed people to live anywhere. And, actually, starting in The US, people did have to stay in certain communities, Plymouth and the rest, and then when we allowed people to move and follow go west for the gold or opportunity, own land, when you could move to cities to follow industry, that is what really sparked a lot of our economic growth in Renaissance. But what you see here on the right, this is just look at the green bars, because otherwise it's confusing. But the green bars are telling you that in the first few years of this program, that in year two, about 6% of people were paying us back. I don't know why they paid us back so quick. Maybe they got their mortgage and then moved, changed jobs, something happened in their lives quickly. But you can see that after a few years, that repayment of the green bar increases year after year, so that by year five, 14% of the people who had gotten the loan, by the fifth year, they had paid us back. And that tracks with conventional wisdom as a mortgage lender. We know we make thirty year loans, but we also know that most mortgages outstanding about an average seven years. Because interest rates change, lives change. The orange bars show that in the last few years, we are not seeing the same kind of trend as we were. It's pretty stagnant. Fewer and fewer people are moving even when they lived in those homes a long time. I think it's because there's not the stock, and I'm gonna again use the word more people are stuck. Another way of looking at that is here. The line shows you what average interest rates are. So you can see that in 2021, interest rates really dropped, and then they moved quickly up into what we've been seeing in the last few years. The green bars show you that in the first few years of this program, we weren't getting a lot of repayments because people needed the money. They didn't have the equity to refinance and didn't need to move. But as time went on, when refinancings were happening left and right in 2021, we all of a sudden had an extra $800,000 of repayments on top of for each of these years, VHFA was selling tax credits. We were getting some amount of money from those tax credits every year. And because it's a revolving loan fund, it's not a typical government program where we get the money in and have to spend it by June 30. We just managed it. And managing it through the home buying process is exceedingly efficient. You don't apply to the HFA. We don't rank score you and make you jump through hoops and get this program special and look at who's most vulnerable. We just tell our lenders, it's available if people are eligible. And here's the rules of who's eligible, and they get to promise this money to people, and yep, we double check on the back end. Yep. They're eligible, and we cut a check, and that's how it works. That means that this program operates with no admin fees. Okay? BHFA already has the loan. Let's be honest. We're making money off that loan. We don't need to make money off this program too. So we have this available for free. There's a $6 per page recording fee that has to happen, so it shows up in title searches. But otherwise, the all the money that happens here is going to the borrowers. This is the one that's gonna make your eyes bleed, but I promise, I've done this testimony enough times, I can explain. It's a five year tax credit, meaning if you look at the row that says 2026, we are in process. We've just about sold all these tax credits for this year. And since we're selling a five year tax credit, it means that one fifth of that is gonna hit this fiscal year's budget. The second year of that tax credit, the bank will say, I'm not paying $250,000 in my bank franchise fee, and so it'll hit next year's budget. So there's a tail on the program. We've been selling this credit since 2014. 2026 was the last year we could sell the credits. It now ends. When we designed the program, we said that's enough money. That's the pool, 14 and 15,000,000. That's how much we need to have the churn to do this. At the time, we were giving people $5,000. Now you heard me say, we're giving people $10,000 So we did have to keep up a bit with inflation. We also knew that last year, you could see the rating on the wall, those repayments were not coming in, so we shrunk who was eligible. We want people to be able to buy a home and not immediately go into foreclosure, and so we want them to be able to have some assets. But we don't want people who are sitting on a million dollars to be able to borrow $10 of the states at 0%. Okay? So we define the sweet spot. So we set that at $30,000. When you're done buying your home, you should be able to have $30,000 in the bank because a roof costs about 20, and we want people to have some that's, you know, all their not their retirement assets, but their cash, their liquid assets, could be 30,000. When the repayments started slowing down and we saw that we weren't gonna have repayments, we were only gonna have the sale of state tax credits, we had to shrink who was eligible, we dropped that to $20,000. So fewer people are getting the program this year than did last year. We made that change last summer. Now, when I look at if this is the last year we can get new money coming in from banks buying the credits, we're gonna have to go from serving about a 150 households a year down to about 40. I don't know how to set eligibility so tight that only 40 people are eligible if it's open to all of our lenders across the whole state. It that's what I would refer to as a boutique program. And so my solution could be I mean, we're even doing more first generation buyer grants than that. So the solution might be that we just pause the program for a year, wait until the repayments come back, get enough money in our bank account for it, and then reopen the program. Lenders do not like it. Realtors don't. No one likes it. When a program opens and closes throughout a year, like, it's open for three months and because the home buying process gets delayed, maybe an inspection, something happens, and someone who thinks they're eligible for the program that isn't, trust me, that would not go over well if that's how we manage the program. But what the HSA is asking for that you may hear about in the future is that we are asking if we could sell this credit for five more years. We are also asking if we could increase the amount that we're selling from 250,000 to 350,000. And it goes back to the question of what's the need. One, we'd like to keep the maximum amount at $10,000. And we are working very hard in many ways within BHFA to increase the number of loans we're doing without costing the state anything. Our mortgages are paid for through other Wall Street means that I'd be happy to talk about another day, but we are trying to get our borrowing costs as low as possible. We think we are gonna be successful in being able to reach more customers if the stock is there, so we wanna be ready with this. So the blue row tells you what you've already approved. You can't change that blue well, maybe you can go in, but please don't change that blue row, which is what where you said that we could sell the tax credits, and I told you there's little tail on those sales. So that's already in JFO and everyone's predictions of what's gonna impact the state budget. The green row is the total of what I'm asking for, which is if approved next year, there'd be 350,000 that the state did not collect in these bank franchise fees. And then next year, it would be twice as much as that because there'd be two years of these credits hitting. The first year from 2028, and the second year of the credits we sold in 2027, and so on and so forth. If you added up the numbers in that green row, you would see it comes to $8,750,000, hitting the state's budget over nine years, which means this costs 700 $972,000 for those nine years. I would like to think that that would give us enough of a pool for this revolving loan fund. Some people in other committees have asked me, well, twenty years from now though, is $10 still enough? I'm gonna say, it probably won't be, but I am not going to inflate my mask or the impact on the state budget for something twenty years from now. And I'm telling you that from all the projections I see, especially with this increase, I feel very confident that this is what the state needs in order for us to keep this program going and have the successes to continue to allow Vermonters to be making $15 on every $1 that we've invested in them, especially since those investments have not been lost to the state of Vermont.

[Senator Ann Cummings (Chair)]: Chittenden.

[Senator Thomas Chittenden (Vice Chair)]: Look, I think it's a great program. And picking up from that previous conversation that you alluded to twice, we're this isn't going out there trying to market people into buying a home. So I don't think it's pressuring them into that. And so Yes. Not hurting the rental market. My question to you though is, if this wasn't available, and again, I do support this.

[Senator Ann Cummings (Chair)]: Hope this

[Senator Thomas Chittenden (Vice Chair)]: makes sense. What are the other tax credits available that banks would then probably shift their attention towards to offset their CRA obligation, state tax liabilities, and federal tax liabilities. Is it just this, or is there like a menu of things that they could use to offset their liabilities?

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: There is a menu of things. Don't look at the screen for a second, because I'm gonna make you really dizzy. But it would be that first, there's there's buying the state credits for the creation of affordable rental housing. There's buying the state credits for the creation of affordable homeownership that includes credits that can be used for that manufactured home replacement program. But there's other credits that I don't administer that I'm not gonna adjust to, but I know the downtown tax credit is a very popular one that gets a lot of conversation. That's a one year tax credit. And so that's one that I believe hits is the same, is also charged against the bank franchise fee. There are federal tax credits possible, but that comes off of the bank's income taxes. And so it's different than the bank franchise. But if you wanna talk about tax credits, the federal tax credit is a huge program, and so that's another one that banks do purchase for CRA reasons and all that. I am a Hauser, so I only know the housing credits. So if there's other tax credits out there that don't

[Senator Ann Cummings (Chair)]: have to do with housing, they don't come up in my top priority competition.

[Senator Thomas Chittenden (Vice Chair)]: Quicker bottle of so if this went away, and again, don't want to go away. I think it makes a lot of sense. What would you expect them to likely a, they would probably be less interested in first time homebuyers because they can be more risky, but b, would you think they would then want to direct those interests in downtown tax credits, or where would that capacity go?

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: I don't know, but here's something I just wanna point out. I know how much these tax credits all sell for, and I believe in all these tax credits. I also wanna say that this is the only one that gets over 90¢ on the dollar for a five year tax credit. So, that doesn't mean that any of the other credits aren't worthy and wonderful, but this one is the most efficient. And one reason for that is that you all were very smart when you said, instead of giving these tax credit awards to lots of developers of housing or downtown areas or something like that, That's a lot of different people who some of which downtown development groups and all that aren't used to selling tax credits to banks. This is a whole other financial transaction. I don't know that they're skilled in the negotiation of showing the bank, hey. This is your IRR that you get off this interest rate of investment. This is, you know, what you can expect from here. We bulk sell all the home ownership credits for the for sale homes and this down payment assistance. That means that we can go to a bank and say, how much tax credits do you want? And we're talking bigger numbers, and there's an economy of scale and an efficiency that we found has benefits program as opposed to if they were little awards of tax credits. I also think that finance institution CFO negotiating with the bank CFO, it's a level of conversation that sometimes isn't possible with other types of tax credits depending on who's selling them. And so I'm very pleased and proud that, again, it only was recently that it dropped to 90¢. To get 95¢ on the dollar for something that they couldn't claim for five years, When you do the math of the benefit to the state of Vermont, that was that's essentially a dollar for dollar, and and that is wonderful. So would they show more demand for their tax credits? Absolutely. Probably. Would it impact their pricing? I hope so. And now they would get more for the dollar. But I don't know because I don't sell those credits, and I don't know what those conversations and negotiations are like. But I do know, and I'm a part of the conversations within BHFA, and I feel very good that we're doing a very good job on behalf of the state of our office.

[Senator Ann Cummings (Chair)]: Question.

[Senator Ruth Hardy (Member)]: Two questions. One is just on your the the this the pie chart that you've had about who the the

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: Yep. Did that over the life of the program? Yes. That's 100 people who answered our question.

[Senator Ruth Hardy (Member)]: Okay. And then picking up on a question that senator Chittenden asked because the way he asked it made me confused a little bit. Banks can buy these tax credits. It doesn't mean they are also the lenders for the mortgage. Right? Correct. So it could be any bank even if they're not a Correct. A mortgage lender. Correct.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: They don't have to be a Beach Pay participating lender. It can make right. And it can be insurance company, a captive. They could they have nothing to do with the mortgage process. They're just buying the tax credits. Okay. So there's not a tie between them. No. In fact, we usually sell most of these credits to about three or four banks, and we have 25 participating lenders. Yeah. Yeah. That's what I figured.

[Senator Ruth Hardy (Member)]: Okay. Just so I'm take care Okay. Any other questions? It's a good sales pitch there.

[Laura Collins (Executive Director, Vermont Housing Finance Agency)]: If there are questions if this were to cross your desk in the future and you had questions, I have a very wonderful staff who would be happy to answer them and come back in and do that. But I do appreciate that I was able to give this testimony today. Thank you for your time. And I'm happy to give other VHPA update testimony at any point. No. Okay. Do you wanna know

[Senator Ann Cummings (Chair)]: more about what we're doing? I know that down payment doesn't sound like much in the overall scheme, but if it's still 20%, right, if you come up with a 20% down payment, you don't have to pay mortgage insurance. Right. And that was $300 a month, so it's probably a lot more than that now, and that adds up, and until you get 20% equity in the house, you're paying that. Yeah. Yep.

[Speaker 5]: I mean, some people feel lucky that they can pay that hundreds of dollars a month for PMI because the bigger issue is without this, they don't have enough down payment to even get that mortgage with the PMI that they have to pay. And there are government mortgage insurance programs that make it more affordable, FHA and rural development, but yes, it comes at real stringent on the requirements for the house. Mhmm.

[Senator Ann Cummings (Chair)]: It has to have a new roof. So, okay. Thank you. Thank you very much. What's your name? God, it's your name. Okay, committee. We've got one last thing I'd like to do, and that is Chittenden. Is anybody ready to make a motion to move forward?

[Senator Randy Brock (Member)]: I'll make a motion to move up.

[Senator Ann Cummings (Chair)]: Senator Brock has moved that we approve. Interesting. Yes. And I'm okay. Cindy Gulick has seconded. Is there any further discussion? If not, the clerk called the motion.

[Senator Randy Brock (Member)]: Senator Chittenden? Yes. Senator Beck? Yes. Senator Hardy? Senator Brock? Yes. Senator Gulick?

[Senator Ann Cummings (Chair)]: Yes.

[Senator Randy Brock (Member)]: Senator Mattos? Yes. Senator Cummings?

[Senator Ann Cummings (Chair)]: Yes. Normally, the chair would report this, but I'm wondering if Senator Brock might like to since you were responsible for getting him into state government in the first place.

[Senator Randy Brock (Member)]: I'm gonna take all the blame all the way. It's all your fault. Yeah. I'd be happy to play.

[Senator Ann Cummings (Chair)]: I I think that would be kind of full circle. Yeah. So that was easy. Okay. Thank you, committee. That is it