Vermont Legislature SmartTranscripts:

[Speaker 0]: We are live on my agenda. We are live. This is Senate Finance on March 13, we are going to continue and possibly vote

[Victor (Committee Assistant)]: on the

[Speaker 0]: last three bills, I think, that we need to get out of here because they came to us directly. So, these are our votes today or not.

[Victor (Committee Assistant)]: The first one

[Speaker 0]: is S220 and I know senator Chittenden and senator Beck, the bill, as it came to us, calls for a tap on school spending between 39% just depending on what your current spending per pupil is. If you're a high spender you're capped at 3%. If you're a lower spender you're taxed, you can do the 9%. And I know we had a lot of discussions about impacts on tuition in schools and state tuition, private individual tuition, and I understand Senator Chittenden, you and senator Beck have been working, and then we had a similar amendment which went on two eighty two yesterday in senator Hardy's proposal. So I think this may be the easier bill to get through today. So senator Chittenden back Okay. We got off the floor about fifteen, twenty minutes ago, so the committee is evening launching.

[Sen. Thomas Chittenden (Vice Chair)]: I'll say a few things and then you see what I think John Gray should be able to present soon. It won't be a surprise to a couple pieces to what you had yesterday. Does lower the excess spending threshold. I'm proposing 112%, and we have numbers to look at of what that is. It also excludes all voter approved bonded debt. Regardless, it basically takes that data, which is I think what you did, Senator Hardy. You'll also see that it includes an appeals process because I am worried that if we put this in and we should look at the numbers at whatever number we pick, there is likely to be circumstances we're not necessarily anticipating and some that are in that. I don't know if it's up on the page yet.

[Speaker 0]: I just

[Sen. Thomas Chittenden (Vice Chair)]: Okay. So it's on the page now. And this has been honestly, I'm not I did not work on a town meeting week at all. It really it's a Tuesday morning. Like, oh, we gotta get something together. So that's where this the the chairs, and I should just start working on this, pulling some perspectives together and being cross over week. I wish I had talked to everybody, but I figured this is how the conversation would build on everything we've already previously discussed. So those are the main contours that this is a soft cap and not a hard cap, which is what I discovered as we dove into this topic, thanks to much of the commentary and advice from those that have been years in Senate Finance than me. This is allowable spending growth cap is something that has come up in years past, and it hasn't been employed and stated in in law because it is problematic for a variety of reasons that we couldn't belabor. But the excess spending threshold alternatively is something that is in law today and and using it as a lever to apply reasonable yet soft downward pressure and incentives to contain spending for those that compared to the other peers and adjusted for inflation are spending more than 112% of that adjusted amount. So I think Julia has some numbers to present. Are we waiting on John Gray to walk

[Sen. Scott Beck (Member)]: through

[Speaker 0]: the We're next gonna have to have John we Julia is booked in the house all day. I don't know. John, do you have did we get any numbers, Victor?

[Victor (Committee Assistant)]: We did.

[Speaker 0]: She did said not to post them until Well, you said so. Okay. Do you want me to post them? Yep. John can walk us through it.

[Sen. Thomas Chittenden (Vice Chair)]: Did I miss any fixed up?

[Sen. Scott Beck (Member)]: Go ahead. Okay.

[Speaker 0]: I I think there may be somebody from showing physical watching us with the ability to text Julia, lest we get ourselves, but we are operating with one hand inside behind our back at this point.

[Sen. Thomas Chittenden (Vice Chair)]: So it is up on the web page. Okay.

[Speaker 0]: It is up on the web page.

[Sen. Thomas Chittenden (Vice Chair)]: I did bumble through an introduction. Okay. Interested about it.

[Sen. Ruth Hardy (Member)]: Gave permission. I know.

[Sen. Scott Beck (Member)]: Okay.

[John Gray (Office of Legislative Counsel)]: Mistakenly. Oh, there's a different ordering of bills. Okay.

[Speaker 0]: John, you

[John Gray (Office of Legislative Counsel)]: I'm happy to come up there.

[Speaker 0]: Yeah. You can take the. Was that ready?

[Victor (Committee Assistant)]: While

[Sen. Thomas Chittenden (Vice Chair)]: you're getting settled, John, I do support this language as it is. It's a place where I think I can I definitely can support it? I think it's good policy, partly because it's already existing. There is one question that as I was walking in some the emails with John this morning, he said I certainly could raise in the discussion, which I'd be open to it. But maybe now that he's now the chair, I will raise that kerfuffle at not

[Kirby (Office of Legislative Counsel)]: a kerfuffle. Not a policy.

[Sen. Thomas Chittenden (Vice Chair)]: Just a policy option after

[Kirby (Office of Legislative Counsel)]: we walk through the language. Okay.

[Sen. Thomas Chittenden (Vice Chair)]: That's at the

[Speaker 0]: end now. Okay.

[John Gray (Office of Legislative Counsel)]: So afternoon, everyone. John Gray, office of vice president counsel. I'm gonna screen share with you this proposed amendment to s two twenty. I will just note for purposes of presentation, in the past, we've had, you know, just draft proposal headers because I saw that there's a possible vote. I do have this in the form of a committee amendment, so we need to consider adding all this up again. But this is just a proposal that happens to be informed of a committee of minutes. So it's still quite different from what you saw before. I think what the direction that has already explained, that backs away from the cap itself as a proposal related to the excess spending threshold, which I will just note is the way that previous allowable growth proposals have worked. They've been actually amendments to the excess spending threshold. But this is just this is relatively simple to explain, I think. So we start with the definition of education spending, which has particularly exclusions when we talk about the excess spending calculation. The one that you're gonna be familiar with is what you see here on line 20 on the first page. For all bonds approved by voters prior to 07/01/2024, voter approved bond payments toward principal and interests shall be excluded from education spending for the purposes of pack, and so on. So that's the existing language of what current law is. All pre 07/01/2024 voter approved bond payments are excluded from that calculation, and the change that you see here is to remove the temporal limitation, and this is just to say that any voter approved bond payments, including those occurring on 07/01/2024 or thereafter, would be excluded from the excess spending calculation. So pretty pretty sure important to understand that one. And all of this, I think, will be relatively simple, at least conceptually, although I'm sure people will have thoughts. Section two is the amendment to the threshold itself, so we're jumping back to Title Hear Me two, where we have a definition of excess spending. And as you know, excess spending is your per pupil amount, those amounts added from the capital construction reserves that exceed a particular threshold in existing laws. You can see on line 12, that's 118% of the statewide average district per pupil education spending increased by inflation. The proposal here is to lower that excess spending threshold from 118 down to 112. So again, a simple concept to address some of the potential concerns with that approach. What you're going to see on page three is a new piece of excess spending. Which is, you can think of this as kind of a whole harmless type provision. A school district's excess, and I should back up and say, the way that, I'm gonna use the word zero here. The way that excess spending works is it's basically a term that we plug into a calculation. So setting it to zero is a way of ensuring that you aren't doubly taxed on that spending, which is what the excess spending currently does. So a school district's excess spending shall be zero if any of the following conditions is met. So the first two you can think of in a similar way there is your spending flat. One, the district's education spending is not greater than the district's education spending for the preceding school year, so at the aggregate level, are your budgets no greater than the preceding school year? If that's the case, then your excess spending would be zero. The The second piece is a comparison, and this is trying to account for some discussions that the committee had around declines in student So enrollment, what if your budget, or sorry, what if your student count went up, so your budget wouldn't be flat because you have more students to account for, but you actually spent in the same way per pupil. And so that's what you see in two. You could also use the condition that the district's per pupil education spending is not greater than the district's per pupil education spending for the preceding school year. So both of the first two are saying, if your spending is flattening, either that your ed spending is no greater than the preceding school year, or your per pupil spend is no greater than the preceding school year, you would get an excess spending of zeroes. Last piece is more discretionary. It does not spell out a built out process, but it creates an avenue for folks to seek some method of adjustment, basically. So the third method that you can have an excess spending of zero is if the Secretary of Education, with the advice of three business managers and three superintendents selected by the Secretary, determines that the increase in that per pupil spend above the access spending threshold was for good cause or beyond the district's control, such as due to emergency capital expenditures or substantial loss of pupils or offsetting revenues. So first two pieces are unit excess spending of zero, even if you're above technically the excess spending threshold, if your ad spend or your per pupil spend is flat or declining. Then the third is you could reach out to the Secretary of Education for this determination that basically the increases in per pupil spend were good cause or beyond the

[Sen. Scott Beck (Member)]: judge's control. One thing. Mhmm.

[Sen. Thomas Chittenden (Vice Chair)]: So really why, what took time to get to today, and we're not talking about this sooner, it's just someone of applause, Julia Richter, in running the numbers on this caveat, which I forgot to mention in my opening introduction about the whole harmless provision. So she did run numbers on how much that would less that would catch, so to speak. And so when you do see the summarization numbers of how much would be affected at these different thresholds, it's important to recognize it's a soft cap, meaning it's not definitely going to stop that spending, but it would drive and motivate districts as I hear many of them do to get underneath the threshold so as to not incur that double tax penalty.

[John Gray (Office of Legislative Counsel)]: Lap is effective date, conduct on 07/01/2026, and because you're no longer doing the allowable broken cap, I haven't here in language just to change the title and act relating to the excess money threshold. That's it. That's the whole of the proposal.

[Sen. Scott Beck (Member)]: I'm

[John Gray (Office of Legislative Counsel)]: happy to leave this up or stop screen sharing, depending on the committee's preference.

[Speaker 0]: Okay, one more time. Chittenden,

[Julia Richter (Joint Fiscal Office)]: The

[Sen. Ruth Hardy (Member)]: little I three, whatever that is, is there a trigger for that?

[John Gray (Office of Legislative Counsel)]: So that's a good way of drawing out the point I was making that I didn't have some robust framework built in. Okay. This presupposes that you did something to solicit the secretary's input. It doesn't prescribe what that would be. Okay. Right? It just says the secretary of education has determined this. For practical purposes, what I would say is there is some thought that went into stylistically how to draft this. Typically, this doesn't feel right of a substantive provision. This doesn't feel purely definitional, and so typically you wouldn't include a substantive provision in a definition section. Basically what I would say is, to my mind, depending on the momentum that this has, at some point in the process, like on the House side, I would probably propose creating a section, like an actual substantive section in the green books that captures the excess spending as a section rather than just having it in a definition. And at that point, could build out, do this, send a report, you know, send your budget to do this. My concern in putting it in section form at this point was how much material to give people at once, basically. That it'd be confusing to explain why we're repealing the definition of excess spending and then duplicating it within a substantive section. So this to me is kind of like getting out the idea, but I agree you could build out more what the actual process would be beyond just saying the secretary approves. Right? The secretary approves assumes that the district sent something to the secretary to be approved.

[Sen. Ruth Hardy (Member)]: The secretary wouldn't act.

[John Gray (Office of Legislative Counsel)]: Independently, they just decide to evaluate everyone's credit. Okay.

[Sen. Ruth Hardy (Member)]: And then, I mean, I get like, this is probably more questions for Julia about I I was looking at her spreadsheets while you were going on for the bill. Edit, it's unclear to me. I I mean, the part of it is the font so super tiny, but the the impact of the combination of lowering the threshold with

[John Gray (Office of Legislative Counsel)]: Hold with the whole harmless.

[Sen. Ruth Hardy (Member)]: The whole harmless or what? It's like a it's a threshold of a threshold.

[John Gray (Office of Legislative Counsel)]: It's Yeah. I think

[Sen. Ruth Hardy (Member)]: it's Very much.

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

[Sen. Ruth Hardy (Member)]: So it's it's not fair to me. It's almost like if we're lowering the threshold to one twelve and then putting these things in here, isn't it actually more efficient to not have such a to to not lower the threshold that much? Like and that that's

[John Gray (Office of Legislative Counsel)]: But then right.

[Sen. Ruth Hardy (Member)]: That's where I'm not sure what, you know, what are the interaction effects there. And if we just kept the threshold at a 115, would we not need this? Right. Because of the districts that would need this wouldn't be

[John Gray (Office of Legislative Counsel)]: Yeah. But you wanna know if there's, like, a meaningful economic difference between just using a different threshold without the whole harmless Yeah. As against this lower threshold.

[Sen. Ruth Hardy (Member)]: Exactly. We might be overcomplicating it with this rather than just having it clean.

[Sen. Thomas Chittenden (Vice Chair)]: I have that summary table that's not what's posted. I'm just digging for it where she did, and it was a very small sliver of less than I think it was less $400,000 that the hold harmless provision actually triggered. I'm trying to find that table.

[John Gray (Office of Legislative Counsel)]: That does sound, of course I don't want speak confidently on this, but that sounds vaguely familiar, the facts of the hold harmless. Very nice. Yeah, because the populations that, know, sometimes we think about these things and we're talking broadly about all school districts. In this case, we're just only talking about the population of school districts that hit the excess. Right, So does part of it.

[Speaker 0]: It's on our website, you may have it refreshed. The Julia's adult. Yeah. If you have multiply it 10 times, you might be able to read it.

[Sen. Scott Beck (Member)]: Yeah. It is a little. I

[Speaker 0]: think she's making copies. She is on her way. Oh, okay. Julia is coming.

[John Gray (Office of Legislative Counsel)]: To save the day.

[Speaker 0]: Oh, sorry. Save.

[John Gray (Office of Legislative Counsel)]: It's time to talk to her. Pick them up.

[Speaker 0]: Because to get it to a size you can read, you can read about one column at a time, which means

[John Gray (Office of Legislative Counsel)]: It's a stylistic choice by staff.

[Speaker 0]: Yes. Well, putting it on. If you put it up there

[Sen. Thomas Chittenden (Vice Chair)]: I just forwarded this On the table. I'm just

[John Gray (Office of Legislative Counsel)]: not gonna expose myself to this potential No. Liability, and I'm going to.

[Speaker 0]: But if Julia is on her way, then be it, he or she Everyone's going to see you. Oh my gosh.

[Sen. Ruth Hardy (Member)]: Yeah. No. I have this table. Sorry. I'm trying to understand is how many districts would be impacted by the whole by the the whatever what are you calling it?

[John Gray (Office of Legislative Counsel)]: I'm just saying hold harmless.

[Sen. Ruth Hardy (Member)]: The hold harmless of the

[Sen. Thomas Chittenden (Vice Chair)]: I think that it shows in that data. So if you look at the two different call but I'm walking through Julia's work, she's phenomenal. So I

[Speaker 0]: Julia's here, so she can Two

[Jake Feldman (Vermont Department of Taxes)]: calls. It's an issue.

[Sen. Thomas Chittenden (Vice Chair)]: She'll make the districts above threshold. The number would be be a whole harmless, and you'd see those, for example, at a 112%, it goes from 35 to 33 districts. So the two districts would have been harmless for

[Sen. Scott Beck (Member)]: a reduction of what looks like 400,000.

[Sen. Ruth Hardy (Member)]: That's not what the oh, I see.

[Speaker 0]: I didn't see that pop up. I

[John Gray (Office of Legislative Counsel)]: I think you're gonna get information. Yep.

[Speaker 0]: Okay. I'm gonna.

[John Gray (Office of Legislative Counsel)]: Julie, you Oh, wow.

[Speaker 0]: We have any questions about the wording for John. Yes.

[Sen. Thomas Chittenden (Vice Chair)]: Go. I do have one. I don't mean to complicate it. It is the last day of crossover Friday afternoon. I just want to say one thing that John said, maybe it'd be best to bring this up in committee. If you look at the appeals language, which I agree, it should be committee support. This appeal language should get refined as it goes forward. But one notion that came to mind, the electrical thing to have in front of me, and for some reason not seeing it. So this is page three. We're going to page three. Roman, that's three at three. Right now, because of the way it's structured is that the school district's excess spending shall be zero if any of the pin falling conditions are met. It might be of interest to the committee to instead of just zero or nothing empowering the the agency of education to extract out expenses related to, for example, if there was a fire, there was a major incident and they wanted to just take all the expenses that the district can categorize as subject to that and remove that from the excess spending, have a a great graduation. I support this language as is, but right now it's zero or nothing in the appeals language.

[John Gray (Office of Legislative Counsel)]: Yep. That that's a good way to describe it. The the point is that the secretary makes one determination whether you're in or you're out. If you make this appeal for good cause or beyond the control district, it does not grant the secretary the ability to change the excess spending threshold or exclude particular items, but otherwise subject certain items to the excess spending threshold. It's just you either have excess spending or you don't. Or you don't. And in part, admittedly, you know, there's different ways that you could do this. This is administratively simpler, I presume, to just have a one time call, and part of the way that I was thinking about it was that this doesn't require the secretary to delve into what items do or don't belong. It makes a holistic decision as to whether or not you're kicked into accessibility or not. The other point that I would make from an incentive perspective, this is speculative, but just from an incentive perspective, if you have an all or nothing, that's more of an incentive for districts to then control their spending in a way where they know that it's reviewed holistically and they can't have certain items sign and pause. That's some of the thinking. It's not saying that they have to do that.

[Sen. Ruth Hardy (Member)]: Have that argument in other contexts.

[John Gray (Office of Legislative Counsel)]: That's some of the thinking. You could absolutely do it a different way, and if you wanted to make it more discretionary, how do we check the I way that we're

[Speaker 0]: guess the conflict would come in where if my spending went up a thousand dollars a student, but I also had a roof failure and I had to do emergency repairs, I couldn't the secretary would have to say yay or nay and balance those out because whatever I you know, the excess spending was not I did that plus I had

[John Gray (Office of Legislative Counsel)]: Exactly. Emergency. You'd evaluate it as package, basically. I'm suppose you're correct it could cut either way. People could try to smuggle in things because they have legitimate things that are for good cause.

[Speaker 0]: This is two years.

[John Gray (Office of Legislative Counsel)]: This is slightly different, and there's a reason to back it up in this way. This is an outright amendment to the statutory language for excess spending, but it's worth noting that the foundation formula in I-seventy three comes in FY-twenty nine and you're not going to have excess spending at that point, so technically it really only applies to the mix.

[Speaker 0]: It it is looked at as a bridge to when you are going to have pretty much a set amount that you're going to have to budget within. Mhmm. And I know we're going to get it all the way through from the house rather than or I think it's a 100,000,000 in this year to buy down the tax rates. It's to buy them down one third, one third over the next three years because if all of this hits at once, there will be sticker shock. We have many other issues to deal with, like ramping up and ramping down, and how do we bring all of that spending tax rates into equilibrium.

[Sen. Thomas Chittenden (Vice Chair)]: Moving to that point, Madam Chair, one thing that came up in these, in my dialogue diving into this is it seems to me, again, relatively new around here, that as you do the yield bill every year in its current form, and I know that to your point, it goes away, it also wouldn't seem relevant to also simultaneously consider the excess spending threshold as another lever as part of these discussions, which in a way we informally do that a couple of years ago, but if there are major swings, seems just consider adjusting this threshold, looking at the variation dispersion of the district by district spending.

[Speaker 0]: You can't use words like variation of dispersion.

[Sen. Thomas Chittenden (Vice Chair)]: But I

[Speaker 0]: did I

[Sen. Thomas Chittenden (Vice Chair)]: did I did do some of that for this, though. I agree with the.

[Speaker 0]: I'd have to go back and refresh my memory. Alright. Committee. Everybody's looking to see what happens to their school. You didn't slip them by county.

[Sen. Scott Beck (Member)]: Some get caught and some

[Speaker 0]: don't. That's the way it always seems to So,

[Sen. Scott Beck (Member)]: we

[Speaker 0]: have a an amendment proposal on the table. Well, we had it hasn't been formally moved. Well, I I said this yesterday. I Martine, is your hand up? Nope.

[Sen. Martine Larocque Gulick (Member)]: Nope. Sorry about that. I

[Sen. Ruth Hardy (Member)]: I appreciate that, you know, that you're proposing similar things to what I was trying to do yesterday. And I'm not sold on the the threshold and the review part of it. I think it's kind of overcomplicated, but I would really like to look at this conversation in combination with the revenue sources. Because if we're talking about putting $100,000,000 of general fund into the education fund to buy down taxes, again, we can avoid having to do that if we do a combination of lowering costs and raising revenue for the education fund and paying for some of the things that are on the education fund that we've added over the last couple of years. And so I would be interested in a package of the two things. This proposal with some adjustments and some version of the two eighty two proposals that we talked about yesterday. Okay.

[Speaker 0]: We've got standalone bills. Together, they can form a package. I'm not I'm pretty sure I don't have the votes to do a package. So given the straw holes we took yesterday, this one is short duration. We're going to have to raise revenue to the education fund. We will be doing that with the second homes tax, but I want to see if we can't get one of these bills out of here. If I put them together, I think they're both dead. It's fine. And I'm looking for somebody to tell me that they vote for the combined package. And I'm okay. See Senator Gulick has her handout.

[Sen. Martine Larocque Gulick (Member)]: Thank you, Madam Chair. Yes, I would vote for the I combined think it's a great way of, as Senator Hardy said, hitting the upward pressure and the downward pressure. So I think actually a great way of doing things. I really appreciate Senator Chittenden's effort with this. I think it's a great effort. I will not be supporting it for a number of reasons. One being that, you know, just today and yesterday, we have two bills where we're adding more burden onto schools. And we do it a lot. I'm not comfortable with even a soft cap. I know that this is a soft cap. It's not a hard cap, but I'm not comfortable with that. I have said this before and I'll repeat it. Our private schools have ways of fundraising. They have mechanisms to fundraise. They are not transparent with their finances, so we don't exactly know what's going on. But I am not comfortable with what I think could potentially harm our public schools because they don't have the same ability to fundraise. They don't have they're not all in wealthy communities that can fundraise. And I yeah. For those for those are just a few of the reasons why I won't be voting for this, but I do appreciate the effort.

[Speaker 0]: At this point, I need a motion to discuss.

[Sen. Thomas Chittenden (Vice Chair)]: I will move s two twenty favorably with No.

[Speaker 0]: I just need move to amend at this point.

[Sen. Thomas Chittenden (Vice Chair)]: With with them to amend

[Speaker 0]: They were moving to amend two twenty with

[Sen. Thomas Chittenden (Vice Chair)]: number 2.1 dated 03/12/2026.

[Sen. Scott Beck (Member)]: Okay. '25. Yeah.

[Speaker 0]: Can we bring Julia up to talk about the numbers? Yes. We can. Julia, if you wanna come talk about the numbers. Sure. And thank you for getting here.

[Sen. Thomas Chittenden (Vice Chair)]: And

[Speaker 0]: his numbers. We got lots of numbers.

[Sen. Scott Beck (Member)]: Good

[Julia Richter (Joint Fiscal Office)]: Good afternoon. Ruth Hardy, JFO. Team is not on work. Heard the request that folks need to see more More data. Information. So so there are two two spreadsheets, two different documents posted on a committee page under my name. Those are the same as the hard copy that you have in front of you. I can go ahead and share my screen, but I worry that it might be too small.

[Speaker 0]: You wanna

[Julia Richter (Joint Fiscal Office)]: share with

[Speaker 0]: the It really small on our screen. So, yeah.

[Julia Richter (Joint Fiscal Office)]: Alright. So then maybe let me just maybe I'll just talk you through what you've had in front of you here. So the first document that I was taking a step back, the two spreadsheets are very similar. And really what they are intending to do is showing with an adjustment to the excess spending threshold, how that would shake out if it were to be implemented in FY twenty seven using the best available FY twenty seven data that we have at this point in time. Know that there are a number of budgets that have failed. We know that there are some budgets that have not yet submitted their public information. So for those failed budgets and for those budget, those school districts that have not yet submitted budget information, we're carrying an estimate of 4.2% increase, just the estimated average state increase. So that's true. For both of the spreadsheets, these have a question.

[Sen. Thomas Chittenden (Vice Chair)]: For anybody tuning in, I just raised something that hasn't come up prior to now, which is that this is overly on FY27, but this would not apply to FY27. This is just to give an idea of what it would have been if it was in place this year, but we are contemplating this for FY28. So thank you for mentioning that. That was not brought up prior to this discussion.

[Julia Richter (Joint Fiscal Office)]: Great. Yes. And that's that's that's consistent with all the modeling that we've been looking at thus far. We at JFO cannot predict how school districts are going to be building their budgets in future years, so we are using the most recent available data. So, the difference between the two spreadsheets is that one is including that hold harmless provision that John just walked through included in the proposed amendment, and the other is showing just a change in the excess spending threshold and what it would look like. I'm sure, do you care which spreads you guys start on?

[Speaker 0]: We got it. We got Just one.

[Julia Richter (Joint Fiscal Office)]: Okay. Then let's just let's start on the one that has the staple in the top left corner. It's titled draft analysis of adjusting the excess spending threshold for senate finance. What we're looking at here is by school district using that estimated FY twenty seven education spending if the if the excess spending threshold were to be adjusted in FY twenty seven, which is not proposal, but if it were to be adjusted, how would that impact each district? So we see here, first few columns should look quite familiar. We've got column A, which is that county designation by AOE, column B, the school district, columns C through F, that's representing the FY twenty seventh data from the agency of education, the estimated ed spend followed by the total excess spending exclusions under current law. You'll recall that that's that debt service payment. So principal and interest for bonds approved prior to 07/01/2024. Column E, that weighted pupil count and column F, the education spending per weighted pupil, not factoring in the exclusions. Then moving forward, I thought it would be helpful to see because there are different thresholds that have been discussed and different amendments, it would be helpful to see just these different amounts, what it would look like. The first columns of excess spending threshold, columns G and H, this is showing that current law FY27 estimated impact of the excess spending threshold at 118%. So what we see here up at the top is that the excess spending threshold under current law in FY27 at 118% is 16,470, That's that's per weighted pupil spending. So every school district that spends, that's a per weighted pupil spending above 16,470. It's double taxed on that amount except for those exclusions included in column D. And then below that we see I've included the total count of districts over the threshold. So how many have something that would fall over the threshold. And then there would be 12, estimated 12 in this instance, and then the total excess spending over the threshold. So that's the stuff of all dollar figures in column h. Of these other excess spending thresholds, the 116, 115, 114, 112, and 110 follow the same intuition. It's just showing you as that excess spending threshold is ramped down, how many more districts are picked up with each of those percentage points decreasing. Is there any more detail about this that would be helpful for me to talk about?

[Sen. Scott Beck (Member)]: Maybe I this is very Norwich on here did they consent. Why? Like their statements, Jack. They don't control that. So the exempting member states? Are they subject to excess spending threshold only right now?

[Julia Richter (Joint Fiscal Office)]: No. Per at least per AOE's excess spending calculation. I defer to John as to how the statute is written.

[Sen. Scott Beck (Member)]: I mean, I don't know. Are they are the interstates exempt? This

[John Gray (Office of Legislative Counsel)]: is not a question I thought about before. There's nothing that speaks to it in the excess spending definition itself. I'm just at the risk of this becoming a larger thing. I've

[Sen. Scott Beck (Member)]: heard of

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

[Sen. Scott Beck (Member)]: it. Think about it. Yeah. I mean but I think they're also the highest I mean, if they're about tax, 80, so it's just strictly low. Yes. Are they the highest in state?

[Julia Richter (Joint Fiscal Office)]: That's my understanding. Yeah. And I will say that they have been listed as exempt here because that is how it is carried in if we find the files. So they

[Victor (Committee Assistant)]: Well Alright. I'd love to know why. For

[Sen. Thomas Chittenden (Vice Chair)]: those following on home too, I I think what's important to highlight is that column key. So not the column all the way to right is what the amendment is proposing if that's a 112%. There's a a big steep jump to get to 110%, which is the furthest most most column. So column p is what the amendment would contemplate if this were overlaid with y 27.

[Sen. Scott Beck (Member)]: I will Am I correct?

[Julia Richter (Joint Fiscal Office)]: If I may, I would just tweak a little, and that's a great segue into the other spreadsheet that doesn't have the stable. Yeah. And that's so so you have you should have two two coffee or something.

[Sen. Thomas Chittenden (Vice Chair)]: So

[Julia Richter (Joint Fiscal Office)]: the one that doesn't have the staple is reflecting reflective of including that hold harmless provision. So if you really wanna see what the amendment would look like

[Sen. Scott Beck (Member)]: Wait a minute. I'm not sure I understand, Janet.

[Julia Richter (Joint Fiscal Office)]: Okay, so we're looking at the spreadsheet that doesn't have a stable.

[Kirby (Office of Legislative Counsel)]: Okay, now that

[Julia Richter (Joint Fiscal Office)]: For those looking on their computer, titled draft analysis of adjusting the excess spending threshold for Senate Finance, including whole premise provision in proposed amendment.

[Sen. Scott Beck (Member)]: Okay.

[Julia Richter (Joint Fiscal Office)]: So what this is doing is this, you'll recall there's that whole premise provision that essentially says, if a district's per weighted pupil spending does not increase compared to the prior year and or their total education spending does not increase compared to the prior year, then they are not subject to the excess spending penalty. So the way that we do that is we first look at, okay, who did not increase their per weighted pupil spending and or their education spending. So we see here in columns d through e, their FY '26 education spending and FY '26 per weighted pupil spending. The next columns, columns F through I, are showing the exact same FY '27 data, estimated data that we were just looking at. Column D, this is that binary metric. Do they fall into the hold harmless provision or not? And a one is given to those districts that either did not see an increase in their probate people spending or did not see an increase in their education spending.

[Sen. Scott Beck (Member)]: Okay.

[Julia Richter (Joint Fiscal Office)]: So any of those districts that have a one in this column J, you'll see that sort of regardless of what their prorated people spending is in FY '27, they won't be tripping the excess spending threshold. They won't have that penalty. We see in these two cells above column j that there are a total 26 districts that either did not increase their per weighted pupil spending and or did not increase their total education spend. There are 26 districts that could fall into this whole harmless provision dependent on maybe they just naturally wouldn't have anything. Maybe they're low spenders, and they wouldn't have anything. But because this is exempting some of these districts from hitting the excess spending threshold and being subject to the excess spending penalty, we see that fewer districts are going to be impacted with this full time list provision than what we were just looking at in the earlier spreadsheet. You Julia, I have

[Speaker 0]: a question when What you have a

[Sen. Martine Larocque Gulick (Member)]: about the districts who their spending has increased simply because they have debt, carrying debt?

[Speaker 0]: This makes sense. It sense. Makes sense. Okay. Indebtedness, right?

[Sen. Martine Larocque Gulick (Member)]: So I have three schools in my district that are in that scenario, Winooski, and Burlington. And Winooski is in that column, but Burlington and Colchester are not.

[Julia Richter (Joint Fiscal Office)]: So the difference is that the bond and debt, those principal and interest payments, assuming that that bond passed prior to the cutoff, the 07/01/2024, that would be an exclusion from education spending for the purpose of calculating excess spending. However, that's not going to be captured in this column J.

[Sen. Martine Larocque Gulick (Member)]: Okay, I think I understand, but I'm

[Julia Richter (Joint Fiscal Office)]: not sure So basically column J is saying, you know, if your education spending didn't increase year over year, then you're not subject to the excess spending threshold.

[Sen. Ruth Hardy (Member)]: So if you didn't If

[Speaker 0]: you spend it last year, and if you spend it again this year, you're not subject to the excess spending threshold because you haven't gone up due to assuming new debt.

[Julia Richter (Joint Fiscal Office)]: Exactly. So if the debt service were to remain the same year over year, then I think that would not be no reason that the education spending would be increasing year over year.

[Sen. Martine Larocque Gulick (Member)]: Our debts payments aren't staying the same year after year. We're actually like reaching our pinnacle right now.

[Speaker 0]: And we'll go down.

[Sen. Martine Larocque Gulick (Member)]: Yeah, it should go down in the next at some point in the next couple of years. But I'm still, I don't know, I'm not a 100% convinced that I'm understanding at this point.

[Julia Richter (Joint Fiscal Office)]: Okay, good. Okay. Let me try with one more answer and it could be a policy question and I can't make the argument as to whether or not or how school debt should be included. Strictly from the numbers perspective, the school debt, the debt service exists in a different place in the excess spending calculation than what we're looking at in column J. So column J, we're strictly looking at the hold harmless Who is held harmless from the excess spending threshold in its entirety. And the districts that are held harmless are, you could be held harmless if your ed spending overall doesn't increase year over year, or if the per weighted pupil spending doesn't increase year over year. That's who we're capturing in column A. Those are the districts that would not be subject to the excess spending penalty under this

[Sen. Ruth Hardy (Member)]: proposal. This column G is the is the debt service. Correct?

[Julia Richter (Joint Fiscal Office)]: Yes. So column but before getting to the debt service, column J is just saying which districts would fall into the hold harmless provision. Right, I get that. Yep. Column G to Senator Hardy's point is capturing what is excluded from the purpose of calculating excess spending. Then we need to say, okay, which districts would still be subject to the excess spending? For instance, anybody who doesn't have a one in column j is still subject to the excess spending penalty if they fall above if their per way of people spending falls above the threshold. However, for the purpose of calculating that excess spending that's going to be double taxed, we exclude that debt service prior to 07/01/2024 that's captured in column g. And that those exclusions in column g are not double passed.

[Speaker 0]: Okay. We got our hands around that one now. So the only debt of service that would be counted would be even faster on this year or last year.

[Julia Richter (Joint Fiscal Office)]: So the debt service is always included in the education spending? Yes. And, yes, the the the the debt service that will be captured in the excess spending penalty is that debt service that was incurred post 07/01/2021.

[Sen. Ruth Hardy (Member)]: I thought I thought his proposal got rid of all the debt service. You don't

[Julia Richter (Joint Fiscal Office)]: Oh, then I stand corrected. I did not do that for Okay.

[Speaker 0]: You forgot all that's what I thought. Yeah. All loans. Yes.

[Julia Richter (Joint Fiscal Office)]: Oh, okay. I stand corrected. Yes. Okay. Strike it from the record,

[Speaker 0]: what I said. Okay. So we can strike out column g. Well,

[Sen. Ruth Hardy (Member)]: no. Column reflects what has already passed. But obviously, Julia doesn't know what We hasn't yet don't

[Julia Richter (Joint Fiscal Office)]: know what correct. And the other piece is what we're seeing in column g are the total excess spending exclusions under current law. The data hasn't yet been calculated as or, like, collected by the agency as to if that time condition for the excess spending threshold were to be amended, what are the total exclusions? So we've done some preliminary work on that and the bond bank has provided you with some great data. It seems as though there is a total annual debt service of 11,600,000 of additional debt service beyond that 07/01/2024 across, I think I don't know to say on the record.

[Sen. Thomas Chittenden (Vice Chair)]: So that currently

[Julia Richter (Joint Fiscal Office)]: More than five districts, fewer than 50.

[Sen. Thomas Chittenden (Vice Chair)]: That's currently not being excluded, but should this bill pass into law, it'd be excluded or Correct.

[Julia Richter (Joint Fiscal Office)]: Plus anything, any other approved debt. And to the extent that that would or would not impact school district and or voter decisions, I can't decide.

[Speaker 0]: I only decided to fix it. To

[Sen. Thomas Chittenden (Vice Chair)]: that point, Woodstock recently conditionally passed a bond that said they would if in fact that was removed from the excess spending threshold.

[Speaker 0]: That is a high school they've been trying to build for a number of years and have not been able to pass it. Yeah. It reaches a point where

[Sen. Scott Beck (Member)]: Well, I think that was I think it was 60 voter threshold by the bylaws. They failed to be There's more than a single majority. Yeah. They did. The underlying bill, the as introduced. Mhmm. You did some calculations for how much how much that would reduce education spending if it was and it was what was it? 6 it's a hard cap. It was 67 or 76,000,000 or something.

[Julia Richter (Joint Fiscal Office)]: That was the with the preliminary this I think it was, like, 65,000,000. That was with the preliminary pre lowered spending estimate. I didn't pull that up, but I will need.

[Sen. Scott Beck (Member)]: Okay.

[Speaker 0]: I

[Sen. Thomas Chittenden (Vice Chair)]: could speak from the cup on what I recall, those estimates.

[Speaker 0]: Julia's gonna Hold

[Sen. Thomas Chittenden (Vice Chair)]: on. So it went 67, and then we added the whole harmless as we were discussing, and that dropped it to 57. Then we got the updated numbers, And my math and Julia's math better was it was about 30,000,000 after we got the revised 4.2% increase in Ed spending with the whole fund list.

[Speaker 0]: The budgets came in lower than Yeah.

[Sen. Thomas Chittenden (Vice Chair)]: That's what I recall. And I think it was like '27, '28, depending on how you did it.

[Speaker 0]: Okay. Senator.

[Sen. Martine Larocque Gulick (Member)]: Sorry. Do we know how do do we have the numbers on how much this would save taxpayers?

[Speaker 0]: That's what we were just talking about. 30,000,000? No.

[Sen. Ruth Hardy (Member)]: It's in

[Speaker 0]: the top column, the top row.

[Sen. Scott Beck (Member)]: 21,000,000. If they did all of it correct. They don't have to. It is a soft cap.

[Sen. Thomas Chittenden (Vice Chair)]: So if they don't, they would be double taxed on about $21,000,000. So they would be there's soft cap pressure on $21,000,000 worth of spend. Yeah. If this were overlaid with f y '27, it is not. So this would be overlaid next year. We have

[Kirby (Office of Legislative Counsel)]: no idea what that year looks.

[Sen. Scott Beck (Member)]: Okay. Well, I'll just while Julia's looking for that number, I I like I like doing this cleanup. I appreciate Senator Hardy's, you know, as part of this greater conversation, but that feels like a conversation that we'll be having more like a conferral with the name as the final, you know, the final appropriation bill comes out and everything. And I do, you know, I think a soft cap with $21,000,000 of possible would be a little more compassionate to our school districts than the as introduced, which is a hard cap. Don't know, have you found that number?

[Julia Richter (Joint Fiscal Office)]: Yeah. So you'll recall that there was also the back and forth that we were looking at. I there's a lot of numbers in in folks' minds because we're looking at the FY twenty five to FY twenty six, and then the FY twenty six to FY twenty seven, and then we have the updated FY twenty seven numbers. So the estimates have changed as we've been looking at different sets of data. And there's also been that the s 02/20 as introduced. You'll recall prior to meeting, you were talking about that dual test. So looking at the greater of either the allowable spending or the education spending increased by HIPAA is what would have been permitted. And using all of that, the estimate is would be if it were to exist in f y twenty seven, twenty one million.

[Sen. Thomas Chittenden (Vice Chair)]: To drop twenty one million?

[John Gray (Office of Legislative Counsel)]: Because the

[Julia Richter (Joint Fiscal Office)]: impacts of that were the decrease in school district budgets. So, the December 1 letter was estimating 5.8% increase. Now, the average increase is 4.2% for the education spending growth. The Two part test. The proposal of the the two part test. Yes.

[Speaker 0]: Okay. Yep.

[Sen. Scott Beck (Member)]: Yeah. But I already asked it.

[John Gray (Office of Legislative Counsel)]: So that stop. You Yeah. I was gonna that.

[Julia Richter (Joint Fiscal Office)]: So I do I do think that that's an important note that when looking at the excess spending threshold compared to the cap included in s two twenty, the 21,000,000 that is being shown in column

[Speaker 0]: t

[Julia Richter (Joint Fiscal Office)]: is and I know this was spoken about, but it's important to keep in mind, this is what is estimated to be over the threshold. And how school districts would respond, I don't know. So either that would be cut or that would be double passed or likely it would fall somewhere in the middle. Yeah. Yeah.

[Speaker 0]: If something really unpredictable, awful happens, we can always come back and not withstand.

[Sen. Scott Beck (Member)]: Well, there is a side appeal. Yeah. There is an appeals. Okay.

[Speaker 0]: Oh, okay.

[Sen. Ruth Hardy (Member)]: So I do not feel comfortable going down to the one twelve. I mean, we're at one eighteen, and going down to one twelve is a pretty significant drop. My proposal yesterday was one fifteen, and that's an area that I feel much more comfortable with. And if we went to one fifteen, I think getting rid of the

[Sen. Scott Beck (Member)]: The harmless.

[Sen. Ruth Hardy (Member)]: Whole harmless thing makes sense. I mean, I think the whole harmless thing is a little clunky anyway, and I'm not I don't really like it. So I would feel more comfortable at one fifteen without the whole harmless. I still, again, would love to take this into consideration with more of a package and include revenue. I hear you that you're not interested in doing that, but I I think 01:12 is too too much and would really feel much more comfortable at 01:15.

[Speaker 0]: Sandra, if you look at the discussion.

[Sen. Martine Larocque Gulick (Member)]: My issue one of my issues with the appeals process is is it's gonna be at the discretion of the secretary. And I I don't have a lot of confidence that that decision might not be the right I do have confidence that it might not be the right one. So I'm not I, again, appreciate the appeals process, but I don't feel comfortable with it, to be honest. And, Senator Beck, I appreciate your point about there's gonna be more tax bills coming to us at the end of the session, but the end of the session is going to be very chaotic. It's a campaign year, we're all gonna be wanting to get out the door. I would love to see this attached to either Senator Hardy or Senator Cummings proposal. I would don't think we should give on that.

[Sen. Ruth Hardy (Member)]: Agreed. Okay.

[Speaker 0]: Discussion on the proposal is to go from 112 to 150. Discussion on that proposal?

[John Gray (Office of Legislative Counsel)]: I thought we were talking about Senator Chittenden's proposed amendment.

[Speaker 0]: The proposal right now is the amendment is to go lower the threshold from 118% to a 112. Senator Hardy has said she would feel more comfortable with a 115. I'm not sure Senator Gulick would feel comfortable with anything. Okay. So I would like

[John Gray (Office of Legislative Counsel)]: to state that Senator Chittenden's proposed amendment number one to both. Okay.

[Sen. Thomas Chittenden (Vice Chair)]: What I would say to that, to your previous comment, madam chair, is this can be revised. So next year, whoever is sitting in these seats can get adjusted at that time to the BAA or otherwise assess down the board. I am comfortable at 01:12, but, again, this conversation was planned to be had. It's I wish it wasn't on the last day of your crossover, but I'd love to hear thoughts from all

[Sen. Ruth Hardy (Member)]: of them. By by the time anybody is back in these chairs and getting going, school districts will be well on their way of making their budgets. They would not be able to adjust adjusted for next year.

[Sen. Thomas Chittenden (Vice Chair)]: That's why it was important to be that process because in those circumstances, if this does, then I I I do trust the agency of education to to handle contingencies and concerns. It's not like it's important for me to have that in.

[Speaker 0]: Okay.

[Victor (Committee Assistant)]: It is simply set of conditions under which the trigger would be pulled, and at that point, the agency of education would do something, I don't know, perhaps more or less than what we have in here. Or

[John Gray (Office of Legislative Counsel)]: It's affected emergency trigger.

[Sen. Thomas Chittenden (Vice Chair)]: I'd just say to that, if I may, that I think the language in a way is open enough to to be that that's We difficult.

[Sen. Scott Beck (Member)]: You know, we don't have it realistically in 2027. We don't realistically have a way of changing district spending at that point. We never we never do. We like to think we do in early January, but we really don't. But what we do have and what we do all the time is we impact tax rates. And I think that's what Senator Chittenden was speaking to here is that, yes, if we came back here next year, we always have the ability to change tax rates and penalties and all that kind of stuff. Money in. That's right. But we're not going to change their spending. They're going to do their bills and

[John Gray (Office of Legislative Counsel)]: then we're going

[Speaker 0]: to do more. And this is further downward pressure, which was the purpose of the original bill, was to try and keep some downward pressure on spending. Senator Gulick.

[Sen. Martine Larocque Gulick (Member)]: Question for Senator Chittenden, and I'm not trying to be flip or do a got you or anything, but can you give me any examples of what gives you confidence in the Secretary of Ed and the AOE right now?

[Sen. Thomas Chittenden (Vice Chair)]: I see their team doing the job as best of their abilities and they have not lost my confidence because of it. I would just be good at this.

[Speaker 0]: And I'm not going to get into a character discussion on the agency's patient. It's not a character discussion. I'm asking for evidence of their success.

[Sen. Ruth Hardy (Member)]: Yeah, thank you.

[Speaker 0]: That's been asked and answered.

[Sen. Scott Beck (Member)]: I'll just say, I think we've had Ken Bates and Kelly Murphy in here at least two or three times this year. They seem to be really on top of it. Have a lot of, and that's who we're gonna be dealing with really is those two. I think it's all we need.

[Speaker 0]: Great. Improving. Sandra, have you made a motion?

[Sen. Scott Beck (Member)]: Did I?

[Speaker 0]: You did.

[Sen. Thomas Chittenden (Vice Chair)]: I did. So Okay. Repeated.

[John Gray (Office of Legislative Counsel)]: I can second that. But made us.

[Sen. Thomas Chittenden (Vice Chair)]: Alright. So I usually move draft three point,

[John Gray (Office of Legislative Counsel)]: like, 3.2. Okay.

[Sen. Thomas Chittenden (Vice Chair)]: Let me get to the or time stamp up.

[Sen. Ruth Hardy (Member)]: I think it's 02/2012.

[Sen. Thomas Chittenden (Vice Chair)]: 02/2012.

[Sen. Scott Beck (Member)]: Okay.

[Speaker 0]: So we now have a formal a motion on the floor to approve, And then this is a strike all amendment. Correct?

[Sen. Scott Beck (Member)]: Yes. Yes. Okay. So

[Speaker 0]: to strike There is the bill number two twenty, and replace it with draft number 2.1, dated 03/1226 at 04:35PM. So far, haven't seen any of those as AM, so I can live with them, and it's the last day of the cross over. So that is the motion. Yeah. Are there any amendments to this amendment?

[Sen. Ruth Hardy (Member)]: Well, I suggested getting rid of the clunky appeals and fresh

[Speaker 0]: whole harmless thing and moving a 115% back. Is that a formal motion? Sure. I would make that motion. Okay. Senator Hardy has moved that we move the excess spending threshold from 112 to 115 and that we removed the appeals process. Well, all of it's the

[Sen. Ruth Hardy (Member)]: rational, so starting on C on page three. C one, two, and three.

[Speaker 0]: Okay. So three, and we will strike section well, we will strike section c. Okay. Is there have I got a graft? I I think he's got a. See well, let's we'll take a go and then because right now, this is just striking. So and changing. Okay. Is there further discussion on this proposal of amendment?

[Sen. Martine Larocque Gulick (Member)]: I just wanna say I really appreciate the effort to compromise. I think there, some of us are working really hard to compromise in this committee, and it would be great if some other folks would join in the compromise. It's feeling kind of one-sided right now.

[Speaker 0]: Is there any further discussion of the amendment? If not, on this one I'm just going to say all those in favor say aye. Aye. All those Aye. All those opposed, nay.

[Sen. Scott Beck (Member)]: Nay. Nay.

[Speaker 0]: Okay. I've got that. Five two. So now we have a move to amend, replace s two twenty two with a strike off of draft 2.1, green twelve twenty six at 04:35PM. Is there any further discussion on this one?

[Sen. Thomas Chittenden (Vice Chair)]: I was just saying, I think this is a big compromise. I think that this has been a really forming process for me to get to this soft cap with the excess spending threshold. I've learned a lot from many members around the table, so I don't see this as one-sided. I see this as getting to a good policy to address what I'm hearing from voters when they're being compensated in our education system.

[Speaker 0]: Okay. Further discussion? If not on this one, will the court call the roll?

[John Gray (Office of Legislative Counsel)]: Senator Chittenden? Yes.

[Sen. Scott Beck (Member)]: Senator Beck? Yes. Senator Hardy? No. Senator Brock?

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

[Sen. Martine Larocque Gulick (Member)]: This is just to strike the initial bill with Senator Chittenden's Yes.

[Sen. Thomas Chittenden (Vice Chair)]: Two amendments. Chittenden's.

[Sen. Ruth Hardy (Member)]: It's Chittenden's amendment.

[Sen. Martine Larocque Gulick (Member)]: Then we're gonna vote on it again?

[Speaker 0]: No. Mandates have to vote. Okay,

[Sen. Martine Larocque Gulick (Member)]: no. Senator

[Sen. Christopher Mattos (Clerk/Member)]: Mattos, yes. Senator Cummings. Yes.

[Speaker 0]: Will call me.

[Jake Feldman (Vermont Department of Taxes)]: 520.

[Sen. Scott Beck (Member)]: All

[Speaker 0]: right, that has passed 520. Thank you, committee. This was the easy one.

[Kirby (Office of Legislative Counsel)]: Would you like to report that?

[Speaker 0]: It's your amendment. Do you want to?

[Sen. Thomas Chittenden (Vice Chair)]: You're welcome.

[Speaker 0]: You can report that. And we now have today find my way through all the charts, two eighty two. This is we have three proposals that came up yesterday. And, basically, the changes are where

[Victor (Committee Assistant)]: let's

[Speaker 0]: new computer just there it goes. We have as introduced, we have a Chittenden, Hardy, and I had asked to see what the numbers look like on February, and we got all of those yesterday. And Patrick had a nice draft of the of the financial differences. And, basically, the diff the differences are at what level of income you start at, and let's see, was what level of income and lot of those level of income, where you start this tax, one was at 500, one was at the federal $2.50, and the other was at 1,000,000, and I believe that's per individual. The original bill proposes that it go to school construction. Police fender parties. It went and senator Chittenden did both went to education, which and that it be used to buy down some of the costs that have gone in there. I would hasten that we have removed things from the Ed Fund also.

[Sen. Ruth Hardy (Member)]: Not a specific. Mine had intent language saying

[Speaker 0]: It has. Yeah. School letters sent the But it would both would send this senator the original bill, which was senator. Yeah. The Boboskies would have put it in a special education

[Sen. Ruth Hardy (Member)]: Not just revenue. There was there were two revenue sources in the original bill. The other one was the second homes tax that would have gone into a capital construction fund. This revenue, I believe, just prior to that general fund.

[Speaker 0]: The general fund. I would be wrong, but I'm pretty sure it's the general. And so we've got two proposals to put money into the end?

[Sen. Thomas Chittenden (Vice Chair)]: A discussion yesterday, a really smart person gave me a round and said, you know, the other thing you could do is just take universal meals and put it in the agency of health services. And then if that's painful with the general fund and then we're not actually allocating. We're not sending the money. So if universal meals wasn't covered out of the ed fund instead it came from AHS, you know, it's part of the general fund. It'd be another way to

[Sen. Ruth Hardy (Member)]: Anything that we do, but that's using general fund and creating more of

[Speaker 0]: a hole over there.

[Sen. Ruth Hardy (Member)]: So

[Sen. Thomas Chittenden (Vice Chair)]: No. Because the revenue if this revenue revenue passed in any of these cases Oh, you're would just go to the general fund, and then we'd also take the expense of universal meals put it into the general fund so that we wouldn't have to card it or what do you wanna call it? Or then ask the tax department if they're here. I holding it off.

[Speaker 0]: Okay. See. Jake, do you wanna

[Jake Feldman (Vermont Department of Taxes)]: Yeah. Okay. Jake Calvin, tax department, just whispering about that to Julia. Mechanically, I don't I don't know how we could isolate just this part of income taxes and then send it somewhere, like the education fund. That would be Haitian applicant. One option which is similar to what you're saying is you let it accrue to the general fund, which is where all the IT goes, but you do something like take some of the yields and rooms tax that split between general fund and the Ed fund and increase the share that goes to the Ed fund by the same amount, that is easy to do. The

[Sen. Ruth Hardy (Member)]: the problem with doing that I mean, I appreciate the complexities of trying to split out the the money. But the only way I think it's important to have intent language in the the in so if we did that, we would need to have some kind of intent language saying this portion of the bill of group tax is for these purposes. Because without it, there it gets kind of lost to open the ears of what we've done. I mean, it was sort of a, you know, political policy choice to do what we did originally and now we're trying to make or I would like to make, like, a choice to say this is the intent of why we're doing this. We're trying

[Speaker 0]: to increase revenues in order to cover existing costs. It seems to me the easiest thing to do because the general fund is just the meals cost is just a cost that's figured out in every school budget, and it's compensated by federal money. And so if you want to raise x million and you wanted to cover the cost of universal meals, you just let that income tax or income derived revenue go to the general fund and you move the cost of meals into the general fund, knowing that they may well send it back to us without the money, but that would be, I think, the cleanest way to do this rather than getting two thirds rather than one

[Victor (Committee Assistant)]: third Is this or is this not education funding? Is this or is this not education funding deals?

[Speaker 0]: I think it is, but

[Victor (Committee Assistant)]: Probably one of the things I'm thinking frankly, the whole term of education funding, we're in a competition. We're in a competition in terms of how things are reported. States report things differently, and one of the concerns I have may be, to some extent, what we are calling education funding, some other states are not. And those states that are not have lower education spending, and we are in a competition in which as we seem to be climbing our way to the top no matter what, that's going to create a problem for us and go on and on. The board and the staff actually going address some of that right now, because what isn't education funding shouldn't be there as education funding. So it's services funding or what have you, but it's not education.

[Sen. Ruth Hardy (Member)]: Well, I think, so You're right that what we include as education funding is is is broader than many. Also, many states don't have education fund in the same way that we do. Mhmm. But many states have one general fund that they spend for all of their, you know, their education and their regular general government expenses. And so since we have this cordoned off education fund because they are unique funding system, then it it the the the sort of trend has been well, anything that is related to education gets paid more out of the education fund. So

[Victor (Committee Assistant)]: But as as I say, it places us at a competitive disadvantage.

[Speaker 0]: Well, I mean, As a general rule. I'm not sure exactly why. Okay. Well, we might be taking this out of educational spending, and we would be raising money to cover the cost of the Gems Act fund, but it would then not show on our ed funding calculations. I think that's what I'm hearing. Okay.

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

[Speaker 0]: have a whole lot of very household looks. Would you like to take about a ten minute break to think about this?

[Sen. Scott Beck (Member)]: Maybe a three year break would be appropriate. Can't agree with that. I'm just, I mean, yeah. I think there's a real you know, there's certainly a a conversation to be had as to whether universal school meals should be an education fund expense or it should be an EHS expense over a general fund. And that's I I could go I could go either way. And You know?

[Speaker 0]: Should we put educate income money?

[Sen. Scott Beck (Member)]: In the

[Speaker 0]: end fund.

[Sen. Scott Beck (Member)]: So the yeah. So if we're gonna, yeah, hypothetically, if we say that, universal school meals or any other expense in the education fund is a general fund expense Done some curriculum requirements. Yeah. And we wanna send it over there and calve off, I don't know, something to sales tax or the rooms and meals tax or the purchase or whatever you want to calve off to send the money over to the general fund to pay for that, fine. I think where I started to get lost is where within that we start raising new revenue, increasing taxes. That's where I kinda, you know, the first part of the conversation, I think that's definitely a conversation we can have, the raising the revenue is where I

[Sen. Thomas Chittenden (Vice Chair)]: start to get lost. Okay.

[Speaker 0]: I'm watching clocks. I'm looking at the bar end of the table, not the screen. Is there anything anybody down there that would support raising additional revenue at this point?

[Victor (Committee Assistant)]: Oh, yeah. No.

[Sen. Thomas Chittenden (Vice Chair)]: It was for a casino?

[John Gray (Office of Legislative Counsel)]: That's our.

[Speaker 0]: That is not a New Jersey. Then can I can I just say something to

[Sen. Ruth Hardy (Member)]: Yeah? Well, I mean, Senator Beck, you and I have had this conversation before. I mean, raising new revenue means lowering other revenue if it's used to offset existing education expenses. And that's what I was trying to do in my proposal is to say, okay, we're what we wanna do is lower property taxes. We wanna lower that kind of tax because that's the tax that's really Right. Really making people concerned right now.

[Sen. Scott Beck (Member)]: So that

[Sen. Ruth Hardy (Member)]: And so, like, raising new revenue to offset that

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

[Sen. Ruth Hardy (Member)]: Is is a wash. It's it's a different it's a different

[Sen. Scott Beck (Member)]: That's a tax reform conversation, which is a is a different conversation from increasing revenue.

[Sen. Martine Larocque Gulick (Member)]: For the tax committee.

[Speaker 0]: Okay. If it's senator Gulick, we've got a discussion going here, then I'll recognize

[Sen. Scott Beck (Member)]: Yeah. I'm just let me finish my thought. Yeah. So that is certainly mean, it's it's it's a different conversation from increasing taxes. And I think and I said yesterday that if we're gonna talk about education tax reform, then I think there are certainly implications with the general fund and I view that as more of a conversation later in the session as we start

[Speaker 0]: Yeah, but the figure

[Sen. Ruth Hardy (Member)]: house is gonna be sending us over a

[Sen. Scott Beck (Member)]: bunch stuff.

[Sen. Ruth Hardy (Member)]: And so we don't have anything that we've fleshed out that we can support, then we're just reacting to their ideas instead of saying, oh, and we have ideas too.

[Sen. Scott Beck (Member)]: And I mean, they they are, and that's our that's our vehicle. That's our that's our place to put the senate's position on what we want that tax reform to

[Speaker 0]: look like.

[Sen. Ruth Hardy (Member)]: What we arguably, what we just did is tax reform because that is that is it has implications for the education fund and education taxes. And good. The one we just voted on. And so you can't have the make the thing we just voted on as two twenty. So, you know, that that's that's that's reform. That's different that's changing how

[Speaker 0]: the reason

[Sen. Scott Beck (Member)]: wouldn't agree I wouldn't agree with that.

[Sen. Ruth Hardy (Member)]: And so if we're gonna have the if we're gonna have the expense conversation, let's have the revenue conversation too and have it together. And it's shocking to me that nobody,

[Julia Richter (Joint Fiscal Office)]: with the

[Sen. Ruth Hardy (Member)]: exception of one person on the committee, wants to seize the connections between those two and how it's a logical conversation to have together.

[John Gray (Office of Legislative Counsel)]: I think we just did. If you overlay the spending threshold is $21,000,000 and if we save $21,000,000 and the Ed Fund and school meals cost $21,000,000 and in fact savings covers the cost of school meals.

[Julia Richter (Joint Fiscal Office)]: Okay, I'm Right?

[John Gray (Office of Legislative Counsel)]: If you save 21

[Sen. Ruth Hardy (Member)]: Not unless we say this is the, you know, what we're gonna replace the the cost of school meals with. You know, there's no there's no outward connection to the universal school meals, expenses in this. It's also a a thought. Remember,

[Speaker 0]: this is a transition to the foundation formula that we voted on last year. When that comes in, there will be definite presentations. I am trying to see if there is a past forward. I have three noes on raising revenue. I have one senator who's signing his name through his bill. I I have Sandy Gulick, I'll go to you. Your hand is up. But this is just questions on the proposal before us, which I think is if we agree to raise this revenue, where does it go? If we want it to go to cover the cost of universal school meals, then do we put it in the Ed Fund or do we move school meals to the general fund? Which I think would be cleaner, that's where the discussion is.

[Sen. Martine Larocque Gulick (Member)]: Are we looking at the bill as introduced or one of the amendments?

[Speaker 0]: We are looking at the bill as introduced. I'm trying to find out if I'm going to have the votes to raise any revenue before I start on how much Right. Because that's basically it is is where we start. It's just different compilations of how and how much revenue we're going to raise. Plus, Senator Chittenden had a couple other things attached, salt workaround, and

[Sen. Thomas Chittenden (Vice Chair)]: So I'd say Senator Gulick, I think we're just talking about all the amendments in the original bill right now in general. Did you have another comment or?

[Sen. Martine Larocque Gulick (Member)]: Yeah, I wanted to remind folks that the top 1% in Vermont will be receiving federal tax cuts of $60,000 a year, which is more than many Vermonters make in a year. And the top 20% in the aggregate will be, getting tax cuts in the hundreds of millions of dollars.

[Speaker 0]: Senator, we had testimony from the tax department yesterday that what they got was an extension of the tax cuts they got in 2017 with the jobs and tax cut bill, whatever that was called, we made changes to the tax code at that time to recapture it. So they are not making a new $60,000 apiece. I assume that's rounding up the 57 that's coming to me, that we adjusted for those claims when they were those reductions when they were originally made, is that six years ago? So it's not I think that's what I heard yesterday. Yeah. So it's not new money. This would be further adjustment on those individuals who are not all the same.

[Sen. Martine Larocque Gulick (Member)]: Okay, so just to be clear, the top 1% in the state of Vermont is not going to be receiving tax cuts? Speaking, I'm asking the tax. Depending, most of these tax cuts

[Speaker 0]: where we're losing money and we're going to see adjustments coming from the house is in the corporate tax. When we went through the tax cuts this year, and I'm looking at Jake, we were not anticipating an additional loss in revenue. But they were they

[Sen. Ruth Hardy (Member)]: had HR one not passed, those people would have gone have gone away. They would have their tax rate was higher. The the it did you're you're right, senator Gulick, in that. If HR one had not passed, they would have had higher taxes. So their taxes were lower than they would have been had HR one not passed. Right.

[Speaker 0]: But that begs the question, if we raised our taxes on them to mitigate the the original tax cut, are we then obligated to lower our taxes? I mean, why is

[Sen. Ruth Hardy (Member)]: it okay to go up? Or My argument for doing something with h with s two eighty two has nothing to do with HR one. It is about about the pressure that we're that most of our constituents are feeling are on property taxes. And so if we can if we can raise revenue in a different way that impacts fewer Vermonters and fewer Vermonters who, by the way, have more money, then that is a better swap. And so replacing problematic revenue, more problematic revenue with less problematic revenue in order to solve the That's that's

[Speaker 0]: that I can live with. Have a problem with talking about the rich. The way if we talked about any other group, we would all be in serious trouble. I don't know

[Sen. Ruth Hardy (Member)]: if anyone's doing that. I think people are making arguments about tax policy and who it's impact. Not in this committee,

[Speaker 0]: but in the emails I'm getting. We cannot control the email. I know unfortunately. So I'm trying to have a conversation discussion about tax policy. And the discussion right now is that they did not receive a new tax cut. They received one six years ago, and the state adjusted its tax code to recoup some or all of that. All wealthy taxpayers file different tax forms. They are not all the same. We have a proposal to tax a section of income that is taxed at the federal level that, yes, the state could use additional revenue. I've got three folks that are not going to vote for tax increase. We were told yesterday that the administration did not support this, which I take is it's pretty likely to get vetoed. We can go forward, but I'm trying to find a road forward. The proposal as we have it is to raise raise this tax, and I will cede my 500,000. I was just trying to make it more of a wealth tax than starting at 250,000, which is not. That's two teachers in some school districts. And so the proposal I've had is to start it at a million or to start it at 250,000.

[Sen. Ruth Hardy (Member)]: Well, think I mean, 500 is in the middle. 500,

[Speaker 0]: think that's in the the middle.

[Sen. Ruth Hardy (Member)]: I wonder if you might consider just doing the three levels, so married, filing jointly, and single, filing jointly.

[Speaker 0]: Yes, agree with that. Understand 500. That would suggest for discussion purposes to see how the numbers played out.

[Sen. Thomas Chittenden (Vice Chair)]: So, I'll just say this. When it comes to taxation, I think we need to align with the benefit principle that where we draw the revenue source should be loosely related to what it is intended to do. That's why we have transportation revenues from the transportation system. We have income, general income taxes, generally the cost of the state. So with that being said, I don't want to raise a wealth tax just because somebody that the rich are benefiting from HR1. I do want to find ways to calibrate our revenue streams to fund the programs and services that this legislature and this governor ultimately approves. And conservative friends of mine have said multiple times that it's all about tax calibration, fairness, and finding ways to equalize things. So to say this the quiet part out loud, I would echo something about what the the chair just said, I I do I will I can support a revenue increase. I just wanna get it to a place where we have more than just Democrats vote for it because I'm also a realist. And if we can't find a rational, balanced approach that draws revenues from one area and then pulls it from another one, then this is just gonna be a democratic bill, it's gonna go along, and then it's gonna we're gonna feel good that we're, you know, drawing and funding resources, but it's just not gonna get us to where we, I think, wanna be, which is just good sensible tax policy. So I'd bring the conversation back to yesterday, and I like how you split this day apart. Are there ways to get a balanced approach to this where we incorporate other things for a grand bargain? I'll just say I see s three twelve is on next. I I know that has cost implications. I keep joking about casinos, but you you have a bill that wants to explore the feasibility of casinos in Vermont. I am hesitant on this, as I've said, but

[John Gray (Office of Legislative Counsel)]: I That raises its own revenue.

[Sen. Thomas Chittenden (Vice Chair)]: I I know. But my I would support it if a community wanted to raise their hand. It's got a

[Sen. Scott Beck (Member)]: You want

[Sen. Thomas Chittenden (Vice Chair)]: what are you saying? Phone call. Are you there? Okay. We

[Speaker 0]: don't have that bill.

[Sen. Thomas Chittenden (Vice Chair)]: Are there the same

[Sen. Ruth Hardy (Member)]: Senator, I was trying to do this yesterday with my bill, and I can tell I've been shot down so many times. And I was trying to make, you know, a a package where we could talk about things on both sides. And now you're bringing up casinos and that and it yeah. It's serious.

[John Gray (Office of Legislative Counsel)]: I can

[Sen. Thomas Chittenden (Vice Chair)]: say this. This is done. 20 is is important because I do see that as having a feasible path forward to inform the discussion and and to the chairs and points that I'd echo is conflating it with this revenue thing that there's a lot of opposition and objections to. I don't think gets us anywhere closer to to crossing a policy that's gonna get into the finish line. So I'm I'm sorry that didn't feel like that I was dismissive of that. We're looking at S-two 82, this big bill drawing from new sources from lots of different locations in a broader discussion, and I'm just saying are there things that can make this come to a place where we're balancing revenue streams, accomplishing a variety of different policy objectives?

[Speaker 0]: Okay, I'm gonna stop the discussion about motivations and I'm if what we are trying to do is find a way to raise revenue and then impact the tax, the cost that are hitting us the hardest, which is the property tax, then the cleanest way to do that is to take, I think you're gonna have to go with my 500 and we're gonna have to scale that or the other ones are you're at a million for an individual?

[Sen. Thomas Chittenden (Vice Chair)]: But an important thing that to to further expound upon possible passport, nonstarter is too strong of a word, but I do not support tax and capital gains the reasons I articulated previously. So, those are excluded in this discussion. I can, I, I'm more happy to continue? Okay. So, that's.

[Speaker 0]: Who? Catharics.

[Sen. Thomas Chittenden (Vice Chair)]: So the notion that came yesterday, if we want further down the path where we pass something that I don't see support from my Republican colleagues, but you want more than that 10,000,000 that might be defensible is right now it's at 4% starting at those four thresholds, but you could incrementally step that net income investment tax to not be just 4% of those thresholds, but phase it in at like 1% and then 2%, 3%. So that if you're making less money, you're getting what we do with other tax policies. Tax department needs things to do, right?

[Sen. Scott Beck (Member)]: Yeah. Definitely.

[Sen. Thomas Chittenden (Vice Chair)]: To get that out by the end of today, might echo the comment from Senator Beck earlier that I do see this as part of a broader and actual feasible discussion in the larger scope of how this process works for better or for worse when there's a lot of things on the table at the end of the session and we have the miscellaneous tax bill where a lot of these things get tacked onto it. So I'm fine with Martine. If

[Speaker 0]: we do that, I mean at some point today I will declare us an impasse and send us on That will end this bill as a bill. All things are able to be discussed and there is a major yield and I'm not sure where things have been attached. I know that that committee has also been having some very difficult discussions on a lot

[Sen. Scott Beck (Member)]: of these same topics. I'm hearing that fuel bill is not going to be a $1,000,000 insurance.

[Speaker 0]: No. And it's not coming attached to miscellaneous tax. So there are ways, and there's still a budget that hasn't been put together. There's issues with I believe there was 25,000,000 more in revenue from the corporate tax included in something that isn't coming in. There's some issue going on, the estimated revenues and so we don't know where the budget's gonna be or what's gonna be in or out of the budget, and that will be the end of the session. Senator Gulick.

[Sen. Martine Larocque Gulick (Member)]: Thank you. Because it's it's awkward for me to join in the conversation from Zoom. So I I appreciate you calling on me. I know we're not discussing motivations, but, I want my voters and my constituents to know that I see their pain because a lot of Vermonters are feeling a lot of pain right now. And this isn't to pick on rich people who are going to be getting tax cuts. That's not what this is about. This is about raising revenue for the folks who are suffering because of Medicaid cuts, insurance subsidy cuts, SNAP benefit cuts, inflation, high health care costs, like that is what this is about. And so I, again, would love us to work together as a team and have a little bit of cooperation and collaboration here. I know not everyone's comfortable with raising revenue in the form of taxes, but I think this is an opportunity for us to do right by our people, the people of Vermont who are hurting right now. So I would like to see one of the proposals move forward. Okay.

[Speaker 0]: Which proposal and what do we just raise the revenue, which means it will fall to the general fund and let them use it? Do we raise the revenue and switch a cost from the fund to the general? And that could also be the OPAP. OPAP. OPAP. Yep. OPAP sounds like pound to me, but I

[Sen. Martine Larocque Gulick (Member)]: would still like to fund school construction, but if we're not gonna do that, I am okay with sending this money to the general fund if we do what Senator Beck said, which is move the universal school meals over there as well.

[Speaker 0]: I've heard of it. Kirby, do you have something that we're running amok on?

[Kirby (Office of Legislative Counsel)]: No, I'm hearing a lot of things, but I don't know

[John Gray (Office of Legislative Counsel)]: which other things I should

[Kirby (Office of Legislative Counsel)]: be writing down.

[Speaker 0]: We don't have any proposal on the table right now.

[Sen. Ruth Hardy (Member)]: I can put one on the table if you want. I mean, I have one on the table, but sounds like that one is not gonna go, which is the original thresholds that were

[Speaker 0]: that are that match your proposal? Pardon me? Was that a formal motion?

[Sen. Ruth Hardy (Member)]: I can move my proposal.

[Speaker 0]: Oh, no. Remove if you made a formal motion to amend, then I don't

[Sen. Ruth Hardy (Member)]: think No, didn't, I haven't made a motion. My amendment that I presented yesterday, move on with yours and Senator Chittenden would have put it at the same levels as the federal threshold.

[John Gray (Office of Legislative Counsel)]: Right. They require about regular light. Sure. It's the amount of.

[Speaker 0]: Okay. And

[Sen. Ruth Hardy (Member)]: then the yours would be at 500,000. So that's, yours is the middle one. So it seems to me that that's where we look for compromise. And, but this is just compromise between the three of us and potentially set and it sounds like senator Gulick. So I don't know if that's enough for you, but I would propose that we do the 500,000 with the- with three thresholds, though, that, you know, kind of the equivalent thresholds that are in the original bill. So, filing single, married, filing jointly, filing separately, and they're usually

[Kirby (Office of Legislative Counsel)]: 500,000 would be the married?

[Speaker 0]: Yeah. Yeah. Married filing jointly. And then you would move That's where you're in the income.

[Sen. Ruth Hardy (Member)]: And then, what I'm hearing from Senator Chittenden is he doesn't wanna do capital gains, but that would that would take away a lot of the revenue, if we didn't do that. But I'm also hearing from you a sort of Tiered. Tiered kind of thing, like two, four, six kind of thing. So do you need to have both, or do you would you be okay doing one of those, doing the tiered but including capital gains? Because

[Speaker 0]: also we have presently have 40% capital gains. That was the discussion yesterday. Exclusion.

[Julia Richter (Joint Fiscal Office)]: Right. Well, that's excluding Brownsburg.

[Speaker 0]: State income State income tax. So, I mean,

[Sen. Ruth Hardy (Member)]: we could do a similar kind of 40% exclusion on these capital gains. I don't know if that's workable. I'm looking at the two tabs guys over there. Like, we have a similar I asked him.

[Kirby (Office of Legislative Counsel)]: We could draft. Yeah. Not that he wouldn't be doing his draft anymore.

[Julia Richter (Joint Fiscal Office)]: Well, no. That's I know he would

[Jake Feldman (Vermont Department of Taxes)]: know. But

[Sen. Ruth Hardy (Member)]: but, like, if the tenants that aren't been administratable, it would be the same 40%, you know? So we could do a 40%, which be on

[Speaker 0]: the tax exempt senator Chittenden with what

[Sen. Ruth Hardy (Member)]: we have now. And then we could do just a- a 4%, and that would potentially still make it real money. But, but it would, you know, not be as much capital gains. And it would only be anything- there's still the 500,000 threshold, so it wouldn't catch everybody's capital gains because they would have to be So

[Kirby (Office of Legislative Counsel)]: if you wanted to be drafted like an exclusion, it would mean that fewer taxpayers would hit that threshold. Correct. Then it would become marginal from there. So it like, if someone had 350,000, which is what the the income tax exclusion, the tax on.

[Speaker 0]: Mhmm.

[Kirby (Office of Legislative Counsel)]: So let's just use that example. 350,000 of capital gains excluded. Let's say you had a million just to My 50. Yeah. Yeah. And let's say you're married, so I'm getting the 500,000 threshold. So you take the $3.50 off of it. This helped me with the math. The $6.50, that's not excluded. So that's 150 over the 500, which could be subject to tax.

[Sen. Ruth Hardy (Member)]: Yeah. At 40%.

[Kirby (Office of Legislative Counsel)]: And you would and and if you do the marginal rates, we then we have to figure out of that 150 at what point would you hit the new rate?

[Sen. Ruth Hardy (Member)]: Right. I guess I would say that if we did the marginal if we did all those things, maybe we don't need the marginal rate. I don't I don't know because it it starts to just whittle it so much that there's not much there. So, What do you think, Thomas? Or Senator Chittenden?

[Sen. Thomas Chittenden (Vice Chair)]: I ask a question to Kirby. I just wanna make sure I'm understanding what we we are this bill does. I think it does it this way and it trained around Minnesota. I under this is what I understood. Minnesota million dollar tax or 1% to fund universal meals was just on these past income sources. So if somebody has a salary that they made $304,100,000 dollars, like this, a salary, so not passive income, that would not be included in the million threshold. Is that correct?

[Sen. Scott Beck (Member)]: So the the Minnesota so Pat, sorry. I'm trying to stop this.

[John Gray (Office of Legislative Counsel)]: The Minnesota threshold is a million on investment income.

[Sen. Thomas Chittenden (Vice Chair)]: Investment income. Is our what we're contemplating right now the same or what we're considering regular income and then above it.

[John Gray (Office of Legislative Counsel)]: This is modified adjusted gross income, which is just ADI and bunch of the foreign.

[Sen. Thomas Chittenden (Vice Chair)]: So so then I I wouldn't support that. What I do support is if this was just on passive income, those net investment income, the income that you don't have a job where you're getting paid hourly, you're working hard for benefits, this is just that type of revenue, then I I do support having some revenue drop from that to pay for kids

[Kirby (Office of Legislative Counsel)]: in

[Sen. Ruth Hardy (Member)]: schools. That's what this is. It's not investment income. That's what the that's what $2.82 is. That

[Kirby (Office of Legislative Counsel)]: clarification on Pat, you grabbed the capital.

[Speaker 0]: Let's let's let's let's let's if they're doing it to amend it. Does it happen?

[Sen. Scott Beck (Member)]: Let's It let's let's didn't look happen. What about salaries? Salary.

[Sen. Ruth Hardy (Member)]: None of them for both. No. Ours doesn't either.

[Sen. Scott Beck (Member)]: Okay. Yeah.

[Sen. Ruth Hardy (Member)]: Ours is just the passive income as well.

[Sen. Thomas Chittenden (Vice Chair)]: That's what I wanted to get. Yes.

[Speaker 0]: So it's not anyone that has a 100,000,000 in passive income, but we were talking about income levels. Some you started at I thought it was with an adjusted gross income of 2 and

[Kirby (Office of Legislative Counsel)]: Yes, 50 so again, how it's structured is it's the lesser of two different thresholds. One is all of your investment income or the amount that exceeds that threshold. So if you set up 500,000, that means that the lesser of anyone earning less than 500,000 for any source of income, this is modified adjusted gross income, not paying for to be specific. If you set it at $500,000 then any taxpayer who has less than $500,000 would never be subject to this. It starts to become a question when they have that investment income, as in interest, dividends, capital gains, risks and royalties, non qualified annuities, etcetera. They have that income, plus they exceed the $500,000 and then it will be the lesser of the two. So if you only exceed it by $10,000 then that would be the lesser, and that's how, that would be 4% of 10,000 on gross. If you have a lot of wage income, but you only have a little bit of investment income, the lesser of could be the investment income. You could have $1,020,000 dollars in investment income and then the rest,

[John Gray (Office of Legislative Counsel)]: you know, So so it's it's the

[Kirby (Office of Legislative Counsel)]: lesser of those two things.

[Speaker 0]: Okay. If I were filing at 250,000 or a 100,000, but I had 500,000 in investment income, that doesn't show up, right? If

[Sen. Scott Beck (Member)]: you had 500,000

[Kirby (Office of Legislative Counsel)]: in investment income and about

[Speaker 0]: 100,000 in wages? In wages, yeah.

[Kirby (Office of Legislative Counsel)]: Then you would exceed the 500, unless you say your modified adjusted gross income is a total of 600,000, so you would exceed the modified adjusted gross income threshold by 100,000, your investment We income will

[Speaker 0]: are taxing it now as part of my, that passive income is being included

[Kirby (Office of Legislative Counsel)]: For

[Speaker 0]: income tax? For income tax. Yes. Okay, so this would be saying whichever is

[Kirby (Office of Legislative Counsel)]: You have a, in your example, under the way that you're discussing this investment proceeds tax would result in 100,000 of that being taxed at an extra 4%. Okay.

[Sen. Thomas Chittenden (Vice Chair)]: Extra because it's already Because it

[Speaker 0]: will be five In addition, will

[John Gray (Office of Legislative Counsel)]: be the five. I thought it be Okay.

[Sen. Ruth Hardy (Member)]: But it's a lesser of, so you can be taxed on the the smaller amount.

[Sen. Thomas Chittenden (Vice Chair)]: I don't think I I so this is gonna be on top of what we already have as a pretty progressive and fair tax rate. And so that's 8.75% up there, and then this would be the 4% on top, and then you can do the effective rate. But we're talking about getting to be is that would that be the highest state income tax in the country?

[Speaker 0]: No? What's that? It doesn't go on your income.

[Sen. Thomas Chittenden (Vice Chair)]: California. Okay. So we'd second to California?

[Sen. Ruth Hardy (Member)]: It's No. It's not income tax. And

[Sen. Thomas Chittenden (Vice Chair)]: so this is a form of income. This is It is.

[Sen. Ruth Hardy (Member)]: But it's not it's not for it's not an apples to apples comparison.

[Sen. Scott Beck (Member)]: That's earned not earned. Okay.

[Kirby (Office of Legislative Counsel)]: Not earned. It's a different tax base than the income tax. So Yeah. But it would be hard to compare.

[John Gray (Office of Legislative Counsel)]: But that income is taxed at the income tax rate and then also at the 4%?

[Kirby (Office of Legislative Counsel)]: Yes. They overlap. It's just not the same exact tax base.

[Speaker 0]: Okay. So on a portion of your income, it would be an extra 4% tax.

[Sen. Thomas Chittenden (Vice Chair)]: And only one other state has done this, hasn't it? Minnesota.

[Sen. Scott Beck (Member)]: Yeah. Go, okay.

[Jake Feldman (Vermont Department of Taxes)]: Yeah, just clarifying something, Jay Feldman Tax Department, Minnesota does it. They have the same income thresholds for MAGI as the federal, but in Minnesota, you need to have at least a million dollars of this before you start paying tax.

[Sen. Thomas Chittenden (Vice Chair)]: Joint filers? Anybody. Joint filers or single filers or

[Jake Feldman (Vermont Department of Taxes)]: Yeah. All the filers. This is federal, but I think any type of filer would need to have a million dollars of this specific company.

[Speaker 0]: Okay. So if he only has a thousand million, or something around in there, I think we can assume that not all of them are making their billion on investment income. We're at a small tax base on this one. I'm feeling I was reading the statistics, like, I think it was Arizona has seven almost 75,000 millionaires. That's a very different tax base that we have, you know, and I'm just wondering at what point we we reach impasse.

[Sen. Thomas Chittenden (Vice Chair)]: I'm here close to there, but

[Speaker 0]: Okay.

[Sen. Thomas Chittenden (Vice Chair)]: Patrick's point, the actual numbers, I have nine seventy two filers would be affected by 1,000,700, 500, 100 rates. Do you have in your mind at all, of the nine seventy two, what percent of those filers would have been the joint filers at the million versus the 700 versus the, joint that I had filed separately?

[John Gray (Office of Legislative Counsel)]: I could estimate it, but That's important. What are

[Jake Feldman (Vermont Department of Taxes)]: we talking? I I haven't. No. And I could.

[Speaker 0]: No. It's it's fine. It's theory. I in ten minutes.

[Sen. Thomas Chittenden (Vice Chair)]: Things are not that. This is a artist the artificial construct that we use to guide policy decisions, and I I'm I'm happy to stick here all afternoon and keep diving into this, but I'm also I've been a heck of a long feet, I'm also happy to just declare impasse and just pick this up as we go forward into the session.

[Speaker 0]: I think I'm reaching the point of impasse on this one. This is a tax. We will have other tax bills coming. We might be able to find a more elegant way or simpler way to do this.

[Sen. Randy Brock (Member)]: But ideally, through long term, what we should also be doing is we should be measuring the income that we get from actions like this versus the income we lose or potential income we lose based on the efforts that we spend to bring people to Vermont. We have a number of programs that are focused on bringing wealthy people to Vermont. The reason we do that is because they give a much larger contribution to paying for things like schools and healthcare and so on. For every one that we can bring, you look at the numbers that we're looking at right now on the tax program of who pays what. I'm just very concerned that we don't shoot ourselves in the foot in the process that we're checking.

[Sen. Ruth Hardy (Member)]: I think that is not that is a not fair way of looking at it because people who have lower incomes are spend a higher percentage overall of their income on both on taxes and also spending locally in our local economy. Mhmm. And investing in our local economies in a way that is as valuable. And it's it's in a really elitist approach to be like, all we wanna do is is attack attract rich people. Oh, no. It's not that I'm not

[Victor (Committee Assistant)]: saying I'm not saying that all. What I'm saying is a practical matter that we are interested in tax revenue and getting as much tax revenue as we can in the easiest way that we can that makes sense. Getting tax revenue from rich people is just as good as getting tax revenue from poor people, and we don't get as much tax revenue. I'm being very practical. I'm saying that

[Julia Richter (Joint Fiscal Office)]: That's kind of my I

[Sen. Ruth Hardy (Member)]: have been understanding that. They're talking about not wanting

[Speaker 0]: to tax rich people. I don't think that's but if you if I spend 10% of my revenue, you figure the top 7% contribute 50% of the hard cash, it's maybe, well, a lesser percentage of their income than it is of mine, it's still hard cash that's coming in to We the need a balance. We need people that work and we need people that invest and create jobs. And we wanna be

[Victor (Committee Assistant)]: in a position, ultimately, if you look at a goal from a tax policy, we wanna be a tax state that is not a high tax state for anybody.

[Speaker 0]: Would be good. Are we at an impasse on this? Have not gotten my fourth vote, so I'm gonna declare us an impasse. I'm gonna give us a fifteen minute break to go walk up and down in diffuse, and then we're gonna see if we can we have not been able to get veggie or phepsa over here to talk about three twelve. That is the last pill I've got to try and get out. I'm not sure we're going to, but let's take the ten