Vermont Legislature SmartTranscripts:

[Sen. Ann Cummings (Chair)]: We can order a bed. I ordered. So we are now live. It's April 30, and April showers are hopefully gonna bring some May flowers, and we're here with Elizabeth to talk about H nine fifty five. Thank you for your time today.

[Bethany James, Office of Legislative Counsel]: Good afternoon, Bethany James, office of legislative council. So I understand that we only have about half hour to go through the first 60 plus pages of H nine fifty five. So what I propose we do is go through a section by section summary that I just put together in the last stop card of the as passed by version. How does that sound?

[Sen. Ruth Hardy (Member)]: That sounds great.

[Bethany James, Office of Legislative Counsel]: And then if we wanna look at the actual language in nine fifty five, we can switch over. Great, Addison.

[Sen. Ruth Hardy (Member)]: I'll ask the vice chair a quick question.

[Sen. Tanya Vyhovsky]: How come we only have a?

[Sen. Ann Cummings (Chair)]: Oh, we had to compress it. Elizabeth sorry. Beck and White's. He's pretty involved.

[Sen. Ann Cummings (Chair)]: Okay. Can you print me? That's okay. Thank you.

[Bethany James, Office of Legislative Counsel]: So I am I'm just gonna start talking, you all call me when you stop. Okay. So I was responsible for the first 29 plus sections. And I believe you've heard walk throughs of all the other sections of bill. Is that correct? Finance and think that's our section. Okay. Reconstruction aid. Okay. Section one is a bit of legislative intent. The first bullet for this is directly from the bill. The first bullet point here, taken directly from Act 73, and then the new legislative intent, I'll let it in the interest of time. Section two is a large substantive section. It amends the entire chapter 10 in title 16, which is currently your VOCES chapter, Boards of Cooperative Education Services. One of the changes or one of the amendments in section two throughout the entire chapter is to change the term Boards of Cooperative Education Services to Cooperative and Education Service Areas, or CESAs. Yes. So, I am not going to, this section by section, just notes at the very beginning that changes, it changes the boards, it changes both these diseases throughout the entire chapter. So if you were to pull out nine fifty five, it's many, many pages. The vast majority of those changes is just the name change. We're used to those kinds of Rates. The substantive changes start in section six zero three. So right now, current law has BOCES, formation of the BOCES as a voluntary process. Supervisory unions get together. They talk amongst themselves. They decide to form a cooperative. They go forward. What h 90 what h nine fifty five does is takes the voluntariness out of it and creates seven CESAs in statute. We know we have one OC CESA. Are there any others in process? I can't speak in process, but there are no There are no others. There are no others. And in my journey on this bill, have heard no testimony that someone's in the middle of forming a POSA.

[Kirby (Office of Legislative Counsel)]: Is it crystal clear in the intent and the construct of this mandatory formation of the CISAs that that does not qualify as the condition to enable the foundation formula to proceed that I understood in Act 73?

[Bethany James, Office of Legislative Counsel]: Yes. The CISAs are not the foundation formula in any way, shape, or form. Thank you. So, section six zero three removes all the language that describes how you voluntarily form it and replaces it with CSO one, the name of the CSO and then the member supervisory unions and their member supervisory or their member school districts. It keeps our current post these, the Vermont Learning Collaborative membership intact. It does not change their membership in any way.

[Sen. Ann Cummings (Chair)]: And that's a So that's

[Bethany James, Office of Legislative Counsel]: the one down in Hartford. Correct. I don't know where it is, but it's down in the Southern Hartford. Hartford. The other main substantive change to the seesaws and BOCES sections are that right now current law says BOCES can provide any services their members deem desirable or need. H95 keeps that concept, offers some examples of what those services could include, including professional development, curriculum coordination development, and transportation, And then requires that at a minimum, CSAB has to offer services in special ed, business and admin services, and union school district creation consultation and facilitation. It's an offer. The members do not have to use those services. So, they can provide whatever services their members need, but they have to at a minimum provide those three services. Then the rest of the changes to the infections or the name change complaint. Section three, River Hills, part of your BOCES enabling laws, act 168 from 2024 that required a report back to you all with how many go seats had formed. That's no longer necessary because now you are forming them in in h nine fifty five. So we're repealing that reporting requirement. Section four, there's currently a start up grant bless you. There's start currently a start up grant program. It's $10,000. H nine fifty five is passed by the house, keeps the start up grant program, ups the amount of the grant from 10,000 to 15,000, and makes an extra appropriation for the extra 5,000 that's needed to get to the total necessary to give all of your six new seesaws $15,000. So that's $30,000. And that's in the budget? Yes. So there's all of the appropriations in the sections that we're about to go through except for one, which I will point out, are made allowable uses of the Act 73 Education Transformation appropriation that was amended in section C103 of the budget. So you made the appropriation for these funds last year in Act 73. It was the chunk of money that went to AOE. The budget amended that appropriation, not the amount, but the allowable usage of it. And all of the appropriations in at age nine fifty five is passed for the house except for one, which I don't want to know, come out of that chunk of money, the Act 73 Education Transformation Plan. And it all flows through AOEs. Sections five through 11 make conforming amendments to everywhere else in the green books that you have the term MOSIS, and we've replaced it with CSOF, so no substantive changes. Section 12 is the transition for having CESAWs get up and running. So, it requires each supervisory union member of a CESAW to appoint a person to serve on their seesaw board within thirty days of passage of the act. It requires each seesaw to call a meeting of the directors and elected chair and other necessary officers within forty five days of the passage of this act. And we added some language here that specifies that the Vermont Learning Collaborative, our only current BOCES, there are articles of agreement that are in effect as of 06/30/2026, can serve as the operating agreement unless they amend them in the future. And the meaning behind this language is to make it clear that they can continue as they are. They don't have to make any changes to conform to any of the changes we've made in chapter 10. Are we good? Keep Okay. Section 13. This is the section that lays out the study committee process. So just to level set, chapter 11 of title 16 is the chapter with all of the laws that govern union school district formation and governance. It's all in it's all in the books. It's all in current law. Section 13 is asking the Remote Learning Collaborative, our one current BOCES, now Seesaw, to hire seven facilitators and one lead facilitator to oversee those facilitators by October 1 to organize and facilitate study committees to study the advisability of forming a unified union school district. So use the current law process that we used in Act 46, and that we used prior to Act 46, any union school district formation, the study committee process. You're gonna be put on a study committee, every school district in the state, and we'll talk about what they have to do. The facilitators are required to have knowledge of and experience working in Vermont Public Education System, and we're going to use those seesaw membership regions just as a dotted line within which each facilitator is working. The study committees. On or before December 1, the facilitators have to assign each school district to a study committee. In that process, they have to consult with school boards. They have to use the suggested groupings from section 14 that we'll get to and guidance. They have to take into consideration grand list values, and they should be grouping folks together according to the following criteria. The aggregate ADM of participating districts should be about 2,000. Participating districts should be contiguous, and they may be members of different supervisory units. And then also by 12/01/2026, the study committees are required to hold their first meeting. Notwithstanding any other provision of law, school districts are required to participate in the study committees, but there is no required outcome. Study committees are required to follow Title 16, Chapter 11, and we're about to walk through some either augmentations to Chapter 11 or some deviations. So, study committees may work with the facilitators to adjust committee membership as necessary. So, the facilitators are gonna plunk you onto a study committee, and if you start your work and you realize, gee, one of the members of our study committee should really be on that other study committee, or we think that we only work with someone else from that other study committee, so facilitators can make adjustments as necessary. Study committees under current law, your budget is allocated, the budget for the study committee to do their work is allocated to each participating school district according to ADM. And we're gonna give the GA, and the general assembly is gonna give these folks money and the facilitator. And if that's not enough, then they would just follow current law for study committee budgets. In their study committee discussions, they have to explore the advisability of whatever new unified union school district that might be formed operating a regional middle or high school or both. And then there's really two possibilities here. Study committee either determines it's advisable to form a new unified school district or it's inadvisable. If the study committee determines it's advisable, they have to issue a final report and proposed articles of agreement. Their final report has to include what current law requires of it, and is also the educational advantages and disadvantages of the proposed new union funding in school district, financial advantages and disadvantages, likely operational and financial viability and sustainability, and any other advantages or disadvantages, including any advantages or disadvantages to the student and taxpayer's position in the state. If the study committee determines it's inadvitable to form a new UUSD, they also have to draft a final report. Once their final report is done, they're disbanded, they're docked. Their final report has to include names of persons being in school districts, an analysis of the strengths and challenges of the current structures of necessary and advisable districts, reasons why forming the new DUSD would be inadvisable, including reference to the law or rule that's an impediment. And if it's not a unanimous decision, what's the minority views analysis? And then their report would need to go to their member school districts. And then if its study committee determines it's inadvisable to form a new UUSD, once the study committee dissolves, those school districts can go on to do whatever they want. They can stay as is. They can form new study committees to pursue different configurations, etcetera. Final reports from these study committees are due on its first member school boards before 12/01/2027, so that gives them a year. The next step in the process is that school boards are required to complete review of the final reports on or before February. The next stop is the secretary is required to review final reports and proposed articles of agreement, and then transmit recommendations and the proposed final report to the state board. There's no time limit in current law as to how long the secretary has to do this. H-nine 55 gives the secretary either sixty days of receipt of the report or 04/01/2028, whichever date occurs first. If the secretary has not finished the secretary's review and made recommendations by either of those timelines, then the study committee can bypass the secretary and go directly to the state board with their final report. And the State Board can continue without waiting for the Secretary's recommendations. And then the State Board is required to issue their final findings on a report June. No union school district is formed without the voters approving it, and so the vote to form a new union USD, if any of the study committees make it that far, has to occur on or before 11/07/2028, which just so happens to be election day.

[Sen. Ann Cummings (Chair)]: Okay. If no one know inertia is a strong force, if no one decides to form a newer, larger district,

[Bethany James, Office of Legislative Counsel]: it's kind of financing, base school financing. It was staying with the present system and raising property taxes? The contingency that is tied to this process, the section 13, is that school districts have to have an opportunity to study the advisability of forming a new unified union school district. And I've been asked, well, what does that mean to have an opportunity? And I guess I would have to wait and see. But, you know, absent an act of nature that prevents folks from actually coming to the table. Yeah. Right? There's going to be that app or that opportunity. And then the second part of that contingency is that if the study results in a vote, those votes the results of those votes have to be certified by the clerks. So the contingency that's tied to the study committee process is essentially that the study committee processes have a chance to play out. It is not tied to any specific results of the study committee process. So assuming that the study committee process has an opportunity to play out, we don't have another global pandemic, there's not an earthquake that splits us into four quarters. Or expect. Whatever. Sharknado. This is where we are in session. It is.

[Sen. Ann Cummings (Chair)]: Y'all The

[Sen. Ruth Hardy (Member)]: slippery slogan.

[Bethany James, Office of Legislative Counsel]: Then assuming all the other contingencies for the foundation formula have been met, the foundation formula would take effect even if no study committees resulted in a union school district for me.

[Sen. Ann Cummings (Chair)]: I will note that that in and

[Sen. Ruth Hardy (Member)]: of itself is an incentive for the districts to merge because it would be difficult for some of the very,

[Sen. Ann Cummings (Chair)]: very smallest districts to to manage the foundation. No.

[Bethany James, Office of Legislative Counsel]: Do you wanna keep going or do wanna Yeah. Okay. Okay. Guidance for study committee groupings. The the house produced two maps. The first map is the seesaw map, and the second map is this guidance map. The section 14 says facilitators, you have to use these groupings as guidance when forming study committees. Your study committee membership can vary from this guidance. You just have to give a a rash now for why you're why you're not following what's in section 14. Section 15 requires the lead facilitator to give you all a final report with the final outcomes and whether study committee results were impacted or influenced by certain topics, such as staffing costs, geographic and topographic barriers, enrollment patterns and projections, etcetera. Section 16 asks AOE in consultation with the study committees and the state board to give you a report with recommendations for any supervisory union boundary adjustments or seesaw boundary adjustments based on any new union school districts that are formed pursuant to the process we just walked through. Those final reports are coming to you in January 2029, which is after the final vote has to

[Sen. Ann Cummings (Chair)]: occur in November. Is there any requirement in here that CESAs either save money or that they report that they have or how they will be saving money?

[Bethany James, Office of Legislative Counsel]: There's there's no re there's no specific requirement to that. H nine fifty five is passed by the house largely keeps our current BOCES law intact, which does require financial reporting requirements and report to be going to the member SU boards. But there is no final reports or not final since they're now in perpetuity. There's no reporting requirement of an analysis of cost savings.

[Sen. Ann Cummings (Chair)]: We may.

[Sen. Ruth Hardy (Member)]: I don't know if was a great mind about this question, but and you may not be able to answer it. But I am curious how fleshed out the, like, the bones of the foundation formula will be when all of this happens just because I would imagine as they're contemplating these districts, they're gonna wanna be able to model the ramifications of Well their decision making.

[Bethany James, Office of Legislative Counsel]: Then section 18 a, good for you. Great. On or before 10/01/2027, the Department of Taxes is required to publish on its website an interactive calculator.

[Sen. Ann Cummings (Chair)]: Oh, nice.

[Kirby (Office of Legislative Counsel)]: This is what the This is what Rebecca said. Yeah. She has no idea.

[Sen. Ann Cummings (Chair)]: Oh, yeah. Uh-oh. Yesterday. Yes. Yeah.

[Sen. Ruth Hardy (Member)]: And then she She personally or she's testifying in Testifying

[Sen. Ann Cummings (Chair)]: in here.

[Kirby (Office of Legislative Counsel)]: Did you drop this out? The floramen at two end of it. I'm just I I sent it to John.

[Bethany James, Office of Legislative Counsel]: Yes. I'm sorry. She was

[Sen. Ann Cummings (Chair)]: a floramen witness. She didn't know what it meant. Okay. But I don't think she has money to set one up Unless we mean the one they have, but the one they have is not set up for seasons.

[Bethany James, Office of Legislative Counsel]: Then perhaps we should not spend our time going over this calculation. Okay.

[Kirby (Office of Legislative Counsel)]: So, Kirby Gulick said to counsel, my understanding of her testimony was that she'd like to have further discussion with this. Yeah. To your point, if I may. Yeah. I agree this could be critically useful for people to see to model what that that supervisor, I mean, could effectively save them and have that lot of money might be better viewed. So I do think it's valuable, but I do think that timeline 2027 fights the tax part of that. Yeah. Very nice.

[Sen. Ruth Hardy (Member)]: To be honest, I was thinking just the business offices would be doing it themselves. I was hoping that the foundation formula was like full enough and fleshed out enough that they'd be able to run those numbers. A lot of them are already running those numbers.

[Kirby (Office of Legislative Counsel)]: It's not that hard to number.

[Sen. Ann Cummings (Chair)]: No. Yeah.

[Sen. Ruth Hardy (Member)]: That's why I

[Sen. Ann Cummings (Chair)]: don't Add up

[Kirby (Office of Legislative Counsel)]: the long term weighted EM multiplied by end of the foundation. That's sounds all you have to do.

[Bethany James, Office of Legislative Counsel]: I think it depends on the choices you make next year when you get the JFO report back and the work that the legislature does in response to that report and the policy choices you make next year. Section 17 is a bunch of appropriations for the study committees to do their work, for the facilitators to be hired, and for CSAS to put some amount of money towards hiring their first executive directors. All of the appropriations in section 17 are an allowable use of the Act 73 Education Transformation Funds. They are not new appropriations. Okay. But they are a whole lot of new positions. No new position? No. But I mean, well,

[Sen. Ann Cummings (Chair)]: into the education system, we are adding new employees.

[Bethany James, Office of Legislative Counsel]: The facilitators are contemplated to most likely be contracts. Okay. Contracted. So there's no there's no positions created in school districts or supervisor unions. It's possible that the Brookmont Learning Collaborative could hang on to a facilitator or two if they see a need for that, but that is already within their power under current law. I see my time is almost up.

[Sen. Ann Cummings (Chair)]: Okay, we have been hit

[Kirby (Office of Legislative Counsel)]: with

[Sen. Ann Cummings (Chair)]: a whole lot of slower maintenance. Okay, do you

[Bethany James, Office of Legislative Counsel]: want me to just keep going? Keep going. Okay. Let's see. So I'm gonna skip over the calculator. Already

[Sen. Ann Cummings (Chair)]: figured that as an issue.

[Bethany James, Office of Legislative Counsel]: Section 18 is the amendment to section 70 of act 73, and I think John went over this in detail when he did the walkthrough of his section. These are all of the contingencies for the foundation formula. Okay. Do you wanna go over any of them now or no

[Sen. Ann Cummings (Chair)]: doubt We at this will get into that in Okay.

[Bethany James, Office of Legislative Counsel]: Reader assistance headings are particularly helpful going forward. Sections nineteen, twenty, and 21 are related to pre kindergarten education. Section 19 is findings. Section 20 is legislative intent. I will let them speak for themselves. Section 21, and you can see I just cut and pasted some language. It didn't clean it up at all for you. Let's see. It requires DCF, Building Bright Futures and AOE to establish a system to jointly monitor pre k. It requires Building Bright teachers to submit a report to the general assembly on or before December 1 with information on the work that they are doing under their federal preschool development grant. It requires and it requires to hire a contractor to conduct an updated cost of care analysis to account for pre k within the education finance system. And that report will be due back to you on or before 12/15/2026. And this is the one appropriation that is not accounted for in the education transformation. This is $75 to JFO to hire that contractor from the general fund.

[Sen. Ann Cummings (Chair)]: Is that in either budget? I'm sorry? Is that funding accounted for in either the House or the Senate funds?

[Bethany James, Office of Legislative Counsel]: My understanding is that in the House, there was some money left over on the bottom line, and this money was going to come out of that. So, it wouldn't I don't know if it was accounted for. Section 21 a amends the pre k statute, section eight twenty nine of title 16, to require a district to report annually to ALE the number of hours of pre k education, essentially, that they are paying for for each child. So, through the provision of publicly funded pre k within their public education system,

[Kirby (Office of Legislative Counsel)]: or

[Bethany James, Office of Legislative Counsel]: if they're paying tuition, whether that's to a private provider or another public program, how many hours are they paying? Okay, you can Data collection. This is an amendment to section forty ten subsection c, which is this is your waiting statute. Right now under current law, the change was made in act one twenty seven that basic that basically says, if you pay tuition, in order to get the demographics for your waiting categories for your tuition students, you may request that information from the receiving schools. And if you request that information, the receiving schools have to comply. But there was no requirement that the school districts actually request that information. So this language says, this amendment requires school districts to require each resident student in pre k through 12 on whose behalf the district pays tuition to complete a form to obtain that necessary information for the waiting categories. Section 23 is a whole bunch of legislative intent language that basically says in any funding reform you undertake, will make sure that you are not going to put our federal funding at jeopardy and you're going to make sure that we're not violating maintenance back or requirements. You note that. Section 24 is an amendment to Section eight twenty eight in Title 16. This is the statute that tells school districts who they are allowed to pay tuition to, and it prohibits a school that is eligible to receive tuition pursuant to that section from requiring tuition or fees of any kind from student attending school above the amount the school district pays. And it prohibits public receiving schools from requiring tuition or fees of any kind from above the amount a school district pays for both their resident students and their tuition students. And then section 24 a is legislative intent. That section 24 takes effect on certainty. Section 25 is an amendment to section seven zero seven of title 16 that amends the amount of a study committee budget for Union School District exploration that the study committee would have to seek voter approval for. Current law requires if the study committee budget is $50,000 or more, they have to get the approval of their voters, and it has bumped that

[Sen. Ann Cummings (Chair)]: up to $500,000

[Bethany James, Office of Legislative Counsel]: Sections, the next number of sections are all rulemaking forms and reports. So section 26 requires the education quality standard rules to be updated by the state board to identify the criteria schools that we determined to be small by necessity or scarce by necessity. And we're asking for those rule updates to be consistent with the work already done by the state board that was presented to you earlier in the year. Section 27 requires the agency, this should be the agency, not state board, to update the district quality standards to establish intra district budgeting guidelines. Section 27A requires the agency of education to consult with FASBO, Superintendent's Association, School Boards Association to complete rulemaking updates that was required of them under Act 183, the yield bill, to include recommended reserve fund account standards in the district quality standards. And section 27B is a report back to you all from the Agency of Education related to transportation. The first chunk asks for information and the second chunk asks for recommendations. In the interest of time, I'll let that language speak for itself. Section 27C is the creation of that student profile form, which is the form that districts, studying districts are not going to be required to have their tuition and students fill out. Section 27D is a requirement that the state board update the length of school day rules to establish criteria for the length of the school day that is consistent with the definition of school on or before 03/31/2027. I believe John and Kirby went over this when they walked through those sections, but this is a concept you are going to see repeatedly from here on out, every time we want to amend the foundation formula. And that is, if you want to make a change to law that has not already taken effect, there's no easy way to do that, and so sometimes we just have to repeal what you did previously and put it back in there with the new changes, and that's what we're doing here. So we're repealing the small schools, sparse school support grants that you passed last year in Act 73, putting it back in here with a few small changes. Those changes are instead of the state board being the entity that determines whether a school qualifies for the grant, it's now AOE, and added language to clarify that these grants only apply to public schools. And section 29A, is the last section I'm responsible for, got a question.

[Kirby (Office of Legislative Counsel)]: On that last one, Beth, does it still have the language last year that the that sparsity was gonna be determined by ZIP code and not district boundaries?

[Bethany James, Office of Legislative Counsel]: It asked if she well, let's look.

[Kirby (Office of Legislative Counsel)]: Last year, didn't we say it was by ZIP code?

[Sen. Tanya Vyhovsky]: Not Yeah. I'm trying to remember where we put

[Sen. Ruth Hardy (Member)]: it up because it was that was a thing we went around and around.

[Bethany James, Office of Legislative Counsel]: Yeah. Yeah. Yeah. Okay. So I'm gonna stop during my screening, and then we'll

[Sen. Ann Cummings (Chair)]: be able to share sparse tab in the very guest. Yeah. So

[Bethany James, Office of Legislative Counsel]: this is the statue.

[Kirby (Office of Legislative Counsel)]: Yeah. Alright. Okay.

[Bethany James, Office of Legislative Counsel]: Sparse. Here's here's what Act 73 did and what h nine fifty five as house does. Sparse area means a city town or incorporated village where the number of persons per square mile they're residing within the land area of the geographic boundaries Okay. From incorporated village. So no ZIP code.

[Sen. Ruth Hardy (Member)]: Yep. I think the ZIP code was problematic because they Okay. We need over

[Sen. Ann Cummings (Chair)]: But it's no longer school. Yes. Catalyst has, like, five.

[Sen. Ruth Hardy (Member)]: Yeah. Exactly. Yeah. So Yeah. Do remember that conversation went around, Cheryl.

[Sen. Ann Cummings (Chair)]: Yes. It went around. And then

[Bethany James, Office of Legislative Counsel]: the last section that I am responsible for is section 29 a, which is an amendment 16 BSA section 11, which is the master definition section for title 16. And section 29 on a adds definitions for the following terms. Average class size, class content area, full time equivalent, school, school day, student, and teacher record.

[Sen. Ann Cummings (Chair)]: Those are not in our jurisdiction.

[Bethany James, Office of Legislative Counsel]: K. Thank you. You are welcome.

[Sen. Ann Cummings (Chair)]: Maybe I have not seen standard of a host. You might know that I'm getting Okay. There. I'm We don't have much. Alright.

[Sen. Tanya Vyhovsky]: Did senator behold see email all of you or Jen? Don't

[Sen. Ruth Hardy (Member)]: think I

[Sen. Ann Cummings (Chair)]: can see. None of your we are trying to find where we

[Sen. Tanya Vyhovsky]: can find a copy

[Sen. Ann Cummings (Chair)]: of your amendment. I know I don't think I saw this morning's amendment.

[Sen. Tanya Vyhovsky]: I emailed both of them to you, madam chair, yesterday. Okay.

[Sen. Ann Cummings (Chair)]: This morn okay. I think I sent it. No. That's it. I did Also

[Sen. Tanya Vyhovsky]: going to be fairly simple.

[Kirby (Office of Legislative Counsel)]: I I just sent it to Charlotte.

[Sen. Ann Cummings (Chair)]: You sent it to Charlotte? Okay. Then we can get it up and not be helpful. So I'm still looking for this email.

[Kirby (Office of Legislative Counsel)]: Alright. Do you want Senator Viegovskiy to give an interrupt?

[Sen. Ann Cummings (Chair)]: Yep. Oh, goodness, we can get it up. But this is a long and complicated, and quite frankly, I think half of this amendment belongs on the education bill because it deals with the second homes tax. Here we go. Yield bill and some sun bills.

[Sen. Tanya Vyhovsky]: But this is a miscellaneous tax. The yield bill amendment was this morning?

[Sen. Ann Cummings (Chair)]: No. This was second home tax. Okay. I just

[Sen. Tanya Vyhovsky]: As long as you have the right amendment in front of you. I have two yesterday. One was to the yield bill, which we did this morning.

[Sen. Ann Cummings (Chair)]: Is is property dollar equivalent, That was a dollar equivalent? Is it I don't think so. Morning.

[Kirby (Office of Legislative Counsel)]: Morning. Is it She just crossed the end, so it's

[Sen. Ann Cummings (Chair)]: not She's getting up.

[Kirby (Office of Legislative Counsel)]: Is it on the other Today. It just showed up. Drop 1.3.

[Sen. Tanya Vyhovsky]: Yes. Drop 1.2.

[Sen. Ann Cummings (Chair)]: 1.3. Okay. The one I'm looking at is 3.1. It's track 1.2.

[Kirby (Office of Legislative Counsel)]: It's just sort of bumpy, actually.

[Sen. Tanya Vyhovsky]: It is long. It is, however, going to be very familiar language. We're gonna rewind back to the beginning of the session when I brought in S282. And this takes most of that language with some updates for clarity, some updates for other changes that have been made throughout the year, and a one year delay in the implementation, and puts it back before you. All for the same reasons I proposed them at

[Sen. Ann Cummings (Chair)]: the beginning of planning. So

[Sen. Tanya Vyhovsky]: yes, you are correct. Is long, and I know you took many weeks of testimony, so you are likely fairly familiar with the language.

[Sen. Ruth Hardy (Member)]: But that's not all us does, though. I'm still

[Sen. Tanya Vyhovsky]: The only change to what was introduced, and I will certainly let legislative council explain the reasons some of these changes were made. So some of the language has changed to reflect more fine tuned language, more nuanced language that legislative council has since developed to better say what we wanted to say. Okay. And the implementation for the tax changes that's out so I initially had proposed February to be retroactive to 01/01/2026. That way, it would capture this tax year. Yeah. This shifts that up on 01/01/2027 to be a little bit more kind to tax and not forcing them to think we've

[Sen. Ann Cummings (Chair)]: had a lot of pushback as we found out, trying to in this tax year.

[Sen. Tanya Vyhovsky]: And so that it shifts it out to the next tax year. And the other piece that is a change and an addition, the only real addition to the bill, there are some deletions from the bill, but the only real addition is in the school construction special fund language. It requires that any money going out of the school construction special fund be at prevailing wage.

[Sen. Ruth Hardy (Member)]: Oh, well, I think that's in h nine fifty five. It may be. Okay. And then but the second half, the property tax classification ses section 53? Yeah.

[Sen. Tanya Vyhovsky]: That is the second homes tax that is being implemented to fund the school construction fund.

[Sen. Ann Cummings (Chair)]: Okay. And it was in February.

[Sen. Ruth Hardy (Member)]: Okay. So this is essentially February? The vast majority of it. Okay.

[Sen. Ann Cummings (Chair)]: The second homes fund is in Act 73. It is washed out a little bit as we move it forward, but that money presently is seen as a way to pay for the property tax rebate program so that that cost doesn't get spread out over everybody and actually some people would be better off not getting rebate because it raises their taxes more than it gets. So if we use it for something else, we will have to find other funding for the rebate. In h September, it does go to school construction. In September, the are you talking about the the Which nine fifty five is the miscellaneous tax bill?

[Sen. Ruth Hardy (Member)]: No. No. No. No. It's the education

[Sen. Ann Cummings (Chair)]: bill. Education bill.

[Sen. Ruth Hardy (Member)]: So in the education bill, the the spending over the base, what was it? Supplemental. Supplemental, I always forget that word.

[Bethany James, Office of Legislative Counsel]: The supplemental is allowed

[Sen. Ann Cummings (Chair)]: to be used Right, for supplemental that's supplemental spending. Right. Yeah. Okay. Why I'm going to say that anything that has to do with second homes needs to come as an amendment to the education because that's it's not 55, that's where it's dealt with. So for us to deal with it independently in miscellaneous tax would be prejudging the next bill.

[Sen. Tanya Vyhovsky]: And I would be happy to offer a substitute that removes that piece.

[Sen. Ann Cummings (Chair)]: Okay, that's good. And should you get the next one back to us shortly so we don't, aren't here with a bill on the floor at about a ten page. I have no control over how quickly I can get another amendment in front of you. Well, as But it would Working through the Yeah. Before we get to

[Kirby (Office of Legislative Counsel)]: the floor.

[Sen. Tanya Vyhovsky]: That would be my hope, yes, of course. And it would Everything in front of you, with exception of the second homes, would remain. But my understanding, and do correct me if I am understanding incorrectly, is that as was posed in Act 73, the second homes tax is contingent on many things, whereas this second homes tax is not contingent. It goes into place.

[Sen. Ann Cummings (Chair)]: That second home, it is, right now it is contingent, it is in Act 73, it is in the law, it is contingent on basically the agency, the tax department and your local listers getting the required background work done.

[Sen. Ruth Hardy (Member)]: There's a formal contingency in Act 73 that the tax stuff goes into effect with the federal the federal federal government. With And that's. That's. H95. Yes. Removes that contingency. But and moves it forward with the tax classification work that's in the h nine fifty five. So I think that this wouldn't account for the the things that are in h nine fifty five, which does which does, like, move it down the road.

[Sen. Tanya Vyhovsky]: Given that information, I'm more than happy to remove this from the amendment.

[Kirby (Office of Legislative Counsel)]: Correct? To no. Do you need to clarify? So Kirby Key legislative counsel, obviously, stuff happened past, and I apologize to her if she had a different idea in mind. Since this was intended to be its own proposal outside of that structure, the way I put it together basically was to remove those contingencies.

[Sen. Ann Cummings (Chair)]: Right.

[Kirby (Office of Legislative Counsel)]: Yeah. Just so so, you know, that was the decision I've been drafting it.

[Sen. Ruth Hardy (Member)]: Right. Must be the contingency, but h doesn't take into effect into account the stuff that's in h nine fifty five.

[Kirby (Office of Legislative Counsel)]: No. It would be it did this by itself would just be putting the classification system out there without the other stuff because it because it can. It could be done. Yes. It can. But the choice was made for 55 to partner these things together and have them go at same time.

[Sen. Ruth Hardy (Member)]: Right. No. I'm talking about the added language about the whole classification system that's in H955.

[Kirby (Office of Legislative Counsel)]: Right, so this version of that does not have its contingencies. This version also doesn't rely on the foundation formula. It sets tax rate multiplier and stays on our current system.

[Sen. Ann Cummings (Chair)]: Okay, we will take that. I'll talk to you on Monday. We did that. It doesn't fall off.

[Sen. Tanya Vyhovsky]: And that was my intent, was to have this go into effect without contingencies, whether or not, or when, not waiting till the foundation formula comes into place. But if that is really a stopping point for the committee, I'm willing to pull that back. I think

[Sen. Ann Cummings (Chair)]: at this point, we've been pushing to get it inactive. Yes. But every grant list in the state has to be updated, and the tax department has to give them the criteria upon which to update it. So, we're trying to not annoy our local listeners, but move it as fast as we can. So, okay. Yep, and

[Sen. Tanya Vyhovsky]: I agree with legislative council it was my intent to move it faster, but in the vein of compromise, I'm the one to have it pulled up.

[Sen. Ruth Hardy (Member)]: And the effective date, just a question, I mean, the effective date, the July '29, that's for the tax classification. That is the same within what's h nine fifty five? Yeah.

[Kirby (Office of Legislative Counsel)]: No. It's it's a year earlier. What I think.

[Sen. Ann Cummings (Chair)]: 07/01/2029. Thought it was going in, I don't this next year, but looks like it's out of one, but we will look at why it's back. Okay. So this is essentially the first part of this bill is essentially the bill, forgetting the number, 82. Two eighty two. All of this bill is essentially two eighty Okay. We spent several weeks working on two eighty two, and I was trying really hard, but he couldn't get it through. I don't know that we will be more successful, but we will take a second look and I will have her walk us through this so we understand what's in this. And maybe some people have had a change of heart.

[Sen. Tanya Vyhovsky]: I would certainly appreciate that. And like I said, it is there are some small tweaks to sort of streamline it more, update it with things that have happened this year, and set it out figure. But I really feel like people are suffering, and and we we are not. This has been proposed, I think, as a wealth tax.

[Sen. Ann Cummings (Chair)]: And while I support that,

[Sen. Tanya Vyhovsky]: I don't really think that's what this is. What it really is is asking people who previously paid that money to the federal government to instead take Well, that's where

[Sen. Ann Cummings (Chair)]: the people that are getting the discount, my concern is you're starting this at 250,000 for a couple. That's a teacher and a superintendent. We are having a lot of trouble recruiting professionals. I've been especially made aware of doctors. We're trying to recruit doctors. They're going to come here. They're going to pay the third highest tax rate in the country, and now we're going to give them a surcharge, and they get the privilege of working at Northwest or North Country when they could work 20 miles away, have Dartmouth on their resume. And so what I we we're trying to I was trying to do is adjust that top racket up, and the house is still working on this. We were gonna do it for miscellaneous tax, but then all that little coupling stuff happened, and we needed to get it out. There is a goat coming. Well, they told me it's coming, but trying to not not penalize the professionals that we need to attract here, and at the same time, you know, if connect some of

[Sen. Tanya Vyhovsky]: that elasticity in the So the way that we attempted to construct it, I will let legislative council dive into the details more, is that the top it is intended that for the top 1% of earners, 100% of the rebates they'll see from the federal government are recaptured. For the

[Sen. Ann Cummings (Chair)]: next 5% Which, because that's where we're not clear. Are we talking, I've gotten, there was a form email that said on average every rich American has gotten a $57,000 tax rebate. Is that because It's an oversimplification. Yes, it is, but most flaky emails are. If I took that $57,000 from every one of my millionaires, it would be about half of the money we're using to buy down tax rates.

[Sen. Tanya Vyhovsky]: So that is why there's sort of we attempted to get at this in sort of two tiers. So for your top 1%, and I would need somebody else to tell me exactly where that number hits. I think it's maybe 550 ish thousand dollars. So people making $550,000

[Sen. Ruth Hardy (Member)]: or more.

[Sen. Tanya Vyhovsky]: Yeah. We made an attempt to recapture that 57,000. Okay. For the next 5%, so that is where you're getting that 125 to $5.50. We made an attempt to recapture

[Sen. Ann Cummings (Chair)]: No. $21.05?

[Sen. Tanya Vyhovsky]: $1.50 for a single person.

[Sen. Ann Cummings (Chair)]: So this is I thought it said 200 for a single person, if $2.50 for a couple of thousand dollars. It's been a while. I'm

[Kirby (Office of Legislative Counsel)]: not following this completely, but you might be talking about, there's part of this that says income tax surcharge and there's the other part that says EIF tax. You both talking about the same thing? You took are you both

[Bethany James, Office of Legislative Counsel]: talking I about

[Sen. Ann Cummings (Chair)]: think we just need to go through this Yeah. A little

[Sen. Tanya Vyhovsky]: bit but there's different structures meant to capture different amounts from different Excuse me. Because we recognize that that sort of middle the top 6% was not all the same. There's your top 1%, and then the next 5%. And the attempt was made to capture a portion of what people were getting back in that lower range so that we are accounting for the fact that they may have lost healthcare subsidies. They may, We're not treating everyone equally. No.

[Sen. Ann Cummings (Chair)]: On the same We're trying to

[Sen. Tanya Vyhovsky]: treat them fairly, to be clear.

[Sen. Ann Cummings (Chair)]: We do not exist in a vacuum. No. New Hampshire's real. New England, New York, California, the high tax states, I've seen several reports they are losing population of young people. They're moving. We hear that. Testimony we had is millionaires that have settled here, our whole 1,000 of them probably won't pack up in the basement, maybe one or two. But where you want to get people is in their thirties and forties when they are starting to earn money, they're setting up businesses, they're setting up law practices, they're setting up child psychiatry practices. If we set ourselves up where their taxes are going to be significantly higher, fair number of them won't come. And that's the balance I think we're trying to get. We aren't going to be able to raise enough money to take care of everybody that the federal cuts have killed, never mind the price of gasoline and food that's pressuring everyone else. So I think it's short term this year versus long

[Sen. Tanya Vyhovsky]: term, and

[Sen. Ann Cummings (Chair)]: we're trying to find that balance. Nothing's working on your bill, but we'll get that

[Sen. Tanya Vyhovsky]: I appreciate that, and that's part of why we used the surcharge. I know Governor Snelling used a surcharge that was able to be pulled

[Sen. Ann Cummings (Chair)]: I back could fairly put a surcharge on for school construction, for flood recovery, for a purpose with an ending. When you're talking about a surcharge that goes on in perpetuity, you might as well just raise the tax rate because that's what it is. So if you're putting on an 8% surcharge, just enough that you're essentially doubling the tax rate.

[Sen. Tanya Vyhovsky]: And to will let you move on to your next witness shortly. I do wanna just reiterate that the intent of this bill is actually not to make anyone pay more in taxes. It's simply transferring who they're paying it to.

[Sen. Ann Cummings (Chair)]: Well, that's the problem. There is not a direct transfer, I'm not sure we have any of the nationally designated super wealthy. I'm not sure we have very much of the top end, you know, you don't know who got the rebates. We're dealing on generalizations. And so we may get few people, but we know that in the Tax Cuts and Jobs Act, that people that own businesses, because of all the pass throughs, they did well. Yes. But the folks that were making 300,000 because two of them were professionals and working, they lost money because of the loss of deductions and other things that happened. So, but they're all on the same income bracket.

[Sen. Tanya Vyhovsky]: So There's certainly more nuance needed that I And we tried to be as nuanced as we could in drafting. I think the nuance is where we had trouble. Only with a little more opportunity to commit to something. Okay.

[Kirby (Office of Legislative Counsel)]: I think it's is there it's my understanding, so it's it's an extra 2%. I'm talking about the first instance of amendment. 2% over 250,000, and is it 6% over 500,000? Okay. How much money does that raise?

[Sen. Tanya Vyhovsky]: I've heard a couple of different, projections, but when we were talking about it, if you're drafting the projection was around $400,000,000.

[Kirby (Office of Legislative Counsel)]: Okay, thank you.

[Sen. Ann Cummings (Chair)]: Okay.

[Sen. Tanya Vyhovsky]: Should I sound Senator White?

[Bethany James, Office of Legislative Counsel]: Think we're going to have her be Okay.

[Sen. Ann Cummings (Chair)]: Alright. We've gotta walk through these. This one's gonna be easy to get to senator White, I think. So, Kirby, you wanna walk with us and tell us what is different for someone. That's okay. Right. Agree.

[Kirby (Office of Legislative Counsel)]: Counsel, I I can share senator amendment walk through. It's it adapts the bulk of s February onset. A lot of it's updated partly because some underlying parts is using have a hold during this session, such as

[Sen. Ann Cummings (Chair)]: You're on. We're not getting to him yet. We've got ways to go. Unless you wanna get in on that.

[Kirby (Office of Legislative Counsel)]: I can try to tell you his origins of some of the language that's in here. What it does is there's there's four deleted sections currently because of some changes, actually, pilot special funds that were removed on the house floor, so it's taking use of those and then adding some additional sections too. So it would use the sections 50 through 53. The first one isn't the first edition.

[Sen. Ann Cummings (Chair)]: What get done on the house floor?

[Sen. Tanya Vyhovsky]: 50 through 51.

[Kirby (Office of Legislative Counsel)]: I'm just saying there's there's four deleted sections because that on the house floor, they deleted those.

[Sen. Ann Cummings (Chair)]: They deleted them from what? From their

[Kirby (Office of Legislative Counsel)]: from the house based and means version.

[Sen. Ann Cummings (Chair)]: Of September.

[Sen. Ruth Hardy (Member)]: Of nine he's just using such. Okay.

[Bethany James, Office of Legislative Counsel]: Yeah. Under the bill.

[Kirby (Office of Legislative Counsel)]: I probably did not need to tell you that. Like, you were using such.

[Sen. Ruth Hardy (Member)]: You're complicating things, Kirby.

[Kirby (Office of Legislative Counsel)]: Okay. Uncomplicate as much as possible. This changes taxes. Any more questions, such?

[Sen. Ann Cummings (Chair)]: Yes. That would yeah.

[Kirby (Office of Legislative Counsel)]: So section 50 would create a personal income tax surcharge. The house, I think, passed. I think they passed a version of this. It was in the last couple of sessions. It just but it didn't make it to the senate. So so this is a concept that's been around.

[Sen. Ann Cummings (Chair)]: Okay. Not the one that's being worked on in ways and means.

[Kirby (Office of Legislative Counsel)]: This is not something that ways and means looking at

[Bethany James, Office of Legislative Counsel]: right now.

[Kirby (Office of Legislative Counsel)]: Ways and means have been looking at a version of the VIP tax. They've been looking at a version of making some adjustments to the income tax brackets. Right.

[Sen. Ann Cummings (Chair)]: That's what I thought.

[Kirby (Office of Legislative Counsel)]: But this session, ways and means, does not look at the surcharge concept. So the surcharge concept would be based off of AGI, would be what they would apply. It is not Vermont taxable income, it's federal AGI, which means it doesn't take into account the things that Vermont does to add and subtract things out federal AGI. It's more based off of the actual federal tax base. But at the threshold of 250,000 of AGI, there would be a surcharge of 2%, and at the threshold of 500,000 in AGI, there would be a surcharge of 6%.

[Sen. Ann Cummings (Chair)]: Okay.

[Kirby (Office of Legislative Counsel)]: Of the income exceeding that amount, so not on the amount under, but just the amount exceeding it in both cases.

[Sen. Ann Cummings (Chair)]: Is those that doesn't line up with our current tax brackets, does it?

[Kirby (Office of Legislative Counsel)]: No. Definitely not exactly. Our highest

[Sen. Ann Cummings (Chair)]: $3.25 or something would be that high. So

[Kirby (Office of Legislative Counsel)]: the first surcharge threshold would be less than our highest current per capita, and the 500,000 would be more than our current per capita. Again, in sizing our brackets, that will be taxable income, so it's not apples to apples, etcetera.

[Sen. Ann Cummings (Chair)]: So this is setting up a new

[Kirby (Office of Legislative Counsel)]: Parallel

[Sen. Ann Cummings (Chair)]: Yep. Tax Okay, we'll have to hear from them. Tax all right

[Sen. Ruth Hardy (Member)]: but that does get it. Federal AGI not Vermont AGI

[Sen. Ann Cummings (Chair)]: yeah

[Kirby (Office of Legislative Counsel)]: that's what it's drafted yeah okay

[Sen. Ann Cummings (Chair)]: so it doesn't line up at all it's

[Kirby (Office of Legislative Counsel)]: This is a major proposal to our income tax system and I mean if we just want to stay where we are I'm not going to support this amendment so that's why I said.

[Sen. Ann Cummings (Chair)]: Okay let's find out what it does but that's the first one.

[Kirby (Office of Legislative Counsel)]: So the next section is the what was once called the wealth proceeds tax, also called the Vermont investment proceeds tax. I I know that we've been on that in this committee. Is the same concept. The language has been updated. It does continue to use the federal thresholds for the NIIT, the net investment income tax, the federal level. The chair was referencing those thresholds as being, you know, 200,000 for individuals, 250,000 ordinary, bio jointly, and 125%. Before we get going too much further, I remember at one point during committee, that far end of the table was discussing different levels of this. Is this the highest level? Because I know there's different parts you could take. It ranged from 10 to 50 something million. Not the most revenue generating, That's what you're asking. Yes. This is this version takes out all of those additions to the pack space that you walk through and sticks to the closest possible to the.

[Sen. Ruth Hardy (Member)]: Oh, so this was essentially where mine ended up when we because we had three different amendments.

[Kirby (Office of Legislative Counsel)]: Right? Your amendment may or may not have been. They they face us for this.

[Sen. Ruth Hardy (Member)]: Okay. Just checking.

[Kirby (Office of Legislative Counsel)]: They're below the middle one. Mine was the middle one. I think this might it might be yours exactly. It uses the same tax base.

[Sen. Ann Cummings (Chair)]: Still honored.

[Kirby (Office of Legislative Counsel)]: It uses the the VIP name.

[Sen. Ruth Hardy (Member)]: But mine did not have that first surcharge thing. This Nope. Just this

[Kirby (Office of Legislative Counsel)]: No. These are completely soundproofing. Yes. Because it it uses it uses that federal threshold. One one thing just assuming that there's any future conversations about this, One thing to keep in mind about this is it is the lesser of your modified adjusted gross income hitting the threshold for the amount of investment income you have, and it's the lesser of those two things. So if the taxpayer does not surpass the threshold, but they do have investment income, there's no tax. If they do, you know because it's, like, 10,000. Right? It's the lesser of. It's the lesser of. So the thresholds are the only part of it. So so a person's eight modified interest income could exceed these thresholds and and still know and even if even if it does greatly exceed it, but you only have 10,000 of investment income, it's the lesser of. So it does so it becomes the 10,000 investment income is is what it's trying to do. So that kinda dual nature of it can should make it confusing. Sure. So that's, you know, that's what I was just explaining in sub b here where it's the lesser of these two things. This proposal has it at 4%. When Ways and Means last looked at this, they had talked about a 3.45% rate for this.

[Sen. Ann Cummings (Chair)]: So Ways and Means has looked at this?

[Kirby (Office of Legislative Counsel)]: They looked at this recently, and this is very similar to what Ways and Means looked at recently, and it's very similar to what's in our party.

[Sen. Ann Cummings (Chair)]: It's what we've looked at

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

[Sen. Ann Cummings (Chair)]: Yeah. At the beginning of the session.

[Sen. Ruth Hardy (Member)]: Well, no, not the beginning of the session.

[Sen. Ann Cummings (Chair)]: Well, February? Part of it was

[Sen. Ruth Hardy (Member)]: this particular version of it was the one that is the skinny down version that I proposed. Okay. When I we were trying

[Sen. Ann Cummings (Chair)]: to get Yes, something trying to get something So out

[Kirby (Office of Legislative Counsel)]: this is the skinny down part where there's no additions to the federal tax base but there are goblet retractions because these are things that are blocking the vaccine. So I think those are the major parts of this version of the VIB test. The thresholds are the same as federal, you have no additions, it's a 4% rate. Ways and means also talking about how hard to certify? No. No? Okay. Ways and means had and and my testimony on this is in Kansas City, so which is some indication that that may not be proceeding any more of this session. They had also talked about adjusting to the brackets.

[Sen. Ann Cummings (Chair)]: Yes. And I think they were going for where my thinking was going, which is maybe we do that, but also trying to not put further taxes on that 200 to 400 group, which is where both corporate executives and business owners stand up and discouraging them from coming here in the first place with professionals. So I think they would be trying to take a little more from the unearned income and maybe come out balanced, but not as a big tax change. This is pretty good sized tax change. That's it. It's beautiful.

[Sen. Tanya Vyhovsky]: Nope. Don't have my hand up.

[Sen. Ann Cummings (Chair)]: I I got it.

[Sen. Ruth Hardy (Member)]: I had a question. Does that does the bills

[Sen. Ann Cummings (Chair)]: appropriate the funds?

[Bethany James, Office of Legislative Counsel]: Or, like

[Kirby (Office of Legislative Counsel)]: This one? Yeah. The it's your amendment. Yeah. Only the the it mostly just generates so most of the money is not no. Just because Except half of the revenue from the part of other tax cost implications that's imposed on the second homes classification is is put towards school school construction.

[Sen. Ann Cummings (Chair)]: Oh, okay. That's that's the only we're not making up.

[Kirby (Office of Legislative Counsel)]: Yeah. Do you want me to go do you want to go through that? That's the last thing.

[Sen. Ann Cummings (Chair)]: I'm trying to I don't have the skinny version in front of me, and I don't have the original version in front of me, but where it fell down here was including senator Chittenden. When we did this originally, there was the inclusion

[Kirby (Office of Legislative Counsel)]: Capital gains.

[Sen. Ann Cummings (Chair)]: Capital gains that caused this caused a major disruption. Is what does this one do to capital gains?

[Kirby (Office of Legislative Counsel)]: Capital gains is part of the federal tax base for the investment income tax, and this uses that tax base. That's straight up number.

[Sen. Ann Cummings (Chair)]: And that is It's a large part of the tax base. It is if as I remember, it was the bulk of the money went away. We didn't use the capital gains as the tax base, then it wasn't worth dueled. And I'm not sure those positions have stopped.

[Kirby (Office of Legislative Counsel)]: So the rest of this tax classification, it takes the current version that we went over, but then adjust it for as I as I mentioned before, adjust it for our current law way of funding education. So I can get that. And, yeah, it has all of the other parts of classifications about transitions and things. It does not have the contingency sections, though. And for the rate, this would just it would set a non homestead residential rate at $2 and the homestead rate would be $1.

[Sen. Ann Cummings (Chair)]: Okay. And the nominal taxation of second home. Double rate. Yeah. Yes. Okay. I'm not gonna take that section up now because it's dealt with in the education bill, and we will take that up when we take up the second home stats and distribution. What I'm trying to so this is a slightly simplified version of taking a federal tax that went in, it's fairly complicated, the less of, the greater of, federal tax that went in to support Obamacare and apply it to one earned income for Vermont residents on Vermont taxes. This committee spent several weeks working on that and could not reach agreement on including capital gains, and without capital gains, most of the money went away. What I need to know is, has anybody changed their positions? And then I'm gonna give you a five or ten minute break before we get into the more fun area of pilot payments.

[Kirby (Office of Legislative Counsel)]: Do you want a I'll take a button, send it to Do you want straw poll?

[Bethany James, Office of Legislative Counsel]: I'm looking for straw poll

[Sen. Ann Cummings (Chair)]: on the amendment, then you get a break.

[Sen. Ruth Hardy (Member)]: Are we talking about the, what pocket?

[Bethany James, Office of Legislative Counsel]: The whole No, the second half, on second homes. You said

[Kirby (Office of Legislative Counsel)]: first instance.

[Bethany James, Office of Legislative Counsel]: That we will do, I mean,

[Sen. Ann Cummings (Chair)]: and senator Bobosky said she would gladly resubmit that. This is the first part, which is two eighty two, two seventy two, that we did spend a fair amount of time trying to vote out in this committee. I believe the vote was four three, and we did not get it out. This one goes beyond the unearned income. It puts a surcharge on people and its couples making $250,000 is

[Kirby (Office of Legislative Counsel)]: That's his business, right?

[Sen. Ann Cummings (Chair)]: If not two teachers, two teachers and a superintendent. It is definitely doctors and a partner that has any job.

[Sen. Ruth Hardy (Member)]: Individuals individuals.

[Kirby (Office of Legislative Counsel)]: It's so Exactly. Somebody Again, it's the surcharge and

[Sen. Ann Cummings (Chair)]: the FTC So what is it for a couple?

[Kirby (Office of Legislative Counsel)]: For the surcharge, it it it's based off a federal AGI for an individual and for that individual. $2.50 would have a 2% surcharge for any amount over that, and for individuals

[Sen. Ann Cummings (Chair)]: But what about a couple filed jointly?

[Kirby (Office of Legislative Counsel)]: Those would be two individuals. Two individuals. Two fifty.

[Sen. Ann Cummings (Chair)]: For two individuals, if they're each making $2.50.

[Kirby (Office of Legislative Counsel)]: This would look at them separately.

[Sen. Ann Cummings (Chair)]: We would look at them separately. So they would be making 500. They would be paying each would be paying a surcharge here of

[Kirby (Office of Legislative Counsel)]: 2% on any amount over $2.50 So in

[Bethany James, Office of Legislative Counsel]: they would be paying

[Sen. Ann Cummings (Chair)]: 2% as a household. They would be paying 4%. What's the surcharge of an individual who's paying, who's making 500,000?

[Kirby (Office of Legislative Counsel)]: 6%. This is in addition to the equivalent. If you have two individuals making $2.50, they pay nothing here because they've not exceeded

[Sen. Ann Cummings (Chair)]: the Right, but okay, they pay $2.51.

[Kirby (Office of Legislative Counsel)]: Then they pay 2% on $1. Yeah. They owe 2¢. The one individual making 500 would have the amount between $2.50 and 500 would be have a surcharge of 2% on it, but then that person would not be exceeding the 500, so that's so that's it. It would be

[Sen. Ann Cummings (Chair)]: Okay. But if a person is making 501, they're paid. That that if that's the sole income earner or it's an individual household, they are paying 6%.

[Kirby (Office of Legislative Counsel)]: Only on the amount

[Sen. Ann Cummings (Chair)]: Only on the amount over. So but two individuals making $2.50

[Kirby (Office of Legislative Counsel)]: 0. Zero.

[Sen. Ann Cummings (Chair)]: With a household income, $2.51 of $502. They would be paying a surcharge. They would be paying the surcharge between the $250 No.

[Kirby (Office of Legislative Counsel)]: It's just looking at individuals. Individuals.

[Bethany James, Office of Legislative Counsel]: Okay. But

[Sen. Ann Cummings (Chair)]: many, if not most people, exist as duos. Many people file jointly. What I've tried because you doing them as individuals, which a, is a different task treatment.

[Kirby (Office of Legislative Counsel)]: I I think I think And

[Sen. Ann Cummings (Chair)]: the household income is the same. If you've got two earners doing $501 or 502 because you'd have to make a dollar over, and you've got one household one person household doing 500, the household income is the same. I'm trying to figure out if the tax

[Kirby (Office of Legislative Counsel)]: Yeah. So yeah. So I can explain that. For once, you would you would have to compare two different households that both make a lot, right, in order for things to be triggered. But there would be a difference if you say you have a couple and one of them makes 1,000,000 and the other makes 0. That would be taxed under the way the surcharge works. That household would be taxed more than if you had two people making 500 each. Right. Because you're building trigger the 2% and get 75. Yeah. So it's so it's the households that have one individual that's a very, very high would be have the most tax. Yeah. That's right. You go to book two fifty. And the pay act doesn't It's lot of. You're call this the governor tax.

[Sen. Ruth Hardy (Member)]: I like that, Scott. Good job.

[Kirby (Office of Legislative Counsel)]: So you come around on it?

[Sen. Ann Cummings (Chair)]: Okay. Committee.

[Kirby (Office of Legislative Counsel)]: I make a motion.

[Sen. Ann Cummings (Chair)]: Well, no. This is we this we're we don't have the bill. This is so this is a straw poll. Anybody in favor supporting this amendment? And this is knowing that we have another tax bill coming from the other body and they assure me it is coming. Assure me they have the thoughts. I they may be wrong, but I mean I

[Sen. Ruth Hardy (Member)]: mean, the middle section what is is essentially what I proposed earlier this session, but I did that in the in the conversation of the yield bill trying to to lower property taxes. And so I I feel a little less comfortable with it just on its own. I liked it as part of, like, okay. We'll raise this tax in order to lower this other tax. Yeah. Ruth, I think you might remember that I proposed taking the school lunches the OPEB payment off the Edmunds

[Bethany James, Office of Legislative Counsel]: report with this. Yeah. So that would have a,

[Sen. Ruth Hardy (Member)]: you know, countering lowering of property taxes. So I'm not gonna say don't like it because it's basically what I proposed, but at the the middle part of it, not the other two parts of it. But given that it's in a separate thing, I'm less enthusiastic about it. Concerned

[Sen. Ann Cummings (Chair)]: haven't been able to hear from the tax department about setting up a duplicate system where this is based on federal AGI or federal, not state AGI. So we're we're setting up two parallel systems which I assume the tax department would have to administer. And I don't know that we could hear from them. Wanna send that over to Jake and Rebecca Well and tell them if they would like to email us something this afternoon.

[Kirby (Office of Legislative Counsel)]: Change minds, though?

[Bethany James, Office of Legislative Counsel]: Like I mean, I was.

[Sen. Ruth Hardy (Member)]: I don't think that that maybe you're gonna I don't think that thing is gonna get the votes. I'm not sure.

[Sen. Ann Cummings (Chair)]: I'm I'm not seeing But they

[Sen. Ruth Hardy (Member)]: did come in did they come in on the VIP tax thing earlier? And I think one of

[Sen. Ann Cummings (Chair)]: the main things was that they just wanted it out by that year so that they could that it follows what Yeah. I mean, that it's it's doing that. This is the parallel system that would make it I'm assuming different forms, different know Vermont income tax on one thing and you told this special tax on another set of income standards and I don't think we've got a low on the grocery. Am I calling that correctly? Okay. We have a five minute break, and then we're going to have fun. And you want the straw poll before the break? I thought we did a straw

[Kirby (Office of Legislative Counsel)]: poll. Oh.

[Sen. Ann Cummings (Chair)]: I'm looking at all the notes. Okay. I'm seeing I'm reading body language. I mean,

[Sen. Ruth Hardy (Member)]: I could be a I'll be a standing voice and say yes just to Okay.

[Bethany James, Office of Legislative Counsel]: To make it interesting.

[Sen. Ann Cummings (Chair)]: So we've got six