Vermont Legislature SmartTranscripts:

[Speaker 0]: I haven't read the article yet, but apparently, there's a belief. Yeah. It's like there's a belief.

[Ann Cummings (Chair)]: These minister White Chair was chewing. He raised the House by the Senate Finance. Welcome. It is Friday, May 8. We are starting a half an hour behind schedule. We are going to to pass the meter on the floor. We are once again eating lunch in committee. So we are going back to nine fifty five. That is the education bill. We're gonna stay on that. And in the end, I would like to boat out five seventy eight, which was the end of Cruelty Hill.

[Speaker 0]: I really asked for small

[Ann Cummings (Chair)]: technical. So So

[Speaker 0]: Malcolm loves that council. I don't exactly know what y'all are looking for, but I will try to help you find whatever it may need.

[Ann Cummings (Chair)]: I don't know that we do.

[Speaker 0]: Okay.

[Ann Cummings (Chair)]: Yesterday, we went through with the tax department several sections that that those here wanted change. Then we got into the property classifications, And I think that's where we still work.

[Speaker 0]: Okay. Do you want me to

[Cameron Wood (Office of Legislative Counsel)]: turn it over to Kirby then? Well,

[Ann Cummings (Chair)]: we went through some of those. What are your sections?

[Speaker 0]: I'm school construction and then what I saw on the agenda was homestead exemption fees, income sensitivity, and I know that potentially Senator Chittenden may have a request there, but I don't want to disrupt whatever pace you guys work for City of.

[Thomas Chittenden (Vice Chair)]: A lot of language has changed to one of the reports that's coming back on the property tax exemption, it just came up multiple conversation points, and if you'd be willing to find time for it, I'd certainly appreciate it.

[Ann Cummings (Chair)]: We will find time. So we did school construction, and

[Speaker 0]: we

[Ann Cummings (Chair)]: have taken Senator Hardy's right amendment.

[Speaker 0]: I I didn't hear what the committee's position was, but we did walk through

[Ann Cummings (Chair)]: We did through that, we have been voted to abandon it.

[Speaker 0]: Correct. I I the way I looked at it thus far is, like, kind of cobbling together, examining individual pieces, and then presumably next week, putting together the package.

[Ann Cummings (Chair)]: Okay. We have agreed on that, but it seems we're not here.

[Thomas Chittenden (Vice Chair)]: If the committee report out of senate education is split three three, they can't amend it. Right? They can only move it out. They would just We would fold into our amendment all of the stuff that some people might want to have done in the education selections? I think that is correct.

[Speaker 0]: I don't know definitively, but I think, yeah, I think when you're moving, you're not recommending any particular action, you're just

[Kermit "Kirby" Gulick (Senate Counsel)]: moving it. No. So

[Ann Cummings (Chair)]: they're just moving it?

[Speaker 0]: Well, we don't know. It could be that there's, the plan thus far has been that it would move Addison District this afternoon there could be vote to move on as amendments, or

[Kermit "Kirby" Gulick (Senate Counsel)]: there could be this alternative path, I'm not sure.

[Ann Cummings (Chair)]: Okay. And then we get it.

[Thomas Chittenden (Vice Chair)]: Yep. And we could do the same.

[Speaker 0]: Everyone could do us. The chambers could take no actions.

[Ann Cummings (Chair)]: But to build this serious now, we the governor's right on that one. We need to do the work. Doesn't meet with time tables. So let's Where would anyone like to start working through? Can I ask John a quick question? So it seemed as though the other day when you and Senator Hardy took us through the school construction, that piece of it wasn't fully fleshed out. Have you worked on it again since then?

[Speaker 0]: There's been a little bit, I don't have an updated draft on those pieces. Obviously Senator Hardy would be better able to describe her full vision of what is intended. The pieces that we did go through are, I would say, iterative. I think most, if not all, of the concepts are there, and it reflects multiple revisions with her, so it wasn't just the first draft, but it was not a complete draft, that's true. Okay.

[Jake Feldman (Vermont Department of Taxes)]: So it's still not complete?

[Speaker 0]: It's still not complete. They just having the time Right.

[Ann Cummings (Chair)]: Then we will have to see then.

[Speaker 0]: We have

[Ann Cummings (Chair)]: sleep before we go.

[Thomas Chittenden (Vice Chair)]: John's time with the commission. Yeah, why don't don't to here? What

[Ann Cummings (Chair)]: your amendment is? I've got the time.

[Thomas Chittenden (Vice Chair)]: Happy to. I I just I worry that without more committee members here, we'd have to go over it again. Do you mind if I bend this arrow?

[Ann Cummings (Chair)]: People. They're not here too bad. Do

[Speaker 0]: you wanna bring them? Sure. I I just sent to Charlotte for posting, and I can also pull up.

[Thomas Chittenden (Vice Chair)]: And every time I try, would you mind walking through where the changes came from, or would you like me to present at least?

[Speaker 0]: It's helpful if you see it just where they live. Yeah.

[Thomas Chittenden (Vice Chair)]: So this is generally concerns about that comprehensive discussion we had last year regarding the the blue wave, I think we call it, not in the political sense, but in how we would switch from our current property tax credit system to a property tax exemption. And no matter how we do it, we smooth that curve, there are going be people that are currently benefiting from the cliffs that will benefit less. And with the language that we had in Act 73, that is studying this multiple times in conversations with senator Robinson, as well as others that that language couldn't be expounded upon to just address, more clearly how's that weighing or how that how that income sensitization could be better understood in the context of the second home tax and otherwise. So this is language to just further solidify and build on the good work of Act 73 regarding the transition to the property tax.

[Ann Cummings (Chair)]: What we have in here is though how that

[Thomas Chittenden (Vice Chair)]: Sure. I think that's right.

[Ann Cummings (Chair)]: That chart, that is one section. It's that is Kirby's area,

[Speaker 0]: though. Right? The the homestead extension is me. There's kinda two things here, and I'm happy to pull up some docs to try to orient. One is that act 73 is where the structure was set. So that's something that was enacted last year, came from this committee, and the piece that senator Chittenden is speaking to is that additional to the the homestead exemption drug that is contingently effective, much like everything else the foundation form of the bill. I'll bring that. There is a report to come back from the Department of Taxes under Act 73 that would be due end of this year. There's a proposal on H nine fifty five to push that report back. And it's a report on an alternative homestead exemption structure. So the question is, do you want to say the high level question? The high level question is how to deal with income sensitivity. Act 73 took a position on this, and I think some of the questions that are raised are just, there's always an edge, There's always a final person who receives the benefit and then someone who doesn't.

[Ann Cummings (Chair)]: There's always gonna be a winner

[Speaker 0]: So of the how best to deal with that, and I can pull up Senator Chittenden's proposed language if that's helpful. Is it

[Cameron Wood (Office of Legislative Counsel)]: on our website people?

[Speaker 0]: I think it is

[Ann Cummings (Chair)]: I'm going to add with your child. Thank you, Thomas.

[Thomas Chittenden (Vice Chair)]: It's not meant to alter or change fundamentally what was the study report was in Act 73 just to further amplify some of the concerns that were raised.

[Ann Cummings (Chair)]: Where would it fit in that bill?

[Speaker 0]: There actually is an existing section of the bill that already amends this section, section 84. Currently, it's just a non stop. The current piece in September is just to kick back the due date for that report with the extended timeline, pushes it back to 2028. So this amendment would maintain, it would align with that date change, but it would add some new pieces to the report, basically.

[Ann Cummings (Chair)]: Okay.

[Speaker 0]: I think it's '84, that is me.

[Ann Cummings (Chair)]: I've got '82, '83, and '85.

[Speaker 0]: Oh, because what you're looking at is Senator Hardy's proposal, think? No,

[Ann Cummings (Chair)]: this is our copy of the bill, nine fifty five passed by the House.

[Speaker 0]: So they didn't touch this section, is presumably why you

[Ann Cummings (Chair)]: Oh, wait, that's on me. Okay. Okay. It's like one. Okay. So in a homestead exemption structure that very much.

[Speaker 0]: Yep. So I can I can skip over the new language here just to talk about what it does in Act 73? Okay. Due date 12/15/2026 in Act 73, you can send the intent language in A, General Assembly wants to transition the way income based property is actually just provided from the credit system towards this income based concept that's sent out in Act 73, The task was for the Department of Taxes in consultation with JFO to submit a proposal to you guys, ways and means, designing a homestead exemption structure that minimizes the property tax impacts for homestead property owners under the new EdTech structure and benefit clips compared to those in the existing credit system. You'll recall that the brackets themselves quite significantly grew in number and actually grew relative to the way the thresholds currently were, which was also an attempt to smooth the curves there. So the first piece that you see here is in alignment with the Halifax pushing back the due date to 2028 as tax had requested, but this would add as pieces to be additionally included with the proposal. Currently, the requirements are recommendations for an inflationary adjustment, suited to income sensitivity, and health side value measures. I believe what was it at? 73 is the same inflationary measure that we have been using elsewhere. And there's just a question, you know, you may not use the same inflationary index in every part of law because they measure different things. So recommendations for an inflationary adjustment measure. In Act 73, requesting an analysis of the implications of moving to income measure that provide benefits to households with household income of up to 175 paid a year. That was something you may recall at the end of last session. I think the Act 73 measures top out at 115, I wanna say. There's a question about what could you do if you went higher essentially. One of the proposals here is in the same vein as this extension to 175, but it's trying to get alternative scenarios that could be provided with different income ranges. So it's an analysis of the implications of extending the homestead exemption to a range of increasing household income levels without reducing the benefits of the income subsidy measures for lower income households, which of course you can guess would mean liability upward for that to happen. Updates to the homestead declaration to address the implementation of the proposed exemption the new language that you see here. And I'm also gonna have a section that you're gonna recognize from a floor amendment maybe a week or two ago. Updates to the homestead declaration to collect data on household incomes. Just explain why generally this is a suggestion here. When there have been efforts to expand or change the income sensitivity measures, part of the conversation that happens is we don't have the link of incomes with the house like values in order to make the determination. So this would try to gather that So

[Ann Cummings (Chair)]: tax gets the house value.

[Speaker 0]: Right, you, your name is

[Ann Cummings (Chair)]: not, she's Susan. Yeah, when you file your policy debt. But the house value rests

[Speaker 0]: They're in separate

[Ann Cummings (Chair)]: They're in separate departments, but all in the tax I

[Speaker 0]: think part of it is that only folks claiming I may not be the best position to describe this, but my understanding is that only folks claiming the benefits of inconsistency are the ones providing this information. Right? That you are collecting the information above those folks.

[Cameron Wood (Office of Legislative Counsel)]: I don't know.

[Ann Cummings (Chair)]: Well, Senator Chittenden, what are you trying to

[Thomas Chittenden (Vice Chair)]: So this is from a couple of amendments around the yield bill. I think it's raised a few times to try to collect more data on this point. I see Julia was just raising her hand a little bit. Yeah.

[Julia Richter (Joint Fiscal Office)]: I just wanted to provide a little bit of clarity just from the modeling and data perspective. Julia Richter, JFO. With respect to this piece, under current law, there's no need to fill out the household income form if you're not going to qualify for a property tax credit. So some folks may still fill out their household income form if they're not going to qualify just because they want to submit that information to the state. But the household income form says, you know, if your household income is above a certain amount, you're not going to qualify. So in doing this, it would collect all of the household income data from everybody. You'll recall that there have been times where the committee has wanted to explore if the property tax credit parameters were to shift. If we wanted to make it instead of 90,000, we wanted to make it 150,000 for the property tax credit. What would that look like? We don't have the household income data, then Jay can speak to this too. The tax department needs to do a lot of work to try to put together a dataset that proxies for the household income. Basically, this would be collecting data so we could model expansion of the property.

[Ann Cummings (Chair)]: Is there problem with confidentiality somehow?

[Julia Richter (Joint Fiscal Office)]: If you have a homestead and you need to file your homestead declaration so you pay the homestead rate, for this year, if your household income is below 115,000, you will file your household income because then you will maybe be eligible to receive a property tax credit. So you put that in. If your household income is above 115,000, there's no reason for you as a household to file your income because you're not going to receive a property tax credit. So most households don't do that. So what we what we end up with is a dataset that has all of the household income or almost all of the household income for households below 115,000, whatever that break even point is. So very, very, very limited data for households above 115,000, meaning that the modeling can't really do as good of a job of looking above that household income.

[Ann Cummings (Chair)]: Okay. But if I am given all the present verbiage about taxing the rich, I might feel somewhat uncomfortable putting on my property tax form, what my household income is. May I

[Thomas Chittenden (Vice Chair)]: What would get to say?

[Ann Cummings (Chair)]: Can we compel people to I didn't think so.

[Julia Richter (Joint Fiscal Office)]: Yeah. I mean, I think that's a I think that's a a policy choice. Right? In order to receive the property tax credit, you need to file your household income.

[Ann Cummings (Chair)]: Okay. But you if if my incomes, it probably anywhere over 100,000.

[Thomas Chittenden (Vice Chair)]: Finally here, that become public information, or is it still okay. So it's listed on stats. Yeah. I can Jake Calvin, tax department.

[Jake Feldman (Vermont Department of Taxes)]: I think there's a bunch of issues, and I'm just not seeing this, so I can't say that I know them all. First one, you know, asked have somebody to fill out an extremely complicated form when it has no bearing on any pension? There's some risk, there's a lot of risk to using tax forms as survey tools. We've testified about that in a lot

[Kermit "Kirby" Gulick (Senate Counsel)]: of other

[Jake Feldman (Vermont Department of Taxes)]: contexts. So, we have 110 versus 100,000 or so people filling out the household income form, which is possibly the most complicated part of doing all of your taxes, to ask the other 100,000 to do it when it has no effect on their taxes. So it's problematic. You know, for the tax department to create this data, you know, it takes takes me, you know, half a day to do it. So, know, the choice is either, like, me working half a day or a 100,000 people working hours to fill up the hospital. Think the form doesn't count for anything.

[Randy Brock (Member)]: Can I ask Jake a question? Yeah. That's great. That's really I'm curious. So how can you just explain how you do it? Because because it is a little bit different. I mean, I'm assuming you take income tax data and make some assumptions about households.

[Jake Feldman (Vermont Department of Taxes)]: Can you Yeah, sure. Happy to. And we just did it the other day actually. But it, so on homestead declarations, you have, you know, primary and and spouse. You you basically just look over to income tax returns and pull in AGI. AGI is a reasonably good proxy for household income for most people. That's the extent of it. It's not that bad. It gets a little bit harder if you if you are trying to like, if if a household has another adult member who shows up on household income form, then it gets a little bit more complicated. But that's not a lot of money there. But in that

[Randy Brock (Member)]: Like, if your mom is living

[Ann Cummings (Chair)]: with you or your your In 20.

[Randy Brock (Member)]: Probably the year old. So when you were doing that analysis for us, you and JFO or Julia were doing that analysis with the blue movie all over the place last year. This is that what you were using was this data that you're or not?

[Jake Feldman (Vermont Department of Taxes)]: It was the blue. Do

[Thomas Chittenden (Vice Chair)]: you wanna answer this one?

[Ann Cummings (Chair)]: Sure. So

[Julia Richter (Joint Fiscal Office)]: the analysis last year, the homestead exemption analysis was not using this expanded file that Jake is talking about Go ahead. Because the file had not been was not created last year

[Randy Brock (Member)]: to do that modeling. You hadn't yet been a half a day doing it.

[Julia Richter (Joint Fiscal Office)]: And so we were doing that modeling based off of the dataset that was available, which was up to the 150,000.

[Randy Brock (Member)]: Okay. And that's part of the reason why we asked you guys to do this report was because we couldn't see a bigger analysis because the data didn't exist yet.

[Jake Feldman (Vermont Department of Taxes)]: Right. I think there was an interest to go to look at going to 175. Yeah. And so that, know, we can get a very accurate picture of going to one seventy five just by doing what I said. Yeah.

[Randy Brock (Member)]: And I think the one seventy five, my recollection is the reason where we why we landed there is because that's where a lot of the property tax credits days out. Days out. We wouldn't because, you know, like, the child tax credit goes up to 150. It's phases out from one twenty five to one seventy five, and there are other tax credits do the same thing. That was my recollection as to why we asked you to do it up to 175 in this report.

[Thomas Chittenden (Vice Chair)]: So the reason why this came up is with the 175 language, I don't know if that language was clear enough to address the very relevant concern, if you remember this, that right in the middle, so the middle income individuals in the lower end, they are going to see where the current property tax exemption shift, the property taxes go up because the cliff goes away. We can bring that visual up again if you want to see it. So this language

[Randy Brock (Member)]: I thought we'd kind of

[Ann Cummings (Chair)]: wrapped it down so there wasn't a huge clip. That's what we worked at.

[Thomas Chittenden (Vice Chair)]: There's still going to be this

[Ann Cummings (Chair)]: There there will be a couple.

[Thomas Chittenden (Vice Chair)]: This language could allow for a greater expanded analysis of how to not necessarily have a lot of that middle income individuals see their property taxes go

[Ann Cummings (Chair)]: up when we ship them. What the issue was for a lot of people wasn't their income. They're retired. Their income is at 95 or $1.10, but the house they bought their income's at 80, but the house they bought for $40,000 is now worth $500,000. It's the house value that escalated so much that they were getting squeezed because their income, they wouldn't be able to buy that value out.

[Thomas Chittenden (Vice Chair)]: There's more of it, look, bring up the visuals from before, but it's hard to discern.

[Ann Cummings (Chair)]: That's a bet.

[Thomas Chittenden (Vice Chair)]: My 2¢. Jeez. What? We will never solve this as long as the income credit income sensitivity program is within the.

[Ann Cummings (Chair)]: So where would you put it? General fund.

[Thomas Chittenden (Vice Chair)]: It will just never solve this in the education fund. It's just the more you pile in there, the more the property tax go up, then

[Cameron Wood (Office of Legislative Counsel)]: the more you have to compensate people,

[Jake Feldman (Vermont Department of Taxes)]: and it's just it's just

[Ann Cummings (Chair)]: The plan is that this is going to be paid for with the second homes tax right now. Yes. So it will be coming out of the education fund. Putting new money in.

[Jake Feldman (Vermont Department of Taxes)]: But we're talking about a bigger program here. We're talking about expanding it to one fifty and one seventy five. Well, we issue this isn't what's in accident three, the the expansion.

[Kermit "Kirby" Gulick (Senate Counsel)]: I got it.

[Randy Brock (Member)]: The

[Thomas Chittenden (Vice Chair)]: Yeah. Well, the one fifty is.

[Kermit "Kirby" Gulick (Senate Counsel)]: But yeah.

[Ann Cummings (Chair)]: The one seventy five is. Yeah.

[Thomas Chittenden (Vice Chair)]: Yeah.

[Ann Cummings (Chair)]: We've already had bills. It's everything everybody on Social Security and everybody 50 and everybody 60. And so we keep trying we try to find a way that people are paying according to their ability to pay. And your ability to pay is at some point a judgment level on how much you think it's fair for you to pay opposed to everybody else. But is but we it's been it was for a while, a constant committee of conference between the House and the Senate about raising both the income and the House value, and is the reason you don't fill out the form if you're not

[Thomas Chittenden (Vice Chair)]: if

[Ann Cummings (Chair)]: your income is over the level where you're gonna get the tax exemption. So because we don't know how many people are over that point and we can't do an accurate calculation as to what the impact would be if we raise is that the problem we're trying to solve? We need to know how many households are above that level in order to calculate what it would cost to go to that level?

[Julia Richter (Joint Fiscal Office)]: So I can't speak to the problem that is trying to be solved. Would say that just sort of big picture, some of the policy considerations that I see from this are if there is an interest in expanding the property tax credit or the homestead exemption in this language, expanding those parameters beyond what were set in Act 73, which is up to 115,000 of household income, and then those household income brackets increased by inflation. There's an interest of expanding that. Act 73 charged tax to come back to you with a study about expanding that to 175. The question that this language I think is contemplating or is getting at is one piece of it is what data do you all consider to be sufficient for making those calculations? As Jay talked about, tax can put together a data set that uses AGI as a proxy for household income. Household income is not AGI, It's not going to be perfectly capturing the space that are taxes looking into or I'm looking into for the purpose of this committee. That's a choice. The legal implications of doing that is way outside of my bailiwick, but I think that's one of the big choices. And then the other piece gets into if you want to look into amending this report that tax is coming back to you with regarding the homestead exemption and how it could or could not be constructed.

[Ann Cummings (Chair)]: Okay, Senator Chittenden, with this amendment, what are you trying to So

[Thomas Chittenden (Vice Chair)]: the second half, I don't necessarily think it is necessary. So that's the declaration of homestead based on what Jay just said. I feel like it can generate it through his efforts. But if you look at the first instance of change, which is at the bottom of page one. Yeah. Yeah. Getting the screen. I get it. I don't see this as harming or altering the the focus, but instead on if just 175,000, that's somewhat of an arbitrary number too, but instead looking at extending the homestead exemption to a range of it, if

[Cameron Wood (Office of Legislative Counsel)]: you keep scrolling down, a

[Thomas Chittenden (Vice Chair)]: range of increasing household incomes would be a way to just broaden the scope to not necessarily put a book in at 175, but also to consider the current implications of the transition. So I don't see this as harmful language. I see this as a way to just expand the analysis to also consider the entire spectrum of both household values and incomes for this buffering tax exemption.

[Ann Cummings (Chair)]: Okay. I guess when I'm struggling and I'm not look attached, we've got one study here. You want to extend it out in to everybody? I mean, I'm

[Thomas Chittenden (Vice Chair)]: That's a

[Ann Cummings (Chair)]: many things we're biting off right now. I don't wanna ask tax to bite off more than they can chew. I mean, I think we we've got a whole new system to put in place. I'm not sure how I'm more concerned about the clip

[Speaker 0]: Yeah.

[Ann Cummings (Chair)]: And the easing down, but I'm not sure how this

[Thomas Chittenden (Vice Chair)]: I would say the first instance addresses that. The rest, I I take the concern about asking for more data to be collected, so dropping those. I just worry that the one seventy five is somewhat

[Ann Cummings (Chair)]: arbitrary. So I'll send it Mattos.

[Jake Feldman (Vermont Department of Taxes)]: Yeah, your new book is 175 or you're

[Thomas Chittenden (Vice Chair)]: extending it all the way out? Just to consider the entire spectrum of both house values and incomes.

[Jake Feldman (Vermont Department of Taxes)]: So that's gonna get to a point of

[Cameron Wood (Office of Legislative Counsel)]: where there's really no benefit to having a credit.

[Jake Feldman (Vermont Department of Taxes)]: They better wanna get the credit exactly.

[Thomas Chittenden (Vice Chair)]: Not to say that everyone's gonna get the credit, but just to look at the age to transition.

[Ann Cummings (Chair)]: This is starting to sound like something you hire a consultant to do.

[Jake Feldman (Vermont Department of Taxes)]: We talked about this last year. Yeah. You don't do any topics. Yeah.

[Ann Cummings (Chair)]: There is no small money in the general fund. You you do realize that it brought me on short that the education fund is as large as the general fund. The general fund is not sitting there with a huge amount of equity. Totally

[Thomas Chittenden (Vice Chair)]: get your point, Sarah. All I'm saying is that

[Jake Feldman (Vermont Department of Taxes)]: to run the system in a way

[Thomas Chittenden (Vice Chair)]: that makes sense and it doesn't drive off everybody's tax rates, creating a situation where some people, a lot of people that received the credit would actually be better off in the same system.

[Ann Cummings (Chair)]: Right, but we're fixing that. We are putting the second home tax in, and this credit will be used it will be bought down with second home money.

[Thomas Chittenden (Vice Chair)]: Yeah. I'm just saying it'll work better if that money is if it pay out in general.

[Ann Cummings (Chair)]: Okay.

[Kermit "Kirby" Gulick (Senate Counsel)]: Because it doesn't drive the February's rate. Excuse me.

[Ann Cummings (Chair)]: Whatever funds

[Speaker 0]: Yeah.

[Ann Cummings (Chair)]: Same people are paying it. Same people are getting it wherever it goes. But we won't know until we get all the adjusted and list values how much that money additional money will be. We won't know until we get there and are able to now with the money we've got, figure out who and, you know, the housing market could crash overnight, has performed more than once. And it's probably only the shortage that's keeping it up now. So even I think we may be too early once we get the numbers for the second hold. So once we know what the potential revenue is and the impact, then we can have the discussion of do we have not enough money to cover what we've been doing? Do we have enough because we cut the second home tax in that or do we extend?

[Thomas Chittenden (Vice Chair)]: Well, the date pushed out the twenty eighth, which is the original house built to that it has to be enough time spent on this conversation and trustee, they will be able to consider. Thanks for the bad luck.

[Ann Cummings (Chair)]: Alright. But I just knew where I wanted John to walk us through, but I think it's Kirby.

[Speaker 0]: Do you want me

[Jake Feldman (Vermont Department of Taxes)]: to jump out of the chair? Slowly stand, probably?

[Ann Cummings (Chair)]: Yeah. Jump in. Think, Kirby, we might there was a lot of discussion yesterday. Oh, we had senator Ron Cummingsdale commence, which caused some discussion. And we have got Cameron coming back. He is our counsel on landlord tenant.

[Kermit "Kirby" Gulick (Senate Counsel)]: Yeah, yeah. And Cameron and talked about this, so he should be in soon. He and I both plan to be around for your questions. We have some overlapping knowledge, so I I can I can try to answer your questions?

[Ann Cummings (Chair)]: Okay. We he is scheduled at 03:15. We've got the military's coming in at three to do animal cruelty. And then because we asked her it was a technical amendment yesterday. We asked her to do so. Just some rewording. So I'd like to take, like, three minutes and vote that out. And then but maybe you can walk us through the definitions again. Excuse me.

[Kermit "Kirby" Gulick (Senate Counsel)]: I I have some things I've looked into from the conversation yesterday. Would help. And I know that Cameron has some things to tell you too. Kermit Gulick, Senate Counsel. Two questions came up where, you know, there's needs for some knowledge about things that I'm going to do. One has to do with condos and parcels.

[Speaker 0]: Do you

[Kermit "Kirby" Gulick (Senate Counsel)]: want to talk about that at all? Can also let you know what I've learned about lodging establishments and how that is our act with short term rentals. Either one of those things.

[Ann Cummings (Chair)]: Okay. I I think.

[Kermit "Kirby" Gulick (Senate Counsel)]: And and we also talk about landlord tenant stuff too. But that's fine. Okay. So, where where do you want to start?

[Ann Cummings (Chair)]: Well, let's start with lodging establishments. That's probably the easiest one to get So the answers

[Kermit "Kirby" Gulick (Senate Counsel)]: what I've been in discussion with tax department a little bit on this and with the Department of Health. I've also looked around our office, and it seems like this particular question doesn't land on squarely on anyone's plate because Cameron's handling short term rentals, but Katie McClain handles lodging establishments, and so I just looked at Then this landlord, Chittenden. So here's some things that law should establish establishments to be aware of in ways that it could interact with the toxic insurance. One, to get licensed with the Department of Health, or to be required to get a license with the Department of Health, an entity has to operate a lodging establishment with rigor mortem units. Okay? That's one piece of it. Another piece is that the definition of lodging establishment, though, specifically excludes short term rentals. Okay? Yeah. There's also, just as a as a bit of a footnote that could come into this, the emphasis when it comes to licensing is about the operator, not the owner of this.

[Ann Cummings (Chair)]: Okay. The operator.

[Kermit "Kirby" Gulick (Senate Counsel)]: So it's an operator operating units, accommodation for the public.

[Ann Cummings (Chair)]: So in a motel that's fairly it frequently, I think, franchises, and there is somebody that's in charge of that motel's hotel.

[Speaker 0]: So putting

[Kermit "Kirby" Gulick (Senate Counsel)]: all of those pieces together, I think your main question was at what point at least my understanding was at what point does a building that has multiple short term rentals maybe under this with the same operator

[Ann Cummings (Chair)]: Mhmm.

[Kermit "Kirby" Gulick (Senate Counsel)]: Does it become a lodging establishment?

[Ann Cummings (Chair)]: I think this was the suggestion that it'd be assumed that any five unit can

[Kermit "Kirby" Gulick (Senate Counsel)]: Yeah, what I would say is I would not assume that.

[Ann Cummings (Chair)]: Okay.

[Kermit "Kirby" Gulick (Senate Counsel)]: My reading of it is that because lodging establishment excludes short term rentals, there are inspection requirements for short term rentals in that same chapter, but it's not the same as being licensed, Okay?

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

[Ann Cummings (Chair)]: Yeah.

[Kermit "Kirby" Gulick (Senate Counsel)]: Maybe if you have three or more units in a building, you could look into getting licensed, and you would not be treated as a short term rental anymore. But the the law is is does not have a bright line up. As soon as you hit three units, you're not you're automatically having to register or be licensed. And I would also focus on or or point out something that the general counsel at the Department of Health wanted to point it out, which is that the system for them is about public health and safety and a focus on that, and it's not about the kind of regulation that we're talking about in the classification context, which is true. But I think that's the big takeaway is I'm based on the on the way that our licensing works now, just because a building has multiple short term rentals does not mean it's going to be a life of Washington South. That isn't that's not

[Jake Feldman (Vermont Department of Taxes)]: like No.

[Ann Cummings (Chair)]: I think because we left out when we did the enhanced rooms and meals tax for short term rentals Mhmm. Last year, We left out those registered as a lodging establishment because that would have made us by far the highest priced hotel motel. You know, our taxes would have been the highest. The room's tax. Yeah. People go there and pay a room's tax. And meals if you're they serve meals. If we done a surcharge on them, they would have been the highest priced in what we would have. Yeah. We didn't think that was where we were.

[Randy Brock (Member)]: And I asked the question about

[Jake Feldman (Vermont Department of Taxes)]: That door is just in the price.

[Ann Cummings (Chair)]: It's What happened? Uh-huh. Do I need to bring down it in $2.40? I think it's the actual one. I think maybe it's wood. It's been the other day, but

[Thomas Chittenden (Vice Chair)]: they couldn't see that. Yeah. Oh, it

[Ann Cummings (Chair)]: drives me We've had trouble with that door for years. It seems it's gotten worse, though. Antiques.

[Randy Brock (Member)]: You had suggested yesterday when we were talking about this that if our intent is to not patch up lobbying establishments in this Mhmm. That we might wanna just say that explicitly that lodging aside those licensed as lodging establishments would be under the what is it? Non homestead, nonresidential.

[Kermit "Kirby" Gulick (Senate Counsel)]: No. No. And and I did put together some links for that already, like, preparation of looking that.

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

[Randy Brock (Member)]: Adding it to your list of

[Kermit "Kirby" Gulick (Senate Counsel)]: It's yeah. It's it's on my list of things you asked me to to do yesterday. Yep.

[Randy Brock (Member)]: Okay. We did ask you to do that? Okay.

[Julia Richter (Joint Fiscal Office)]: Yeah. I wasn't I thought

[Randy Brock (Member)]: it was we weren't sure yet, but okay. That's good.

[Kermit "Kirby" Gulick (Senate Counsel)]: And so, yeah, the main purpose of that would be to make sure that you don't have any of these lodging establishments having a quirky situation that falls between the cracks and ends up getting taxed as

[Ann Cummings (Chair)]: Right. Same there there should be no change to them unless

[Kermit "Kirby" Gulick (Senate Counsel)]: But I I I don't based on what I've seen so far this morning, would not anticipate that that a lot of short term rentals are going to fall out of, you know, out of the second home rate because of that.

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

[Kermit "Kirby" Gulick (Senate Counsel)]: I just I don't think that a lot of them are going and getting licensed based on what I see.

[Ann Cummings (Chair)]: Okay. This all started because the tax department suggested just to make it easier on them and on landlords when we start out that since right now most of it's five or more units. Right? Most of them are apartment buildings. Think about it. And that and we could say at least initially, if you've got five units, we're gonna, you know, just check nonresidential, nonvolished. Got ourselves into the weeds. We know we have mixed use, and it's commercial on the 1st Floor, the landlord, and so yeah. And we got ourselves into, well, what if one of those five units is a short term room?

[Kermit "Kirby" Gulick (Senate Counsel)]: Mhmm.

[Thomas Chittenden (Vice Chair)]: And then

[Ann Cummings (Chair)]: but you sometimes having been through this with act 60, you probably weren't here when they you got a rebate, but it was next year, that rebate wasn't owed to you. You had to send back the money and people spent the money and then didn't have the money to pay their taxes, and we finally decided it was easier to swallow the amount that people might have gotten a rebate more than they owed than go through all the harassment of trying to be absolutely I dotting, t crossing correct. That's costing us more money and definitely a lot of goodwill. So this may be one of those areas. We may, for the sake of making the tax department not have to hire five more people or not start to get sick because they're working fifteen hour days. Allow that and then monitor it as it goes. If we find out, because I know they read advertisements, at least they used to, on people advertising their home for rent on, like, whatever, and watching for those. At least that's what they told us when we were first looking at short term rentals that they did keep an eye on, camps and places. And so it might that might be the thing to do right now and then find out what's going on.

[Randy Brock (Member)]: I'm just a I'm concerned about doing that. If you have a five unit building, you can have four units that are short term rentals and just one unit that is a homestead, and that would be considered if that's the case. If it's four of the five, but the landlord lives in the fifth and they're filling out the form and they declare it as their homestead, then they're getting a big tax rate on the other four units because they'll be

[Ann Cummings (Chair)]: He took non homestead commercial right now. Right? Landlord doesn't live.

[Kermit "Kirby" Gulick (Senate Counsel)]: That scenario would be the same as current law. Like, if you if you did if you did exempt the five plus, they would all the other units would they wouldn't be taxed as homestead. They would go down as non homestead. Oh they would. Just like they, just under current law If it's done

[Randy Brock (Member)]: they're done correctly, the landlord would have to declare 80% of the building is non homestead, is that a yes? Yeah. Okay. What is, then what is specifically that Rebecca was asking for? Can you explain it again, Chittenden? Maybe I'm confused.

[Jake Feldman (Vermont Department of Taxes)]: Sure, you're talking tax reforming time. What Rebecca was asking for is to kind of make the work of the tax department, but especially local officials, easier by ruling out, and I hate to introduce the word category here, but in the grand list, towns put properties in the different, 15 different categories. One of them is called commercial apartment, and it's five units or more. Okay. And what we were asking for is to have that, anything with five units or more, kind of taken off the table as non homestead residential. At least that first, in the beginning of the new classification, as we know that there's only 1,600 apartments in the state that are short term rentals, and some small fraction of those are in these bigger apartment buildings, so it's like you're really a needle in a haystack situation. So taking them off the table at first to reduce the workload. Okay, so if they're,

[Randy Brock (Member)]: I'm sorry, I'm still not, I think I'm still not getting it. What I was understanding was that this could be a five unit building that could have all three of the things in them. They could have a long term rental, a short term rental, and a homeowner residential. And if that were the case in a five unit building and they have a mix of all three of those,

[Jake Feldman (Vermont Department of Taxes)]: how would it be classified under what you're asking for? The building and the land would be classified as non homestead, non residential.

[Randy Brock (Member)]: Non homestead, non residential. Which is what a regular apartment building would be considered, right? Yeah. With long term rentals, like an apartment building with long term rentals. So, in the case of a building with five units in it, maybe one is owner occupied, like I was describing before, two are short term rentals and two are long term rentals. It would just get the commercial rate or the non homestead. Non residential. Terrible. Can we change that? Can we just call it commercial?

[Thomas Chittenden (Vice Chair)]: That would be Why

[Randy Brock (Member)]: is it non commercial? What was the argument against calling it commercial?

[Jake Feldman (Vermont Department of Taxes)]: Maybe some people are offended by calling it a commercial. Commercial,

[Ann Cummings (Chair)]: yeah.

[Kermit "Kirby" Gulick (Senate Counsel)]: I think And industrial and other things have also been in

[Jake Feldman (Vermont Department of Taxes)]: that category. It's a big gift.

[Kermit "Kirby" Gulick (Senate Counsel)]: The most accurate would be called other or something like that.

[Randy Brock (Member)]: The best plan. Industrial is commercial, isn't it? It's very confusing in front of my address, but

[Ann Cummings (Chair)]: I think what we're doing is we're looking at what is the codes are in your local lister's office and how your local lister because at this point he doesn't she doesn't care if you're renting it short term or long term. It's a commercial building. We know I mean, we've got people who's rent out maybe two rooms units on the 3rd Floor in their house. Oh, okay. But this is local. If you start playing with the rules and you start putting short term rentals in there, your local lister is going to know pretty quickly. These are small towns. Maybe Burlington, the neighbors won't cattle. But if that use changes, these are pretty small groups. That local lister is going to catch on. What if somebody's playing? What about

[Randy Brock (Member)]: putting it doing what the tax department is suggesting for the first

[Ann Cummings (Chair)]: five years? That's what I was saying.

[Randy Brock (Member)]: And then making it so it changes so that you kind of get time to

[Jake Feldman (Vermont Department of Taxes)]: The classification system a, Vermont is not so to do it. It's going to be very hard. In the first five, ten years after it starts, there's gonna be a massive amount of change. Shifting around, yeah. So, loopholes, maybe creating more exemptions for certain things that people want to exempt, redefining. So, right, so leave it off at first, but then address it later on.

[Ann Cummings (Chair)]: You can find out what's

[Jake Feldman (Vermont Department of Taxes)]: not It's not a big part of the base.

[Randy Brock (Member)]: Just putting in language in there that it says that will address it later on. As a as a compromise, I feel state certain. There's gotta be a reason why the House didn't wanna do it.

[Jake Feldman (Vermont Department of Taxes)]: So, yeah,

[Kermit "Kirby" Gulick (Senate Counsel)]: know where people are on this, but just to be very clear about what Jay does in.

[Randy Brock (Member)]: Okay.

[Kermit "Kirby" Gulick (Senate Counsel)]: It is that to automatic if a building has five or more units Right. That it automatically is taken out of non homestead residential no matter how it's used. And if if that doesn't take it out of homestead, so if there's a homestead part, like of hardy men, that's a whole other thing.

[Ann Cummings (Chair)]: Yeah. Correct.

[Kermit "Kirby" Gulick (Senate Counsel)]: But it's always just going to treat we're gonna pretend that it's always apartments. And so if you have nine short term rentals in a building, it'll be treated as apartments instead. So publicly I think that that would be seen as you have exempted buildings that have a long short term rentals, and that was a policy decision to do that. And the department's argument is based off of administration would be easier if those large buildings did not have to file anything with them, and it could just be done automatically. So not for policy reasons that they asked me. But but that is the that is the question is do you want those larger buildings to be essentially stemmed from a higher rate?

[Ann Cummings (Chair)]: If we've been well, we may in Burlington. But they're banned in Burlington.

[Hillary Chittenden (Office of Legislative Counsel)]: They're banned in Burlington. Short term, has to be owner occupied.

[Jake Feldman (Vermont Department of Taxes)]: Unless it's It has to be owner occupied.

[Ann Cummings (Chair)]: So we will pick them up that way. They're made Oh, they're not bad.

[Randy Brock (Member)]: There's a lot of problems.

[Ann Cummings (Chair)]: We have twenty four seconds over.

[Jake Feldman (Vermont Department of Taxes)]: Yeah. Can Okay.

[Kermit "Kirby" Gulick (Senate Counsel)]: You know? I think No. We don't have to talk about condos that came up, but nothing

[Julia Richter (Joint Fiscal Office)]: They were very clear

[Ann Cummings (Chair)]: that dwelling included condos.

[Kermit "Kirby" Gulick (Senate Counsel)]: Condos, the short version is that most condos are going to go onto the ground as their own parcel with a portion of the value of the land assigned to it. The thing I would flag is that the classification system is built around the concept of parcels and how parcels are used when it comes to the mixed use questions that we walk through and things like that. Is it looking at

[Speaker 0]: a parcel that's going on in the parcel?

[Kermit "Kirby" Gulick (Senate Counsel)]: We have a definition the only definition parcel we have is for the grand list, I would say there's a difference between how how it's defined on the grant list

[Jake Feldman (Vermont Department of Taxes)]: and how you might if

[Kermit "Kirby" Gulick (Senate Counsel)]: you consider having a span number as its own parcel, that is not the same definition as what the grant list definition. Obviously, there's some ambiguity right now about what a parcel is, but a lot of the condo discussion was centered on does it have its own span, and let's call it its own parcel that way. And in the long run, whether legally having your own span number released through your parcel, think, is more of an open question, and it's just something to be aware of as this evolves and we're working on this issue. I mean, it's a pretty niche area, not a huge red flag, I would say, at this point, but we should probably be aware that, yes, this system is gonna be built around parcels, and do we all mean the same thing when we say parcel? Because if we start talking about span numbers being parcel, that might not be what everyone thinks of.

[Ann Cummings (Chair)]: Span numbers are used by the haricters.

[Kermit "Kirby" Gulick (Senate Counsel)]: A a span number is what a parcel is assigned to be an individual parcel, but in this case, a condo having its own span, it would mean that the square footage of land on the ground

[Ann Cummings (Chair)]: Yeah.

[Kermit "Kirby" Gulick (Senate Counsel)]: Would have would actually, in this case, have multiple span in first. It would be each condo would have its own, and the underlying land would have its own span, but that span would be considered an inactive parcel. That's the way it's treated, which so so we can we can apply the system that we have to to treating span like their own parcel. I would just flag that there might be some ambiguity about

[Ann Cummings (Chair)]: what is parceled mean. A blister come in and walk us through this?

[Jake Feldman (Vermont Department of Taxes)]: I I don't I just don't wanna

[Ann Cummings (Chair)]: make the it's a complicated system. I don't want us to make it worse.

[Kermit "Kirby" Gulick (Senate Counsel)]: It's my my concern is worse than the page and making sure we're all tied with the same thing. I think that we all have a pretty good understanding of how things currently work, so I don't know that you need testimony about how do things work.

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

[Kermit "Kirby" Gulick (Senate Counsel)]: but it is something to keep in mind with, like, like, when we talk about parcels, are we do we need span number? And if so, maybe the bill language should indicate that. Currently, the definition of parcel for the grand list, I don't know if I have it in front of me, but more or less, it is a parcel of land and all of the improvements on that parcel of land. Yeah. That doesn't really match when we start saying the condom is because you're not talking about land at all.

[Ann Cummings (Chair)]: No. Talk about dwelling on. Oh. And sometimes yeah. Like, it's, like, really welling is on. Okay. Sometimes they go off.

[Kermit "Kirby" Gulick (Senate Counsel)]: So yeah. So so so it's do you do you understand? Like, it's not it's not a major problem, but you've been it could become Well,

[Ann Cummings (Chair)]: I think it's we go through this because we have a system that was set up for the current system where there's homestead, non homestead commercial, and we're adjusting. And I don't think any of us know there's a system within your town hall and within property valuation that works in its own language and we want to make sure that we know what we're doing. I'm inclined to especially Burlington says you have to be owner occupied which is the place where you have it's one of the towns that has a large number of short term rentals, and probably big enough buildings, so you could have six units. It's even in big Victorian houses, if you're just doing rooms, you'd be a rooming house, I think, because you have to have kitchen and separate sanitation. Okay. We're gonna let Kirby take a breath, and we're gonna peek Alright. To animal full teeth.

[Hillary Chittenden (Office of Legislative Counsel)]: For the record, Hillary Chittenden's office of counsel. As requested by committee yesterday, I prepared an amendment which, in several places, removes any reference to what the director of animal welfare settings would be of security in rules and replacing it with a report back on December 1 to all relevant Copyright Committees, and the interim security bill currently sets, instead of lasting until rules have been approved, it would last until legislation of statutes. That's you're gonna be. Okay, that's the concern. Who has the authority to say peace has become

[Ann Cummings (Chair)]: somewhat of our ability because it has been of reaching over the line. So rather than say, you can set in rule what the fees are, you do the study and bring it back to us and tell us what this would cost. I don't we probably aren't gonna be able to set fees high enough to cover the cost, but we can at least know what the whole what the you know, we should know what the actual cost is and know where we're coming up short.

[Hillary Chittenden (Office of Legislative Counsel)]: The question we asked today about where else we delegate rule making authority like this, I can't say we did a comprehensive sweep, but the one instance we came up with was the Department of Forest and Parks. Very bad place to go. Just providing information. I'm in no way advocating for something else.

[Ann Cummings (Chair)]: It's one

[Hillary Chittenden (Office of Legislative Counsel)]: of the slap that around for this happens. Noted. I will not provide

[Ann Cummings (Chair)]: this information in the future to the. No. We will say it is rare, and we caught them too. So that is the amendment. I would love a motion.

[Thomas Chittenden (Vice Chair)]: I move favorably h five seventy eight. That would amendment draft number 1.1 dated 05/07/2026.

[Ann Cummings (Chair)]: That's a motion to amend.

[Thomas Chittenden (Vice Chair)]: I feel like when it's the committee report,

[Speaker 0]: you can do one

[Thomas Chittenden (Vice Chair)]: in one.

[Ann Cummings (Chair)]: Do it as amended?

[Kermit "Kirby" Gulick (Senate Counsel)]: But I could be wrong.

[Thomas Chittenden (Vice Chair)]: No.

[Ann Cummings (Chair)]: Alright. Paper. On that paper. That's what you've got in the paper.

[Kermit "Kirby" Gulick (Senate Counsel)]: You got

[Ann Cummings (Chair)]: it. Right? That's what we're doing. Senator Chittenden knew that we approve h five seventy eight as amended.

[Thomas Chittenden (Vice Chair)]: Move it favorably with amendment.

[Ann Cummings (Chair)]: With amendment, which we just went over. Is there any further discussion? Any further amendments? If not, all those in favor say aye.

[Christopher Mattos (Clerk)]: Aye.

[Ann Cummings (Chair)]: Opposed say no. We all voted for it. You can check it off. I call that seven zero. If we aren't all voted for it, do a roll call. Okay, thank you. Absolutely.

[Thomas Chittenden (Vice Chair)]: Would you like to report us?

[Speaker 0]: Want me to take this one since the module is here?

[Ann Cummings (Chair)]: Okay. Thanks, Chris. Now go. Here. It's ten. You can't do that. I'm not gonna give you a break for the day. I'm gonna try and get us out of here before 06:00, and they opened a reasonable chance at that. So Cameron looks like it's gonna be along with next week. I thought we were going to get extra time, But if we're going to be on the floor until 02:00, we are not going

[Speaker 0]: to get extra time. Yeah. And

[Ann Cummings (Chair)]: Maybe by Wednesday, we'll be ready in the end, Bill, but I don't know. Okay. So, Cameron, yesterday I'm not even sure what senator Romkins was asking for, but the issue came up that if you rented three thirty days, you came under landlord tenant law, and that was a long that was the definition of long term rental. Mhmm. Some of us saw that as putting an gaping hole gaping hole for her. In the long short term rental that we're looking at and trying to make sure that I guess we're talking about landlord tenant law, and this is for tax purposes, make making sure that we have that we are allowed to do that and then making sure that what we're doing is clear.

[Cameron Wood (Office of Legislative Counsel)]: For the record, Cameron Wood, Office of Legislative Council, just make a quick comment. It appears that senators Brock and Chittenden didn't get enough of plan for this morning for three hours. So

[Ann Cummings (Chair)]: Maybe we should've just asked them. You

[Speaker 0]: guys keep seven seven six?

[Jake Feldman (Vermont Department of Taxes)]: Oh. No. No. We don't want it.

[Cameron Wood (Office of Legislative Counsel)]: Here's what I will mention as regarding the landlord tenant piece here. I'm not aware of the details of the bill that you were reviewing yesterday. I'm not aware of the details of the the language, you know, specifically, so I I won't necessarily speak to that. But I do think it's probably a good idea to maybe divorce the thoughts or the concepts of what you're dealing with in the tax world having some sort of implication or driving of the application of landlord tenant statutes. The Landfill Agreement Chapter, the Residential Rental Agreement Chapter in Title IX, there is no time frame that when you pass some sort of day threshold, you become a tenant by default. The landlord tenant relationship is created by the intent of the two parties, and there is no obligation that you have to rent a unit for a specific amount of time in order to establish a landlord tenant relationship. You can have a landlord tenant relationship for rental occupancy that's on a week to week basis, and the landlord tenant chapter even contemplates that because it discusses rental agreements that are on a week to week basis, and how much notice you have to provide if you terminate a rental agreement that's based on a weekly basis. So the agreement doesn't have to be writing. It can be oral. You can have an oral residential rental agreement, And so the courts are gonna look at what are the intended parties. Did you intend to enter into an agreement whereby individual have exclusive use of a given space, and there's just no there's no time requirement on what that is. I think the longer that you live somewhere, the more argument that you could make and the more evidence there's gonna be to point to there being a a landlord tenant type relationship. But the only thing that I've seen and and, senator Chittenden, I see you you wanna jump in. I'm just gonna the last two points. When you look at the residential rental agreement chapter, it specifically excludes transient occupancy of the hotel, hotel, or other Latin languages or other lodging that is subject to the meals and rooms tax. And then when you go to that definition of hotel, that includes short term rentals. So that's how you know you're not talking about landlord tenant is if you're talking about a hotel or you're talking about short term rental. Those are specifically excluded from the landlord tenant chapter. And then the last thing I was gonna comment is when you look at the meals and rooms chapter section, section, that talks about if you're in a hotel, and, Harvey, forgive me. And if I get some of this wrong, feel free to jump in because we're talking about tack now. I'm a late lieutenant. When you look at the meals and rooms chapter and you look at the definitions, it says that if you've been in the hotel for longer than thirty days, you become a permanent I think it's a permanent occupant or something. You know? I have to fill up the exact line.

[Ann Cummings (Chair)]: So do find out, like, to a business person that's going to some kind of a training course and you can do a longer term rental and then maybe other arrangements like that.

[Cameron Wood (Office of Legislative Counsel)]: But that definition, that ease of the meals and rooms, again, it's not, that doesn't automatically, by you staying longer than thirty days and impacting meals and rooms taxes, that by itself doesn't automatically create a landlord tenant relationship.

[Thomas Chittenden (Vice Chair)]: Language. Page 100 to page nine fifty five, if you want to see the language in question, I want to crystallize what I think is the concern. If you look at that, it acts like mission for long term rental. It adds an additional threshold that a dwelling unit, so on top of the thirty days, on top of the bonafide, a bonafide, landlord tenant also says the dwelling unit with combined rental periods in the current calendar year for a total of at least six calendar months, which need not be consecutively. I I believe what the concern is, and I'd love to hear you reflect on it is, as much as landlord tenant policy is separate and is not as independent separate, there will be landlords seeking out this tax benefit to qualify as a long term rental, which would very likely impact the landlord's preference for terms or conditions and contracts that abide by this definition. So that's, I think, where senator Rob Insale is saying this definition will drive landlord behavior altering landlord tenant constructs. And I think that is,

[Cameron Wood (Office of Legislative Counsel)]: and I don't want say accurate, I'm not trying to pass a value statement on what you're saying. I think that is rational argument on a way to think about it. Everything

[Jake Feldman (Vermont Department of Taxes)]: that

[Cameron Wood (Office of Legislative Counsel)]: you do is tax policy influences behavior, right? And so you know, if you're setting it up to say that, you know, you have to rent it out for, you know, six months at a time, and it doesn't have to be consecutive, and a landlord decides, okay, I'll do six one month term rentals, you know, to meet that six months, that's possible. And does that, you know, does that alter a landlord who may otherwise rent it out over a year or rent it out for six months? Yes. I could

[Jake Feldman (Vermont Department of Taxes)]: see that. But it

[Cameron Wood (Office of Legislative Counsel)]: but again, it just that's not altering anything in the landlord tenant relationship. It may be altering how an individual utilizes that property. What I just want to to make clear is it's not gonna alter the law of now the landlord tenant relation. There's tenant collection. Yeah.

[Ann Cummings (Chair)]: Yeah. People will change. I think most short term rentals are not for months. They're they're b and b, know, and it's four days. Maybe it's a week or two, but it's not generally for a month or two. Think it's it's it's short term. I don't think we wanna set it up so that you could yeah. I think as we heard it yesterday, you could read it to your best friend from your month in the summer, which that friend may or may not occupy it, and you could rent it to him for $6, and then you were in long term rental and you weren't a second home even though you own to me, a second home is one on which you are not that is not your primary residence. You are not filing unless you're earning money here, we get into if you're really honest and you came up with a great business deal online, you owe taxes to Vermont. But generally, if you're up here skiing, you're not paying. You're not filing an income tax with the state of Vermont. You're not yeah. But

[Thomas Chittenden (Vice Chair)]: the landlords that currently offer I'm sorry if I'm pronouncing that right. That's alright. If they currently offer a thirty day term for a new dependent. They are more likely within the silencing, if I was a landlord to offer only six month contracts just to ensure I get the past benefit. So I do think this would happen. That's

[Ann Cummings (Chair)]: Like, that's a long term. Right? That's six months.

[Thomas Chittenden (Vice Chair)]: I know. But they will be less likely to offer the one month terms.

[Ann Cummings (Chair)]: Because Well, they I I

[Randy Brock (Member)]: think it's only got six times. You know? They they would they would qualify in this. And I think that in some ways, this is a policy choice of trying to get more stable long term housing that is not short term rentals, that is not, you know, renting for just a month and a summer. Yeah. This is this is trying to get more more housing in Vermont too in

[Hillary Chittenden (Office of Legislative Counsel)]: some ways and and and not allowing people to skirt the tax system in order to, you know, have short term rentals. At least some of the short term rentals would qualify as long term housing.

[Ann Cummings (Chair)]: A room on the 3rd Floor suite with a dorm fridge and a microwave would be perfectly adequate short term rental on there for the weekend. It wouldn't be a long term rent.

[Hillary Chittenden (Office of Legislative Counsel)]: Right. You wouldn't make the definition. It wouldn't, but

[Ann Cummings (Chair)]: when I we first started this and I got all the emails from people, the ones that told me I bought a house, I bought three houses, and I rent them out short term rental and you should don't be taxing me. I wrote I emailed back and I said, so you have a facility that could be a long term rental. Why don't you rent it out long term? Every one of them said it takes too long and it's too expensive to get rid of a bad tenant. Yeah. A good short term tenant is out of there in two days. Mhmm. And that is part of the balance. We've got to strike if we want those single family homes or apartments back in the long term. And I don't know that we can accomplish that with tax policy alone. I don't think we can. No. The cost benefit. No. They're gonna

[Randy Brock (Member)]: do the cost benefit, but I think that this is trying to make sure that if you're going to get the the the tax benefit of beef, the non homestead, non residential. Thank you. That you are actually that, that you're not a short term rental.

[Ann Cummings (Chair)]: But we will right now, we need to get a rational, doable, understandable policy in place. There will be some people that change their behavior because it's their tax policy. If we raise taxes, some people will move out and other people might move in or maybe more people move out. When those behaviors become apparent, We are having been through act 60,

[Thomas Chittenden (Vice Chair)]: which

[Ann Cummings (Chair)]: not too many nobody in this room, and I wasn't on this committee when they did it, But we need people in all legislated. That's right. Caledonia. 60? But we we used afterwards, we made adjustments. Yeah. My first year, we did act 60, and my second, we did civil.

[Thomas Chittenden (Vice Chair)]: So I'll say what I said yesterday, we've got four years to adjust this so I'm fine with just moving on, but I will say the language in this current configuration is a landlord that's trying to do long term rentals, only rented it for five months out of the year, and then the other seven either couldn't find a tenant or otherwise vacant, maybe they were updating it, I think they wouldn't meet this criteria. So maybe it's just that if they only rent for at least thirty day increments full stop, not allowing for short terms after that, anything shorter than thirty days, maybe that would address some of our concerns, but we have the next biennium, people will have the next biennium to figure that out, it's fun.

[Ann Cummings (Chair)]: Yeah, I mean to say if it's available for rent Yeah.

[Thomas Chittenden (Vice Chair)]: But with vacancy

[Ann Cummings (Chair)]: rate, unless you're pricing your rent at $6,000 a month for a standard apartment, I mean, you can manage to not get it rented. But if it's if you're renovating it, it's not available for rent.

[Thomas Chittenden (Vice Chair)]: I think this will be fixed over time as the tax department comes back to us with circumstances and concerns.

[Randy Brock (Member)]: If you're renovating it and it's not available for rent, if it's just your, it's still a commercial property, right? I mean, it still would be

[Kermit "Kirby" Gulick (Senate Counsel)]: So, yeah, so a few things to unpack. I think the assumption, if a landlord and you have a unit for long term rent

[Thomas Chittenden (Vice Chair)]: and that's your business, right,

[Kermit "Kirby" Gulick (Senate Counsel)]: that you have an incentive to maximize how long how much you have a tenant in there. Right? Like, that's the the more that is occupied with tenant, the more so that is the presumed incentive behind this. So the thirty day period then is to get at leases for long term rents that are typical, and the six month period is to make sure there's not too many gaps between those thirty day periods. With the presumption that you are going to try to maximize how much you have a tenant in there, that's truly what your business is, is to have long term renters. Six months means that you could have a five month gap for renovations or whatever. With the current rental market, we know that what statewide, there's like a 2% vacancy rate or something. Like, it's like not a problem to get tenants in there and if you're motivated to get tenants in there. So that so those are the presumptions behind it. I think when it goes to landlord tenant law, when we were first drafting this many months ago, my thought was this affects landlord tenant law and did not impact by the way, everything here is absolutely wonderful. It indirect it it would indirectly it would not it would not direct the effect of

[Jake Feldman (Vermont Department of Taxes)]: landlord tenant law at all. It's because it's a tax it's property tax law.

[Kermit "Kirby" Gulick (Senate Counsel)]: Indirectly, might it how might it influence landlord behavior would be the thirty day period part of it, which is not the emphasis this is not the emphasis of your conversation because everyone's been saying, oh, thirty days is good. Well, it means that the landlord behavior could change so that leases of thirty days are a very high priority because you need that in order to qualify for classifications as opposed to say fourteen days or something like that. I think that is the area here where landlord behavior would be effective. But the motivation to have a

[Thomas Chittenden (Vice Chair)]: tenant in there as much as possible, which it

[Jake Feldman (Vermont Department of Taxes)]: would seem more than six months, I don't

[Kermit "Kirby" Gulick (Senate Counsel)]: think that that would be affected so much from, or at least that's been my thought working on it. We got four years.

[Randy Brock (Member)]: Mean, generally landlords want long term stable good tenants. Tenants. They get them in there. They want them to stay. So they're not gonna just keep turning it over with thirty day rents if they can have a stable client in their unit.

[Cameron Wood (Office of Legislative Counsel)]: Unless they're getting much, much higher rate for that thirty day period than they would otherwise, and they're in an area where that kind of turnover in fact occurs. Providing lodging, for example, for medical professionals who travel.

[Thomas Chittenden (Vice Chair)]: They have a property manager in the old law, that sounds good.

[Cameron Wood (Office of Legislative Counsel)]: The red page for it.

[Ann Cummings (Chair)]: All the headaches.

[Thomas Chittenden (Vice Chair)]: You guys wanna be labor this point for another half an hour?

[Ann Cummings (Chair)]: No. No. I think I don't think this committee had to reach its breaking point. Yes. I think