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[Senator Ann Cummings (Chair)]: Walk us through this bill. We are live. We are back. And we are on to age six fifty. This is right? Yes. Sitting in accolades for educational technology products. So this case is coming to us from housing and economic development or Ed?
[Cameron Wood (Office of Legislative Counsel)]: Senate Ed.
[Senator Ann Cummings (Chair)]: Senate Ed, okay. Then walk us through.
[Rick Segal (Office of Legislative Counsel)]: Good afternoon. Rick Segal with the Office of Legislative Council. So, H650 is an educational technology bill. Page one of the bill is a technical correction to the underlying chapter of student protection of personal information, student privacy. The correction is the current language has a chapter for enforcement, while it should just be that subchapter that appeared to be an estate made several years ago in that section. So nothing super substantive here, just correcting a technical issue there.
[Senator Ann Cummings (Chair)]: You've been doing a lot of large scrutiny corrections yesterday.
[Rick Segal (Office of Legislative Counsel)]: Of my yeah.
[Senator Ann Cummings (Chair)]: No. Of everybody. I think we're rushing things. Yesterday, it was a comp, but it changed the beanie.
[Rick Segal (Office of Legislative Counsel)]: Now this was years ago, Matt, in my my. I can't speak to my colleagues. So on page at the bottom of page one begins the subset portion, add in a new subchapter in this chapter 62, file nine of educational technology, which sets forth some registration requirements. It defines what an EdTech product is. It is hold on. They'll have the this in case this in case sorry. This is the ask pass my house version. Let me pull up the Senate version. Okay, same first page is the same. So we have the same EdTech sub chapter registration defined with an EdTech product is. It's any software, application, or platform that collects, processes, or transmits human data, and that is used for teaching purposes teaching and learning purposes at the School of Vermont. A filing is any type of filing that the Secretary of includes initial registration amendments, a report, those kinds of things. A provider of an educational technology product is a person that provides an NSAID product that is in use at the school, and the school includes public schools and independent schools that are approved under 16 BSN sixteen sixty eight. School District also has the same meeting as the 16 BSN Alumni. So a person that registers as a provider of an EdTech product, when they make that filing, so this would be if they register with the state as an LLC, if they file the reports, as part of the reporting requirements, would also provide the following: The name and email address of the person, website address, a link to the most recent privacy policy and terms and conditions of each product in use in any school, the name of each school in which the provider operates pursuant to a paid contract, the name and a brief description of each product, also indicating which products are offered at no cost to schools, which products are known by the provider to be in use in any school, and finally, an attestation that each product meets, current state law, includes a student privacy law, the Remark Agent Program Design Code Common Sense Code, and then all other relevant federal and state privacy laws.
[Unidentified Committee Member]: That's really quick, I'm sure.
[Rick Segal (Office of Legislative Counsel)]: Up above it says initial filing amendment or whatever. If the business isn't registered in the state of Vermont, their headquarters isn't here, would
[Cameron Wood (Office of Legislative Counsel)]: we ever know? Or is this a separate thing where if you do provide this product, you
[Rick Segal (Office of Legislative Counsel)]: do have to register. The the idea is to capture business that, has customers in Vermont, and you should be, at the very least, establishing a foreign business doing business in Vermont. So if you're a California Texas Corporation LLC, a business who does business in Vermont, either online or in person, should be registered with the Central State as a foreign entity. So, like, Google, the center, they register They should not
[Senator Ann Cummings (Chair)]: This is this is doing the insurance type foreign entity for me outside of Vermont? Right.
[Rick Segal (Office of Legislative Counsel)]: It's a pass through, the state has a record of who you are, you have some registered agent in the state, so you get sued, and you sue medical The paper. Right. That's what we should be doing. The house version, or at least the introduced version, did have some enforcement with this. There were some registration fees with this. They were taken out by the senate. So it's kind of a honor system to some extent. So if an EdTech provider doesn't register, there wouldn't be any penalty besides the underlying penalty of doing business without a credential.
[Senator Ann Cummings (Chair)]: And is that underlying fee why it's here?
[Rick Segal (Office of Legislative Counsel)]: Yeah. So as introduced, there was well, and I think Ezra has some information.
[Senator Ann Cummings (Chair)]: Oh, okay.
[Rick Segal (Office of Legislative Counsel)]: But yes, as introduced, there was not just a fee, but also a penalty if you did not raise your
[Unidentified Committee Member]: fee. Okay.
[Rick Segal (Office of Legislative Counsel)]: Those are gone.
[Senator Ann Cummings (Chair)]: All right.
[Cameron Wood (Office of Legislative Counsel)]: When you talk about a product,
[Unidentified Senator (Committee Member)]: is that a product that has to be sold directly to the school or could be sold through a third party such as distributor of products?
[Rick Segal (Office of Legislative Counsel)]: So it's any product that, as the definition says, that collects, processes, or transmits student data. So it would be a provider of that product. And the provider means a person that provides it, which is
[Unidentified Senator (Committee Member)]: So it could be a distributor rather than the manufacturer of the products. And then the question is, does the distributor have any control of what's in the product?
[Rick Segal (Office of Legislative Counsel)]: This was briefly discussed in the committee, but they were eventually happy with the way it was ordered.
[Unidentified Senator (Committee Member)]: So could it would it typically a distributor the distributor is eBay, but the distributor is some other Joe's educational products company who purchases products or gets products from another entity, and then that entity is the product that is sold.
[Rick Segal (Office of Legislative Counsel)]: So my read of it is, for example, eBay would not be. So they're kind of a middleman to some extent, or they're just distributing the product. Would be I would limited to
[Senator Ann Cummings (Chair)]: to distributors that are just here.
[Rick Segal (Office of Legislative Counsel)]: So Google, for example, they have Google Classroom. Right? Right. It's a large entity, but they also provide directly this product that serves teaching and learning purposes. Mhmm. So I can't say that it's not always going to be this distributor, but I think it's meant to target the entity that is actually
[Unidentified Senator (Committee Member)]: making that product And to that's point is whether or not you could get to the entity making the product. It's a product that's being sold and provided to you through a distributor. You're buying a product and and it's prepackaged, it's got all the software and so on necessary to operate it, the instruction manuals and so on, and you're buying it as a commodity from some other product. You wouldn't expect eBay to go in and repair that product and change it to meet your specifications. They're selling it as a commodity. And I'm just wondering how this legislation deals with that kind of situation, if at all.
[Rick Segal (Office of Legislative Counsel)]: I think that there could be a question, but if you want to exclude distributors or if you want to
[Senator Ann Cummings (Chair)]: Let's Just keep walk. Walking
[Unidentified Committee Member]: through them.
[Senator Ann Cummings (Chair)]: May become wrong. Okay.
[Rick Segal (Office of Legislative Counsel)]: Finishing up with that section, moving on to section two, a totally separate section. This is a two year pause on chatbots in schools. A is the intent section, I won't read that, you're welcome to read it. Subsection B is the subset portion. So subject to the exception in subsection C, no school shall allow its students to use a chatbot for teaching and learning purposes until 06/30/2028. The exceptions are that a school, principal, or head of school shall have the authority to grant an exception, provided the chatbot is educationally warranted, which is not defined, so it would be up to the principal or the school to make that determination. Submission two is a different type of exception where a student that has a five zero four plan is the kind of accessibility for a plan with the school that requires us to chat bots, they would be allowed to use that chat bot with or without the principals.
[Deborah (Joint Fiscal Office)]: Approval.
[Rick Segal (Office of Legislative Counsel)]: Any definitions? Chatbot is any AI, algorithmic, or automated system that generates information via text, audio, image, or video in a manner that simulates interpersonal interactions or conversation. Pretty broad definition. And school is a public school or independent school from '16 BS 08/1966. And we shall provide notice of this provision, and if necessary, provide support to a school, implement these provisions on and on field August 1 of the sharing.
[Senator Ann Cummings (Chair)]: What is this on paragraph two, line 14, page four? This I understand that it's part of the IEP or five four plan. Provided, however, that if such use is required to meet an international student's special education needs or as part of a disability and an international student does not have what what is this in here?
[Rick Segal (Office of Legislative Counsel)]: This so this language is from the cell phone bill that the legislature passed last year.
[Senator Ann Cummings (Chair)]: This might be a translation service.
[Rick Segal (Office of Legislative Counsel)]: So there are apparently some international student sorry. That doesn't have some reason, maybe they're not eligible for those other plans. I don't know. The five zero four plan.
[Senator Ann Cummings (Chair)]: But this is just saying about international students special education needs or disability accommodation. What about just an international student? And we international student, does that mean, an exchange student, or does that mean a student who doesn't speak English, or what does international student student or, yeah, I mean, new American or what? Yeah. It's a weird I know. Yeah. It's not a term that we usually use. It's in high in college, it's used in international students.
[Unidentified Senator (Committee Member)]: I thought international student typically means someone who is from another country here usually temporarily.
[Senator Ann Cummings (Chair)]: Exactly. Like an exchange student or something. This seems like strange wording. And then and then it is it only for if they have special education needs, not if they have just general translation or individual students, international students? Bet that's what we're about. So maybe
[Rick Segal (Office of Legislative Counsel)]: a question about St. James. Yeah. As this came word for word from the cell phone school bill, which was going to be placed into this to capture anything that subdivision one does not capture, or the first three lines of two.
[Senator Ann Cummings (Chair)]: What are we I guess I'm trying to figure out what problem we're trying to solve.
[Unidentified Committee Member]: With the chat box general or with the bill with any any Do
[Senator Ann Cummings (Chair)]: I get to ask that too? I don't know if it's fair to ask you.
[Cameron Wood (Office of Legislative Counsel)]: Senator Robinson, I would love to speak up for this.
[Senator Ann Cummings (Chair)]: No. She's been hearing out of this week.
[Cameron Wood (Office of Legislative Counsel)]: And she's the presenter of the bill, but I I think what you might be trying to solve by this Yes.
[Deborah (Joint Fiscal Office)]: My understanding Maybe. So
[Unidentified Senator (Committee Member)]: There are some
[Senator Ann Cummings (Chair)]: real concerning things about AI chatbot and interacting with kids and how it's very upregulated in what they do, what they
[Cameron Wood (Office of Legislative Counsel)]: tell kids. So I I think the intent is positive. I just don't know if this approach is necessarily the right tactic. I have a lot of confidence in how our schools are run to be less out of perspective.
[Unidentified Committee Member]: Yeah. I I agree. It sounds like Local control you mean. It's right, buddy. Work. How do I apply
[Senator Ann Cummings (Chair)]: Okay. But just on the screen, it's still alright. Alright. Let's keep going.
[Rick Segal (Office of Legislative Counsel)]: The last section is the working group that would be a legislative worker group. Look
[Unidentified Committee Member]: at that.
[Senator Ann Cummings (Chair)]: I'm gonna nominate the center of math folks for this one.
[Unidentified Committee Member]: I think it'd be education vendors.
[Rick Segal (Office of Legislative Counsel)]: So, well, let's see who the membership. So, the purpose is to study ed tech products in the state and provide any recommendation on how it can certify such ed tech products. Membership is three current members of the House, not involved in the same party, one by the Speaker, and three members of the Senate,
[Deborah (Joint Fiscal Office)]: not from the same party.
[Senator Ann Cummings (Chair)]: Legislators definitely, definitely have this kind of expertise. We do. Yeah. We should definitely be surprised. That's spoiler plate. Let's keep going. It's Friday afternoon, folks. Anyone this was Steve.
[Rick Segal (Office of Legislative Counsel)]: The working group consults with AOEP, the Vermont Superintendent's Association, the Vermont Independent Schools Association,
[Unidentified Committee Member]: one, create a list of
[Rick Segal (Office of Legislative Counsel)]: products in use across schools. In consultation with the Secretary of State, review all ed ed tech product registrations pursuant to this bill that's creating that registration process. Interview stakeholders, including teachers and children's privacy advocates, to determine the benefits and harms of using ed tech products in the classroom, including chatbots. Recommend whether students or parents of students should have the right to opt out of using EdTech products as part of their education. And as it pertains to the certification of EdTech products for use in schools in the state, determine what criteria to use when evaluating these products or certification, determine which state entities will be charged with the certification process and what extent, and recommend whether any third parties, third party services should be utilized to assist in certification. The working group will have the assistance of Cameron Wood and Cameron Wood. Oh. That's true. Status working group. Maybe Jonathan Gray.
[Senator Ann Cummings (Chair)]: He didn't try to ask you to do this.
[Rick Segal (Office of Legislative Counsel)]: I'm trying to match their level here. Are doing a great job. Left counsel JFO would be involved in the working group's job. The report would not be reported due to proposed legislation. So on December 30, the working group would submit its findings through proposed legislation to house commerce and senate economic development and education, also house education. Meeting will begin on or before on We can Okay.
[Senator Ann Cummings (Chair)]: We can
[Unidentified Senator (Committee Member)]: Alright. Through
[Senator Ann Cummings (Chair)]: this. That's it.
[Rick Segal (Office of Legislative Counsel)]: Effective date is July '6. '6. Okay.
[Senator Ann Cummings (Chair)]: Well, obviously, from our emails, there's some concern with this in the educational community. Should I say we will have the Bs in next week? School board, superintendents, principals, at least the NDA and
[Unidentified Senator (Committee Member)]: Expecting an amendment that would show that each legislative member of the group shall have no prior experience or confidence in the area of
[Senator Ann Cummings (Chair)]: the location. Absolutely. Would Clearly. I just just to drive that point home. I think it's Yeah. Boots, belts, and suspenders.
[Cameron Wood (Office of Legislative Counsel)]: My concern will still be how much of what we're kinda constantly changing is germane of finding Hansen's.
[Unidentified Senator (Committee Member)]: There was a
[Senator Ann Cummings (Chair)]: in there, we can do whichever we want. We can put a fee in for being on committee.
[Cameron Wood (Office of Legislative Counsel)]: We don't pay it. Okay.
[Senator Ann Cummings (Chair)]: Okay. You just have to pay the fee to be appointed. Okay. I think, though, we should take another look. I'm not comfortable if there's that much. I at least need to hear what the concern was. We heard the concern with the charge in the bottle bill. I think we at least need to hear the concern. Things move quickly this time of year and sometimes we miss something bigger than a comma, Well, we should
[Unidentified Committee Member]: start hearing concerns on both sides now.
[Senator Ann Cummings (Chair)]: And I would I don't know what is a student privacy advocates?
[Rick Segal (Office of Legislative Counsel)]: There are apparently some groups that have been suggested that could work to help certify this. I couldn't name them for you, but it's been
[Cameron Wood (Office of Legislative Counsel)]: asked.
[Deborah (Joint Fiscal Office)]: That's the idea.
[Senator Ann Cummings (Chair)]: Okay. Do they know anything, Okay. We will we will hear from the bees. We will at least hear what their concerns are. We will hear from economic stuff from education and hear what they're trying to do. And And from us too. Well, then we will decide what we ought to do. Alright. Senate goes on guard. Mhmm. Instead of if we're gonna hear from education. Or do you mean the committee or from the From
[Cameron Wood (Office of Legislative Counsel)]: the from
[Unidentified Committee Member]: the field? We will hear Go back. From First
[Senator Ann Cummings (Chair)]: of all, soup the bees, and we will hear from the education committee, the reporter or the chair, whoever, I guess it is Senator Ron Hinsdale, we'll get some her and then we will take a look. Okay. Here's everything. This is joint feedback from the bees on our on our website about this. I know I haven't gotten to my emails yet today, but I know I've had several on this. I I mean, I'm not a B, but I was on a school board for a long time. And I can tell you that making this worse would be an administrative nightmare. Unless we're going to fund positions in schools,
[Unidentified Committee Member]: I'm not comfortable with
[Senator Ann Cummings (Chair)]: And we're trying to ask our students to do some major work right now. Want them to be distracted by this. We We will have everybody. We're going to go on to another
[Ezra (Joint Fiscal Office)]: So, in my enthusiasm, I post that a full Zoom link, so I'm gonna jump back
[Unidentified Committee Member]: meeting expectations on Fridays. Yeah. Alright. So I will go ahead and just share this with you. Okay. Alright.
[Unidentified Senator (Committee Member)]: So as you've heard from Rick,
[Ezra (Joint Fiscal Office)]: this bill would do a few things. Primarily, it would require educational technology product providers to register with the Office of the Secretary of State and provide some additional information about themselves and schools or districts that they do business And that's the primary fiscal impact on the Department of Health today. Communicating with the here. Well, I think the reason is here is like, well, that's up to the Secretary Blumer, but as Rick said,
[Unidentified Committee Member]: at one point there was
[Senator Ann Cummings (Chair)]: A fee.
[Ezra (Joint Fiscal Office)]: There was a fee. This is just an additional fiscal piece here. Speaking with the Secretary of State's office, I'm estimating between 70 and 90,000 in fiscal impact for fiscal year 2027. The bulk of that would come from the cost to the Secretary of State's office to update their IT systems. They've communicated to me that that could be anywhere from 60 to 80,000 to update their systems to absorb this additional information from those registered.
[Senator Ann Cummings (Chair)]: Okay, so at this point it's a wash. But we're may well, maybe, if we're lucky, cover
[Ezra (Joint Fiscal Office)]: So as far as So there is no fee yet right now. So this would just fall to the, you know, Secretary of State's office, their budget.
[Senator Ann Cummings (Chair)]: Thank you, Madam Chair. So Ezra, this will not cover the cost of putting new positions in all of our school districts to cover the administrative burden of the program. Is that correct?
[Ezra (Joint Fiscal Office)]: Yeah, this is only the Secretary of State's IT calls. Got it. If there was additional burden on school districts, that would We can't estimate if they would hire new people or if they would
[Rick Segal (Office of Legislative Counsel)]: yeah, yeah, that's But that's Yeah,
[Senator Ann Cummings (Chair)]: are some schools
[Cameron Wood (Office of Legislative Counsel)]: out there.
[Unidentified Committee Member]: There's also an additional $10,000
[Ezra (Joint Fiscal Office)]: per diems and expense reimbursements that we're estimating for the legislative working group.
[Cameron Wood (Office of Legislative Counsel)]: I hear Senator Mattos should be hard enough.
[Rick Segal (Office of Legislative Counsel)]: It just
[Unidentified Committee Member]: happened. Only if it's that we've heard of. Yeah, it's really a good chance. So, that's really the high level. I mean, I
[Ezra (Joint Fiscal Office)]: think Rick walked you through it, happy to
[Senator Ann Cummings (Chair)]: Alright, that is it, fiscal reporting.
[Ezra (Joint Fiscal Office)]: Alright. Those are the two pieces we're seeing, the IT cost and the per diems, any other costs that could happen at the school or district level. We can't estimate that at this point because it would be up to every school or district
[Senator Ann Cummings (Chair)]: They've to signed contracts with these various entities and they can't use the product. I'm assuming that's lost money.
[Ezra (Joint Fiscal Office)]: I can't speak to that.
[Senator Ann Cummings (Chair)]: I know. We can't we don't know. I'm hoping we will hear that from the schools when we get them in. Okay. But that's it. The fees are gone, and there is the registration that would provide maybe enough revenues to update your computer system to get the increased revenue. Alright.
[Ezra (Joint Fiscal Office)]: So that would be a question for the Secretary of State's office.
[Senator Ann Cummings (Chair)]: Okay. All right. Thank you. We are going to go on to another new bill, an acclimating to manufactured homes in limited equity Cameron, you're the lead on this one?
[Cameron Wood (Office of Legislative Counsel)]: Yes, ma'am.
[Senator Ann Cummings (Chair)]: A limited equity cooperative convales association or something similar?
[Cameron Wood (Office of Legislative Counsel)]: No ma'am, is not. Okay. Leave that one. So, for the record, Cameron Wood, Office of Legislative Counsel. I'll share my screen, and we'll start walking through 757. I'm gonna walk through the as passed by house version, and then there are a few changes that are recommended by the Economic Development and Housing and General Affairs Committee that I'll kinda comment through as we we go through. First, the section one is gonna deal with some really more technical changes to the sections regarding the sale of manufactured homes. And first, before I jump in, we're talking about manufactured homes, also known as mobile homes. They were kind of referred to as mobile homes all the way up until the mid-70s when the federal government came in and put in regulations governing the manufacturer of these homes, and in the federal regulations, they're referred to as manufactured housing. There is a specific definition in title 10 that kind of matches that and talks about the dimensions that it has to meet in order to be titled a mobile home, but you might hear me just kind of using that term interchangeably
[Senator Ann Cummings (Chair)]: But it does not mean the prefab homes that are put together in a factory that have wood frames, these generally have metal walls. I wouldn't say they
[Cameron Wood (Office of Legislative Counsel)]: have metal walls, but they're
[Unidentified Committee Member]: built on Yeah. A They're built on a
[Cameron Wood (Office of Legislative Counsel)]: chassis and they are moved into place, and then typically when they're sighted, especially nowadays, they don't move from there, but historically and even today purchasing a, you know, what the federal government would call a manufactured home, it's built on a chassis and it could be moved subsequently. I was corrected I think in house ways and meetings where I was told, well there are stick built homes that can be gooped as well, they are sometimes, and I said, Touche, that's true. But ultimately, these homes are or can be mobile. So was one time. Correct, correct. And so I'll use that term somewhat interchangeably, you'll see a section towards the end where it gives our office the statutory revision authority to go in and change where it's referred to as a mobile home, to change it to a manufactured home in statute, again, to match the federal definition or the federal use of how the federal government, know,
[Senator Ann Cummings (Chair)]: But titles these homes in our
[Cameron Wood (Office of Legislative Counsel)]: what we didn't wanna do, is we didn't want to, as part of this bill, to go in for every instance to change it, because your bill would get very, very lengthy if we were making these, you know, statutory revision changes throughout, and so the bill still refers to them as mobile, it gives us the authority to change it to manufactured homes moving forward. Okay, so again, the first few sections here are about in Title IX, there's a chapter which governs the sale of these phones. When they're sold by a manufacturer, when they're sold by an individual, what you have to do if you're selling it to someone else, you have to go to the clerk, you know, you have to get a sign off that you paid your taxes, the information has to go to the clerk where the home is gonna be moved to, if it's going to be moved, etcetera. So the first change is here in page two with the definition of permanently sited. This is important because if you're selling the home to someone else, and the person who is purchasing the home is locating the home on a land that that person owns, so it's not going into a mobile home park, it's going into their property. If it is permanently cited, then it has to be financed via a mortgage Yep. As residential real estate.
[Unidentified Committee Member]: Right.
[Cameron Wood (Office of Legislative Counsel)]: And so there the house general committee wanted to be explicit that not all of these conditions had to be met in order for it to be deemed permanently cited. So it's been set up on blocks, we've removed the wheels, connected to utilities, skirting has been installed, the wheels are actually been removed, etcetera. Not all of those conditions happen to be met. I would argue that by using the word include, that is already our use of the statute. As you know, we don't include the but, but not limited to, use the word include, etcetera, but this is just a little cleanup from the House General Committee. The next section is about, as I mentioned, when you're talking about the sale of the home, and when does it have to be conveyed via deed versus a bill of sale, and so the best way to look at this is if the individual who is purchasing the home is financing it via a residential real estate mortgage, then you must transfer the mobile home via a DME. There are, depending on where the home is going to go, it's not always financed as a mortgage, residential real estate, could be financed via a personal property loan, but if it's gonna be financed via a real estate loan, it has to be transferred via a deed. And so this section outlines how that is transferred. So again, subsection a here, if you're purchasing it from a dealer after 2008, it's being financed as residential real estate, has to be conveyed via a warranty deed, and then subsection B talks about if it's financed or refinanced as real estate, then it has to be transferred via a deed, and then you get to subsection C, which is about warranty deeds, you get to subsection, pardon the scroll, you get to subsection D about quick claim deeds, As you can see, we're just adding in some language to clarify what section governs what. We've just added a warranty deed for subsection C, and quick claim deed in the subsection below. The other change here that you should note is the strike that sentence. Currently, the statute requires that the individual receive permission from the property owner in order to sell or exclude on the deed, and that is being removed. There can be an argument as to why you want to include the owner of the property where the home is on signing off of the sale. If it's in the mobile home park for example, the owner, you know, the individuals may owe the mobile block rent the owner of
[Rick Segal (Office of Legislative Counsel)]: the park.
[Cameron Wood (Office of Legislative Counsel)]: I also compared to the other committees, you as the land owner may want to be aware when somebody is coming in to move the homes off of your property, given the effort that it takes to do so, etcetera. But the committees felt that, often our committee felt that that was unnecessary and so they wanted to start getting it. All this language here, starting on line 17 and moving forward, this is just the standard form that the statute outlines. It's not required to be used, but it's a standard form that can be used when you transfer via a deed. So again, really more just kind of technical changes, changing wife and husband to spouse on the model form, not a lot of substantive changes there, more I would say is drafting cleanup with clarity. Then we get to section two, where we start talking about limited equity cooperatives, and Madam Chair, I'll start by kind of addressing your question. There is in Title XI, which governs corporate structures, there is a chapter, chapter 14, which governs cooperative housing corporations. So these are corporations that are set up by individuals to have more of a collective homeownership model. So the corporation owns whatever the housing is, whether it's an apartment, could be an apartment building, in some instances it's a mobile home park, where the corporation owns the park and the houses that are in the park, and then you, as an individual member of the corporation, you have a proprietary lease as part of your membership share, and that grants you the right to live in one of the units in the cooperative. A limited equity cooperative starts here on page seven. The difference between just a cooperative housing corporation, which could be for profit corporation, versus a, and I just mean by for profit corporation, I just mean, you know, it is making money on behalf of the members who are shareholders of that corporate structure. The limited equity cooperative subsection A here really outlines its purpose. So the Cooperative Housing Corporation may organize as a limited equity cooperative in order to fulfill the public purpose of providing and preserving housing for persons of households of low and moderate income at the time they purchase their membership share. So it's a cooperative housing corporation that's designed for low and moderate income people, and low and moderate income is defined as with 80100% of AMI. And so the way it works is, the large specific corporation of the limited equity cooperative have to have a formula that's built in to ensure that the cost to the individual member when they purchase that share is a cost that is available to individuals of low and moderate income. The other key piece to know about a limited equity cooperative is this subdivision six, which is when or if the limited equity cooperative ever dissolves so it can only dissolve if the members who are the owners elect to dissolve the corporation if they dissolve the cooperative housing corporation, any assets remaining so starting on line 11 any assets remaining after retirement of their corporate debts and distribution to members of their share, paying them back their share costs, any assets that remain after that have to go to a designated five zero one(three) entity, or to another limited equity cooperative, whose formula is no less restrictive than the one that the cooperative has dissolved. So you're limiting what you can do with the assets of this corporation if it ever were to cease to exist. Okay? I'm gonna pause there with any questions before I jump into the actual changes with the document about here.
[Senator Ann Cummings (Chair)]: Okay, because that's all current law. Yes ma'am. Yeah.
[Cameron Wood (Office of Legislative Counsel)]: Okay, so the changes that you have, here on this subdivision seven. Current law, articles of incorporation require that in a limited equity cooperative, you cannot so lease a unit for more than
[Ezra (Joint Fiscal Office)]: 110%
[Cameron Wood (Office of Legislative Counsel)]: of your proprietary lease costs. Think about it this way. You live in an apartment building. There's five units in the apartment, You're all in a limited equity cooperative, and you're paying $800 a month for your proprietary lease, which gives you the right to live in one of the units. And that's your proprietary lease cost that goes to the limited equity cooperative, it gets pooled, and that's the money that they use to cover whatever the expenses Exactly. Are for the
[Rick Segal (Office of Legislative Counsel)]: Yes, ma'am.
[Cameron Wood (Office of Legislative Counsel)]: So the concern that was being raised in the House General Committee is that for a for some of these limited equity cooperatives that are mobile home parks, the proprietary lease may only give you the ability to put your own mobile home in the park. So in this scenario, the corporation doesn't own the mobile home. The person owns the mobile home. Their proprietary lease, as a member of the corporation, gives them a right put their mobile home in the lot. And so their mobile home lot, their proprietary lease only requires them to pay for the mobile home lot costs, which could in some cases be relatively low, might only be a few $100. And so then if you need to sublease out your home for whatever reason, you're limited to only being able to charge 110% of your proprietary lease. So if your mobile home rent is $100 you can only sublease the entire house out for $110 And there was concern about that, because in some of these parks, as I mentioned, the person owns the mobile home, they may have a mortgage on it, as you mentioned. So that's why you have the changes on page eight, which says that notwithstanding that section, for a mobile home park organized as a limited equity cooperative, the Articles of Incorporation shall prohibit the subleasing of the unit unless the member demonstrates a hardship, in which case the board of directors may grant an exemption from the prohibition. You may say write off, well why are we going to limit it entirely? I can't answer that question. I can say, because that's a policy question for that committee, but I can say it is somewhat in line with the language around cooperative housing corporations. If you have a corporation, and it's designed for members to live there, it's designed as a collective ownership, home ownership model, and so in the statute chapter, in the chapter governing the cooperative housing corporations, there are sections that limit the ability to sublease to only one year at a time, and then it says that 80% of the units within the corporate housing structure need to be leased by members.
[Rick Segal (Office of Legislative Counsel)]: Yeah.
[Cameron Wood (Office of Legislative Counsel)]: So there are other statutory pieces that limit what can be sub leased, how many units can be sub leased at a time, etcetera. So this says, for a mobile home park with limited equity cooperative, no sub leasing unless you demonstrate a hardship, and the unit has to be sub leased to an individual of low or moderate income. Again, that's what the limited equity cooperative is designed for, for those individuals. Okay, then the Articles of Incorporation, if you're going to sub lease it, it says that they have to require that the unit owner shall not sub lease the unit for a higher amount than necessary to cover the costs, which include the proprietary lease, mortgage, utilities that are passed on to the subleasing. That's the first change. HAPPING, PAL, and Mobile Home Park, Limited Equity Cooperative can sublease their So
[Senator Ann Cummings (Chair)]: you can't make the profit.
[Cameron Wood (Office of Legislative Counsel)]: Yes, ma'am, but you can cover your costs. Right. Okay. Then we get to B. B1. There was a lot of discussion throughout this bill moving through different committees about the registration of these entities with the Secretary of State's office. This is a corporation, it has to register with the Secretary of State. At one point in time, the Secretary of State's office was listing these limited equity cooperatives as nonprofit corporations within their registration system, and then at a point in time, they stopped doing that. Why did they stop doing that? Because technically they're not nonprofit corporations, they're just not, it's an entirely different organization structure. And so apparently that distinction, the fact that some of them are listed publicly as nonprofit entities and some of them are not being listed that way, creates problems for the ones that are not listed as a nonprofit entity. Because when they go to access state funding and grant opportunities, if they're not listed as a nonprofit, they have to jump through additional barriers to demonstrate their eligibility for those funds, whereas apparently the ones that are simply, hey Secretary of State has those listed as a non profit, they can kind of breeze through and no problem.
[Senator Ann Cummings (Chair)]: These might be things like water, those seem to be the big issues.
[Rick Segal (Office of Legislative Counsel)]: Yes ma'am, exactly. So,
[Cameron Wood (Office of Legislative Counsel)]: there was discussion in committee about, well, don't we just change all of them to say they're all non profit entities? And you really can't do that because, and the Secretary of State's office made it very clear at the end, after this was in the Center for Economic Development, that they're not nonprofit entities, there's nothing about them that is organized as a nonprofit entity. Separate from that, you have to keep in mind there are two things here. Nonprofit is just an organization structure at the Secretary of State. That has nothing to do with whether you're tax exempt at the federal level. So tax exemption at the federal level is different from being registered as a nonprofit with the state. And so it's not really appropriate to just waive a statutory wand and say all of these things should be listed as nonprofits, because legally they're not. So what the House General Committee landed on was this V1, which is to say that a mobile one park organized as a limited equity cooperative shall be treated for purposes of state funding and grants as if it were incorporated as a state nonprofit corporation for a public purpose and public benefit. Now, there's a little bit of validity to that, because when you go up to the top, if you remember, I mentioned that for a Lemonbeck Creek cooperative, in statute, it says that it is designed to fulfill this public purpose of providing preserving housing for persons of low and moderate income. So it is serving a public purpose. There are some concerns, I think, with having a very blanket statement like this of just saying, for all state funding and grants, you should be treated like a nonprofit. Again, for starters, nonprofit status is just an organization type, with all it is, and it has nothing to do with whether you receive tax exempt status at the federal level. And so that concern was raised by the Secretary of State's office during the process of whether it's really appropriate to phrase it this way or to do this. A few other quick things, nothing in the section is deemed to alter or change specific funding or grant requirements, so the concern there was, if you have a funding stream that isn't available to mobile home parks because it's available to something else, we're not trying to change the criteria for specific funding streams here. And then ways and means added in this language at the top of page nine, nothing shall be interpreted to impact or alter the tax treatment of these entities. So what does this do? It gives some level of statutory language for these entities that are not registered and listed as a nonprofit. It gives them some statutory language they can point to when they go to apply for certain state funding and grant opportunities to say, hey, the state really does think that we serve a public purpose similar to what a nonprofit organization does. We talked a little bit in the Senate Economic Development Committee about whether or not it's more appropriate to just go amend whatever these state funding and grant streams are to ensure that they're available to these entities, and that's where you get the amendment from Senate Economic Development, Housing and General Affairs. Their amendment is going to put a sunset on that section, one year sunset, so it will be repealed July. And then it requires the Department of Housing and Community Development, in consultation with other entities, agency of administration, ANR, AOT, to submit a written report identifying, starting on line 11 here, identifying all state funding and grant loan programs available to mobile home parks for infrastructure improvement with an analysis on the eligibility and regulatory barriers prohibiting access to the funds for mobile home parks registered as limited equity quadrants, trying to give you as much information as possible to try to address the direct question that led to the language
[Deborah (Joint Fiscal Office)]: being proposed in the
[Cameron Wood (Office of Legislative Counsel)]: first place. Why DHCD? They oversee, they have a specific division in DHCD, their mobile home division, in conversation with the committee, it felt like they were probably best to answer this question. So, sunset, one year, report back. And the last thing I will mention, and then open it up to questions before I turn it over to my colleague John to talk about the rest of the bill, there's a section in here regarding municipal zoning, which would add in for this list of housing. So no bylaw of a municipality shall have the effect of excluding mobile homes, modular housing, or prefabricated housing, that is current law, and this would add in to say that you cannot have a bylaw that prohibits that type of housing in any district that allows year round residential development.
[Senator Ann Cummings (Chair)]: You were just discussing this language, running at Senate Natural Resources.
[Cameron Wood (Office of Legislative Counsel)]: It's in another bill, isn't it?
[Senator Ann Cummings (Chair)]: It's not quite, this is a little bit different.
[Cameron Wood (Office of Legislative Counsel)]: And there were some other things in that bill that are not Yeah,
[Senator Ann Cummings (Chair)]: right, that's a good question. What's the definition of
[Cameron Wood (Office of Legislative Counsel)]: district in that race? Good question. I'm probably not the best person to answer that. This is technically in Ellen's area because it deals with land use policy. Usually
[Unidentified Committee Member]: towns are broken up in
[Ezra (Joint Fiscal Office)]: the Zobe districts. So in Burlington, would
[Senator Ann Cummings (Chair)]: it be like a ward? We have wards. No. No. It's about land use and stuff beyond what can be built. I used gas chains. It's not political. No. Gotta that mean you can't if you allow residential to build development, you cannot ban Manufactured. A mobile home park? Manufactured. Manufactured home. Right. Because I've
[Cameron Wood (Office of Legislative Counsel)]: got that already. You wouldn't be able to ban the mobile home.
[Unidentified Committee Member]: Right. Yeah, this one doesn't have anything to do with the part. Right.
[Cameron Wood (Office of Legislative Counsel)]: Might not be in the lab of the use in that Zombie District. But it would just be the home, you know, so single family, one, somebody could put the mobile home, but
[Unidentified Committee Member]: a mobile home may
[Cameron Wood (Office of Legislative Counsel)]: not be a home.
[Unidentified Senator (Committee Member)]: Oh, right.
[Senator Ann Cummings (Chair)]: It takes more land than a single. Okay,
[Cameron Wood (Office of Legislative Counsel)]: so then here's some sales and use tax exemption, which I'm gonna let John talk about in just a second. His last two sections, Secretary of State Business Registration. The committee is adding this in, if you remember, I said that there was discussion about whether or not to just unilaterally change the registration for some of these entities to list them as nonprofits. Secretary of State was not open to that for many reasons, some of which I've discussed. So what do you do about the ones that are listed as non profits with the Secretary of State? And they really shouldn't be, and the Secretary of State's office was not comfortable similarly with just going in and unilaterally changing them because there are legal consequences that go with that when it comes to their reporting structure, how often they have to report, etcetera. So what they landed on was this session law language that gives the Secretary of State the authority to update a limited equity cooperative's registration to ensure proper reflection of the corporate business organization structure within the Secretary of State's system. I don't imagine any entity taking advantage of this because it would probably be to their detriment that they did. But it's there. And then conforming revisions, as I mentioned at the top, this gives our office the ability to replace mobile home with manufactured home throughout the statutes as necessary. To again, try to align your statutes which refer frequently to mobile homes. There's a chapter about mobile home sales we talked about at the beginning, there's a chapter about mobile home parts, etcetera, to change whereas we're appraised mobile homes and manufacturers. So I'm reporting the underlying bill from the boarding committee, and, Selvich, can I ask this question that is germane to what we just heard? When did the Secretary of State stop classifying these as nonprofits, and do you have any other additional background on why? I heard you because they didn't think it was that, but was it the new Secretary of State? Was it the motherly one that triggered the reconsideration? To my knowledge, no, sir. Okay. As you all probably are aware, they've been working on a new IT systems with the Secretary of State's Office for a few years now. My assumption is when been at labor, when you start going through that process, you're looking at all of your business rules and your process that you're doing, whether they need to be updated, etcetera, so my assumption is during that, I will ask because I don't have a direct answer to that. I don't believe it was any The news secretary of state came in and said, Hey, stop doing this. Don't think it was And with the prospective repeal from the one year where they would be eligible for these types of grants, do you anticipate any concerns with grants then being rescinded if that status changes? Is too broad of a question to really speak to. I don't think so. I don't think so, because technically the entity that's issuing the funds really should be ensuring that with this language or not, the entity that's receiving the money is eligible based on the criteria of whatever that state funding or grant statutory criteria is. And so I think if you repeal this language that we looked at above, you know, where you have the sunset, you know, you're not repealing the underlying authority to issue those funds to begin with, so I don't think you would run into any issue with that, I'm certain. I could keep asking more questions to keep us here later on Friday.
[Unidentified Committee Member]: Thank you.
[Cameron Wood (Office of Legislative Counsel)]: I was gonna ask the question, but
[Senator Ann Cummings (Chair)]: Okay. Let's turn out of John and Ted. Thanks, Cameron. You're welcome.
[Unidentified Committee Member]: Damn. You're welcome.
[Senator Ann Cummings (Chair)]: I'm not seeing any red signage, but I want to to maybe get the
[Cameron Wood (Office of Legislative Counsel)]: John may ask some
[Senator Ann Cummings (Chair)]: questions. I was wondering about flags. Can you ask
[Unidentified Committee Member]: No red flags. Okay. What you want questions? I might
[Rick Segal (Office of Legislative Counsel)]: ask two of the members of the committee
[Unidentified Senator (Committee Member)]: in the morning. We don't understand the delay that Well, that's
[Ezra (Joint Fiscal Office)]: It's your second time hearing it, Senator.
[Cameron Wood (Office of Legislative Counsel)]: There are some school home parks that aren't able to access some resource and because of recognition change. And so this is just trying to correct that unfairly and
[Rick Segal (Office of Legislative Counsel)]: do some other things that John's gonna talk about.
[Senator Ann Cummings (Chair)]: Hello. Hello. Hello, John. Welcome to Friday.
[Unidentified Senator (Committee Member)]: Happy Friday. Yes.
[John Gray (Office of Legislative Counsel)]: I'm John Gray, the Office of
[Unidentified Committee Member]: Life Center Council. I have two short, sections to share with you that don't say much, but you have a meaningful effect. And I think before walking through the language, this is an update to the sales and use tax exemption for mobile homes. The first thing to do is to call back to something that Cameron spoke about in the beginning. You recall him talking about transferring by deed or by bill of sale.
[John Gray (Office of Legislative Counsel)]: Part of that conversation is whether or not a mobile home is treated as real property or tangible personal property. You might have questions about that. I don't especially wanna answer them.
[Senator Ann Cummings (Chair)]: Real property owns property taxes.
[John Gray (Office of Legislative Counsel)]: Yep. Yep. There you go. I think that's that's simple way to put it. Because they're movable in the first place, one could ask the question, what does it mean for a mobile home to be real? We typically mean that fixed to property, right? But anyway, the point is that property law treatment produces the tax law treatment, and so what that means is that for your one time taxes that hit mobile homes, real, mobile homes that are treated as real property are subject to the property transfer tax, and mobile homes that are treated as tangible personal property are subjected to the sales and use tax. Under current law, those rates are quite different, and I can pull them up if it's helpful. The property transfer tax, you can see here 1.25%, but you also want to note this subdivision one, which is particularly relevant here. With respect to transfer of property be used as the principal residence, the tax shall be imposed at the rate of half a percent on the first 200 ks. So what this means is a mobile home treated as real property is subjected to this tax and that effective tax rate is gonna be somewhere between I think 0.5 and the 1.25 depending on the value that it has. There may be some other complications there, but that's the range of rates that you're looking at if you're talking about treated as real property. Sales and use tax is different, right? The tax to be paid at the rate of 6% of the sales price. So what you're seeing is the problem that animated the language you see here is an attempt to say, well, in both cases they're being sold to be homes essentially, so they should receive the same kind of tax agreement. Initially this began as a concept that would have tried to subject all mobile homes to the PTT and basically resulted in them always being treated as real property where that possible. It resulted in some pretty odd things like subjecting tangible personal property to concepts that only apply to real
[Rick Segal (Office of Legislative Counsel)]: property. So a sort of
[John Gray (Office of Legislative Counsel)]: more intuitive approach was reached which instead of disrupting the connection between property law treatment and tax law treatment, just leave those as is. You get the sales and use tax, you get the property transfer tax, just try to create a comparable effective tax rate for the mobile home. So currently the mobile homes under the sales and use tax are hit by that higher rate, right? And so these are, the changes I'm gonna show you are trying to create parity across the PTT and the DMOs, sales and use tax. You're only gonna see sales and use tax here because they're more advantaged on the property transfer tax, you're bringing those homes in line with what's done for real property. Does that make sense? There's a piece I didn't mention, but now that we have the language, can talk about it. So one is that, and you see here under sub S, there is already an existing exemption for mobile homes and modular housing under the sales and use tax of a particular percentage. It wouldn't create that effective tax rate that you're looking for. And what you can see in the struck through language is that the existing exemption is to provide an exemption for the estimated portion of the cost attributable to labor. So it was not something that was solely intended to create parity across the two, just both because they happen to be homes. You see that struck through now because the change that's being made is just to have them treated essentially the same. The other piece I wanted to note is, as you can imagine, if you're trying to create parity, need to make sure that you pick up any existing exemptions under the PTT and apply them to the sales and use tax. So you may recall from either last year or the year before, there was a wholesale property transfer tax exemption provided to these energy efficient mobile homes. And so to ensure that they receive the same treatment if they happen to be tangible personal property, that same exemption was extended to the citizen use tax. Those are just statutory purposes. The actual language is in section six here. Retail sales and use shall be exempt from the text on retail sales, and the use tax imposed under section 973, and these are the changes. So there's already an existing exemption for mobile homes modular housing. That was at 40%, it was based on that portion attributable construction cost. It's bumped up to 90%, and if you think about what this does, if you have a 6% sales and use tax, and you're now multiplying it by 10% because 90% is exempt, basically producing a tax rate of 0.6. So in that range of near the 0.5, the 1.25 that you saw under the property transfer tax. I'm sure Ted will have more to say about this or he can contradict me. I hope not. So that is the first change. Again, the simple way to think about it is you're just trying to create the same effective tax rate for a manufactured home, whether it's real personal property or tangible personal property. That's the whole idea of it. And then this one's pretty simple. You already saw the statutory purpose for this. This is using the language that's already used in the property transfer tax exemption. That's a wholesale exemption from property transfer tax for new mobile homes. I can pull up that definition if you're interested, but I hope not, that bears a label, evidence in greater energy efficiency or are certified as zero energy ready home by the Department of Energy. This is not new. I did no digging on how this works, I just pulled it in from the property transfer tax to create equal treatment across both taxes. That's it. That's my whole. And I'm sorry, should say that it doesn't go effective until January 1, so it wouldn't kick in this summer, get the tax department done.
[Senator Ann Cummings (Chair)]: Alright, questions for John. You basically haven't changed the purchase of used tax, you just changed what it is applied to.
[John Gray (Office of Legislative Counsel)]: I think the simplest way to think about it is that mobile homes, at least from this one time tax standpoint, are more advantaged if they're subjected to the property transfer tax. When So you're thinking about how to create parity, could move in either direction, right? You could treat real property worse, or you could treat personal property better. This bill opts to treat personal property better. It opts to bring them in line with the way that real property is treated. Does nothing to the property transfer tax. It just extends the same thinking, the same economic thinking to the sales and use tax. The property transfer tax remains exactly as this. It just amends the sales and use tax to extend the exceptions to mobile homes in the same way that they're essentially receiving.
[Senator Ann Cummings (Chair)]: I love the energy star exemption. Yep, she. It's okay.
[John Gray (Office of Legislative Counsel)]: And the change from 40 to 90% exemptions for the mobile homes is to create that same effective a comparable effective tax rate. Okay. Because it is the land frequently that adds the value
[Senator Ann Cummings (Chair)]: to the mobile home. If you own the land, it's a lot easier to get a mortgage. Yep.
[John Gray (Office of Legislative Counsel)]: And I think that's a lot of the complexity that went into this all the stages of this bill really was that many buyers are approaching from the same perspective. This is going be a home, but there's some factual difference that puts them in a different bucket in terms of taxation and what they can finance that may not be a meaningful indication about them. It's more of an indication about the way we have set up the laws. This is an attempt to, I think, conform more if possible. It doesn't always look that way, but that is my simple description of what
[Cameron Wood (Office of Legislative Counsel)]: the bone is trying to do.
[Senator Ann Cummings (Chair)]: Okay, Ted, do you wanna
[Deborah (Joint Fiscal Office)]: Sure.
[Senator Ann Cummings (Chair)]: Tell us where all of this is from from.
[John Gray (Office of Legislative Counsel)]: Absolutely. Or me.
[Senator Ann Cummings (Chair)]: I have a feeling it's not gonna make us any.
[Deborah (Joint Fiscal Office)]: Deborah, fiscal office. I'm going to start in a similar place and not at all contradict John who did a great introduction to this topic and how we ended up with the 90%. Sarcastic. Cam did a great great job as well. So looking at the the data for property transfer tax and how this is kind of leading into to how the 90% exemption was Right. The property transfer tax, most manufactured home transactions are principal residences, and the value of those transfers is less than $200,000. So the vast majority of properties are paying a tax rate of 0.5%. There are a few that go above that marginal value and pay the the marginal value of 200,000 and pay 1.25%. There are amazingly some that are transferred to secondary residences and even some that are paying the 3.4%, percent, which I thought was fascinating. What that works out to being is that when you take the total tax paid and factored into the number of transactions, the effective tax rate overall was 0.6%, not including the clean water surcharge, which the mobile home transactions or manufactured home transactions would pay if they were secondary residences or on the marginal value above 200,000 for a principal residence. So yes. So you have an effective rate of point 6%. And so as Sean walked you through, to convert to make create parity between the actual data that was seen on the property transfer tax And the the 6% sales induced tax rate, you just leave 1010% subject to tax, and then you get the same 0.6% rate. What that means and those the data so the the fiscal impact, because it's a half year In fiscal year twenty seventh, there's an effective date of January 1. That means that it would reduce sales tax revenues to the education fund by $200,000. You're increasing the exemption from 40 to 90% in in that in fiscal year twenty seven, and then the cost of the exemption would increase to approximately a half million dollars in fiscal years after fiscal year twenty seven. And so standard disclaimer applies absent any adjustments policy. The homestead property yield or statewide nonhomestead property tax rate may need to be adjusted to account for this foregone revenue. That is the main oh, yes. And so these data the the data from the the but the sales tax exemption comes from the tax expenditure report since it is an existing sales tax expenditure, it's just increasing it. We we base the estimate from the from this data and also used actual property insurance for tax data. Yes. And that's the main fiscal impact of the bill that's covered in the fiscal note. We'd also note that the one year provision by which all limited equity cooperatives are treated for as nonprofit for grant purposes, it doesn't necessarily change the pool of resources, but it could add a few additional applicants and pools for state credits and resources for that one year when it's in effect. But I think you'll have much more data in the report that's coming about the types of state grant opportunities that are available to to housing and manufactured home cooperatives. Yeah, we'll spend more time thinking about it eventually in the conference.
[Senator Ann Cummings (Chair)]: Committee, I think I would like to give us until Tuesday to let this percolate. Yeah. Lot of numbers and a lot of concepts. My okay. So they should I because I'm really tired and not I don't think I followed. Sorry, Jonathan. I'm sorry. Don't know if followed. I thought I was following Cameron, but then I got completely lost. Sorry, John. Okay. The question is
[John Gray (Office of Legislative Counsel)]: I was so clear.
[Senator Ann Cummings (Chair)]: I don't know. It's my it's my brain now. I'm just really tired. It's Friday. It's been a long good week. But is it just coincidental that the numbers that it work out?
[Deborah (Joint Fiscal Office)]: There was a data ask for for me to to say, you know, if you wanted to create because there's early testimony about the effective tax rate paid for real property transfer actions under the property transfer tax. And the question was, what would the sales taxes exemption have to increase to to make those line up? And essentially, what people are paying in the sales tax lines up
[Senator Ann Cummings (Chair)]: with that point 6% effective tax rate. So if the if if the rates change, won't we have to do some kind of adjustment in the future?
[Deborah (Joint Fiscal Office)]: For the property transfer tax? Make it
[Senator Ann Cummings (Chair)]: equivalent again?
[Deborah (Joint Fiscal Office)]: Yes. If you did adjust the property transfer tax rates, you'd have to adjust it. If you did any work on those
[Senator Ann Cummings (Chair)]: So you backed into it. It wasn't just coincidental that it was neat.
[Deborah (Joint Fiscal Office)]: Exactly. Yes.
[John Gray (Office of Legislative Counsel)]: You've okay. Yep. You're asking if it's a whole number by accident? Or Yeah.
[Deborah (Joint Fiscal Office)]: Yeah. Maggie, I mean, it's not I think, you know, the effective tax rate is a much longer percentage than point zero six. Yeah. And so the 90% was done to be close enough.
[Senator Ann Cummings (Chair)]: Okay. But if that effect if that if any element in there and your carefully calculated scenario changes that we would have to change other numbers too in the future.
[Deborah (Joint Fiscal Office)]: There could be a situation where you're, yeah, you're picking, you know, the property transfer tax, even the the threshold values for when you pay different rates.
[John Gray (Office of Legislative Counsel)]: Yeah.
[Deborah (Joint Fiscal Office)]: You know, as inflation increases, the effective tax rate would go up, and you could consider decreasing the sales tax exemption Yeah. And make them match. Yeah.
[Senator Ann Cummings (Chair)]: Not gonna happen automatic.
[John Gray (Office of Legislative Counsel)]: No. Or manufactured homes start to cost more.
[Deborah (Joint Fiscal Office)]: Right. Exactly.
[Senator Ann Cummings (Chair)]: Yeah. So it's something we're gonna have to come back to and tweak, and we wanna keep the same ratios to to to taxes.
[Deborah (Joint Fiscal Office)]: Yes. And if you wanna have it match, like, really closely match up. Depends on the tolerance. Right? You have a of different deviation.
[Senator Ann Cummings (Chair)]: I still don't quite understand it, but I did understand that there was this relationship that seemed like it was, no pun intended, a manufacturer relationship. And then if we wanna continue that relationship into the future, we have to might we might have to take continued action. Okay. Okay.