 Welcome to the Vermont House Appropriations Committee. It is Tuesday, February 14th, 2023. I think Valentine's Day. And we had a briefing this morning on security. And right now we're running a little bit late. So I appreciate commissioner's patience, but we're gonna have with us now the department of taxes and go over their budget presentation for FY 24. Commissioner, I don't think you were with us during budget adjustment. So I'm gonna ask us to introduce ourselves because we're all kind of somewhat new. I remember you from my last time around in here. Yeah, sure. Texas. I'm representative Diane Lampher and I represent Addison Three and live in Virginia. Welcome, John. It's a little very good to see you. Pat Brennan, Esther. Tiff Lomley from Burlington. Harry Dillon from Woodsfield and I represent Dexbury faced in Moretown, Woodsfield and Warren. Good to see you. I'm Mark Mulholly from Calis, Plainfield and Marshfield. Trevor Swirl, Underdill and Terrapin. Woody Page from the board. Rebecca Holcomb, Sharon Stratford and Origin Thepford. Good morning, Jim Harrison, Chittenden, Vendon, Killington and Pittsfield. He's getting so good. I might remember all your time coming up. Representative Tolino Tolino is at a meeting and but he'll be back, Brattleboro and then representative Lynn Dickinson, that the end there and she is from St. Albans. Not there right now, but coming in. This taxes budget belongs to Representative Shai. So I'm sure you've worked with her before on this. Who we know well, yeah. Yes. Commissioner for the record and we'd like to introduce yourself and your team. Yeah, absolutely. Thank you. So Commissioner Craig Bolio, I'm here with our chief operating officer, Andrew Stein, who's here remotely as well as our finance director, Sharon A.C. and then also Will Anderson from the Department of Finance and Management is here with us and all of those folks are instrumental in putting this budget together and they have my utmost thanks. What a better way to start a day about celebrating love than the tax department, right? Everybody's favorite agency. Well, in this committee, we like it. This is perfect. So I'm gonna just start speaking a few minutes about our mission, values and goals as a department and then I'm gonna hand it over to Andrew to really get into the meat and potatoes of the budget and the ups and downs. Are we driving the slides? Question I should have asked before. I don't think so. Oh, you have the slides. Oh, perfect. We have them in our, yes. That's perfect then. I'm just gonna start on the first slide that says the mission and goals and actually maybe where I should start really on the second page if you wanna flip to the page that has the four core values. But our mission is a simple but important one. It's to serve our monitors by administering our tax laws fairly and efficiently to help taxpayers understand and comply with their state tax obligations. The part that I really like to focus on are those first three words, right? To serve our monitors. And there's a variety of ways that we do that. In 2021, we actually established core values. So it was a relatively recent exercise for us although we had had a mission statement for a long time to my knowledge, the department hadn't established core values before and we thought really at that point in 2021 coming up on two years of emergency management from the pandemic that we ought to have a shared language or a North Star to help guide or ground our decision making moving forward and help shape the agency that we wanted to be. And then we established four of them. The first is service. Maybe the one that was most organically and vigorously practiced during the pandemic when my office did a lot of stuff that we didn't do was as many agencies and businesses around the state and the country did. But really one that I was proud of our staff every day they came in, put their heads down and said, point me in the direction of helping somebody and I'll do it. When we talk about tax administration, right? If people don't understand what their liabilities are they're less likely to file and they're less likely to file accurately, right? For better or worse, the bedrock of the US tax system is voluntary reporting, right? People report to us what they owe they report to us what they paid. We examine it, maybe we adjust it we send a refund or a bill, right? But we don't go get every dollar people come to us with that. Furthermore, you know and they've had academic studies that back this up in those cases where people do not understand their liabilities if you take that service oriented approach it has a measurable difference on the voluntary compliance rate and the voluntary reporting rate. One of the most mind-blowing stats from my department is 98% of the money more than 98% of the money that my department collects comes in voluntarily. That means that we stand up the systems and we produce the forms we produce the instructions and we stand by to help when people need it but 98% comes in voluntarily, right? And that doesn't mean that our compliance division isn't doing their job they bring in over $50 million a year and they've brought in more money year over year every year for approaching the last decade save for 2020 when COVID hit and we repurposed folks. Our second. Just a quick question on the $50 million. Sure. Can you categorize that as true? I mean, some people make honest mistakes and they need to be corrected. Some people are intentionally trying to skirt the system. Shucks, I got caught so I got to pay. Any, if you had to estimate buckets you could put in it. I don't want to estimate a number but I can say the vast, vast, vast majority is honest mistakes. On what? The vast majority is honest mistakes not outright fraud. Now we have some, right? And we catch it every year but most people, they just don't know what the right thing is to do and so it's an honest mistake. There's also an element and we'll talk a little later in the presentation which is the tax gap, right? And that is also comprised of more honest mistakes and those folks who are trying to skirt the rules and not complying. And that's a little ambiguous as to how big that is but yeah, I would say the majority is mistakes. Thank you. Did you have a question? I'm just gonna leave it on the table. I mean, I'm gonna leave it on the table. Okay. The second core value is integrity, right? As we just talked about the bedrock of US tax system is voluntary reporting, right? So we need to be signaling both to the people who want to do the right thing, that we do the right thing but also signal to the people who aren't going to do the right thing, that we do the right thing, right? And there's a few ways that we go about that. The first is that we take to the maximum degree our responsibilities for confidentiality and security. We strive to make sure that at all levels of the agency we're collecting the proper amount of tax and not just revenue maximization. And we've gotta have a culture that holds ourselves accountable, right? That people feel comfortable admitting mistakes and that we can correct them and that also if somebody sees something wrong they can tell us and know that we'll take action on that. The third is growth and that's not necessarily growth of revenue but hopefully you do see that over time but it's really growth about the way that we provide value to Vermonters, right? And certainly with the pandemic we saw how much in the world and society was changing there's a lot of elements of that in tax administration too, right? You've got cryptocurrency, you've got the gig economy you've got remote work you've got other stuff I'm not even thinking of, right? All this stuff impacts taxes impacts tax administration and our department has to remain at the forefront of that to be able to serve Vermonters and make sure that we're doing our duty to the state and to our taxpayers. And that means that our staff have to feel like they're empowered and have a future at the agency, right? Part of that mission. It's why organizational health, employee engagement and staff morale are such high priorities for me. Yep, go ahead. I really appreciate you're working on this and one of the things and you see this at the federal level as well and one of the challenges about talking about non-compliance is that there is there are so many opportunities that are within the law for people to avoid paying taxes. And it just, it feels like our tax agencies are barely able to keep up with that and make recommendations on how to address that. And I wonder if you're seeing that as well. You're very wealthy, you don't have to pay taxes. So I mean, there's a bigger question that you're asking there. I mean, I think what you might be referencing is probably a lot of the internal revenue. And so the challenge that any state agency or state would feel when they decouple from that and we feel this particularly in Vermont is the challenge that becomes for compliance if you start to decouple from the feds. So if you're concerned about certain areas of the internal revenue code maybe having certain taxpayers not paying no fair share, Vermont could decouple from those. And there are areas that we do that. For example, Vermont doesn't recognize accelerated depreciation schedules. We have our own rules for certain that operating losses as well. In a small state like Vermont, that gets challenging quickly, right? Because we rely today so much on the federal infrastructure for audits. We get what's called federal tax information that brings in millions of dollars a year where the IRS has done audits. And if we've got the same rules as them we can piggyback that. If we don't have the same rules as them it's kind of all on us to find it. So it's a decision for the legislature in areas to decouple from federal tax law but I do urge caution and thoughtfulness when we do that to make sure that we'll have the resources at the state level to go after that. Right. Does that get to the- Yeah, and it probably also affects carried assets it affects past business passers. And I just wonder if you feel like you have the capacity to track that stuff. We do not have the capacity to do what we're doing tied up to the federal law. If the discussion started to be let's start decoupling from a lot of the federal laws then we would have capacity issues for sure. Sure. You don't have to answer this now. Cyber security. And I know you've got a great new system. Yeah. On tax, on time, on budget and paying for it's great result right there. But I know that the cybersecurity that a real issue in your department would be one that would be a prime place to tap into. And then a few years ago which I'm sure hasn't gone away but the rash of false tax claims that came in that ended up being problematic. Somebody filing on somebody's behalf and then when they go to file later somebody has absconded with their refund. Yes. Let me, can I, I'll hit both of those separately. So to start with cybersecurity. I mean, I think for any revenue agency that's like top of mind concern, priority, right? We work with our partners in the agency of digital services who handle a lot of those kinds of cybersecurity issues they are handled directly from my department. But as you mentioned, we do have an awesome computer system, VTACS that we continue to invest in to make sure that we have all the latest security updates. And it's when Andrew starts to talk about what's in our ups and downs, you'll get some information part of what we're asking for the shares to continue to make those investments. So I think we're in good shape but nobody's ever perfect, right? And we've always got to be vigilant about that. The second issue of identity theft refund fraud. So yeah, that was, I would say probably peaked approaching about a decade ago, right? And there was an interesting point where criminals were able to start getting that information where state agencies were catching up to getting that information, right? And so that created this real information mismatch where a criminal would have the info and it would look legitimate enough that the IRS and state agencies had struggled to catch it. I am happy to say that in the last several years and particularly with things like VTACS, our access to data is much greater than it's ever been. And we've actually seen a downward trend overall in Vermont in identity theft refund fraud. And I'm hopeful that there's two elements going into that. The first is what I just mentioned of having everybody's got more data. It's harder to do this now. For criminals to get it through, they have had more data than they would have ever had before. And unfortunately, there are other financial crimes that I think have become more attractive in those years. Thankfully for us as tax administrators that means a downward trend. The second piece is we've been really vigilant about this in Vermont for the whole time where the IRS and other states have struggled with it. We have worked really, really hard in Vermont to have like virtually $0 of fraud issued. And so I can't say this for sure, but I'm hopeful that folks who are inclined to commit these crimes, look at Vermont and say, that's not a place that is worth doing it. And that is hopefully paying dividends for us as well. But thankful to say, it's always gonna be a problem I think, but definitely on the downward trend and limited exposure these days. Thank you, Representative Blumlee. Hi. So a few years ago, the Department of Labor sent out 1099s. Yeah, the 1099s. And a number of my constituents were affected by that. And the now identity theft insurance that the state provided for the last two years is expiring. And I'm just wondering how vulnerable are those folks to identity theft at this stage in the game? I don't know that I can answer that. I mean, there was so many people involved in the actions that those individuals may have taken might protect them as well, if you freeze your credit and things like that. I will say, I mean, we, there are data breaches all the time, right? And we are constantly trying to watch out for those, keep ourselves abreast of when they're happening so that we can flag our own systems, right? And one of the more insidious scams these days is trying to hack CPA firms, right? So that they can get all the client information. And when those kinds of things happen, we try to figure out who was involved, who was impacted. We will have data on that from the Department of Labor issue, right? Because we know who issued all those 1099s. I would also say, normally when we see these kinds of crimes, it's not homegrown, it's not local. Identity theft fraud is not usually being committed by Vermonters on Vermonters. It's usually, in fact, people out of the country because it's harder to catch them, right? So in terms of whether or not somebody got something in a Vermont mailbox, there's certainly a risk. But I would say it's lower than if, for instance, like a data breach happened where somebody outside of the country had access to database. Does that make sense? Yes, thank you. Again, I think for a variety of reasons, people should always be vigilant and taking steps to protect their own identity. But at our department, that's one of the things that we try to be mindful of is being aware of those kind of things and how can we make sure on our side that we're trying to catch that if people are filing when they shouldn't be. Okay, thanks. And then the last core value I have is community. And that's, in many ways, that's the value that all the other values flow into, right? I mean, I think maybe us and the DMV have the broadest constituency in Vermont state government and that we interact with virtually all of Vermont, right? And they come from different walks of life, different backgrounds, different cultures, different languages. We've got to be ready to serve them all. And recognizing how community plays a role in tax administration, right? When we have people who are calling us for their renter credit and really need that money, right? Those are friends, family, and neighbors. When a business that we frequent is collecting sales talks on behalf of the state, right? To just be mindful about the external community that we have, but also the internal community that we have at tax, right? And caring about organizational health and employee engagement and morale. We're gonna feel better and we're gonna do our jobs better, right? If we're supporting each other at the department, working together and being willing to ask for and receive help. And that really feeds into our three goals. Actually, sorry. Just one thing, I do remember when you talked about these values last year and past appropriation, we were hearing from every department and agency, and I think we still are this year about how, you know, how the vacancy rates are. And I seem to recall that your vacancy rate was really quite low in comparison with other agencies. Is that still the case this year? Yeah, I think it's about 5%. And I can say we have, we are fully staffed as of this month in every division except one. So, and that includes our taxpayer services division and our finance division, both of which are integral with the tax processing season. So we're feeling pretty good right now. I mean, we've put a lot of focus on this. There was a period where, certainly when the pandemic first started, we started seeing a lot of applicants, people looking for that stability and government. And then we got to the point where I think everybody got where those were starting to rindle and we were starting to struggle a little bit and we put a lot of focus on it, right? About selling ourselves as a department, about selling the work that we do with being meaningful and valuable. We have an awesome recruitment video on our website for people who haven't seen it. It's really well done talking to like frontline staff about what they like working for the department. And all of that has paid dividends, really a lot of like frontline staff putting in time to be messengers to potential applicants. So happy to say we are feeling pretty good going. I want to say that because you really took the initiative and created a community that's not just the people at the top. But cheers to your person. Yeah, and we have really three overarching goals and then I'll wrap and hand it over to Andrew. But the first is to be a model for service oriented tax administration, right? And what that means is I want to be recognized for the service levels that we're providing. Every agency says they're service oriented, right? But it's not the same. I once called the regular helpline of a bunch of tax departments around the country, about a quarter of them hung up on me. This was like the phone number to get help. And they were like, we're sorry, we have too many calls. Please call back. That doesn't happen, right? If you called my department right now, I think that the wait time would be maybe zero, certainly under five minutes. Been unable to get through to a person. I'm just to say it. And we should talk because that's now what we're going for and it's not the experience I hear about. So let's talk and we can fix that. The second is to reduce the tax gap, right? We talked about that a little earlier in the presentation. So the tax gap is the difference between what should have been reported and paid and what actually was. It's really hard to estimate. And so to my knowledge, the state has never done it, but the IRS does it every few years and it's always really backdated. So their latest I think is for 2016 and 2017. IRS estimates that after all of their own compliance efforts, the federal tax gap is about 13 or 14 cents on the dollar. So every dollar of federal taxes that should be paid, the IRS thinks they're getting between 86 and 87 cents, right? Which translates to half a trillion dollars or close to it, I think. So it's a big number, right? If you, and there are reasons they have federal payroll taxes that we don't have, we have sales taxes that they don't have. So it's unclear to me if that's what the state tax gap would be, but if you just translated that to the state general fund, you're talking several hundred million dollars, right? So that's foundationally the reason for really any tax to put this to engage with those folks. Most of them just making honest mistakes and helping them get into the voluntary compliance system, but also empowering our audit and compliance division to find and engage with those who will not comply voluntarily and helping them get onto the right side of the law. And the third is maybe the most subjective, maybe the hardest, but I want the tax department to be the best place to work in Vermont state government. Taxes are hard, taxes are complicated, taxes can be scary for folks. We need a talented and engaged workforce to be able to meet our mission and serve those Romaners. I want people to enjoy the work that they're doing, to enjoy coming into work, they'll do a better job and we'll all feel better and be happier about it. If you have 150 staff, if you asked all of them, what it meant to be the best place to work, you might get 150 answers and that's okay, right? We have to be able to strive for that, even if it's subjective and even if it means different things to them. Kerry, representative Dolan. Thank you and good morning. I just want to express my great appreciation for the services that you've provided for Monters. On the first hand, I have constituents who reached out to you with complicated questions that their own accountants can figure out and you personally responded to them in a very quick turnaround. And that kind of service is I think emblematic of your department and the type of work that you're doing for the Monters every day. So I wanted to just express my appreciation. Thank you very much for that feedback and I'm happy to pass it along to our staff when we get those kind of compliments. I mean, I think this is one of the benefits and ways of being a small state and a small department, right? As you know, I came up through the department, I started as a temporary employee, right? And I've had really the luxury of working in a number of different positions. So I know different areas of the department, I know what those jobs are like and many of those folks I knew as peers before I took this job, right? And so I know everybody's working really, really hard. We want to be accessible, we want to be helpful. So I appreciate that feedback and happy to pass it along. You're also a very complicated tourney to explain. So it's also what you have to explain is very complicated. So I really appreciate it. It can be. Yeah, it can be. I don't see. It's not a music job. So I'll make sure you've got 20 minutes to get into your budget and any new initiatives. I'm going to hand it over to Andrew to work through the ups and downs and the initiatives. Everyone, can you hear me okay? Yep. Great. We've had a couple of blips on our end. So if we encounter those, Craig, I'll kick it to you and then I can jump back on. So Andrew Stein, Chief Operating Officer, Department of Taxes. I know many of you, but not all of you. Wish I could be there in person but getting over an illness. So I'll spare you all the germs on this wonderful Valentine's Day. Thank you. So I'm going to start on page six, which shows our total expenses for the year in a pie chart, $30.8 million. The biggest- It is something that we noticed or just starting to interrupt. There's no page numbers. Whoops. So yeah, I've been to a lot of the presentations this year. Yeah. To be in green at the bottom, they're on my version that I sent along in the PDF. They're- I don't know what they are. They're right here in the middle. Just in black. Oh, there we go. Yeah. For some reason it looks like there is a formatting issue on the one page that I want to start on, which is page six. So it's just after the core values with the pie chart there. Yeah. And we're trained to go right straight for the crosswalk. So it's the one slide just above the crosswalk. Okay. Yes. So this year, biggest piece of the pie, as is typical for us are salaries and benefits. The piece that we'll talk about, spend a bit of time talking about here is our IT piece, which has grown from past years in terms of our operating budget request. It's not actually growing in terms of our expenditures, but we're folding in our computer modernization fund into the annual budgeting process or proposing to do that, which we'll spend a bit of time on in a moment. I want to just touch on our current initiatives, what our current budget is supporting. We're implementing a range of new policies to act 138 tax reforms. That's a big package that passed last year, new child tax credit, changes to the earned income tax credit, changes to the child independent hair tax credit, changes to retirement income exclusions, student loan interest deduction. There's some other reforms that occurred there too. And that took a lot of time in testing from our team to update our system and then to help taxpayers navigate those reforms. So that's a really, really big deal. I mean, our personal income tax accounts for 60% of the general fund and it has by far the largest impact on Vermonters in terms of the number of filers that we have, 380,000 filers. It's really a massive effort every year to administer this tax. So we're glad to do it. So corporate income tax reforms, we're also in the process of implementing a range of corporate income tax reforms that the legislature passed last year. Cannabis taxes, we implemented this past year and that's an ongoing implementation helping new businesses. There's a lot of folks who have never run a business who are navigating a new market here and there's a lot of service that goes into that. And then there's a range of new local option tax towns and helping businesses understand how to navigate the local option tax. We wanna maintain a historically high processing efficiency this tax season, which we'll talk about in a little bit if we get to that slide, but you can look under our performance measures for personal income tax administration. Last year, we set the loftiest refund processing goal that we've ever set as a department and we hit it. We also finished processing homestead declarations for property tax credits so we can advance to the deadline last year, which is by far the fastest that we've ever turned that around. And there was a lot that went into that. We made a lot of changes to be able to accomplish that and we're very proud as an organization to have those impacts on our communities. We wanna complete the Vermont Property Information Exchange and more than one, we need to. This is the implementation of the new statewide property tax IT system. It's on budget and on schedule right now. We are in the final phases of implementing that project. We're planning to move forward with a new scanning project. Another item here is building on our recruitment success and I should also mention we wanna build on our retention success as well. It's important to invest internally as well as externally on building our workforce. And we have a really, really strong team that we're very proud of. We're going to continue process improvements on forms and V tax updates that we've been working on and we're planning to further operationalize our organizational values. We're incorporating those in our merit policies and in other areas of our performance evaluation process. So I'm jumping to the next slide here, the ups and downs which is the meat of this. Salaries, benefits and retirement, those are up. Internal service fees are up. The biggest up here is $5.2 million for the tax computer system modernization fund. And we'll jump into that a little more on the next slide, but this is a fund that has existed since 2007. And expenditures have been greater than this in the past for this fund, but this fund has never existed within the annual budget cycle and that's something that we're proposing to change here. This is a fund that used to receive multi-year appropriations. So that's why you're seeing this as an up here because it typically doesn't come before this committee in this format. Also on here is an $800,000 up for the, it says the state appraisal and litigation assistance program. We're calling it internally, the commercial appraisal and litigation assistance program. And I'll touch on that on the next slide. So let me, let me, let me, the special fund, you have the 5.2 and the 800,000 is coming from the special fund. What's the name of that special fund? So those are two different funds. Two different, okay. Those are two different funds. So the 5.2 million is the tax computer system modernization fund. And that's a fund that has existed since 2007. Yeah, that's the savings went to pay and then you kept a percentage into that you think. Okay. Yes. So that's, that's part of, maybe we should just go to the next slide because that gets it. But the 800,000 is commercial appraisal and litigation assistance program. So what that would come out of is local option tax processing fees. There's a special fund for local option tax processing fees. And the, as the number of local option tax towns have, it has increased over the past number of years. So have those fees. And while our administrative burden is higher than it was even three, four years ago for administering these taxes, it's not as high as the revenues generated from these fees. And this is something we've been transparent about over the years. And so this is a proposal to use that those surplus and fees to cover a need that municipalities have been expressing to the department and to the state for a long time now. Representative Harrison has a question. Yeah, I just want to go back to the 5.2 million. Is that an ongoing, that increase in ongoing expense each year or is this a one time? It's, it's ongoing. So it's about 5 million a year depending on the year. So that fund has and continues to pay for our V tax system, our integrated IT system. We never received a separate, we have a little bit of general fund that we pay, that we use to pay for that, but to build this system, we have used the computer modernization fund and we use the computer modernization fund to support that system. So in terms of implementing new tax types, in terms of security enhancements, that is paid for from this fund. The Vermont property information exchange, the new property tax system for the state is paid for from this fund. The micro simulation model that the joint fiscal office and the administration share to model economic and personal income tax changes is paid for from this fund. The scanning project that is underway and that we're planning to move forward this next year is also paid for by this fund. And so one important piece there, Rep Harrison, that might be helpful. So this money, it looks like new spend and it isn't. This has been getting spent. It's just been getting spent through session law and multi-year appropriations. So what we're looking for is putting it into the, whatever you've been spending and then a $5 million increase. Right, so it's not a $5 million increase. It's what we've been spending. There is a restructuring of the fund that is a bit of a general fund hit because the fund has been deficit spending for a number of years by design. But yeah, so that's why it looks scarier than it actually is but the challenge and one of the reasons we're proposing this is increased transparency. Right, if you were to try to go back and piece this fund together, you're looking through session law year after year with amendments and restructurings and things like that. So our proposal here in part is to say, let's just make this part of the annual budgeting cycle that will show up on these things. Thank you for the clarification. Sure. Thank you, Greg. When VTACs was started, it was like, if we, correct me if I've got the, I'm gonna just be very simple. We want to purchase X-System. X-System should create savings within the process. Yeah. Okay, so literally move to the new system in segments, but the savings that were created from the system purchase and running were then fed back into pay for it. And then in the end, we had a little, there was X-S and the VTACs used to give the general fund because that savings was a nice boost. That's right, so I, yeah, go ahead. Sorry, I didn't mean to cut you off, but I'm sure the one thing I would clarify there, it was not like internal savings, it was increased revenues that got brought. So essentially we had, again, more data, better processes than we've ever had. So our audit and compliance division was able to bring in more money. I would say it was so successful, we actually got the amount of money we needed early and paid it early and got a discount. And you may remember that over the last several years, we've had a couple of restructurings that have been designed to bring the revenues going into the fund down because we did hit a point where the big part of VTACs was paid, the $28 million upfront investment, but the fund structure was still generating the money to pay for that. And we were like, whoa, whoa, whoa, bump the brakes. We don't need that much. A few years ago, it got restructured again to be 2% of compliance revenue, which I remember from earlier in the presentation, is 2%, so it was 2% of 2%. And that was intended to spend down the surplus that had been created by the fact that we had that, that discount, I don't wanna call it a discount. Clients, you know. Yeah, exactly. Before we had restructured the fund was running such a surplus. And so now we think that this restructuring, which does increase the revenues going to the fund a bit, will be sustainable for the long term. So how much is in the fund now? Is there zero or is there, is it that 2% of 2%? Andrew, you've got that, yeah. So, yeah, give me a second. It's, what we're projecting is around the end of this year around 5 million in the fund. Keeping in mind that we spend about 5 million a year. If you give me a second back, the issue is we project that. So, high level of the issue is in FY24, if we don't adjust the funding structure, we'll have to spend down the money in the fund. Because we've been spending down this big surplus. I think it was FY19 or FY20, I don't know if you want to know that. You can see, if I show you a chart, you'll want to go through this. The revenues were like this and the expenditures were like this. We built up the surplus in the fund. Once that change, we gotta have the expenditures up here and the revenues here and we've been spending down. So, at the end of FY20.4, we will just about spend out more, have spent out more at the end of FY20.4, or all the money in that fund. So, it's about 5 million in what we're projecting at the end of this year. So, the ongoing 5 million or so will come from this fund to take care of the ongoing. That's right. But it's been calculated differently that they have been doing it. Yeah, that's right. So that you've got that amount within that budget. Yes, the other key element to this is the fund is set to sunset at the end of this fiscal year. So, that's another part of our proposal is to just codify it. Yeah, and it's all there in the language. Yeah, there's also a restructuring that moves it away from compliance revenue specifically. So, instead of 2% of compliance revenue, we're asking for 0.21% of all revenue collected. There's a few reasons for that. One is, as I talked about, we strongly encourage voluntary compliance, even within the compliance division. And so, I didn't want to have odd incentives for maybe the department to be taking overly aggressive actions for our budget. And so, as we get further away from V-tax implementation, V-tax changed everything at the department, not just the compliance division. So, it is a restructuring in that way as well. So, good. And we had talked about this before, but we will need language for your initiatives to put in the budget. So, I think it's in there. Is it in the language? It's in the government's budget. It is. The language that we want is in there. And you're OK with the language the way it is. So, we'll just check with Maria to make sure it's where we like it to. So, that goes to it. So, you're codifying what was in session law to make it statute. And so, in paying for it, we want to pay taxes. And then, some other piece of what you were doing within that? Well, it's the bringing it into the annual budgeting cycle. Instead of multi-year appropriations, do it one year at a time. Yeah. That also makes more sense as we're in the operational phases of these projects, right? It was useful to have multi-year appropriations when we're in implementation. And who knows when we've got to pay the invoice. But now, it's much more cyclical. Great. Thank you. Sure. And the third, so we've talked about computer modernization time, we've talked about commercial appraisal aggregating assistance program, which I'll just touch on that a little bit more. That was passed last year, 32 of the SAS Section 5.1.3. It was supported by both the administration and the legislature. And what this really, the end here is due to the integrity of the appraisal system with regard to commercial properties. So when we're talking about our education funding system, and particularly on the property tax side, it's a closed-loop system. So that means that municipalities don't have money to value certain properties. They're typically the most complex in the highest-value properties in the state to value. That then shifts. It creates a risk of shifting tax burden on other taxpayers. And so what this will do is it'll create two positions, a program manager, as well as an attorney position, which is technically the NGO's office we pay for it, and that position will help with appeals and litigation, and $500,000 in money to pay for commercial appraisal to assist municipalities with these large countertribes like commercial and commercial appraisals. So that's that proposal. And that proposal will be an ongoing spend-bend. Any questions on that before I get to our last main and next year? This isn't one time. This would be half a million a year. 800,000 a year ongoing. And this was interesting. This program was created with a contingent effective date, contingent July 1 of this coming year if the legislature funds it. So the legislature had asked us to come back with a cost estimate, which we've submitted to Ways and Means Incentive Finance, but this is that cost estimate to run the program. And this would, to be clear, this is dipping our toe in the water, right? We think that the scope of this would be 10 to 15 properties a year. So this is not the state able to assist on all commercial appraisal for 800,000 a year, but this is to stand up the program, see what it's like, see what the benefits are and the challenges, and help out municipalities that need it. So this could be like when Green Mountain College closed or something, and how do you appraise it if it's not a college anymore? Yeah, I mean, examples like that are what we're thinking about. And towns that may not have the resources, but get some kind of big new thing, or a mall, or a dam. We have a program for the dams, but the one that I keep thinking about is a methane digester in Salisbury, where who knows how to handle that. So it would allow the state to be able to help with that. And then the last initiative is a one-time initiative, and that is to current the surplus to make a one-time operation in the modernized program. And I have a description on this slide. The roughly 44% of the land in my area is enrolled in the current program. However, this program is highly-reliable. All of the records for this program are in paper. They're in the right of all, but they're in paper. And to digitize all the records and further digitize and streamline the range of processes, specifically the application side, and then moving forward transfers with draws of properties in that system were proposing a one-time attachment at the program of $1.75 million. And that is harsh. We're going to incorporate this program in our VTAC system. It wasn't initially incorporated in that system, because it's part of the private VTAC system. And this data is about a master of real-collect property taxes, and we don't administer property taxes through the VTAC system. But over time, we identified opportunities to incorporate this specific program into the VTAC system, and there's a range of checks and verification that can be automated. And they have a talented team in the space that they really struggle to keep up with the demand-man program. This amount of paper and this, the extent of manual processes is on the top. It's almost on the top. So this is not our textbook program. And if you go to slide this year, if you go to slide 12 more presentations, you'll see that I mean the number of applications processed by the April 15th is 20%. The average day is the process applications, and this doesn't fall slowly on the ground, but the number of days the process and application is about 150 days. And that is really out of line, the number of other articles. We want to see this in the future. So I'll go out. I was just going to say, so committee, I just wanted to look because I wasn't sure that I had seen the 1.75, but for those that are keeping score, it's on page nine in the language. It's under the fiscal 24 one-time special fund appropriations. So this 1.75 is coming from the current use administration fund, which from notes when we had a walkthrough, I have that it has about $2 million balance in it. And so there's a request here, that that's where it's coming from. So it's not a one-time general fund. It's a one-time from this special fund to make this upgrade, right? And that special fund is for current use administration, right? I mean, certainly the legislature could change that, but that's what it made sense to us. I want to make sure that I saw where it was. Yes. Yeah, okay. So it's in there, representative Holcomb. When you do these modernizations of the systems, do you also look at how we get that information? Oh yeah. I think that to streamline the whole process. I mean, in many, I had some experience on the V-TEX project. I was a business analyst there and then the project director for a couple of years. In many cases, we're rebuilding processes almost from the ground up, right? It's like a fresh look, capacity planning, make sure it works for what we're going to be able to do. The benefit that we'll have doing this one that we didn't necessarily have with V-TEX is we have all the experience with V-TEX, right? When we first built V-TEX, we got a bunch of improvements, but then later we also realized, oh my God, I didn't realize I could do this, right? And built it out. Now we have more of that, but yes, that's part of business and process improvement, huge part of the process. It's a lost opportunity if we don't do that frankly. Yeah, for sure. So I'm just going to wrap up. The last slide I want to spotlight is number one, the personal income reduction. And again, this is our largest tax tax, the first tax tax, but there's no tax tax that impacts matters more than the personal income tax and that impacts the general fund more than the personal income tax. And our erroneous response to that in 2020 last year of our time the final fund issue within 45 days of due date was up to 99% of which is the school November 7th. And that has been based on a range of work and for monitors and our canardies. So we're very proud of that. And then refunds issued within 30 days of filing out was 100% of the way out. So it was without a doubt the most successful tax season November 7th. We also stood up in another credit as I mentioned before for a process for less than that direction which I can find. Okay. Somebody must have just put the bells by mistake or something. No, no, no. So one, I have one. Okay, go ahead and then we'll start wrapping up. Okay. Oh, we talked earlier with the budget adjustment I called you and said, gee, we're reverting a lot, you know, millions of dollars for the renter rebate and the homeowner rebate. And we agreed that it was probably because of federal subsidies and other things that took the place of it. Yeah. And so what's happening this year for this budget? Are you trying to assume something back to normal or did you change your numbers as a result of what happened? So the homeowner rebate is forecasted each year. And so that, I don't remember what that's tweaked to this year, but yeah, we always calibrate that the renter credit is not necessarily calibrated every year, but we did not propose any adjustments to that. That's been at 9.5 million for a number of years. When we first did the reform in 2020, I think, one of the hopes was that we would spend that 9.5 million, right, because the program spend had been going down year after year. And now we've had the couple of weird years with the federal subsidies impacting it. So our stance was, let's not touch it right now, let's see what happens, and then adjust the dials to the program to get that 9.5 spend. If the legislature agrees that that's the right number, of course. But from our chair was more of, let's see what it looks like this year, and then dial the change of the dust to spend. It's sort of like one more year when all the dust is cleared. Yeah, I mean, not all the dust is cleared, right? But hopefully we're getting a clearer picture. And the homeowner rebate is a key section that's in the program. Jay and Bill are in the program. Oh, it is. Oh, okay, thank you. Yep, sorry, good clarity. Are you also, I mean, what's the, is there a timeline on the homeowner rebate in the property tax credits? I'm asking because some of our towns are now talking about delaying collection of taxes in August until those are fully done, but it's also now creating problems for the school districts that have to receive those revenues in advance of the school year so they can fund. So it feels like something has happened, which is changing local perception of when those rebates will be calculated and people will be informed. A few years ago, we had, we missed the deadline several years ago. And so that might be reverberations there. But for the last couple of years, I mean, we've hit that deadline. Again, last year we hit it a week early, which is usually we're down to the last, it's June 30th. But what I would say is that is a big squeeze for everybody, right? June 30th is the deadline for those files. We get them to towns. A lot of towns want to bill on July 5th, right? And so they need their tax rates and they need their property tax credit files. So it can also be a real squeeze if the town hasn't voted its budget yet, right? Because the state gets, I believe, 30 days from that. So sometimes there are towns that have delayed that as well and then we're trying to get everything done at the 11th hour. So it can be a challenge for the towns that want to bill first thing in July. But I will say for the last couple of years, I believe we've had our house in order at the department to be able to do that. So I'm curious, I'd be curious to talk with some of those communities about where that perception is coming from. But I do acknowledge, I think it was three or four years ago at this point, we had missed it for not everybody, but a portion of them and we sent a second file. And I remember. Okay, yeah. So it must have been 2019 or earlier. The memory may have been both the one. Yeah, right. So I'm not sending it to you. I'm just trying to figure out where and where. Yeah, I understand. Yeah, no. I mean, again, even in the best of times, even in the best of times, it's a tight, it's a tight window. That's what happens. Yeah. Thank you. Anything else you guys want to tell us and committee any other questions for? No, thanks. Thank you guys. Oh, this is great. Thank you. Thanks for having us. Thanks for how I do. Thank you. And I'll be in touch with you next time. Appreciate the time. Thank you. Thank you. Sorry, I need air traffic control. Excellent. Thank you very much. I'll let you know. Yeah, I'll let you know. I want to get that sorted out. Sarah's great. And then he's got to go, but Sarah's ready. Maybe we can do it before that. Yeah, because we got a break at 11, right? Good morning. Welcome back to the Vermont House Appropriations Committee. It is Tuesday, February 14th, 2023. Little bit after 10, we're coming back in. We're going to hear from our JFO, Sarah Clark. There's a couple of things that I've asked Sarah, which we may not, obviously we're not going to fit all of this in here, but just so you have it on your radar screen, one of the things first off that she's going to show us is that as a committee, I mean, you may have looked at it online. This is the letter that when we send to agencies, both the house appropriations and the Senate appropriation, well-negotiated letter that goes to an agency that says, hey, when you're coming in, this is what we expect to bring and we expect you that this is what information we're going to want to know. I thought maybe we should walk through the letter. So when you're working with your budgets, you will see what we've sent out as the expectation for what they should bring. That's this letter. And then I just want to, there's also probably, I don't think we're going to have time coming up like next week is to understand what the cash fund is. I think Adam might be coming in around that and then JFO to help us. Also, the letters that have now gone to all our standing committees in the house are out there. So you may get questions about what does this mean or where it is so Sarah can help us navigate. And all of the letters to every one of the committees is on our webpage that you can see what was sent to them on our behalf. See what their questions may come from. We also have not walked through the balance of the language which sometime maybe before we leave here this week we could have your presence. So those are things that are my radar screen that I would want Sarah to navigate. All right, but first off. Great. Tell us about what is here. Great, good morning everyone. So you should all have in front of you a letter to Secretary Kristin Clouser, the Secretary of Administration from Senator Jane Kitchell and Representative Diane Lanfair, the chairs of the Appropriations Committees. Also to know as the chair indicated, it's helpful on the House Appropriations Committee website on the homepage. There's a link to this document on the left-hand side. So it's anchored there, it's always there. It's underneath additional information and it's labeled budget instruction. So I think this is one of those core foundational documents for this committee that it has this kind of permanent place on your appropriations homepage. And speaking as a former employee of the executive branch, this document was key in helping me to prepare and understand what were the critical components of information that the Appropriations Committees were going to need in order to be able to evaluate our budget proposals. I'm being summoned. Okay. So Representative Shah, will you take over? All right. Take the bus. Thank you. All right. Shall we turn? Okay. Great. So I think why don't we just do a walk-through starting on page one where we can talk a little bit about some of the components for some of the members. This will be not new information. It may be new for some of you, even returning members. And it's a good context as you, you're kind of I'd say maybe midway through hearing from the agencies and departments as a good kind of refresher for the types of things that we should be seeing. Sometimes they don't, they're able to during testimony get into some of the details that we're asking for but there should be documents that would support that that there's an area that you wanna drill into. So new since the pandemic started is that we've added a section to these instructions asking agencies and departments to use the COVID-19 pandemic as a lens to talk about how they've had to change the administration of some of their programs because of COVID-19. Hopefully that the impact of COVID-19 is getting less and less in terms of like normal operations but we felt it was still important this year to include that question because I think it's still, its presence is still being felt across state government. And so specifically as it relates to COVID-19 this language asks agencies and departments to provide information about what challenges and opportunities have been presented as a result of the COVID-19 pandemic and if they've had to change the way that they operate in terms of delivery of services, the use of space, technology, et cetera. In addition, this calls out in the bulleted section what new initiatives are being proposed in the budget. I think in general agencies and departments have been doing a great job really highlighting what those initiatives are for you to evaluate. And it also asks what programs would you run differently? Program to stop operating, but I don't think we've heard a lot of those yet. No. No, that, we don't tend to stop. Yes, tends to be more challenging but I think Diva may have one proposal in their budget that they talk to you about that they're proposing to stop but there aren't a lot of them. As is typical, we ask for documents to be provided to this committee in PDF format. I'll know it's interesting to like ebb and flow of paper over time. I think there was a time before the pandemic where we were, has appropriations was really using your iPads for just about everything and there were very few paper documents. I think that tide has turned in some ways maybe because of the pandemic and just the way that we've had to meet and look at things. So now I think we kind of rely on paper and electronic copies. So I'm going to page two which talks about evidence-based performance accountability. So this continues to be a focus of the legislature and the executive branch. This whole page is really dedicated to talking about the importance of evidence-based performance accountability and information being presented in a way that provides some data to help evaluate the performance of programs. You'll see the three questions that are highlighted kind of in the middle of the page that will be familiar to folks. So we did have some, I think helpful additions in this section this year. So the questions are, how much did we do? And the primary measures that departments or agencies are using to assess that performance that second sentence, I think is a new addition this year trying to really drill into getting the data to assess the answers to the questions. How much did we do? The second question, how well did we do it and what are the primary measures to measure that? And number three is anyone better off and the primary measures you use to assess performance. And I think as you look back on the testimonies you've received over the last two weeks, we have been able to get into some of these more performance accountability conversations. I think it's forever an evolution and striving to improve in the executive branch, speaking from my own experience. The chief performance officer within the agency of administration, they are required to submit to the legislature with something that's called the program performance management budget, the PBMB. And last year, I think they ended up because of COVID, right? They ended up, I think that report was filed with the legislature in mid-March and we did, this committee did receive some testimony from the chief performance officer. I don't believe that we've received that report yet for this year, which also makes sense in the context of the other duties that office has had to take on. We have a question. Oh, thank you. And thank you for walking through this. This is helpful, I've seen the letter, I've read it, so that this is always helpful as a review. My question is about those big questions in terms of whether that's enough. Because you could say, like just take vacancy savings where we see, we're unfortunately in a situation where some agencies have greater percentage of vacancy savings than what we typically try to strive for. So if you ask these three questions, how much should we do? It's a function of current staff capacity. It doesn't get at the question of, and then how well we did is again, a function of current state capacity. It doesn't look at where we fall in short and why. So I just wanna flag that in terms of whether is there will be an opportunity sometime in the future to, you know, in a future year perhaps to kind of revisit these three questions and whether it's adequate enough in terms of helping us ascertain the extent to which we are delivering customer service, services for the public, at most effective manner possible. So I think that Tristan has a response to that. And then we have to. Yeah, and I have to, and I apologize. I have to leave in just a second and really appreciate it. I think to your point, Carrie, there's another paragraph down below that if they're doing it, will really help get at the deeper story and the deeper information around all of the things that I've been sort of asking for, the external benchmarks, et cetera. And then also especially the trend over time. So if they answer the question, how much should we do in a vacuum, but without the trend? And we let that happen, but we don't ask for the trend line. Then we're allowing that number to be used in a way that isn't useful. And that's my thought for us. And I apologize for running right away after I say this, but I think the degree to which this will become a more important leverage rests in our hands, not the administration's hands. Because we have to ask, we have to show that it matters to us. We have to probe here and push and have follow ups and have that keep being built. They have done a lot of work, but if we don't show an interest in it, then that is just performative work. It's not applicable to the day-to-day. Well, and the other thing in this particular case with vacancy savings, is they may do it really well, but they may be letting things fall away that they can't do. So they're not doing enough of it because they have more, so things aren't getting done. We don't have a what isn't getting done question. Right, yes. The trend will help a little bit, but actually it doesn't necessarily help. I think that's the art of our work as appropriators, is to surface that. So I'm so grateful to you for saying that. And one of the challenges, but there are two challenges I'm saying. One is that, one is as my statistics professor used to say, you can't fix with analysis what you messed up with by design. We don't even have the data, like they're not even collecting some of the data sometimes that we would actually need to evaluate the impact. So part of it is how can we think forward now to what data we need them to collect as we implement new initiatives. So they actually can be evaluated because I don't even know if we can evaluate some of them. I suspect that's true. And I think we have to look at that when we put appropriations together. Right, like we're saying that we're gonna fund something new and then I'm gonna get out. This is the baseline data you need to collect. Otherwise it's not analyzable. Yeah, yeah. Sorry. Okay, I know you have to run tip and then. Well, I was gonna say some of what Tristan said and I really, really appreciate that point. And I, you know, I also am really interested in what is the benchmark you're shooting for? You know, like what is, and we got that from the department of taxes. I felt, you know, like they identified what we're shooting for. And some, for some departments, it's easier. You know, it's quantifiable in ways that is harder for others. But I, that, and so I think that that contextualizer performance in this program area is a really important line. It is something that I even missed when I was reading this. So just some word that like we can just keep our eye on that piece. Thanks. Does this letter get sent to you, yeah? You know, that is a great question. I'm not, I... But would Maria know? Oh, yeah. Does it go to you? I don't think it does. Or these are the... How about the state colleges? Yeah, I don't think it does. It goes to state agencies, departments and agencies. In fact, sometimes we have to send it we should make sure we've sent it to the, Attorney General and Attorney General. But you know, you make a good point because we're giving millions of dollars to the state colleges and the University of Vermont and they come and present. So... Yeah, I feel like in the future, we might wanna do that because if we're gonna try to fulfill our role with those entities, which hopefully I am doing, but nonetheless, it would be nice if they got. So this is a public document and I don't know that there isn't any reason that you couldn't say you're in my portfolio. We've asked everybody else to do it. Here's what we'll be asking you. So here's the letter. Well, I'm meeting with the law enforcement university in an hour and a half and I will give it to you. And I don't wanna put Erin on the spot, but I'm about to and we can follow up. I think, you know, we send it to Secretary Clouser and I know they sent it out across state government. I'm not sure about the entities that you asked about, but I think the intention when we schedule is that we also include a copy of this information. And so they may have received it in that way, but I'm not 100% sure on that. So it is important that they all receive it. If he gets it twice, he gets it. Yeah, he can tell Mark if he did. I wonder if also for next year, we should consider a fourth question, which is of all the policy alternatives you've considered, is this the most effective and efficient way to achieve the stated goal? Because we can be very efficient, but if it's not within a strategic strategy, but if it's not the most effective and efficient strategy, we aren't even looking at that. Aside on the one that you picked. Yeah. Yeah, great. Okay, great. So anyway, as it relates, I have last year's report from the administration, which is, I got the acronym wrong. It's programmatic and performance measure budget report, PBMB. It may be something that the committee, once we receive that report, you may wanna have the chief performance officer in to have this kind of conversation with him. His name is Justin Kenny, and he's been kind of at this for a long time. And so it's, last year, it was a very interesting conversation to follow. So maybe something to put on the radar for this committee. Okay, I'm gonna flip to the next page, which I realize there's not page numbers, so we can add that for next year as well. So the top of the page I'm at is the appendix, which is where we list out the documentation for the budget testimony and kind of related items to make sure that the administration is aware of. One, as you should be familiar, the first section talks about how there is a point person on the Committee of Appropriations that's kind of delegated responsibilities for oversight and review of a certain cadre of departments that you are responsible for. And so this just talks about that process for the administration and lets them know that you will be reaching out to have budget meetings. And I know that that's been happening all over the place, both for budget adjustment and for 24, but this talks about the process and lays the foundation for the back and forth that happens as this committee works to understand the budget proposals. And it also highlights, which I think is really important, especially in the House, is that the point person from House Appropriations is going to work with the committees of jurisdiction to understand the budget proposals. And so I think that's part of what we do in the House to craft what eventually will be the FY24 budget as the Appropriations Committee working collaboratively with the committees of jurisdiction to evaluate proposals. The next section labeled budget testimony just talks about how the commissioner or director of each department will come in and provide brief, concise testimony that leaves times for questions and discussion. And it notes that the testimony and supporting material should reflect the FY24 governor's recommended budget. It also talks about the use of iPads, which in around the table, there's iPads, there's computers, including myself. So we have a mix of electronics that we use here. The next item. So you say relate to the governor's budget, which is better than reflect. So if someone wants to come in and has the guts to come in with an additional request, they can. I'm not sure that I've ever seen that happen, but yes, that is in the realm of possibility. Well, it depends on where it's from. Yeah. Well, now in the agencies, they just go with the government. Yeah, they will not do that. But the outside organizations, they may, okay, I keep a folder that says budget asks, which is. Or evaluate the disproportionality and ask from governor's agencies versus other agencies. We don't get additional asks from, I mean, we have in the agencies. No, no, I mean, but we, the total in terms of the total rate of increase of budgets for agencies supervised by the governor versus the total rate of increase. Oh. That's lovely. You're a win on it. Oh. That is beautiful. That is beautiful. Hard to follow that up. I think that might have come from an agency. No. Tax department just, yeah. So they don't need to send flowers. They did a good job. But I mean, I think the, I'm distraught. Some people are able to talk about the condition and the needs. And some people don't have that discretion and are coming in asking for bigger increases. And I just wondered if the system just seems, I think we have to be aware that there's an eternal inherent bias in the way we've structured the presentation. And we just have to be aware of that. And we have added, we've gone back and added, I'm thinking, Trevor, we did something with the defender general that wasn't in the original budget. Didn't we? There was an IT or something. And then another year, we did some people at DEC. I would put all of those groups outside of this conversation. That's true. That's a good point. And it's also not even state agencies. It's independent groups that come in and petition them. They're separate file and budget tasks. They don't get this one. Yep. Okay. Continues. Thank you. Great. So the next section is the Vantage Budget System Reports. So these are the reports that provide a lot of detailed information about the respective agency and department budgets. It's run from the administration's budgeting system, which is called Vantage right now, this current iteration. Agencies and departments typically do send these reports when they send over the balance of their testimony materials. Erin uploads them to your website. We also have them on the Joint Fiscal Office website. It's where you're gonna find line item detail in terms of operating expenses, like what's the actual proposed amount being spent in a particular line item. It gives a historical trend. It lists position by position. There's all sorts of really detailed information. It may be, some of you are familiar with them, Representative Shai, I think you had some questions about the Cannabis Control Board maybe earlier this week, because they did provide their materials. I was just doing a quick sampling of our website, and I think we may be missing a few of these reports, so which isn't atypical, because the departments and agencies are really focusing on getting their ups and downs document, the presentation materials, everything in order for the committee. The Vantage, it's a system that they just have to run the reports and send over the PDF, but those are things that Aaron and Maria will follow up to make sure that we get them, but it gives you a really a deeper dive into the nitty gritty of their budgets, if you will. It's one of the items that we've talked about maybe having someone from finance and management come and walk you through it, but I encourage you to maybe dip your toe in and see what information is there. I have been known from time to time, if I'm looking for a particular line item within a department, sometimes you can find that information in the Vantage system reports. Yeah, great. The next item is the crosswalk spreadsheet, the ups and downs, I think by now that's probably getting more and more familiar to newer members of the committee, and that that's typically what we are walking through when we try to evaluate a submission. You know, one suggestion is very specific. It would be really great if they could put the B number on their crosswalk and most of them don't. So it would be really good if you could tell them in the future. The dark green is sometimes it's in that dark green. Sometimes, but more often than not, it's not. Yeah, and I think we do note that on here. It says to please write in that section numbers corresponding with the budget should be included on the far left of each crosswalk. So I think it is an important note that maybe we can try to stress with the administration. I know our colleagues in finance and management is listening and so you just acknowledge so. The other one is page numbers that we can read. Yeah. Maybe had two or three presentations where they've actually been page numbers that I can see otherwise. Yeah, oh, good notes. Because without the section number, it is hard to find and without the page numbers, it's hard to find. So important notes. Okay, then the next item is federal funding. So we ask agencies and departments to identify federal funding sources that are likely to be reduced or eliminated in the coming fiscal year based on the information that they have at the time. We also, if there's any other significant changes that are occurring to their federal funds, we do ask them to highlight that for us. I know at the agency of human services, they do as you evaluate their budget proposals, there's a lot of changes to federal funding. And so they do identify that for the committee for our awareness. An item I've moved on to the next page, speaking of no page numbers. And the second paragraph on that page, this is a new section this year where we've asked for agencies and departments to let us know if their budget proposal includes any significant funding from any of their recent federal bills. So that could include the American Rescue Plan Act, the Infrastructure, Investment and Jobs Act, Bipartisan, Safer Communities Act, et cetera. And so I think you have seen some of those items flow through in some of the presentations that we've received. I expect when we get the details, for example, in the agency of natural resources and the agency of transportation, we'll see more of those items highlighted for us. The next item is a particular flavor of federal funds, which is the federal state fiscal recovery funds. A lot of agencies and departments are carrying out right now programs that were essentially fully appropriated last session using American Rescue Plan Act, state fiscal recovery fund dollars. And so we are asking for them to be prepared to provide an update to this committee on the status of those programs. I think we've had some conversations about the need to understand the status of these programs, but I don't know that we've actually had the opportunity yet to dig into some of those programs. So this may be a conversation once we get through the initial testimonies to take, maybe working with the Secretary of Administration's office to try to understand the status of some of these programs. We do work with finance and management who provides updated like how much has been spent from this fund source, which gives you a view into it. I think we've had, I've presented some testimony to this committee on that, but it's not, it's more complex than just looking at an expenditure report from the accounting system. So that's a note for more conversation to come. The next item is labeled impact on Vermonters, the policy impact assessment. The policy impact assessment is actually, I think a relatively new tool that the administration is using to help evaluate new initiatives, if you will. It is a form, it's a pretty, I think it's like maybe an eight page form that agencies and departments are asked to fill out for the governor's budget process to answers a series of questions about any new initiatives or changes that will be included in the budget request. And so we've asked for agencies and departments to provide us with policy impact assessments to the extent that they filled them out. To my knowledge, and I haven't looked closely at this yet, I'm not sure if we've received any of these yet. And so that may be an area of further follow up. It's just gonna give you some more detail about new initiatives, new proposals to help you understand what's being proposed. And so I don't, I don't know if you recall seeing any of those yet this year, but I think that's an area that we can follow up. And the next item, we asked them to identify any changes to positions and vacancy savings. I think that's been a common theme as you review department's budgets to understand the impact of higher levels of vacancy savings, because it does seem pretty consistently through the budget adjustment. And now again, in the 24 that you're seeing higher levels of vacancy savings and trying to understand what's the impact of that on program delivery. So that's the piece we're not getting. We're getting the dollars, but we aren't hearing what the impact is of the vacancy savings. So it's back to what Brett Dolan was saying with, you know, what are we getting to do that's not happening. So is the, do they have any sort of a, I think they don't probably don't have the form about that kind of impact. So it would be up to us to ask the question. Yeah. Yeah, and I think as you meet with your agencies and departments, making sure to have those conversations to understand the impact will be critical. And where is the vantage report on your website? It would be, if you went to appropriate, there's going to be an advantage report for each agency department budget. It's not, there's one report on your website. Correct. Correct. So it's under the agency. Nope, you would go to the joint fiscal, there's a couple of places that you can go to get that information. As Erin receives the vantage reports, she's going to post them on the house appropriations website underneath whatever the department is. I've seen those. Yeah. Yeah. The other thing I couldn't, I could know, I don't, there's something called the big budget book, which is one of the, it's, you know, really a three-inch book, exactly. That has some additional details, but not quite as many details as the vantage report. So it's just another resource to want. Yes. Another question, again, I keep coming back to the vacancy savings, but when I looked at the instructions for the agencies and creating their budgets and proposing their budgets for the governor's budget, I think it was sent out last August or September timeframe. When you have a cost of living increase, including salary steps perhaps, but you are required to maintain, unless you can advocate otherwise, to maintain only a 3% growth, for example, to cover some of that cost of living increase. So the way it appears that agencies are trying to make up that difference is through vacancy savings. So it may be certainly a function of not being able to find the right employees, or the posting may be at a lower level than when they can attract the right people. But it could also be, this is something that I think, perhaps the whole comment kind of mentioned. The why is missing, you know? Why are vacancy savings so high? And to tease that up, instead of one general response of being a, it's because of our unemployment rates being so low, generally speaking, that could be really a partial answer as to why we're relying more and more on vacancy savings. So I just want to flag that again in terms of trying to understand the why. So B, that they can't meet their statutory obligations. I mean, I know we did that because we had to use the vacancy savings statutory obligations. And so that's something we should know about, but that's not visible in this thing. And the other question I have is we talk about grants, but we're also not talking about contracts. And it feels like we may be shrinking the government, but it's not clear we're shrinking the cost of government. We just may be outsourcing it. And I'm just not beyond the impact on pension obligations. I'm not clear what the implications of that are for services and cost of services and efficiency. And unless we're also listing the main contracts, I'm not sure we know what's going on. But if I may continue. Just to follow up, I think there's kind of a double, you know, a couple of things happening at the same time. One is again, when we've frozen fees for many, many years and then, and yet still putting such pressure on the vacancy savings as a means of trying to meet the agency's budget and expectations. The two things are working, I think, to getting to the, having an impact on the outcomes we're seeking. Yeah, I think to your, the points that you're making, understanding vacancy savings is complicated because I don't, I think some of what we're seeing now, like for example, the Vermont psychiatric care hospital, some of what we're seeing now, and we've heard testimony is that the challenges that they have actually recruiting workforce. So it's not increasing vacancy savings to try to meet a budgetary target. It's workforce related. However, I think historically, and I can't speak to any other departments, vacancy savings in the 24 budget, if they're increasing it to try to meet a budgetary target or if they're increasing it because it's what they're actually anticipating to experience. I think understanding when it is because of a budget target versus what they're experiencing due to workforce challenges. I think the point about grants and contracts is also a good one because we do, in one of the reports in the Vantage system is a detailed listing of the texts of grants. The agency of human services also has to provide a detailed grant inventory. So every grant that they issue in a given fiscal year, but we don't ask for the same on the contract contracting side of things. And it really is like, in a lot of ways, grants and contracts are very, very similar. And so understanding that is important. The final point I want to make on this is that for the time being anyway, I reserve my right, is the impact it has on customer service. And we hear anecdotally the impacts, whether it's trying to get a permit for your wastewater treatment plant or whatever the permit is, the delay of five months in today's economy where we fundamentally need to have more housing and the infrastructure to support more housing. And those delays on customer service are having a real impact on the runners in businesses. So I just wanted to kind of mention the implications or impacts of these. One last comment on this, and then we're gonna move on. And I just, I really, I was really uncomfortable with the text conversation not because they didn't do a good job. They did a great job with recruitment, but recruitment is not easy in some agencies and it's not because they are trying and because they're normally doing a bad job. So I just have to say that because I feel like we are rewarding people who have easier situations and we're not maybe looking hard enough at why some agencies are really struggling. And it's not that they aren't trying all the same things with incentives and improvement of work environment. They may just have structural issues. There can be lots of disabilities. Yeah, yeah, great. Okay, I think so we've talked about grants and they have to provide a list, a summary of grants distributed to community and nonprofit organizations, carry forward funds. This committee, we've had a lot of conversations in the context of budget adjustment. They're supposed to, for each appropriation, provide a summary of the amount of carry forward funds that were available at the end of FY22 and the anticipated amount of carry forward funds available at the end of FY23. So I think that this is an item that we don't necessarily receive all the details from each of the agencies and departments. But as you know, from having just processed and passed the budget adjustment, it's sometimes really critical to understanding where carry forward is and why and then how it gets used. Single audit findings. So we ask agencies and departments to let us know when there are repeat findings related to the single audit. So this typically can signal to you if there is a structural issue within an agency and department, is there a reason why they continue to have the same finding as part of the single audit? And so I don't know if you've heard of any repeat findings this year in testimony that you've received. I will tell you the Joint Fiscal Committee does get an update from the auditor. I think it's in September or November where he provides his kind of assessment of the single audit in some areas of concern. And one of the things I highlighted this year is workforce issues. Not only I think what you've been hearing about as it relates to delivering programs, but also within the financial offices, agencies and departments and their ability to keep up with the audits and corrective action plans and those types of things. So it is an important area and can be an indicator of programs that are under stress. And then we have the last thing on this page is the human services specific request where we ask for longitudinal data about the populations and the services that they receive from the programs within the agency of human services. And so that could include things like caseload trends, the characteristics of the populations they're serving, acuity of need. And I think you'll, as we, you received some testimony last week from the agency of human services, you saw varying degrees of that information. I'm not sure how much you've got to dive into some of those slides because the testimony is just to get through the ups and downs. I think for DCF was three hours and you've got a little bit of that data, but not a lot. Yes. Okay, let's move. So my concern, the way this is phrased is we talk longitudinal, but then we say reason. Slowed and longitudinal and recent aren't the same thing. And what I'm finding is that we're getting a lot of five year trends, which are absolutely meaningless because that's three years of the pandemic. That's where we are now. And it doesn't help us. We need to go back further. So when you meet with your folks, you can ask them. Okay, and I think that's really it. On the last page is questions and to reach out to the Joint Fiscal Office staff. Do you ever get any questions? We do. We usually, we get asked, when are we getting this? So people like, people really do use it and we do get some questions. So, yeah. Great. Thanks, Sarah. Is there one that we're supposed to talk about? The only thing that I'll maybe highlight to you as the chair was reflecting and it's on your website. Yesterday, Maria sent out to all of the subject matter committees. A request, a memo from this committee, from the chair requesting their feedback on the FY24 budget. And so as you look, and maybe for ease, if you're on the House of Appropriations website and you go to yesterday's date, I think you will find all of the letters that were sent out to each of the committees. And so there's a cover memo that requests their feedback on budget proposals by March 1st. And then we include links to the entire budget. So both like the executive summary, the language and the web report. But then something new that we have done this year, working with our colleagues in Ledge Council to maybe try to be a little bit more direct in terms of the feedback that we're looking for from the subject matter committees. We created tables for each of the committees. And so if you were to click in, let me see, you were to click into like House agriculture for trying to like set a template, set the framework for how we wanna receive the feedback for them and give them some more specific details about what we're asking for. So it starts, the first section is looking for other feedback. So if they have items to add that are they're not included in the governor recommend, or something that they wanna provide more details on, that's the first thing that they can do. And then the template goes through kind of section by section, starts with like the number section. So the B sections where all the dollar changes are to the extent depending on what agency or department it was, whether we have the details behind their changes, we did provide that information to the subject matter committees. So for example, human services, healthcare, we have the details from the agency of human services. And so we tried to highlight for those committees, some of the more significant, if you will, policy changes so that they could really hone in on that and not give them enough detail so they could to focus their attention, but also not wanting to prohibit them from thinking more broadly. So we detailed the dollars, the B section changes. We listed any relevant one-time appropriations, which this year are significant. As you know, the governor is proposing roughly 270 million of one-time appropriations. So there's a lot of policy, if you will, being proposed in those appropriations. And then we have a section on language. So if there's any language relative to that committee, asking them to look at it. And so... I'm looking at the AG one and it's interesting. So for example, they have the tax department because it's the digitization of current use, which is an AG related thing, which isn't... I mean, I think they support the current use program. I can't imagine that this is directly related, but it's indirectly. And so it's nice. This is a lot of work to put this together. This is very impressive. Thank you. Really helpful. It was a lot of work. But I think it's gonna be to a good product. Yeah, yeah. And now that I've done it once, maybe, I mean, every budget year will be different, but at least the concept is bigger. Yeah, so. Kudos, thank you. I think I saw Mark, Marek Mahalyan. Yeah, thank you. I just printed my out for agriculture. I mean, for a, I read an ad. Do you have any... This is a lot of work on their part. Do you have any sense as to whether they're gonna do any of this? Have they talked to you? So they have not talked to us specifically yet, the committees themselves, but they will do the work, similar to what they did in budget adjustment. They will do the work. And it's, I think it's meaningful. It's meaningful to them. It's meaningful to this committee. And it's a lot of work, but it's important. I agree it's important. Yeah, yeah, yeah, but they will. And that's why, so we try to stress, if you are supportive of a proposal, you don't have to do anything. You can just leave it blank. It's like, let us know if you think something should be adjusted or if you don't support something. So we're trying to reduce the work burden on them, but, you know. And I'll just, I'll point out to that. It isn't just, I think as a body, we don't need to just react to this. We need to think about, okay, that's great. What do we want to do with, this is now our budget to write. What do we want to do? And or, so it's sort of like, what is going to be our rewrite? And maybe some of this will come over, you know, as pieces come in, instead of like, we want to do this and then try to break it. My mindset is like, this is what we want to do. And there might be parts of this that move over, right? Does that make sense? And we're done, you had a question. Thank you. Just a couple of comments. One is not only do I like this, I also appreciate adding priority there for that very reason that we may not be able to support everything, but what do we want to hear in terms of the policy committee's priorities? I just also wanted to just mention regarding this January 26th letter, thank you for this. I mean, because it was easy for us to kind of identify some of our frustrations when we get this information that it's not the complete story, but I truly wanted to make sure you will realize how appreciative we are of this work. So thank you. And next year, it might actually result in a more uniform approach to the reporting that we get. And as we ask the questions that we're saying we want the information to, whether it's in this forum or when we meet with our budget portfolio people. As Tristan said, we're responsible for making sure we ask the questions. Right, and because we're just having it on our website going, all you have the agency's letters are up is, I felt it was important to have the walkthrough of like this is what's going on, that it isn't just, it is just on our page, but in the future you'll be a little more and not in tune to it, but understand when we say that, oh, I should probably go get that and we see what my budget area is hearing. And it's funny because we had to negotiate, not negotiate, but it was a letter that's coming from both the Senate and the House. So the Senate required myself several drafts before it was comfortable for both. And because the House and the Senate don't always approach the conversation the same way. So working with JFO to get just the right balance between how we dig in and seek at the level we do of our standing committees versus, but we got there. Thank you so much. All right. Yeah, huge, very helpful. Good, good. So you got through the letter or we got through. Yeah, so I checked off. So, yeah, there's coming up would be cash fund and the, oh, in the language, we have the other language, which we'll keep popping you back. Thank you. That sounds good. And I have to just say, I think I said it, but Maria really drove like getting these tables and like pouring through the language and the budget ends. There might be some cases where some things were lucked out or we added things that shouldn't have been added. So it's a little, wait a minute. Sure, that's a good point. We're all right. This is amazing. Great. Thank you both. One and a clock. So is it break? Yeah, it's break. And the press releases out for our public hearing. Oh, perfect. Just came in your public hearing. So we were breaking to 1130 and then we have the, today, today we have to be in the 30s.