 We're gonna go ahead and get started. I think I know just about everybody in the audience, but if not, I'm Rebecca Kelly. I'm the governor's communications director, but I'm also the office's liaison to the agency of commerce and community development, which is why I'm here to kick this off for the Department of Economic Development and the Department of Taxes. I think, again, I think most of you have all been to these before, but just we try to stick right to the hour. So forgive the teams for rushing through some dense topics pretty quickly. We'll leave time for questions for sure, but if you have additional questions or you wanna dive even deeper into something, the team is available afterwards, or at any point you can contact the governor's office to connect you or you can connect with them directly. Their contact information is in the slide decks. So with that, I'll go in just to clarify, although I don't see any media in the room, questions are just for our legislators and we'll connect with the media afterwards as well, if needed. All right, commissioner. Good afternoon, everybody, and thanks for coming on this dodgy weather day. I'm Joan Goldstein, I'm commissioner of Department of Economic Development. We're gonna talk about economic development, economic revitalization, and what the impact is with affordability. I'm not gonna go through every single program that we have, but I thought, nor will we go through every single economic indicator, but we thought that these two indicators, we're actually, yeah, two indicators and the change in those indicators were really kind of telling about why we get involved and what we talk about when we talk about affordability. So the figure 76,079 is Vermont Medians' Household Income as of 2021, and that was an increase in 11% since 2016. But when you look at the median house price over the same period of time, the increase is 71%. It's really stunning when you look at that difference, right? So how do Vermonters catch up? How do we help Vermonters make a living, be able to afford a house, be able to support themselves and their families, and that is at the very core of economic development from a human beings perspective. But there is also hard dollars that we talk about as well. So when we talk about, just for example, the income tax, right, the income tax makes up more than 70% of the general fund. So yes, we want people to have jobs. I mean, it really impacts how we pay for government services in addition to, of course, the economic wellbeing of individuals and their families. This comes out very light. I don't know if you could see it, but I guess you have copies of this. So really the object of the game is to enhance and try to create or enhance economic activity. And we do that in a number of ways, right? And the more economic activity and the more kind of tax revenue that gets generated, then we have some more affordability, the affordability of the state to provide services, the affordability of individuals to live their lives. And so the four pieces of the puzzle that we've represented here, it's by no means the entire picture, but we get involved in things that have to do with property revitalization. Business recruitment, retention, expansion. Business assistance, how do we get businesses to the point where they could be creating revenues and creating jobs and workforce recruitment and training because none of that will happen without having the human capital available and trained to bring about this economic development. Another slide that kind of, the color doesn't look all that good on this, but just to give an example. So on this pie chart, we've got the Vermont Economic Growth Incentive. You'll hear a lot about it this session. We affectionately call it VEGGI, and that is really the only incentive program we have at the state, and it's really for expansion of business or relocation of business in the state that wouldn't happen or it happened at a much less advantageous rate. And we also have on the bottom part of this pie chart, the RDC and SBDC, these are our partners. We don't do it alone from Montpelier. We cannot. We need people out in the local area to understand what is going on out in the area. Like what are businesses facing? Who are the property owners? What do they need? What is happening? How could a business grow? Where could they be accommodated? So we spend a lot of time with our RDC and the SBDC group so that they could alert us to what are the needs and what are the programs of the state that could be matched. Along the way with VEGGI as an example, we've just since its inception, the qualifying jobs that were created with over 8,000, the qualifying payroll over half a billion dollars, and the average wage was 58,000. But that's from 2007, so it's a little bit lower than what you'll see the median being right now. And new qualifying investments was over a billion dollars. So we feel very strongly this program needs to be reauthorized so that we have something to help encourage growth. And when a lot of people hear economic development, they think about a bunch of people going to different states and trying to steal the businesses and having them relocate to Vermont. It's very different, like in economic development, we didn't even bid on the Amazon Q2. We know who we are, we know the size of Vermont. We cannot compete or represent that we could accommodate 4,000 jobs at once. So really our number one target market for recruitment is Canada, the Quebec market particularly. And so two years ago we were appropriated a small amount of funds to get some Montreal representation to help put our name on the map when these Canadian businesses are looking to expand. Many of them are very interested in the US market, either as an end market for their products or as a subcontractor to some of the large prime contractors, particularly in the aerospace industry. And it's been successful, we have a much better, more energized sort of prospecting list. And what we found that 400,000 number up there is 400,000 square feet of space that these prospects are talking about, that what they need. And so as we look around the state, there are very few places that have available industrial space. Bennington has some industrial buildings and there might be some up in the northern part of the state, but rarely do we find a ready fit. And so we're placed in this situation where we have to say, well, we could build that for you. Permitting me take 18 months to two years, but when in fact some of our competitive states like New Hampshire or over in Plattsburg, they may have ready made buildings. So as a way to defend against that, or actually to really be more on the proactive level, we, the governor is asking for $10 million this year in the budget to accommodate that growth. And it's not just for recruitment. I mean, that is the recruitment number, but we know of businesses around the state that are looking to expand their footprint and we don't have ready made buildings. So this is our attempt to work through the Regional Development Corporation Network. They work in turn with Vita and we could fulfill some of that seed money to get to the RDC so that they could then purchase the land or expand the building, but the idea is the readiness so that we could accommodate growth. Wanted to show a few pictures because there's nothing worse than looking at a presentation of full text, but just to see what you're looking at, these were two entities that tapped into the Vermont Employment Growth Incentive. A lot of times people think that these businesses have always been there. One is the Lawson's Finest Taproom in Weitzfield and when they came to see us, I think they were at like two people, now over 50 people. And the other is Commonwealth Dairy, but you may know them as Green Mountain Creamery if you buy their yogurt products. They came to be, these are not new veggies, but I'm showing it just as a point that we cannot take this type of development for granted. Commonwealth was able to use veggie as well as community development block grant, other opportunities throughout the agency as well as Vermont Training Program. So as I said, one of the objects of the game is really the property investment, improvement, revitalization. And I have three programs in particular that are focused on that. One is an ARPA Fund Capital Investment Program that we started last year and new and improved called Community Recovering and Revitalization. We were appropriated in the first year, $10 million and that leveraged $195 million worth of capital investment projects. The other is the State Brownfields Remediation. Two years ago we were happy to get general fund appropriation, so was agency and natural resources for the State Brownfields Revitalization Fund. Why is that important and why is it in the governor's budget again? Because it works. Basically there are these underutilized or abandoned properties, contaminated properties all over the state and people are really reluctant to get involved with a good reason, right? Everybody in the chain of title will have liability unless they work through the state's limited liability program. And that's great, that works. They get limited liability. What was missing was a flexible source of funds to do the cleanup. There's EPA money, but there's a limit on how much could go to each site. And so this was a perfect opportunity. We were appropriated $25 million in conjunction with DEC. We were able to utilize most of that actually and we're back at it again this year and asking for another $10 million for ACCD and $2.5 million for DEC. And just to give some ideas, like so far 35 acres of land have been remediated or on the process of being remediated and the projections are for housing projects which is what our preference is for housing or for economic development. 353 housing units projected and 540 new jobs projected. This was a fund and an ask that had pretty unanimous support. I mean it was the one thing both chambers were pretty much in agreement with and it's the one program that has the least amount of controversy. So we're very, very pleased to be talking about it and showing the benefit of it. The other part of the pie here, we have this tax incremental financing district known as TIF. A lot of talk about TIF. We have about 10 active TIFs in the state right now. These have, it's done tremendous work if you've been to St. Albans before and after, Winooski before and after, Town of Hartford, Barry, Putnam Block in Bennington. It basically gives the municipality the instrument with which they could develop the infrastructure necessary to encourage private real estate development and that real estate development will provide incremental tax revenue to the state, to the locality but while the TIF district debt has been incurred for the infrastructure, we use that incremental revenue to pay back the bond. So what we wanna do with that is actually bring it to smaller towns. The 10 districts that are in existence are usually larger towns, more sophisticated towns. It involves many, many, many parcels of land, a 20 year financing plan so you could tell how complicated it gets right at the get go. What we're going after this session is what we call project based or mini TIF affectionately and it's basically a smaller towns may need water, wastewater project to just develop one housing project and we wanna give those towns that ability in that instrument and we've tried for five years to get it and we haven't been successful but I think as towns are realizing that their opera funds may be going elsewhere that this instrument is still a very flexible instrument for them so I wanted to tell you about that. Again, some more pictures. I think what you'll see on the left is we call it the Fonda site. That was the top part of the picture was demolished. I guess it was in 2015. Just have to check my date. Actually, yeah, the site closed in 05. It was demolished in 2012 and it sat vacant and idle until 2021 when Governor Scott invested 25 million in this general fund, Brownfields fund and so we were able to get the funding to clean it up. It was demolished so it had to be cleaned and Connor contracting was leading the effort and American Rail Dispatching Center is pending occupancy of that building or they might already be there at the time of taking that picture. They weren't there. The other photograph is Congress and me, I believe. Yeah, and that was a Brownfield. It was a Brownfield funded cleanup of a lot behind a new building but both of these were, I believe, in the TIF district. I'm looking at Abby to make sure I'm not misspeaking. All right. This is another example, the Putnam block. I don't know how many of you are from the Bennington area but this was a multi-year, multi-funding stack project and it's hard to see here but I think it used to be on the left hand side. It just was like a parking lot and now not only is it a redevelop green common space for the development there but there's housing there, there's first floor retail. It really looks beautiful and so we're very happy about that. The Bennington folks put together everything from new market tax credits to community development block grant to downtown tax credits and it was within the TIF district and also Brownfields. So a lot of these work in conjunction with each other. The other, White River Junction, the Main Street Reconstruction and Private Investment in the Hartford TIF district. That TIF district, I mean, on the left hand side is the Main Street sort of streetscape improvement. There is a housing, the middle picture is a housing development right on South Main and on the right is it was like an old tire site. That was a Brownfield that we cleaned up and is now a housing, multi-unit family housing. Of course, there are other areas of the department. I mean, I think I've hit on most. You're gonna hear this year is veggie. We need to reauthorize it. We wanna simplify it. We wanna make it more transparent. TIF, I explained how we want to make it available to smaller businesses. We're also, as I said before, going after additional Brownfields funding. But we also run the relocated worker program. There's an ask in there in the governor's budget to continue with that. Economic development is really an ecosystem. We can't just wait for all the housing to be developed before we recruit people. We can't stop creating new jobs until we feel that the workforce is sufficient enough. We have to work on all cylinders. And so this last slide, or second to last slide, I think, it really just talks about some of the other things that we were working on. The 23.4% is the median wage increase on the Vermont training program, which is another program administered through the department. And there's an ask from the governor for another $5 million, a one-time ask. And the training program helps businesses grow and upskill and train their employees. We could pay up to 50% of the cost of the wage or 50% of their training costs. And it's been heavily utilized in the last year, as you could imagine, with the shortage of workforce, people are training their incumbent workers to do more or to learn different skills. The median wage increase was above and beyond what the state median wage increase is. And I'm forgetting that number at the top of my head, but the Vermont training program report is posted on our site at accd.vermont.gov if you wanted to refer to it. We are tasked with doing that comparison each year. And the 992 number is the number of new Vermonters that have come in as a result of the relocated worker program. We instituted that first year was 2019. And each year it changed a little bit, but enormously popular. All kinds of occupations people are moving here for. A lot of people say, well, doesn't the employer already pay? Well, not necessarily, especially some of the jobs that people are filling. Mental health counselors, healthcare workers, you name it, it's across the board, arts organizations, nurses. It's all over the lot. And so that is just another example. I mean, the grant, we didn't give 992 grants. We gave out something more like 300 to 400, but that just connotates that they're bringing partners and families. The other, it's not in the government's budget necessarily as an increase, but just so that you know about it, that we have a whole technical assistance group within the agency that helps small business get government contracts. Very important first step for many small businesses. And there were 176 million of government contracting that happened in the last fiscal year. The Northern Board of Regional Commission doesn't really hit our budget other than a capacity grant, but we do get significant funds over the last several years. There's been $21.3 million of investment that gets administered through our department. We really do the solicitation and prioritization and hand-holding to get people to apply and that the people are municipalities or nonprofits to do primarily infrastructure or some sort of economic development activity. And that's all I have for prepared comments. And hopefully I've touched on all of the things and happy to answer any questions. Yeah, we have, I mean, I didn't do it for this necessarily this exercise, but you know. Yeah, I think it's fair to say the median income in Chittenden is higher, much higher as is the median house price, but this was just to get an idea of the picture of the state as a whole. No questions? Everything's a go? Thanks so much. Good afternoon, everybody. Thanks for coming. Anybody who comes to an afternoon session to talk about taxes is a friend of mine, so I appreciate that. I'm gonna see if I can make this. The right one. Right one, okay. Oh, but it's on the, there we go. Got it, so this is next slide up here? Okay, perfect. So I'm Craig Bolio, I'm the tax commissioner. I'm gonna talk today about a few things. I'm gonna talk a little about the administration's approach to tax policy. I'm gonna talk about some of the highlights of what we've achieved, and I'm gonna talk a little about what the governor is proposing in this year's budget as it relates to tax policy. So to start, I wanna take a look at this graphic behind me, and on the left you'll see the governor's strategic priorities, things that you've heard before, right? Grow the economy, make Vermont more affordable, protect the most vulnerable, modernized state government. I threw level the playing field in there, that's really more of a tax policy specific one, and I'll admit when we get into the weeds of tax policy the governor usually leaves that to me, but rest assured that has been a strategy that we've employed in the administration. And on the right you see the NCSL, National Conference of State Legislatures, Principles of a High Quality Tax System, and this is what the Vermont legislature and legislatures around the country use to judge whether or not tax policies would fit into that high quality tax system. And I show this graphic to show that there is a lot of overlap between the governor's strategic priorities and the NCSL principles of a high quality tax system. So on the left you see grow the economy and make Vermont more affordable. That sounds a lot like economic competitiveness, right? Making sure that our tax system is responsive to interstate and international economic conditions, making sure that we're not creating unnecessary disincentives to live here, to work here, to do business here, right? You see protect the most vulnerable. Well that has a lot to do with fairness, right? Making sure that our tax system is actually progressive, so those who make more pay more, and also making sure that those who are making a similar amount pay a similar amount, right? Making sure that our most vulnerable don't have an undue share of the tax burden. You see modernized state government, well that sounds a lot like simplicity, right? Both in operations and in policy, right? We need to make sure that taxes are easy to understand, easy to file, right? If people don't know what they owe, they're less likely to file altogether and they're less likely to file accurately, right? And level the playing field, which overlaps a lot with the principles of accountability, which means make sure taxes are transparent, make sure you don't have unfair exemptions and credits that are creating inequality and neutrality. Making sure that you're not creating unintended consequences with your tax policy, right? The governor is very interested in making sure that businesses don't have an unfair advantage from tax policy. A great example of this was several years ago when online transactions were not subject to sales tax most of the time, right? That was an unfair advantage for online vendors that main street businesses were feeling, right? And all of this is underscored by the final principle of the NCSL system that the governor embraces wholeheartedly, which is sustainability and reliability, right? And you heard a lot of that theme in the governor's budget address this year, making sure that we don't have a volatile system, making sure that we're planning for the future, making sure that it's sustainable, right? So I show this to show that our goals and principles overlap significantly. Sometimes there may be debates between the administration and the legislature about exact details of how to achieve something, but we share the same goals, right? So let's talk a little about what we have achieved on this front, and I think there are a lot of achievements to highlight, right? I'll start with Act 138 of last year, a $40 million tax reduction bill. One of the largest, maybe the largest, tax reduction bill ever in Vermont. It had a number of different things, right? The new child tax credit, expansion of the child independent care tax credit, expansion of the earned income tax credit, expansion of the social security deduction, as well as creating a commensurate exemption for civil service retirement fund and military pensions, right? It had a more generous student loan interest deduction than the feds give. I can look at Act 11 rather of 2018, right? In response to the Tax Cuts and Jobs Act, which would have increased taxes on Vermont families to the tune of about 30 million in aggregate, the administration and legislature worked together to prevent that tax increase, right? And at the same time, lowered rates, simplified tax returns, right? I can point to the corporate reform of last year. Headlined by moving to a single sales factor, a portion factor, right? Which helps incentivize bringing more workers to the state, helps incentivize improving properties in the state and removing disincentives by having corporate taxes go up as you bring more jobs here, right? Getting us in line with the dozens of other states who had already enacted that policy, right? And I can point to the renter credit reform of 2020, right, a program that helps lower income Vermonters pay their rent, right? A program that had been very challenging to administer for years and very difficult for taxpayers to file and also had a couple of really big holes, right? We were able to make it so that you don't have to rent all 12 months out of the year anymore because shouldn't a program that helps support people who are renting be able to support those who might have struggled with homelessness for a month or two out of the year? Absolutely, right? We were able to make it so that people who were living in roommate situations didn't have to share income information with each other anymore. They could file their own claims, right? So again, we've worked together in a lot of different places to be able to make a lot of great achievements and deliver on a lot of great policies for Vermonters. So looking forward, what's the governor talking about this year? Well, he's putting forward a $17 million tax reduction package as part of his recommended budget. In addition to that, there's a unique opportunity that the governor is encouraging the legislature to take on, which would also decrease federal taxes for a share of Vermont constituents to the tune of 10 to $20 million as projected by the Joint Fiscal Office, right? So together, those two elements could be as much as $37 million in tax reductions similar to Act 138 of last year, right? And in each area, these are policies, each of the areas that impact the state revenues, I should say, these are policies that are in areas that we have worked together on before and delivered for Vermonters before, right? So I'm gonna start with the unique federal opportunity that we have. You might have heard it called the Salt Cap Workaround. You might have heard it called a Pastor Entity Tax. I will tell you it's the closest thing I've ever seen to a free lunch in state tax policy. If Vermont enacts this policy, it can cut federal taxes again as projected by the Joint Fiscal Office, $10 to $20 million for Vermont business owners while not reducing state revenues by even a cent. In fact, if you structure the credit properly and the version of this policy that the governor supports would actually raise half a million dollars for Vermont while cutting federal taxes for those constituents, $10 to $20 million, right? Background on this, some of you might be familiar. In 2017, the federal government passed a bill that limited the state and local tax deduction on federal personal income taxes to $10,000. States love the state and local tax deduction, sometimes called the Salt deduction, because it means the federal government is subsidizing a portion of a state's taxing capacity, right? If taxes go up in a state and you can take the Salt deduction, the federal government is paying a portion of those taxes for your constituents. So states worked really hard and really quickly to get around this cap. The first one, or maybe the one that got the most press was some states started to ponder if their state tax payments could be considered charitable contributions to the government so that they could be deducted as charitable contributions. And the IRS said, no, absolutely not, you cannot do that. And states went back to the drawing board and they came up with this other structure of a pass-through entity tax, which allows owners of pass-through entities, S-Corps partnerships and LLCs that are taxed as S-Corps and partnerships to take advantage of this. And since the IRS actually blessed that approach and said that it is acceptable, out of the 41 states that have personal income tax and can enact this policy, 29 have done it, right? Including New York, Massachusetts, Rhode Island, New Hampshire can't because they don't have personal income taxes. But this is taking the country by storm now and tax nerds are rejoicing. Second policy that the governor's really interested in, earned income tax credit. The earned income tax credit is a program that helps put more money in the pockets of low and modest income Vermonters. It is widely recognized as one of the greatest anti-poverty programs ever established. Most of the money goes to families with children. And it is based on earned income. So it helps incentivize and enhance participation in our workforce. Now, a number of different states have their own version of earned income tax credit including Vermont and current law. We currently offer 38% of the federal credit and ours is fully refundable, which is an important fact. Fully refundable means that if your credit is larger than your tax liability, you get the difference back in a refund. And this matters particularly with a program like earned income tax credit because it's generally going to lower income folks that don't have very high tax liabilities, right? But there are three jurisdictions around the country that have a more generous earned income tax credit than Vermont, Washington DC, Maryland, and I would argue New Jersey, right? And so this proposal would put us closer to the top. Washington DC greatly expanded theirs last year and it's hard to catch. But this would tie us with Maryland as the second most generous, fully refundable earned income tax credit in the country. Next proposal that the governor's really interested in is a further expansion of the Social Security income tax exemption. This is something that was originally created as part of Act 11 in 2018 when we were reforming Vermont's personal income tax system. We also put a partial exemption for Social Security into Vermont's tax code. And that was expanded modestly last year in Act 138. So under current law, anybody who has less than $50,000 of income as a single filer or less than $65,000 as a joint filer can get a full exemption from state taxes for their Social Security. And that phases out over the next $10,000 of income and anybody over that has to pay Vermont taxes on all of the Social Security that's part of their adjusted gross income. So there's a couple of elements here from the governor's perspective. The first is that expanding this threshold will allow more seniors to retire comfortably and worry less about paying the bills. But the other piece is that the modest expansion of 5,000 last year has mostly been eaten up by the significant Social Security increase, cost of living adjustment this year. It was 8.7%. So that's moving folks who are getting Social Security up the income band further to the edge of this eligibility. So if we make this expansion, we'll be able to help retain that expansion that was put in last year and help more seniors retire comfortably. I would also note the legislature enacted last year a similar exemption for those receiving civil service retirement income and the governor's proposal moves the income thresholds for that program exactly the same as the Social Security. So moving those out 15,000. And the last is one that I know you've heard from the governor a number of times. It's something he's extremely passionate about, which is a full exemption for military pay, military retirement pay, excuse me, and survivor's benefits. 38 states either do not tax military retirement pay, military pensions at all, or don't have a state income tax. Vermont put forward a very modest partial exemption last year, but virtually every state is more generous than Vermont with maybe the exception of California that fully taxes it, right? So the governor is putting forward a proposal to fully exempt this income. And again, it's twofold. One, it celebrates the military service that these folks have spent the majority of their adult lives serving our country. And it also helps enhance our workforce. The Joint Fiscal Office put out an issue brief on this topic a few years ago, and they noted that this was a national figure, not a Vermont figure, but that nationally 70% of military retirees are between the ages of 35 and 50, which means they're still gonna be participating in the workforce, right? They're not just done their career forever. So let's make sure that we provide a structure that allows more of these military retirees to stay in the state and more to come here. And again, as you look at the list of those that don't tax it at all, I believe it's all of New England and New York with maybe the exception of Rhode Island. So it's a significant disincentive right now. That's all I had. I'm happy to take any questions. No tax questions, come on now. Well, thank you very much.