 House Ways and Means Committee and it's May 7th. And we're going to be discussing continuing a discussion on education finance this morning. We have Mark Pruldt and various other staff people here to help us with that discussion. I don't expect to resolve the issue today. I think what I'd like to do is to be a little more clear about some of the possibilities are including some work on an idea that Mark and Scott and I and some others have talked about which is to see if there's a way that we can get money to schools we talked about, you know, can we get money to the Ed fund? The answer is no. Can we give it to taxpayers? The answer is no. Is it possible to get it to schools? The answer is eh, we'll see, maybe. And then when we have kind of gotten to a place with that discussion where we've given staff some more work to do, that's kind of where we'll end up. Then we'll shift gears and we'll hear from Abby on language that she's prepared on the moving to the state collection of the property tax. And I know that Commissioner Bolio wants to have a chance to weigh in on that, which I appreciate. It's a, it's not a new idea, but it's a new idea for this year. And Bill Taube is here with us and we've also sent an invitation to Peter Conlon. I'm not sure whether he'll be able to join us or not. And the other thing I wanted to mention is that House government operations is going to work on the short term borrowing bill that we worked on yesterday and sort of moved out of the committee in memo form rather than bill form. And Robin is going to join them at 1130 when they take that up and talk about what, share with them what our committee is thinking was. We've also, I believe, invited Karen Horn to this discussion. Yep, she's here. She's joined us. So with that, unless there are some announcements from committee members, I'm going to, I don't see any, I'm going to move to Mark to always get us started with the not very good news. I appreciate that. We'll start a discussion on what we're going to do on end finance. Okay. So I thought the best way to go about this might be to show you where we think we are right now. So I have a balance sheet that I call the current law balance sheet that we can look at and get an idea of what the size of the problem is. We're looking at an FY 21 and then talk about some of the ways at the staff level and in this committee that we've tried to wrestle with how to use this TRF money to address this problem. There's a couple of different ways we've been looking at it. I can walk you through them and we have one that may still be viable. So I can touch on that. So, Soresha, can you bring up the education fund outlook that's labeled FY 19 to FY 21? And can you just show me the bottom of that so I can make sure it's the right one? Yes. Okay. Okay. So we've, we've seen this before. I just want to remind you what's going on here. So this is an, this is an outlook for 19, 20 and 21. FY 19 is actuals in the books for references, for reference. FY 22 reflects the $54 million. That's $24 million. $22 million. You said FY 22. Oh, sorry. So, all right. FY 20 right now. In FY 20, down on lines four, five, six and seven, we lost $54 million compared to the January forecast. That's really all that happened. But if you drop to the bottom line, the consequences of that are keep, keep going all the way to bottom. The consequences of that are online 27. You can see that we have no stabilization reserve. In fact, we're short $3.7 million. And down online 31 where we previously had a $12.9 million surplus. That's gone. So this is where we think we're ending up in FY 20. So now if we move on to FY 21, I've called this, can you go back up to the top social? I've called this a current law balance sheet, but what I've done here is I've set, I put in place, Chloe actually did this, we put in place the December one tax rate parameters on here, talked about changing those and that's a possibility, but you know, just for just looking at that, this is the, these are the tax rate parameters that were in place in December. If we lower them and I have the second sheet, I can show you what they would be if they're lower. Did it take some down by about a penny and a half? And we can look at that, but if we go back down now to the bottom again, Sorcha, we've lost another hundred and 12 or $113 million in non-property tax money. So that plus this $3.7 million problem leaves us with $153 million hole. That assumes that the reserve target is restored to the full 38 million 5%. That may not be necessary. That's not necessary. That's not necessary. It assumes that we're using the December one. Tax rate parameters, which is also not necessary, but otherwise I think this reflects where we are. So it's, it's a sizable problem, $153 million. To balance the fund next year. So any questions on that? I do because the, the, I think as a committee, we had said that we wanted to use the tax rates that we were using to reduce the number of people who were using the tax rate. And that was the reason why we left March 13th. And rather than the December 1st ones, and my recollection is that those are a bit lower. So I wondered if you could show us that spreadsheet as well. And this sheet has some other stuff on it, which we can avoid from now, but it's so much. If you want to pull up the other sheet. Yeah, Mark, I didn't post that one. So give me a second and I'll put it up. Okay. Okay. So I'm going to go back to what we were doing around trying to, you know, figure out how to get some of the, to split the rate into the COVID into the non-COVID portion, but I can show you what the tax rates would look like. If we were assuming that. The rates would have been set. Priority pre-COVID. So. So I'm checking in with committee that, that was my recollection is that that's, that's what we, that's, that was our target. Yeah. Right. And the reason I wasn't too concerned about it on the current law sheet is because if you go to these rates, you bring in a little less money. So instead of having a hundred fifty three million dollar hall, you have a hundred and sixty six million dollar hall. We need to, but we need to know that if we're trying to figure out what the solution is. So. Absolutely. So these are the tax rates. The A B and C. Those are the tax rates that you likely would have set pre-COVID. Because for two reasons. One is because there was a 12.9 million dollar surplus on the bottom line that was available for tax rate reduction. And the other reason is the school districts came in with budgets that were lower than we anticipated back in January. Instead of 5%, they were down around 4.2% or something like that. If COVID had never happened and that was the end fund outlook. We were looking at these are the tax rates that we would have ended up with. Yeah. I guess, you know, on March 13th, when we went home, we, we were actually, we had a bill already to vote. And we talked about whether we should vote it or not. We decided not to, which in retrospect was probably, I think the right thing to do. But I speaking just for me, I, those are the tax rates that I feel. I feel comfortable going with, they're an increase for everybody. But they're an increase that's along the lines of what we expected would happen if COVID hadn't happened. But I really feel like I need to check in with the committee. Cause this is, it's a decision that is, you know, 11, 12 million. Is that right? Somewhere in that neighborhood. Yeah. I think that represents other people want to weigh in on that just so that I can. So we can know which. Where we are. Anybody. Sam George. Okay. Good. So the. The increase over last year raises an additional 11 million. Is that what? No, the difference between December one and March 13th is about the number of people that have an income. And then they were projecting. Yeah. I don't know if it's 11, but somewhere around there. Yeah. I mean, that's a. That's something that a level at which I'm comfortable with. I mean, I still. I feel for people that don't have an income and still going to get. But, but we got, we have to, we have to do something. Yeah. Yeah. Yeah. Yeah. The question is, do we go with December one or March 13th? Just to put it as simply March, March 13th. It's my vote. Okay. George. I feel the same way. That was the place we landed after the school budgets were passed. And so I really think that that's, that should be our starting point now. Robin. And I agree also, and I think that it's important to separate. What's happened with the pandemic from what the reality was going to be. So people actually really know clearly. What's causing the problem. Yeah. Scott. Yeah, I feel March 13th is fair as well. Yeah. I mean, you know, I'd love to have it be lower. I mean, I don't know. I don't know. I don't know. I'm with Sam. People are going to have a really tough time, but I can rationalize using those March 13th rates. At least. And so I get that it makes a bigger hole, but the question is going to be. If we, if we can't fill the hole entirely with cares money, we're raising revenue from somebody. Cause that's how we get money into the ed fund. We're going to have to keep it as low as possible on property taxpayers. Cause I don't think they're going to have the wherewithal to pay. Anyone else want to weigh in on it? Okay. So I'm going to, I'm going to treat that as a settled question until we revisit it. But then all right. Okay. Okay. So, so going forward. I will use those tax rate parameters on any of the education funds that we look at. And again, just keep in mind that the, the hole that needs to be filled is 167 instead of 153. Not a big difference with so bad already. I don't think so. So then how, how are we going to address this? We've been working at the staff level and here over the last couple of weeks. And there have basically been. Apart from the feds coming through the rescue with more than $1.2 billion, $1.2 billion to solve this problem. And because of the bells and whistles and all the constraints that are in the CRF guidance, it's been really, really difficult to do it. And we've actually had issues where we're getting subsequent guidance that's even more restrictive than the guidance we initially got. So I'll just walk you through quickly what we've done. What we were thinking and where we are right now. So initially we've got, wow, all you have to do is take that $167 million out of that 1.25 billion and put it into the education fund as a revenue source. And you've solved the problem tax rates are where you want them to set. And we've filled that gap in there with the, the Corona virus relief fund money. Problem solved. That was clearly even from the first time. It was clear that the feds were not going to allow us to directly replace lost revenues in that way. So that I did in the last one. The second idea, which we spent quite a bit of time on so far is to try to take some of that CRF money and direct it right back to tax payers. So that they're able to pay their bills, even if the tax rate increase is built into the rate, they would have money in that way. So that's what we're going to do. So we're going to, we're going to spend a little bit of money on the tax payers, even if the tax rate increases built into the rate, they would have money in hand. In order to pay the bills. So we could address the problem that way. And use as much of that CRF money as necessary. The second set of guidance that came out. Just, I think on the 27th or last week, specifically prohibits the use of it for that. And the actual example used. I think the answer to that is yes. With a big caveat. And the caveat is that. Any spending that the schools do of this money has to qualify. As COVID related. Eligible. Eligible. So that eliminates putting into the fund. It eliminates, I think, sending it back directly to taxpayers. So the third option we've looked at is, can we get this money directly to the school districts? In order to use the money. And I think the answer to that is yes. I think the answer to that is yes. Eligible. Eligible costs. So there's a bunch of questions that raises. First off is. Can schools identify enough money. In their FY 21 spending. That would be COVID-19 eligible. So that's one question. The other question is there's a, this would be a huge. No, no, no. Absolutely. I think schools would have to keep very close records as to what they were spending the money on. And AOE would have to then collect that information. I don't want to do an application process or something where schools said, we have this COVID-19 related expense. We'd like you to reimburse us out of the CRF fund that's in AOE. And address it that way. But we're still in the midst. I think it's valid. There was one issue about whether or not money could be sub granted from AOE to the individual districts. And I think that that's, that's probably permissible. So I think the question is really whether or not. Schools are going to be able to identify COVID-19 related costs applied to the agency forum and get the money and have it work out that way. It's a really, really roundabout, really, really important. And I think that it's an ineligant way to deal with this, but so far it's the only way we can figure out how to get. The CRF money, the $1.25 billion that the state has received from the feds and use it to solve this problem without running into problems. The regulations. Emily. Schools are always already receiving other COVID relief funds. emergency fund that came out initially. That's the 27 million we've been talking about. AOE is working on that now. I don't know how that comes down, but that's that's also money that could potentially be used to close this gap. And the way that would work is if districts receive that money after the close of this fiscal year, it could be treated I think as an offsetting revenue for their against their budget next year. But AOE is working on that right now. I don't have an answer for that, but that is a potential $27 million help. And they would have to am I do they have to account for that in the same sort of way that we're imagining they would need to account for this? They need to account for it, but the 12 permissible uses of that money are way, way broader than what the CRF money is. You can use it to keep teachers employed, you can use it to provide remote learning, you can use it for just about anything. The CRF money is a different animal. So we could ask them to use that money if that money winds up in next year instead of this year, we can hope then they could use that money for more flexible purposes and save this money possibly for the narrower purpose. I think so. I don't know actually who has control of that money because the money goes directly to from the feds to the agency of education. The education agency is then directed to send that money out to supervisory unions based on a specific formula. So we're going to control over the amount or how much it is and you know, so yes. Jim. Thanks. Mark, similar to Emily's question, I wondered if we end up using the 27 million for certain things that the feds would say, well, you can't use the big pot because you already covered that hole. I mean, you know, keeping the left hand and the right hand far enough apart so we don't get accused of double dipping. Yeah, it would make it would make sense to use the 27 million dollars to cover things that you can cover with that money and that you're not able to cover with the CRF money. I suppose, yeah. Understood. Thank you. But then I'll sort of assume is that we control it. That that's that's correct. And it's like, you know, the problem with this and the reason it's going to be so difficult is we have 150 plus, you know, 154 districts all doing this independently, all in different situations, all with different levels of need. I'm assuming under COVID-19 different numbers of people being able to pay and not pay their bill, but somehow we have to, you know, AOE would be have to be able to oversee that whole process and make sure that when we get audited down the line a couple of years, we've got sufficient documentation from the districts so that, you know, the money isn't required to be clawed back to the feds. So, so the thing that I mean, you've touched on it, but the thing that I'm sort of trying to sort out is, you know, we have how many districts 154? I think so. Yeah, I don't know if I like that. All at some point, every one of them will have a budget. We have a few stragglers, but basically they will all have budgets that are adopted in some way. And I'm trying to figure out how the, even the 27 million, but if we add to that, and, you know, by quadrupling it or whatever we're talking about here, how that CARES money is going to impact the size of those budgets and whether I guess it's sort of what you were saying, are we getting the money to the districts that need it? And what are districts going to end up at the end of the year if they voted a million dollar budget, are they going to end up with a million one or with 900,000? I mean, just sort of because of the vagaries of the way the federal law is working. Anyway, just throwing out the worry, I guess. Scott, you've been thinking about this a fair amount. Well, George, that raises hand. So let me hear from George first and then I'll actually why don't we go ahead and let Scott go because mine's a little different direction. Yeah, thanks. I have been thinking about using a grant in substitute for some Ed spending, kind of on a one-to-one basis. I think we, I mean, it's just an idea. And I think I've had some conversations with JFO and Ledge Council. I know the chair has as well. There are definitely some things to figure out, but it might be the best, worst idea that we have right now. Yeah. Do you have some thoughts about this question about, so the two issues and Mark has touched on them, but there's the administrative difficulty, both for districts and for just the volume of documentation and so on. But then there's also the question about whether the distribution is actually going to get to the places that really need it, you know, sort of this equity, I guess I call it an equity issue. Have you thought about the second part of that as you've been working with this? Well, you know, I was, my thought process was along the lines of is to make this, you know, have it be a census block grant. And so it would just, it would replace one for one ed fund, ed spending dollars. I hadn't contemplated trying to do anything within that to try to, you know, steer more monies to districts that are going to be more affected at the expense of other districts that are going to be less affected. That makes sense on a lot of levels. It does add a degree of complexity to it though. Well, I was also thinking that some districts are going to have an easier time documenting than others. You know, some of the districts that are more sophisticated are going to have an easier time. That's true. And I also thought of maybe, I mean, this is kind of, I mean, we're going to, this is crazy talk, but I mean, if there was some way if districts that could show more than more than the grant could somehow give dollars to districts that were short, you know, an inter-district transferring mechanism or something. I mean, but that's something, boy, we've never done anything like that. And the second district would still need to meet the spending requirements under COVID-19. So, you know, I don't know. Yeah. Sam, sorry, Mark, you go ahead. Well, I was going to jump in. I think that the part of the problem is we cannot direct this money. The $27 million is going on out under a specific formula. And the larger part of money that we were trying to draw from to close this up can only be used for COVID-19 related expenses. So, it can't be directed. It has to be the other way. The direction is going to be coming from the districts to the AOE saying we just spent the million dollars of COVID-19 related expenditures, reimburses that amount of money to replace the money that we've taken back. But there's no guarantee that they're going to match up. I mean, if we took down the education payment by X amount of money, it's going to affect everybody's specific amount, how much they'll actually be able to recoup through this application process to AOE is unclear and it's probably not going to match up to all of your dollars. So, you're going to have winners and losers to the extent that you have a district that has that has a reduction in their education spending because we claw back some of the money and it's not able to get enough money for COVID-19 relief, they're going to have a deficit and they're going to have to carry that forward into the next year. So, it's a really messy way to go about this. It's just the only way we've been able to think about it getting any of this money into the ed funds. Sam and Emily and George. So, this is could you direct it out to districts based on their equalized pupil counts or no? Emily. Nice idea though. And then I was going to say, can you use their, you know, your properly weighted counts? It's going to be hard to go back to real life and not be able to mute people. Do we have a sense of when we're going to have those final numbers from AOE about the first bucket of money and then I've heard you say both it's going to need to be a reimbursed expense and talking about clawbacks and so I'm wondering is there specific guidance from the feds about that or are we just worried about making sure that we don't wind up in a clawback situation and protecting ourselves? There is guidance, we're just having trouble making the guidance work with the solution because they've precluded using it for making up the lost revenues which is really what our problem is. We're trying to think of workarounds and so far they've cut us off the past twice so far now and we've got one more here which may be possible. And we don't want to send the money to districts and sort of trust that they can make their numbers around CARES related funding really because it would be harder for them to be in a clawback situation than for us to be in a clawback situation? I'm not sure how that would be because the money would be going from AOE out to the district. I'm not sure about that. I don't know you're asking who would have to defend it that it's COVID-19 related? Yeah I guess I was wondering what would happen if we asked the districts to defend it after the fact? I don't know. The way I was thinking about working would be that there would be an appropriation of the $1.25 million sum portion of that to AOE to keep funds for this purpose. They would set up a grant application process. The district would apply for it and say we have a million or we have a million and a half dollars of COVID-19 related expenses reimburse us for that money and ideally we'd get everybody back to what their budget is but that's not going to work out exactly I don't think. I think we'd have to specify who has the risk on it. There may be stuff in the guidance on that too as well. I was looking at the other restrictions. Just sort of a final detail there is when I think about the administrative logistics of this it seems incredibly important to it actually working at all and so there is a decent chunk of money for AOE to deal with the administrative this right? I think that AOE could justify using some of the money on the COVID money to administer this. If they had to bring on an employee or a couple to do it I think that they could do that with COVID-19 money. I think that would be a legitimate use of it but again I don't know. So Bill I realize that you don't you don't get a hand to raise so you go ahead. They'll probably be subject the districts would probably be subject to a federal single audit. The trigger is $500,000 so some of them might be under that but it's all their federal money not just one grant so whatever the funds receive will likely have to be audited and for compliance so that's one way and then the agency is responsible for monitoring any grants it gives out any federal grants so it'll it'll have to hold them accountable as well. I guess the question though is that if it's if it didn't fall within the guidelines who has to come up with it? They would be on the hook for it. They being the districts the recipients as opposed to AOE. Okay let's see I've got George Scott and Sam. So I'm thinking about it just a little bit differently. When I look at the the Ed Fund balance sheet a number that jumps out at me is the property tax credit which is in the pretty close to the number we're talking about here as needing right. So two questions. One is could we transfer that to the general fund? The obligation for the property tax credit where the general fund may have a whole lot more possible offsets which are COVID related to that money. The second thought was okay so we've determined how much this is what if we doubled this extended the range so it covered everybody. It's you know people's incomes are dropped off dramatically that's COVID related and we need to give more property tax credit per system. Would that work? We can go talk with Kitty about it. You know that I don't mean to sound so flip it it's I agree that if there's room in the general fund that you know we we should we should keep that communication going. But I will also say that the general fund is going to be in I think this year they're okay but there's so many restrictions on the use of the COVID money that it's not helping out a lot of sort of regular general fund kinds of things and the income tax is going to suffer next year for sure and that will be at the end of fiscal 21. So I guess I'm just saying it's not like the general fund is okay but you know I hear what you're asking and I think it's worth a conversation. Scott and Sam. But the other piece of it was the other piece of it was um increasing the property tax credit and using the money for that using the co the CARES money for that as a COVID expense. Yeah Mark. Okay. I just I pulled up the language this is may fund may fund payments be used to assist impacted property owners with the payment of their property taxes. Fund payments may not be used for government replacement including provision of assistance to meet tax obligations. So I don't know how strictly to read that but it sounds like you cannot put money in taxpayers' hands in order to meet the tax shortfalls. So just to you know address one of the paradigms that seems to be driving our thinking here which is that there seems to be an expectation that all of the that we're going to use CARES and use CARES money to pay off all of the borrowing in FY21 and I wonder if maybe we should start looking at borrowing mechanisms that don't require a one-year payback. Say that to Megan. The the paradigm that we're working with here that we're trying to fill is that all of this borrowing is going to need to be repaid in FY21 which makes that a really big number in FY21 and maybe we shouldn't circle back to the borrowing conversation and see if there aren't longer term mechanisms that might work better. Yeah and in which case we need to also be looking at FY22. Maybe even beyond that yeah. Peter oh Sam you are on my list. You go ahead and then Peter. Thank you. If you put your hand down I forget you so. No I didn't put it down did I? Yeah. Yeah where is the administration like where is the AOE like do they have any ideas like I mean I feel like we're kind of stumbling around in the dark and kind of need some direction from the executive branch like I mean we're just I don't know can we can we at least get them to come in and say that they don't have any ideas. I just want to show you my notes my notes say for Tuesday AOE. Okay thank you. And I agree and it has been a little bit frustrating that you know the this is a very significant part of state government and it's a lot of money and the administration has not in spite of invitations has not really been present for the discussion and so I at some point whether they are or not we need to figure out a solution I mean but I will they're on my list to come in and I thank you Peter. I wanted to go back to Scott's reframing of the solution to perhaps be a three to five year solution rather than a one or two year solution and I have I have rattling around the observation by Treasurer Pierce that there was that additional I forgot the acronym or the name of it that we could borrow and depending on the performance and use of that that some of it may be forgiven and I distinctly remember it was an intermediate a bit of help over an intermediate term like three to five years and I just think understanding what the terms of forgiveness would be and and what it in the end would add over that term of repayment is worth exploring and I agree with Scott. Mark you've done some looking at borrowing do you want to uh we we haven't actually done that much I think that the the mechanism that Representative Anthony is referring to I think Beth Pierce said that that would not work for this purpose. That's the municipal liquidity facility. Yeah I can never remember the name of it but yes I think it's like a two-year limitation and there's a bunch of other constraints on it in terms of size and things like that. We did just take a look to get an idea of like if you went out and borrowed the full amount of money to cover this gap and then paid it back over say 10 years you'd be looking at two or three cents on the tax rate every year for that for that time but that that that's a that would be a way to address it but um put more pressure on property taxes for a long time. Yeah um Bill oh Jim you had your hand up you put it back down. Mark explained pretty much clarified what my question was so I'm almost I'm all set thank you. Yeah Bill. So in my note in my notes from Beth Pierce she talked about long term borrowing. FEMA disaster relief program five to ten-year deficit term. I think that the borrowing may be a piece of the solution but the the worry I keep having is what is fiscal 22 look like and and then you know obviously when we get to 23 we're really kind of guessing but but to run it out is because if what we do is borrow to get out of the current problem and we're borrowing to get out of 20 out of 20 I mean that's essentially what we're doing we're doing that by using reserves and so on but if we also borrow for 21 that just shifts the problem to 22 and if 22 looks equally bad or almost as bad or whatever we're just gonna host phone reckoning I guess. Other other thoughts um so I'm thinking of trying to make sort of a list of what not a list so much but some idea of what what we would like staff to work on over the next few days hopefully they get a little break on the weekend. George did you want to jump in? Well yeah I mean the other unpleasant choice is to try to raise revenue to cover this and you know there there are some things which I have championed for many years which you know have other benefits can reduce our costs elsewhere but things like a tobacco tax increase which hasn't been done since 2015 in Vermont you know we talked about the sales tax for candy that's only three bucks but you know one dollar or three million but a one dollar increase in tobacco tax would be 6.7 million bucks there's the old sugar sweetened beverage tax which is 25 million dollars you know but somehow it seems that raising some revenue may need to be part of what we do so well just to be really clear we don't um if we to the extent we can't use carous money we're raising revenue um it's just we're raising it from property taxpayers so there isn't a way to resolve this um without getting more revenue into the fund um that's why we're pushing so hard just to figure out if we can use carous money um but if we can't that's really where we're going to end up and I also on my list is the cloud as well which is um you know not um also not going to solve a hundred and sixty seven million dollar problem but um with something that we were prepared to do when we left in March uh Peter um I just following up uh George's observation I also would love to know whether there's any hope of exploring revenue options I gather I'm sure that's a executive branch discussion that like Sam I wish were sooner than later but one way to think about it even though the opportunities that uh George listed in that you did as well the cloud uh while they don't cover the principal they would cover I think largely the carrying costs of an intermediate term debt so that uh essentially we'd be able to pay it back uh and the interest would be paid by uh an assortment of relatively small incidental tax proposals um are there other thoughts um George and somebody remind me what the uh um the amount of money associated with the cloud tax that we had we're talking about before this all happened how much additional revenue were we talking about? Graham? I think he's here but maybe not the might be double-tasking multi-tasking there. Oh sorry I missed the question I was I was dealing with the toddler what was the question? Uh the amount of revenue that we were estimating from the cloud change? Um it was about seven million dollars um however I would probably want to revisit it in light of the current economic situation it might be doing better than that it might be going a little bit worse depending on what types of software people are buying candy which was discussed I think would be a little bit lower than three million dollars um I'm eating it every day some people are eating a lot more um but some people are probably not going to the corner store as much um things like that um and depending upon when it went into effect candies a very cyclical um sales pattern like Halloween and Easter are huge buying patterns so if you say start it in January you'd miss the holiday or the halloween so there roughly three and seven would be you know something you can sort of think about right now I must have never thought about timing a revenue bill around Halloween before this might be here to think that maybe we should tax pumpkins maybe we should tax pumpkins um I do gather that the alcohol taxes revenues are up right yeah and it may be that the what we end up with is a mix of things um you know so um I find it hard to believe at the moment that we're going to use Kara's money for the whole hundred and sixty seven on the other hand there's the thirty that's there um there's the possibility of not filling all the reserves you know there may be some room in there um and of course not filling the reserves is essentially a short term loan because we have to fill it it's an obligation but there's not a carrying cost to it or other than the use of the money um so you know it may be that some revenues some um some uh Kara's money some you know shorting the reserves you know sort of a mix of things is where we end up I don't um I I don't see us a single I was going to answer that it sounded like it was in my house uh Peter just uh one of the ones that I thought uh Scott had shown us a range of tiers if we change the minimum one of the tiers would bring in about eight million as I recall it goes to the general fund Peter doesn't go to the Ed fund I don't remember that which tiers are you referring to Peter talking about the minimum tax on the it's the whole corporate tax um thing but it oh the corporation yeah so we are going to have problems some in the general fund and um how about probably well that we may have to do something this year but we don't have to do something before July 1 so um Robin and George um while we're talking about possible tax options I'm going to bring up again my um luxury tax on clothing of $200 or more and whether that would be um I don't think we've ever asked for how much we would get from that but I think that's worth looking at too Graham do you have that estimate or did you uh yeah I did that last year I think and I but I think the threshold was at $150 and I believe that almost was um seven million but again with the caveat of you know people buying patterns right now the pandemic right okay it's something yeah uh George and a bunch of small pieces might be what we need to do I mean the other discussion that we have had many times does not feel like a good time to do it to me but is expanding the sales tax to services it doesn't feel like a time to do that but that I mean that that is out there it's sales tax it goes to the ed fund and then the the one other thought is some kind of separate COVID sales tax surcharge that we just put on temporarily while we're dealing with this disaster okay so instead of expanding the base raise the rate temporarily yes temporarily in a clearly temporary manner the COVID tax the COVID sales tax yeah sounds awful Emily I just want to understand what you meant by surcharge and now I do so thank you okay uh admittedly admittedly it's ugly but but they're all ugly choices here yeah I really I would like to explore a bill mentioned it that FEMA disaster loan five to ten years I think I'd like to explore that as being part of the mix okay yeah we will um I have to admit that I'm sort of unconvinced about borrowing money other than other other than maybe not filling the full reserves but um but yeah we'll look at it if that's where the committee wants to go I'm I'm fine um not my first choice uh so Mark if you got the whole list of all the um things that we are looking at and Graham I guess as well because some of them are all those running things and I thought it all might also make sense to see if we can find out what districts think about their COVID-19 related costs yeah next year if they thought about what they might they might be running into because it may it may be more than we expected it may be enough there so yeah well so um keeping the the winning carers money to the schools concept on the table um and next week we will hear from AOE sort of generally but also specifically on this and then we also need to hear from the superintendents and the school boards and um get you know we can do some work ahead of time with them but um I would want to have them whoever be speak to the committee about what some of the issues are that they see and so on so so we will set all that up so Jim and Emily yeah thanks um I agree I think it's time to look at a list of the things that we've sort of kicked around part of this puzzle and also I was saying um from the schools as they began to work through what could they spend it on and that's an exercise them more than us what's going on I can't tell who it is but uh I couldn't hear you okay I'll try it again sure um I would agree that a list of possibilities a number of suggested today that have merit and see what what what they are and decide what the committee thinks about them and then also Mark as you were saying um what might the school spend the money on it's a more of an exercise for them and AOE than it is for us but it would be nice to see what the thoughts are this is COVID related you know the things where that where they where they can clearly spend it at least if we had that um and the list of possibilities from our end we might be able to narrow down the target a little bit and I also agree with Janet I'm really reluctant about borrowing um it's money now but I don't know I'm worried about how how and when we pay it back and we are borrowing for 20 essentially understood the longer term stuff um this feels like enough to me but but we'll we'll talk about it um we'll we'll get more information on it uh Emily you had your hand up are you still wanting to speak I do um thanks I'm also nervous about long-term borrowing given how profoundly more unknown the future is than even it usually is um and to the laundry list of small taxes um I'd love to add bringing beer up to just to be really unpopular and um if other sort of I guess the laundry list come to mind before we meet again what's the best way to should I just send them to Mark and Graham and you Janet or that'd be great and I don't send them to the whole committee because I want to be careful not to get into a committee discussion on email um but yeah that'd be great if if you um want to just let people know that you're thinking about it just blind copy the committee but um so that we don't end up in a discussion that's all but yeah yeah uh do send ideas in because it's um idea time uh Scott I would just speak to comment about you know somebody's I don't know who said it will if you borrow who pays that back well whatever you don't raise and cares money or consumption taxes is going to get paid by property taxpayers so if you borrow it you just spread that property tax burden over a number of years but it gets picked up by property taxpayers yeah I guess that's probably maybe that's why I don't like it yeah well yeah they gotta pay it somehow but yeah um okay so we're gonna shift gears um and oh George I'm sorry I looked away go ahead a lot of people look away from me um I just wonder if Graham has any idea if we were gonna do a property I mean um sales tax surcharge how big a surcharge would we need um to raise you know say uh a hundred million dollars um I think based upon the numbers that I have from top to bed on the fiscal year 21 his first pass on the sales tax an additional one percentage point would raise somewhere in the neighborhood of sixty six seventy million dollars per additional point so if you made it a seven percent sales tax you would raise somewhere between sixteen seventy million dollars um based upon what he's forecasting out of the April 28th um so whatever that forecast is for fiscal year 21 will obviously change whatever that extra point will raise and that's assuming no elasticity of demand the extra point won't drive down sales and remand things like that so that would be even that would require some of these other solutions to um such as not filling the reserves um and using the 30 million for example um yeah you still you still have always a little bit to go got as close to there um yeah I mean I guess the question um would be sort of what's what's the most manageable for people and what's most most palatable for people um and sort of assuming um I'm still starting with the assumption that we need to get we need to get the money to schools you know they're not saving money at this point um and they're not spending less and um we can't burden taxpayers anymore than what they basically agreed to when they adopted their budgets you mean property taxpayers is that what I didn't say that right what did I say I said something else no you just said taxpayers oh yeah I'm sorry property taxpayers yeah uh any any other ideas um yep uh I don't see other hands anyway um so do share ideas with Mark and me and Graham probably would be the the best thing to do and we'll come back to this on Tuesday and hopefully and we'll have AOE here um and we'll have had some communication with the school districts about how feasible the CARES plan is with them all right Abby we are now talking about state collection of um the education tax okay great so um for the record Abby Shepard office of legislative council um the language that is posted on the website um requires the department of taxes to work with a list of stakeholders um towns so Vermont league of cities and towns and the Vermont municipal clerks and treasurers association as well as bank and credit union associations to propose a plan um for implementing transitioning their responsibility for billing and collection of the statewide education property tax transitioning that away from municipalities and to the department of taxes so sorry that's sort of a mouthful do we have the draft up on the pay sure probably should have put it up there so great okay so the um it's more than just a study um it is a an actual plan for implementing um and requires fiscal estimates as well as legislative um language it is required January 15th of next year of 2021 that's typically when reports and studies and any sort of reporting to the legislature are required I assume that that was enough time but that date could be changed the office of legislative council and the joint fiscal office would provide legal and fiscal assistance and then in this second subsection there's the list of the issues that would need to be addressed in this plan so I can just read through those if that's unless there are any questions on the first um subsection a I don't see questions so why don't you go ahead and then and then sort of I want the committee to be thinking sort of generally is this the approach that you were anticipating and that people are comfortable with and um overall and then we can if it is then we can get into the details of what we're looking what we're asking for um but I want people to focus on sort of also the general concept here okay go ahead okay so the um list of issues and I actually can share um with Sorcia to put online and to share with the committee um back in 20 because 2011 the tax firm did a feasibility study on this um and that lays out a lot of the issues um and then in the 2012 session was the last time this was really taken up in detail and that's where I pulled a lot of these issues from um so within this implementation plan these are the issues that need to be addressed um adjustments to the assessment calendar so um any lodging of the grand list but any um grievances at that whole process leading up to creating the grand list the calendar might need to be shifted if the state is billing and collecting instead of towns also establishing billing dates whether it would be one two three or four currently towns can make up to four installment dates um the format of the bills um the establishment of collection dates so when taxpayers are actually paying the methods of payment um including withholding I believe that was one of the potential options proposed back in 2012 or that was under discussion withholding um from income tax um other methods of payment such as um through escrow um through banks which is why the banks and credit unions were included as um stakeholders the department would need to consult with and then whether there would be any early payment discount and how the existing early payment discount for towns when they make their education property tax payments whether that would you know a conforming change would be to repeal that but what what sort of discounts would be allowed or not allowed for taxpayers um subdivision four talks about the authority to collect delinquent payments um and any penalties and interests that would be charged whether that would stay with the towns or would also move to the state um and actually I'm looking at my ordering it might have also made sense to include sub seven under this four but it's in there anyway I just want I like that um appeals and abatement when you're sure I I lose you I don't know if others do but I'm sorry I have two screens so I'm looking at my I gathered and I'm just it drops out when you shift when you shift back and forth yeah I also can't see myself now so I don't know what you're seeing you okay my cat is asleep so she shouldn't disturb us um so I was just on subdivision four regarding delinquent payments who would have the authority to administer those um subdivision five having to do with the administration of the education payments to school districts and that's currently primarily administered by the agency of education the treasurer is receiving the payments and then the agency of um education is determining the amounts that go out to school districts so how that would be dealt with under this new collection system where the department is collecting instead of towns um subdivision six uh makes reference to locally voted exemptions so when towns um are allowing for certain exemptions from um local property tax and from education property tax this usually results in an agreement for the taxpayers to cover the amount of the education property tax payment so how that would be dealt with in this new system where towns are no longer collecting that so how would they continue to make up for what they've voted to exempt locally and then subdivision seven as I was referring to in terms of delinquencies um penalties and interest who would have jurisdiction over the appeal process who would have jurisdiction over abatements which currently is entirely at this at the town level except for very limited circumstances um and then the next three points are more related to the plan itself so the timing when the when the transition would occur how long that transition period would take um how many years it would be rolled out um and then the fiscal impact of the rollout during the transition but also going forward to um anticipate the cost to the state of actually administering the collection and billing and um any other administrative costs and then actually a catchall in subdivision ten for any other consideration related to this transition and that's I did not put an effective date um but I assumed it would just be captured and if this were going into the miscellaneous tax bill for example that it would be effective on passage and it would require the report on January 15th great thank you um some of this sounds really familiar to me um to admit um so questions or um also just looking for the committee to um you know I think there was general interest in pursuing something like this I guess the first question is this is this is this the right path um and um were you were you expecting something different more decisive or less decisive um so anybody's got any thoughts um I'm looking for hands and I don't see any George I'd love to hear from the commissioner yeah yeah okay anyone else got any but he's here so uh was anyway I'm here I'm on the phone I'm having a bit of an internet uh challenge okay let me see if they've got anything from anyone on the committee and then we'll shift gears to you um and look like it okay go ahead thank you for being with us here and uh for looking at this and I think really short notice sure happy to happy to be here uh Craig bullio tax commissioner apologize can you guys hear me okay yeah you're fine can't see perfect my my internet went down and I have very bad cell reception at my house so I was surprised I was able to call in um but I'm glad I am uh yeah so I think I think my testimony on this is fairly brief um you know generally we're open to this idea open to have this conversation as the uh chair mentioned this isn't a new idea um I think that the timing is generally right it's the timing is the only thing that I have any hesitation about um but we're about we are starting our new integrated property tax management system project right now to upgrade the statewide grand list so this is generally the right time to be talking about this as well so we're open to it uh the the January of next year um you know the only thing that I would want to say to that is is just the unknown with the COVID-19 pandemic right if there's another spike in the fall or the winter and that requires response from from the executive branch and the legislative branch to address I don't know what that does to workloads um you know the other thing I would mention is is starting the implementation for for the IPTMS we're expecting that we'll be live with some pilot towns in 2021 and then really launching it wholesale in the spring of 2022 so I do want to be transparent to the committee you know about what timing expectations would be to be able to take that over it may be a big undertaking to try to make it part of that initial launch which means we may not be looking at fiscal year 22 for this it may be beyond that but I just wanted to let that be known but again generally positive to the idea open to having this discussion I know that VLCT has has deemed that they're also open to having the discussion where I don't know where the clerks and treasurers stand so that would be another important facet to make sure that we're we're all on the same page and I guess the last thing that I would also say on the timing I'm I have some worries about how to coordinate with all of these folks right now right with so many towns shut down being in May trying to get a report by January or a plan by January that could present one challenge so you know if the committee is willing to give some additional time I think that's useful but those are my my brief thoughts and my my first impressions great let me see if there's questions I'll give you I don't see any so I'll give you thank you for for being open to it in terms of timing I think if we do this my inclination is to keep the January 15th date but understand that this is this this is a complicated and cooperative effort it's not we're not going to be sitting there on January 16th and say gee you didn't make it because you know that there was a spike in cases in December we're going to work with you in terms of of getting the information as you know as expeditiously as possible but understanding the weird circumstances that we're in so but if we don't put a date in then we don't get you know we need to get a lot of people at the table and I think the date helps us do that that's my reaction I don't you know that's just if I'm back and back in this position then I can definitely say that we would be working with you in terms of getting a proposal to land at a at a reasonable time other people want to land Sam you had your hand definitely in your girl I was just going to ask for what his alternative date might be but I also accept your explanation as reasonable uh anyone else have thoughts I think that you know that go ahead yeah and I agree with what you said too I think we need to have the date and then be willing to be flexible about that I have one sort of maybe it's a total minor question when we were going through this and I just wondered if if the administration of TIFFS is impacted because education property taxes impacted if we did this is just I'll say the same or is there any kind of administration of that that changes as a result just a hasn't thought correct you have a thought about it yes sorry I didn't know if that was a question for me I've been reading this proposal as taking on just the billing and collection of education property tax at this point and not you know the underlying assessment and values that I would that I would say TIFFS might fall into there but I think that those are the kind of questions that we would shake out in this plan okay great thank you um I'm writing notes now to make sure that we get the clerks and treasurers in as well so I'm sensing that people are okay with this approach still interested in it um get sort of wait yeses not not something and so given that what I'll I'll do and I think Abby's done a really good job drafting and sort of capturing what the issues are now turns out that there are more issues that we haven't thought about we'll be dealing with them when we you know when we look at a actual proposal um we will get the clerks and treasurers in and I know that Karen is still on the call but I don't know whether she is on two different calls so um I want to give her a chance to weigh in if she wants to hi dear I was just about to leave um thank you I do think that this uh proposal is very workable and and we're happy to um you know uh work work on it anyway that's helpful and I'm also um actually quite pleased to hear that the department of taxes is interested in in this that there are going to be a lot of changes with the new grand list software so I hadn't thought of it before but I I do think that's an appropriate um timing issue right now thanks yeah that's useful thank you Karen uh so um well we'll keep Karen and Craig you know invited when we take it up again I I don't anticipate and if they want to offer testimony just let Sorcha know but I won't schedule you for testimony again on it um but I we will have the clerks and treasurers in um to speak about it uh anything else any other questions about this any other issues people want to bring up okay good good work we'll see you all I have one thing Janet sure at your level I mean um of course the governor's starting to open things up has has there been any conversation of you know if there might be a time next month or that the legislature might actually get together or come in yeah I don't know um yeah okay it seems unlikely but um it sure would be nice yeah people are thinking more July or August um yeah okay building my first job is to get my hair cut looking at you Bill I don't know you do house calls maybe today's press conference will open that pack up I you know I have an appointment on the 16th mission ball fund but anyway I have an appointment on the 16th and I keep waiting for the announcement that I'm gonna be able to get it done madam sheriff I might add if you just shave your head like me you can just do that from home I've had no problem yeah but then I couldn't have a picture up so get in it if if you're gonna get you here Sorcha that's your cue to take us offline yeah I think so all right I'm stopping the live stream now thank you