 This is House Ways Means Committee. We're meeting on June 2nd, Tuesday after a cold, long cold weekend and another cold day. So we have the yield bill that was a committee bill that came out of our committee has second reading on Friday. It's up for third reading today. And we have three, I think there's more than three amendments but three proposers of amendments who are gonna be with the committee this morning. We've set aside roughly 10, 15 minutes for each of them. And once we're done with that, we're gonna hear from Chip Conquest who is gonna, I'm not sure exactly what time is coming in, but the appropriations committee is continuing to work on what I call the phase one budget and he's gonna talk to us about the education appropriation in that budget. And then the time we have left, we're gonna work on the school construction bill. And I noticed today when I was looking at that bill that it's described as a bill to cease the moratorium on school construction aid, which is what the underlying bill said. And of course the bill, that's not what the bill does. And I mentioned that partly because people keep saying, oh, are you gonna stop the moratorium? And I keep thinking, I don't know why people are asking me that, but then I look at the title and I realize that's why. So just that's the bill, unfortunately they used a bill that had a title that there's no longer has anything to do with the content in the bill. So that's what our morning will look like. And just to also remind people that we have a caucus of the whole house today at 330. And I assume the yield bill will be part of one of the issues that will be discussed and possibly also the hunting and fishing licenses for members of Abnecke tribes with, I'm guessing because we didn't do that, no house caucus last week, I don't think. Anything else that anybody wants to bring up before we get started? Cynthia, I think we have you first on the agenda. So why don't you go ahead and we've got the amendment. I think people got it this morning. And why don't you go ahead and tell us what it does. Thank you, Madam Chair. Cynthia Browning from Arlington. This amendment simply adds a section to the existing H955. And in this section, I'm trying to suggest that the General Assembly make a renewed commitment to education finance reform. Yeah, that's right, that's good. Education finance reform along several different lines. I know that we have worked on some of these issues over the years. I know the tax structure commission is studying this right now and we can await their recommendation. But I think the fact that we have not fully addressed these issues and made substantive changes has made the current crisis worse. Property taxes are higher than they might otherwise be. Students who are particularly meeting may not be getting the assistance they need despite higher costs overall. Our, the money that is used to support home ownership may largely be going to people who have homes and are no danger of homelessness. And yet it won't help the people who are suffering through loss of income this year since it's based on last year. And then there's the fact that we are paying for various items in the Education Fund that are not in fact education. So this amendment is an attempt to do our commitment to looking at those matters and not proposing any particular changes now, but asking the Senate and House committees to work on these issues and to bring reports to the full bodies, whether it's through bills that are introduced or through issue briefs each year by March 1st or the next four years. It may be that some people don't think this is necessary because of course we have struggled with these issues already and everybody knows about them. But I think it is necessary because I don't see the kind of movement that we should be making on these issues from before this crisis hit. And I don't want this crisis to serve as an excuse to push these reform issues to the side and neglect to address them in the near future. So I look forward to the committee's response. I would be open to any changes in the language that would make the amendment useful to the committee. I certainly drafted it relatively quickly with the help of Ledge Council. So if there are ways that it could be improved and found acceptable, I'm totally open to both. All right, let me see if there are questions. Anyone on the committee? A question, don't see anybody. Scott, one second. Hi, sorry I was late at Zoom, got the best of me this morning. So I'm just, I'm looking at this list in this section, Cynthia, and there's not a single item there that I don't agree that needs to be addressed. And in fact, I've submitted several bills addressing several of them over the years. My question though is that, isn't all of this being looked at by the Tax Structure Commission? I think they are looking at it and they will produce a report for us. I ran out of time to look at their website and the language as to when that report is due. And I greatly look forward to that report. However, we know that there's a tendency for the General Assembly to receive reports and say thank you so much. And then you don't necessarily have reform based on that report, however useful it may have been. So this recommitment that I'm asking for certainly does not exclude waiting for their report and acting on their report. You'll note that I'm presenting this as a four year process because I think that's what it may take to look at these different elements and how they might fit together in new ways. And the report of Tax Structure Commission will be an essential component of that study. But it's the two committees in the General Assembly that have the final responsibility for this. And not to move forward and continue to struggle with these issues, to my mind would be a great failure. Sam, I think you had your hand up. Did you take it down? I did. My question was essentially the same as Scott's. I feel like I had my answer. Yeah, George. I'm just a little bit curious about the timeline of what could get done before March 1st, 2021. You know, sort of a summer study committee or something like that. It's a little hard for me to envision that by March, 2021, with a brand new committee starting in January, there's really going to be time to do that. Can you tell me your thinking around the March, 2021 date? Well, my recollection is that we generated some reform proposals along these lines, some of the lines, I can't remember which year it was if it was the first year I was on the committee or the second year I was on the committee. If you wish to change the date, that's fine, but you'll note I'm not asking for any particular product on that date. If the new committees wish to look at the list, look at the materials they have and produce an issue brief that says, these are the things we're looking at and we'll go forward with it, that would be sufficient. But one of the problems I have with the way that we tend to work is this is such a difficult and tangible area that the full bodies tend to leave it to the tax committees and that's understandable then when the proposals get out, it's hard for them to evaluate it. And so I think they need to be brought into the process because if we're really, these reform proposals will be difficult because there will be always the ups and downs and confusion. And I think they need to be brought into the process and I think it's going to take several years, but we have to have some structure that requires us to have sustained commitment. If you don't like that timeline, you can say starting in 2022, you can make, I was gonna make it April 1st, that's April Fool's Day, so I didn't wanna do that. So you can make it a different year, you can make it a different month. I just feel there needs to be some structure in place so that the difficulty of this path does not discourage us and allow us to keep putting it off because I think that would be a disservice of Ramonis. Anyone else have a question? I don't know if anybody, does anybody, Sarsha, maybe you know when the tax structure commission is supposed to do its report. Do you have that? Yeah, I don't have the exact date off the top of my head but I believe it's February 15th. February 15th of May 21, yeah. 21, great. So by then, we would have a much clearer idea of what they're doing. Scott, thanks Sarsha. I knew somebody would know. Scott. I don't know how he would do this. Maybe Sarsha could work something for magic but would it make sense to try to get somebody from the tax structure commission on for five or 10 minutes to give us a quick update about what they're doing as far as education finance, the examination? Well, it might, I don't know how feasible that is. Just, I'm just trying to think, well, let's think about it. Yeah, I don't know. The other, the other question I had was, and I've got, and Peter Holland's on here somewhere. Hi, was at the Education Committee also has a role in really all of these issues, although principally the waiting formula that is also involved in education finance. So I don't know how that works in the Senate. In some ways this feels like, you know, it's a description of the jurisdiction of the committee in a lot of ways with some flesh on the bones. Peter, do you have any thoughts at all? Your comment. So I agree with you. I'm glad that we're invited to be part of the conversation. I mean, a lot of this does have to do with tax policy. But I'm just here to ask questions if I have them, but at the moment I don't have much to offer. Okay, thank you. Mark, well, so if we decide we want to hear from the Tax Commission, we'll figure that out over the course of the morning. Oh, we've got some time, but any other questions for Cynthia? Any last thoughts, Cynthia? Oh, Scott, you go ahead. I would be, again, I want to emphasize that I would be open to any changes, the inclusion of the Education Committees, moving the date to reflect the Tax Structure Commission Report. You can move the date to May 1st, and then next year we'll be setting up the work for the succeeding year. There's all different kinds of things you can do. I understand that these are things that we work on all the times that people may think we don't need to make this commitment, but I think there's something useful in having the full body agree that we need to work on these issues and to have that be a joint commitment so it can't just keep sliding off because it's too hard. So if there are ways to make this amendment useful to the committee that you would wish to amend it, I'm totally open to that. And I would await the committee judgment about it. And Madam Chairman, may I stay on the Zoom meeting so I can hear the other amendments? If you prefer, I can get off and go to the YouTube. I won't speak or anything. I just wanted to ask your permission to do that. No, that's fine. Okay, thank you. Scott and then Jim, and then we're gonna move on to the other amendment. Just a quick question. I mean, as far as these different things that you're interested in, Cynthia, I mean, I could put together a comprehensive bill to cover all of them in a matter of hours. But what happens, and you've got a shallow in there. So what happens if the committee on Ways and Means Senate Finance, the political will isn't there to move any of these forward and that's what it's gonna take as political will. You've got a shallow in there. What happens if they don't move forward a proposal? But remember, I'm asking for either a report in the form of either bills or issue briefs. So if they had proposals and they were unable to pass them out of the committee, that would be that their report. Okay, I see your point. And then the larger body would know, wait a minute, these are things we thought we needed to do. Why can't we do them? And is it because the proposals are flawed or is it because we haven't developed the evidence-based understanding to overcome the political resistance? And I think that's part of what I think the issue is because it is politically hard. And so sharing with other members and educating them and getting their input and their support or their objections, I think it's gonna be essential to getting this kind of reform done. So I'm proposing a slightly different way of doing that rather than the committee is working in their committee rooms and then bringing something out. I'm proposing regular reports, bringing in the rest of the body so that they're not surprised and resistant to proposals that may come forward. So we're running over our time but Jim Maslin has a question and I'll let him answer and then I'm gonna move on. Well, not so much a question. Not so much a question is just a comment. I mean, I'd start where Scott started all the pieces that Cynthia laid out are things that I support, maybe all of us support. I don't see any harm in this amendment but then I don't see a great benefit in it either at this time. Okay, great. Thank you. So I think that Ralph is next. Is that right? I'm having trouble with the documents and the agenda. Is that right, Saoirse? Is that what I've got? Yes, he's next. Great, thank you. So you can identify yourself for the record. You have three, no, you have two amendments. Is that right? Or just one? That's correct. Two amendments. Two amendments, okay. Thank you, Madam Chair. Representative Zachariah, Ralph, Heartland, Windsor and West Windsor. Thank you to your committee very much for taking the time to take up and review these amendments. Also just wanna give a big thank you to your legal counsel and JFO who worked very hard to come up with these amendments on short notice. And in my research on this, I was surprised, well, not surprised but this is an extremely complicated subject and I appreciate your committee's work on it and working through all these things. So I have two amendments and I will just tell you briefly that I support the general bill. I think that we do need to increase the yield and I don't support the idea that we shouldn't be taxing folks. I think the underlying idea behind this amendment is that there are folks who still have money and that are able to contribute towards making taxes less of a burden for regular homeowners. So the first amendment that I have is crosses out original strikes out section five and replaces it with two other sections. And this is the language is pretty short but it is the surcharge rate for homestead properties with fair market value exceeding $1 million and it adds a surcharge of 50 cents per $100 in value. So this would generate approximately $4,860,000 in additional revenues. My thought on this again is that if we are taxing folks that have higher value properties that this will lessen the burden of the increase of the yield on regular homeowners who have lower value properties. I initially, obviously the returns and the revenue could be higher if we were also able to put this tax on non homestead properties. However, I've learned in the process that non homestead properties is not just residential as you all are very aware. It also includes commercial businesses. And at this time I'm not interested in putting an additional tax on our commercial industries. That is what I'm dealing with in my committee and recognize that they do not have the additional funds right now. So this amendment, the primary piece is at the top. The rest is language corrections to adjust the bill for the rest of the bill for that. This, the effective date is meant to be retroactive so that it can be applied to the current yield. And the funds would go towards the education fund. So that's the first amendment. Madam Chair, would you like me to stop there and answer questions or just go right into the second amendment? Because they're quite, are they quite different or are they related? I haven't had them. Yes, the second amendment is a study, Madam Chair. And it's essentially is meant to sort of... Yeah, it would be an alternative for this. So do them both, right? It's related to this. Yeah, do them both. It is. Remember whatever. That's correct. Because in my under... Of course, while digging into this and learning more about it from all the people involved with this is that it is clear that if we wanted to add an additional tax, surcharge tax or tax higher value properties in non-homestead at a higher rate that we need to essentially create a third tax category. So the second amendment that I have is again, section five. So if you thought in your infinite wisdom that both amendments should be approved then we would need to re-label the sections. However, so this is a study that would look at the feasibility of creating a third classification of properties for the purposes of statewide education property tax. The third category would comprise non-homestead, non-commercial and non-agricultural properties of the fair market value exceeding $1 million. So again, this sorts out our agricultural industry, sorts out commercial industry from the non-homestead properties. And it also essentially allows for us to tax higher value properties at a higher rate if we wanted to without a large amount of administrative legwork which we wouldn't be able to do currently. And it is my understanding that the tax department or IT is currently looking at RFP to revise how the tax system is structured. And this could potentially serve as some advice of how they could, what they can include in their RFP of how that system could be structured. So those are my two amendments. You could certainly think of them as one or the other or if you like both of them, certainly happy to approve both the first amendment is a proactive way of hopefully filling some of the revenue shortfalls in our education fund. And so I think that it does serve a valuable purpose while also lessening the burden on regular monitors. Great. Robin has a question. We'll get started there. Thank you. Thank you. My question, Zach, is the 50 cent per hundred on the full value of the property that's over a million or does it start with the value that's a million and over? Where does that start? It's a great question representative. And this is for the full value of the property. This we had, I looked at both of them. If we did the taxing the excess of a million, the revenues generated would be significantly smaller. Believe it was, if we did 10 cents, it would generate about $290,000. That didn't feel like it was gonna make much of an impact on the budget. So this isn't the full value of the million dollar property. So there is a cliff. Okay, and did you also look at, right now our taxes allow, Homestead is considered, your property pressed two acres and the value of the houses, somebody will correct me up to $400,000 or $300,000 or something. And so did you look at that also as anything over that amount or did you just only looked at the starting at zero, the first dollar gets taxed this way? So I looked at excess of a million. That was the only thing that I looked at. So I didn't. Okay. But so I'm not entirely sure how this actually applies to the income sensitive folks. I know that there is income sensitivity around 400,000 properties. I'm not sure how this applies to them actually. If, since it is a surcharge, but again, so I'm not entirely sure that would apply to income sensitive. Okay. Thank you. Other question? Oh, sorry, if it's okay, Madam Chair, I also wanted to point out that, that, you know, I chose 50 cents as just a number, but it can be any amount of value. This would increase the burden on wealthy homeowners by some about $7,000 annually. So if you could also increase it to a dollar, you could also decrease it depending on how much you wanted to fill the hole in the budget, excuse me. Let me see if there's other questions. I've got one. Did you do any looking at all at the distribution of these million dollar plus properties? Sort of where they are in the state? I did not. All I know is that there were 683 parcels. If we were able to expand it to non-homes instead, it would be a significantly larger group of homes. I'm sorry, I didn't. So no, I don't know geographically. I didn't hear you. There was a sentence that cut out and it had to do with something I was interested in. So say it again. The last sentence you said, if we were able to expand it to... I lost you again. So I did not look at the geographic distribution of the homes. And currently this is only 683 households, properties. If we were able to expand this to non-homes instead properties, it would be a significant... Yeah, that's what I'm sorry, I just didn't hear it. So yeah. And you don't know whether it applies to properties that are owned by somebody who's income sense test. Mark, you know. I'm not entirely, because this is a search, I know that, yeah, I know that I talked about, I think that if it was just a straight tax increase that that would probably not impact them, but because it's a surcharge, I'm not entirely sure. That would be a question for legal counsel. Well, that's a question for Mark, it's just raised his hand. Abby can weigh in on how she drafted it, but the way I did the revenue estimate was to assume that this was a surcharge that would apply to any property worth more than a million dollars. It would apply to the first dollar and there wouldn't be any adjustment for property tax adjustment. But if, so if your income sensitized and you own a million dollar property, you would pay the full amount, even if you're income, whatever your income is. You'd still receive your property tax adjustment on your normal tax, but the surcharge would be applied to the entire value of your property at 50 cents. Yeah. Right. And Abby, that's the way I drafted. Yeah, Heather, okay. Other questions anyone has? Do people have questions? Jim. Thank you. I spoke with Zach yesterday. Was it yesterday? Day before, Sunday, about his first amendment and I was- Which one is that? Whenever it was. Sunday. No, what amendment are you talking about? The first one, the 50 cent one. The 50 cent one. Okay. The surcharge. And I know clearly where he wants to go, but I was troubled by the fact that at the time, but right now we can, we could assess this on Vermonters in their own homes, but not on, you know, second homes, which in some cases are valuable property owned by other people. And it seemed that the equity issue there was the first thing that jumped out at me. And I know Zach would try to amend, figure that out with the second amendment, the second proposal, which I think would be worthwhile if we could figure that out. But anyway, that's my 10 cents for the moment. Thank you. Okay. Any other questions? Madam chair, if I could, I just wanted to say that that, what Jim's referring to, I unfortunately the surcharge doesn't address my true intent. The intent would have been to be more equitable and apply an actual increased tax rate on homestead properties that are residences. But we currently, it would be too difficult to actually do that. And that's why the study hopefully would create that third tax category that would make that possible for the future. And I think it opens the doors for us to be more intentional and precise with our work. I think one of the, this is a comment more than a question. There's, we've been talking for years in the legislature about depending more on income and less on property value. And it seems to me that this moves us in the other direction pretty forcefully when you consider that the surcharge is going to be paid on the full value of a property no matter what a person's income is. And so I would want to understand a whole lot more about what those consequences are before I went with us on the other proposal, the classification study. We've had conversations in the committee off and on about wanting to look at different classifications. And I need to go back and look at the language that you've got here. But I like the idea of finding ways to identify different classes of properties so that we can better understand, we've talked about rental properties, for example, I think and some others, but I'm not sure whether, I don't know whether this is the, I don't know that it would necessarily be a third classification described the way you're describing it. But anyway, that's just a thought, so. Anyone else? Sorry, it was a great thought, Madam Chair. And I'm a novice at this. I wish I was as pro as you all are understanding this language and the education tax and the tax system, but certainly would be happy to amend the amendment so that it actually is the language that you would prefer to move forward. So I like I said, I don't know enough about this to say precisely, this is the way to go, this is the way I imagined it with my little understanding of how the tax structure works. Well, it's certainly an interesting concept, whether we'd have time to sort of figure out what the different pieces are in the moment right now when we've got a bill pending on the floor tomorrow. I'm a little dubious about that because it's complicated, but and it would require some work with the tax department about what they're capable of doing and so on. But it's an interesting idea. I'm just not sure that this is the way I would frame it, but other people want to jump in. Emily. I think too, if we were gonna look at re sort of categorizing, I think residential non homesteads are sort of the, which we call second homes basically are sort of the missing category that we can't quite get our hands around a lot of the time. And I guess I'm curious if the tax structure commission is looking at those categories of separating what it would look like to separate out rental housing from commercial properties from non-residential. I don't know if this is the next moment to ask that question, but I'm doing it anyway. Yeah, well, it's a good question. I think that the tax structure commission is more focused on moving the way we finance education more heavily onto income. I think that's where their focus has been rather than redoing the property tax system. But whatever we do with the amendments we have this morning, I think it's a great idea to have them into the committee and have a discussion with them. And so I don't want to, I should characterize what they're doing without having them in here. So I won't because social will remind me put that on a future agenda for us, no matter what. Other questions on this, I don't think so. Okay, great. Thank you. Thank you very much for coming in. Thank you, Madam Chair. I have to go back to commerce, but thank you for taking the time to consider our mind amendments. Thank you all for your work. Thank you. Barbara. Thank you, Madam Chair. And I appreciate the opportunity to listen to the other amendments being proposed. This is representative Barbara Murphy for the record. I have proposed an amendment that unlike the ones that you've already been listening to actually subtract, I think a total of five words from the original language. My intent is to remove any reference to future intent with permissive language to a deficit in the Ed fund and just speak to the budget year we're looking at. And that's pretty much what I'm asking here. Let me see if I've got questions here. I have a question, but I think it's really more for Abby than it is for you. So if we said nothing about a deficit, is there any legal impediment to having a deficit in the education fund? Would you like me to answer that? Yeah. Great. So we did at legislative council look to try and find some sort of prohibition against running a deficit. And there is, unlike in other states, there is no constitutional prohibition against running a deficit. There's no requirement either to have a balanced budget. There also is not a statutory requirement to have a balanced budget or not to run a deficit for the education fund. I think we've looked at the stabilization reserve in particular in this committee. So the language as it was proposed by the committee was still fairly open about the possibility, not necessarily the intention to run a deficit, but again, it being an option to allow for a deficit in the current upcoming fiscal year and going forward. So this wouldn't preclude running a deficit either this amendment. So my question's a little bit different. If we took out, I didn't like that notwithstanding language to begin with because it suggests that there is a role and I don't believe that there is one. If we took out notwithstanding lost the language, I think somebody can pop it back up there in the, so if we took out notwithstanding any provision of law to the contrary in whatever fiscal year we're talking about, the education fund may incur a deficit. Just took that out entirely. What's the legal status if we have a deficit? What's the legal issue? Or is there one? I'm not sure that there is one to be. Then why does notwithstanding language in there? I think it was more just to cover all bases because they're not being a strict prohibition or requirement just to be absolutely clear that it was the intent to allow it. But again, if there is no prohibition or requirement, that language could be removed. And it wouldn't have any impact. I don't believe it would. And then you still have your intention if a deficit is projected or created depending on. You'd still start with the if a deficit is projected, right? Yeah. That would be my preference. But anyway, not to allow it, not to confuse things with notwithstanding laws to the contrary that don't exist would be, I think would be better. Scott. I think I would agree with that, just removing section A and then re-lettering B as A. But Barb, you said that there were five words in here you were proposing changing. The only one that I saw was the removal of the word beginning in section A. Is there another change here that I'm missing? Yes, I removed four words from section B because your original language, excuse me, the original language of H959. But again, that just alluded to future year permissive that I felt was more statement than I'm comfortable making when we're responding to the COVID-19 and to the current situation. So that I'm very comfortable with removing section A. I think that would be lovely. Just get rid of it totally. I see a lot of notwithstanding that I think does just get in the way of clarity. But I would also say that then I would prefer and still put forward at least to you as a committee, section B become the section A, that it have the four words removed that spoke to future years. Okay, I see the difference there. Thank you. Yeah. Committee, anyone else have any questions or any thoughts about this? I... George and Peter and Scott. Everybody's now got a question. Good. George, George, you're muted. Harry hit the wrong button. I think it'd be fine to remove section two, subsection A in its entirety that notwithstanding language. And if in section B, I don't care one way or the other about any or any succeeding fiscal year because we can do that now. So it just basically to me says if we took those four words out, those five words that we would need to come up with potentially a new list of options for future years. Because this would only be requiring be addressing the list for 2021. But I don't have any problem with that. Peter and then Scott. I'm a bit reluctant to remove the reference to future years since we just don't know what fraction of FY 21 will still be underperforming, so to say. And I think in fair notice to the general assembly and to the general public, the kind of tax increase that we were faced with if we funded entirely through an adjustment of the property tax, I think is worth, is sobering enough to say it may well be that it'll take more than a year or two into the future to rectify the damage done in FY 21. Thank you. Scott. I think I'm in agreement with George. I think we should remove a re-letter B A and I think we wanna get rid of or any succeeding fiscal year. Because there really shouldn't be a deficit in FY 22. And the reason for that is, is that the consumption when in the tax letter, we're gonna have a really good idea what the consumption taxes are gonna be. The districts are gonna have to react to that. And that reaction will set the homestead and the non homestead yields the non homestead rates to balance the fund. So there really should not be a deficit in FY 22 unless we have some crazy circumstance in the late spring like we did this year. So I think I'm in agreement with George. Yeah. The other thing to point out is that sub B is a statement of intent. It's not operational. And so when we get to a fiscal 22 deficit if that should happen, and I agree, we will have gone in with our eyes so much more wide open voters will, the school boards will, et cetera. But I think we should anticipate that we don't have a deficit, create a deficit in 22. But if we did, we'd be looking at a whole, probably a different list anyway. So I'm fine keeping it at just 21 and removing sub A. Sounds like that's where George and Scott were headed. Anyone, any other thoughts anyone has? So Barbara, that's not exactly what you had in your amendment. If you wanna offer it redone or you want us to offer a substitute or whatever, however, I appreciate your flagging the issue. I'm happy to proceed, however you and the committee wanna proceed. Thank you, Madam Chair. I would suggest, I think maybe for ease with Ledge Council and for ease of process, I am very supportive of what I believe your proposing would be the committee alteration to what I'm presenting. I again see with everyone here saying, and spoke with representative back over the weekend. He, Scott and I corresponded a little bit. And I think he just didn't quite see that recurring statement in the listing language that was reinforcing for me that we were speaking beyond what I felt really was appropriate. But if you're willing to go with my language in section B and just make it section A. I'm totally supportive of it being a committee substitute amendment. And I would certainly as it hit the floor just withdraw my amendment. So I guess the question is for the committee and particularly Scott and George who are reporting this and it wouldn't be a sub-A just be those section because there'd be no other subsections left. But Scott, do you have a preference on a proceed? I think we could just ask Abby to prepare a committee amendment to reflect the conversation we just had. I think that would be fine. Okay, that sounds fine to me. Peter, I know you had a different perspective. I wanna check in on the committee to see whether members of the committee are gonna be a majority anyway on board with doing that. I don't know how to do that. I can do it by asking Sam. Doing the amendment as you suggested with George and Scott or that is fine with me. It makes sense to me. You're gonna have to make a decision next year anyway. So we don't need to have authorization for several years. We can authorize what we need to do a year at a time. Yeah, so let me ask if anyone on the committee, we'll vote on it when we see the language but I just wanna make sure that this path is agreeable with people. Is there anyone on the committee who is uncomfortable with doing this or doesn't wanna do it? So we'll have Abby redo language. If we get it this morning, we'll try to vote it before noon. Is that okay? And the other two issues, I'm gonna postpone for the moment doing a vote on them but if people have thoughts they wanna share, let's take a couple more minutes and if people wanna, we didn't have much discussion about. May I just say farewell and thank you. This is Representative Murphy. I'd love to just thank Abby for the assistance she gave. I know we're putting Ledge Council through the ringer on weekends and I just really appreciate her help and everyone on the committee's work on this issue. It's a challenge to all of us and I just really appreciate the effort everyone's putting into it. So thank you. It's nice to see you. Thanks. Committee, any committee discussion on Zach Ralph's two proposals? We didn't, I didn't really get much of a sense about where committee members were on those. No. Robin. Thank you. I don't think I'm in favor of a surcharge rate that starts with the first dollar but I do like the notion of some sort of property classification study. I don't know as was mentioned earlier whether we have time to organize something like that the way we want right now but at some point I think that would be a very useful thing to have. Yeah, I agree. I don't feel that I've got time and focus to figure it out this morning but it is a subject that we've occasionally talked about. I'm sorry, George, Emily, Peter, Sam and Jim. I shouldn't talk. Go ahead. I think at one point somewhere along the line from Mark we got some information about what the income levels were for those 683 properties. Somewhere in my distant past memory it seems like we got that and it's a little bit surprising that a number of them were not high income people and that makes me a little nervous with this exactly but on the other hand, I also agree with with the idea of trying to come up with an additional non-homestead residential classification, the second home classification is different from what we have now. Emily. I think it's important to remember that just because someone's not high income doesn't mean they're not high wealth and so that could be part of the factor in that conversation. I looked at that chart very recently as part of my crash course and so I might even be able to find it more quickly than they might be able to because it's sitting somewhere in this pile of papers in my desk. So I'll pull it up in a little bit and send it to George. Especially coming from Wyndham County which seems to now have the highest rate of second homes in the state and with all of the changes that I think are about to happen in at least my county's real estate market with folks buying homes site unseen. I am very, very curious about really understanding what high value both residential and non-residential homes look like in this state and really getting a much better picture of that. And I think the only way we can do that is by really setting up the different classification system and really separating it out from rental and commercial markets because they have such completely different policy implications when taxed. So I've written that. So I'm gonna hear from everybody. I also want you to know that I've written a note to myself that we're gonna hear from the Tax Structure Commission and we're also going to do some committee work on classification. I'm not sure exactly what that's gonna look like or where it will end up but I can tell that there's certainly some interest in doing that. Peter, Sam, Jim and Scott. Thank you very much. I've for a long time thought both for political reasons but also equitable reasons. It makes a difference whether or not we're talking in regards to a residence which is not a homestead that we're talking about the owner who may also be filing income taxes here. That is to say they're essentially contributing to the Ed fund in two ways as opposed to someone who does not file income taxes in Vermont but yet owns a residence in Vermont. I think there's equitable distinction to be made quite apart from the practical issue and I've always thought it's odd that we don't somehow give credit for income taxes paid against some ownership of another piece of property elsewhere in the state of Vermont. Thank you. I think that I'm not for creating, well, certainly as this proposal does I don't think that we wanna create an incentive for people to become non-residents. And I think if we want to get at the income of people we should do it through the income tax and that we probably already have the most complicated education, finance system in the country. And I think we need an initial level of complication without knowing how it interacts with income. Since I am interested in a further investigation of residential property types but I would not be in favor of going forward with this proposal. Jen, Scott, George. I, well, in summary, I agree with Sam that I wouldn't wanna create an incentive for people to become non-resident, non-homeowners, da-da-da. But the notion of the study is something that I think is intriguing even though it may not be worded exactly the way we would do it if we did it ourselves. So on balance I'll support Zach's study, although if we had time, I think we'd rewrite it a little bit. Yeah, I wanna be clear that I'm not gonna support it as it is because I think it's a distraction from what I actually would really like to be able to put some time into. But the committee may be split on that, that's fine. I won't be upset if it doesn't pass. That's fine. Scott, George, hat. I have taken actually time to look at these types of properties where you have high income, low property value or high property value, low income. And there are a lot more outliers than people think there are. And then when you layer over classification and income sensitivity and all the other things in the education fund, this is a really complicated decision that I wouldn't support making in one day, especially when you're looking at the amounts of money that it would raise, but I am supportive of the conversation and I am looking forward to what the tax commission might say on this subject and other subjects when they report to us. No, I'm sorry, George, and then Pat. I forgot to say the most important thing when I spoke a minute ago and that is that I would not support doing an amendment, this amendment to 9.59. I think 9.59 should stay as pure as it can. Just telling the towns how they can set their tax rates and get their property tax bills out. And I don't want to complicate it with other stuff. So even if I would be supportive of the study, I would not be supportive of it here in this bill. Pat. So I don't support either one may come as no surprise, but if I were inclined to support either one, it certainly wouldn't be. I agree with George in this bill. I'm given the time constraints and we're gonna be on the floor tomorrow with it. I think the timing's off, but so that's where I am. I'm a no on both of those. Mark. I just wanted to point out as you're thinking about this classification issue that if you were trying to set up a system that would tax second homeowners in Vermont in a different way, you'd also be taxing Vermonters who have second homes as well. You can't make a distinction between our state people and in-state people in order to raise money. So people who have camps, second homes anywhere would have to be subject to the same additional tax which has been a problem in the past. Yeah. That's why this kind of thing takes a lot more discussion. It really does. Thank you. Joey and then Jim and then Emily and we do need to move on. I've got a chip is here on that education thing. So Joey. I just think I just wanted to say that this has been a conversation that has been ongoing since I've been on ways means. And I certainly think it needs a more in-depth study. I too, I've always been supportive of having the whole system being based on income. And I hope at some point that we actually have the audacity to do that. So I'm gonna leave that as my last request to the committee as I move on. Thank you. Jim. I agree that it's better not to clutter up the bill. And I agree that we don't wanna change tax structure on the fly here. I would just iterate that I'll support the study because it's a study, but I understand it's gonna fail and that's fine with me. We'll go forward and figure it out from here. Mark, did you wanna jump back in or did you just forget to put your hand down? Thank you for not to put his hand down. Good. Okay. Thank you everybody. And I don't know whether we'll have time to vote today. We may, but I certainly have a sense of the committee. And what I wanna do now is Chip is with us. I think he's still with us. Are you still with us? Yes, hi. To talk about the, what I call the phase one budget. I don't know what people are calling it anymore. Now it's gone through a lot of names. And the parts of the budget that deal specifically with the education fund. Don't welcome. Well, thank you. So that's what I thought I was here for. It's good to know that we're on the same page. Oh yeah. So as you probably know, we are calling it the phase one budget. And I agree it keeps changing its name. But so far I think we're on the phase one budget. I'm sure your committee knows that right now we have the Ed fund in there at 40% of what we expect the total of the Ed fund to be. And I just, I think I'm here to give you a little bit of a rationale for why we've done that. You probably all know that we have decided in our phase one budget to do something a little different than what the governor was proposing. We're going to sort of as a default say that the funding in for the first quarter will be at 25% of the adjusted FY20 levels. The governor had reduced that by 2% meaning that the default was 23%. There are some funds that are a little different including the Ed fund. And I'll talk about that in a second. But we have tried to be as consistent as possible with that 25%. And part of the reason for that is a couple of things. One, we don't want lots of people coming forward and saying why their budget really needs to have more than the 25% if there's not a particularly good reason for it. And we feel like the more we make exceptions the more people will be coming and asking for a waiver from that basic default. The other thing is that, and this I may be speaking maybe not for the committee so much, but for myself is that there's a little bit of a danger when you say essentially the full 25% of last year's budget in a year where we know there are gonna be significant reductions that are gonna have to happen. We just don't want, we and I say it and I'm speaking a little bit personally here, but wanna be careful that people are not looking to spend more in that first quarter than is probably appropriate given what they're gonna have to do in their budgets in the rest of the year. So I've spoke to consistency, my favorite example so far is that we have an engineer in the Department of Public Safety who designs dry hydrants. His salary is $55,000. For some reason it's come up as an issue and we're saying, nope, we're just gonna give you a quarter of that salary in the first quarter and we'll take care of the rest of it when we do the rest of the budget. So like I say, we're trying to be as consistent as we can. There are some exceptions, probably I know that the chair wrote to chair of Ways and Means that one of the things we're doing is in the retirement and pension systems we are funding those at 100%. There's a reason for that and that is that we expect that the rating agencies will look at that and see that even in a difficult year like this we've right up front committed ourselves to fully funding those and that there won't be benefits to that. And so like I say, there are some rare exceptions but we're trying to stick as closely to possible to this. And lastly, we in our consultations with JFO and I'd be happy to hear if you all feel differently but we have put in a number that we believe is a little bit more than sufficient to cover what is expected to have to go out of the Ed fund in the first quarter. There's no, I mean, there's no belief that we won't be funding the Ed funder as fully as it needs to be funded but it's just a matter of trying to be consistent about how we address all of state government at this point. Questions, anyone on the committee has? So is there any anticipation that the amount that needs to be appropriated is going to be changed different when you come back and do the full budget? No, no, I mean, I think we are relying on you all and JFO and Mark and all to tell us what the numbers are. But our understanding, my understanding from the testimony is that the number that I think Mark came up with it I couldn't be more about that but that would have to go out in the first quarter because of the way the Ed fund gets rolled out was somewhere in the order of 34, 36% or something. We've put it in at 40 just to be 100% sure that we're safe but there's no intention to fund the Ed fund any differently or less fully than we would in any normal year. We're just trying to, again, like I say, be consistent about what we put out in the first quarter relative to what we put out when we come back and do the budget, which will actually be for the full year. Sam. Is that just in terms of the funding or the budget needs of schools, is the first quarter actually require a full quarter of the amount of the budget or is it the year or is it, I mean, really evenly divided by quarters? I mean, the first quarter is what? Well, August, September, October. Well, I'll give you my very understanding, which is that because of the way the funding goes out to schools, it's not even over the year. It's not easily dividable into quarters. I believe that the administration had recognized that when they put out their proposal. I think they had it at 34, 36% instead of 25. With that recognition, we've talked to JFO and just, you know, I think Cushan did a little bit just to be absolutely sure, but you'd have to ask Mark or perhaps your chair or somebody else a lot more about how those roll out than I do. Okay. And Chip, just so you know, the Brookies are biting. I caught five of them the other day. I'll be up. I forget out of my committee. I mean, I think the thing I'm struggling with is, you know, when we do the Ed fund, we do a full year. We do the tax rates for a full year. We do the budgets for a full year. And I'm just trying to understand how this affects the Ed fund balance sheet, which is, you know, to do a partial year appropriation when we have a, it's structured as a full year operation. Maybe I'll ask Mark who's here. So I'll just say, I don't know if you're asking Mark right now, but. Yeah. He's back on, but you go ahead. I'll just say that our committee, it's, we want it to be cleared. Our communication D wants to be clear that we don't have any, we won't do anything that we think in dangers, the way funding rolls out or, you know, it has any detrimental effects. All right. This is our proposal for, you know, this is the way we'd like to do it now with our, and our understanding from talking to various people is that, that this is, this works. If we find out that there's some problem, we certainly want to know about it and we'll adjust. Well, I think, I think it leaves the, it leaves open are the decision whether we're going to fully fund the entire education payment. That's how, that's how I would see it. Mark. Yeah. I don't know the answer to that question. I don't know how the 40% came up. They came up with that. It was an appropriations issue, but I can, I can find out for you. I do know that the reason that they're having to wrestle with this differently is the education fund money goes out in a very different fashion than normal money goes out from the state budget because some of it comes into the education fund. Some of it goes directly to school districts. So I will, I can check with Steve Klein and Stephanie Barrett to see what the rationale for the 40% was, but I don't really understand it. Anyone on the committee? So have you already voted this? No. When do you vote? We, it may, depending on how things go the rest of the day, it may, we may vote it out this afternoon. If, if, I mean, I can't speak for the committee my own reaction to be if, if we discover that there's any kind of a serious problem, there's always the option for, you know, amending it on the floor after hearing from you all. And can I just get a understanding, right? Is your concern that we, if we only fund a portion of it now that there, that there may be a move from somewhere to reduce the amount of funding that we put into schools into the Ed fund overall, and that by the end of the year we will have sort of indirectly reduced spending? I guess it's the uncertainty that concerns me, given the fact that we're setting tax rates for a year and budgets are all voted for a year. But don't we, don't we sort of have to send schools the amounts that they voted on and budgeted? No, we're going to come back and pass another bill. George. I just had a question for Mark, really. And that is, I'm curious, what, what will the Ed fund outlook sheet look like with, with this? I just trying to picture that I can't, I'm having trouble. Yeah, I don't understand that either, I'm sorry. I'm going to have to do some more work on it because it's categorically, it's the education payment. They go out on all kinds of different schedules. Some of the money goes directly from the municipalities to the districts. Some of the money goes from the districts into the education fund. So I need to do more work before I can answer your question on this. I'm sorry, I just, I just found out about this this morning, so. Peter. Peter, comment. Yeah, I find myself joining the course of, if it doesn't really matter, why are we doing this? It seems to me the Ed fund works separately from the general fund. Ways and Means has made a commitment to fully fund it. So I guess I'm among those who sort of not understanding what the purpose of the 40% is. If it really, in the end, doesn't make a difference. Other, other questions, comments anyone has, George? Not really a question, but a comment. I just want to go on record opposing this concept. I don't think there's reason to do it and I don't think it's a good idea. I think it's just gonna make an already complicated system more difficult to deal with as time goes on, plus raise some uncertainty for the schools. And I just don't think it's a good idea. Anyone else? Yeah. Jim. Yeah, yeah, George, well stated. And I think that's where I come down at this point in time. If it doesn't make sense over 12 months, it's just gonna make things too complicated for us. We'll have to do some sorting out that we'll regret later. So that's my 10 cents. Thank you. Anyone else? Chip, I don't know if you're looking for the committee to weigh in or what you're looking for. I'm looking at these obviously with interest in it. Peter is here from education. Peter Conlon is here from education committee. I mean, I probably defer to the chair about how you would like to do this. I will certainly take your concerns back to our committee. And I don't know if there's a conversation that happens between chairs or if you all, I mean, I'll leave it to the chair to let me know how you wanna proceed, whether you wanna have a vote in your committee right now. Right. I have a note that Steve Klein wants to get in. Actually, it's a note from Mark. Is he trying to get in the meeting? I mean, he's welcome. Oh, it's so. I will send him the update. I mean, the link for the meeting. The link, okay. Oh, Mark is sent something. Anyway. Sorry, Steve was asking to get in and I didn't know how to let him in. So if Sorcha can do it, that would be great. Good. Just wanna know if I've heard from a few people on the committee, anybody else wanna chime in or people? Don't know where they, where people are on it. Emily. Well, I agree that the last thing that I think the district's need right now is even the slightest bit more uncertainty or confusion in how they're doing their work. So Steve, we're talking about the 40% contribution payment. Okay, so I'm gonna speak. Well, you asked to join the meeting and I'm not sure whether you wanted to explain why it was happening or whether you wanted to hear what we thought or what was the purpose. So I just joined because Mark sent me an email saying I needed to be here. And so I didn't know what I was going to do. Yeah, Steve, I couldn't answer the question as to why the allocation in this initial budget going out was gonna be 40% and how that would affect the education fund. How about the balance sheet? The education fund out with the balance sheet, yes. So I, and this is what I'm thinking about. So basically the 40% should cover any money flowing out of the Ed fund between now and the end of September. The first three months of the year. It should not affect the operations of the Ed fund or the balance sheet. What it does actually do since we're not appropriating the full dollars in FY21 is just the same as the case in the general fund. You will not have spent all the money in FY21. It means it leaves until the August, September period to figure out the whole complexity of closing the year in some ways. That would be my first salvo. Salvo? First the presentation or whatever that. I don't know, I'm not sure where you're going in which direction, so I didn't want to. So George probably expressed it best and he's got his hand up so I'm gonna let him express it again. Actually, I wasn't gonna express it again, but I can, but let me ask you a question first. So Steve, that sounds like for the education fund, you're leaving open the possibility that we won't send all the money to the schools that we have promised them. And I just don't understand the why. Why are we doing this with the education fund? What is the benefit? If we're going to actually send them all the money, eventually what is the benefit of doing it this way and making them all uncertain, nervous? I was just saying that I am opposed to this. I think it's a bad idea. I think it's going to make the schools very edgy to do this and just see why. Okay, and I can't tell you that there's a right answer to this question. I think that they're fully funding everything you need to spend between now and September 30th. I can tell you there's many, many programs in state government that we're only funding for three months that are equally in need, demanding focus that have nine more months to go. So it's more just the nature of this bill that you're funding a quarter. So perceptions about why and perceptions about, I think the message is that they're funding one quarter because there's a lot of stuff going on. And there are some limited cases where they are going to fully fund. And I think the one that is the most aware of is the teacher's retirement funding and the state employee retirement funding because for the Wall Street, just let them know that that commitment is 100%. They're the ones that are there. You are raising this concern. It's not, I can't tell you it's really a policy choice. And I don't think anybody has been talking about and not funding it long-term. It's more just that the practice in this bill is to fund most of the cases 25%. The other one where we have funded more like in the, and two of you some examples in VSAC, they have to get the money out. So that's being funded at 50% because they need to know it's there for the first semester. It's been designed to make sure we can cover all needs for that first quarter and then go from there. It's not a, I don't think it was done to sort of indicate that they're going to reductions, but it's done because that's the nature of the bill. But I would turn it over to Representative Conquist who can sort of be more of, I don't focus on the committee. I don't have anything to add. I mean, I think we said essentially the same thing you and I for this committee. So other committee members have questions. I'm not sure exactly where to proceed from here. I guess I'd be curious whether there was any, whether there was any discussion about this in the Appropriations Committee and any argument being made along the lines of the argument that George has made in the committee. Or was it just, this is what we're doing for everybody. This is what we're doing here. I'm sorry, you're asking, did we make a, did anyone? Did anybody make the argument that George has made in your committee? Which is that this causes concern among the schools and- Can I please open the question about whether we're gonna fulfill the commitment to provide full funding for the schools? No, the chair has gone out of her way to say in every situation of Ed fund, any other fund that we were talking about or any other budget that this is not, we're not saying that what you're getting here is an indication of what you will get for the full year. This is just addressing first quarter issues to make sure everybody has what they need to get through the first quarter and that the decisions in other budgets anyway, the decisions about what the full year funding will look like will be made in August and September. Can I, I don't mean to cause havoc, but there was some discussion, somebody in the committee did bring up the idea of fully funded and other people talked about a concern about why there was a discussion of this at one point in the committee. And I think just to echo what Rep. Conquist pointed out, the chair did say that they were gonna make very clear in their presentation that this is in no way implying that it's not gonna fund it. It's just that it was the being in that quarter for, and you would have to talk to her. There was a reason why they felt that that was more appropriate to do, but they were not doing it with the goal of reducing the funding. They just doing for the appropriate misgoal. Anyone else have any questions? That's Steve or Chip. Chip, thank you for joining us. So you headed back in your committee room. I hope that Steve might know better than I, but I don't think we're meeting any more, but I will convey all of the concerns that I've jotted down here to our committee. I would assume that there'll be some further conversation before we have a vote on this particular part of the bill. If there's room for somebody from our committee to join you, I think George articulates the concerns as well as anybody I might ask if you could do that, but I'll, I can talk with Kitty about that. Jim. Yeah, Steve Klein's last comments about being clear what the money's for and then it's not an intention to cut funding later in the fiscal year. I think we're very, very helpful. I'm not sure how that might be articulated to all the parties, but his comments were very helpful. You mean, so it would be including some language in the bill that say that's our intention to fully fund this? As I guess Chip said earlier, we leave it to the chairs to figure out just how to word things, but I take people at their word that this is not a backhanded attempt to cut education to education funding. So it would be nice if there's a clean way to articulate it just so everybody is doesn't get wiggled out about it. Thank you. Great. Thank you. Thank you everybody. Thank you Chip for joining us. You're welcome to stay. Thanks. Might leave anyway, but I appreciate the offer. And I will just say that we've been, the chair has been welcoming people from other committees. I'm certain that she would welcome somebody from Ways and Means, George, if he's your designee to come talk to us. I'll pass that on to her. Oh, thanks. Peter Conlon, is the Ed Committee meeting today? We are, we meet at noon. Yeah, and I'll certainly provide an update. That'd be great. Yeah, actually that would be helpful because. I think that we would probably get stuck on this issue anyway on the why question. Yeah, okay, great. Thank you. Thank you everybody.