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AGCVT News

Legislative Update; week 10 "Shirt off your back"

Week 10 - March 22, 2013 "Shirt off your back As snow encapsulated the Capital City, it was hard to tell if it was more like a wet blanket or an opportunity to slow things down in the statehouse. Legislators rolled in slowly over two days, all having different distances to travel and slightly different travel conditions. The tone and tenure was one of less optimism; at least $20 million in taxes would be raised, the capital budget was bulging at the seams with no increased funding in sight and legislation that didn't pass out of committee last week was being re-crafted in between debates on the floor. Not necessarily the best way to pass legislation or for advocates to have opportunities to weigh in. The Speaker of the House; Shap Smith (D-Morristown) directed the "money" committees to decrease Governor Shumlin's overall spending plan from $50 million to $20 million. Much of the new revenue continued to be sought from the grocery store isle. Last week, soda and candy, this week cigarettes, bottled water and dietary supplements. Does the grocer feel a little picked on? Frustrated might be a better word to capture the attitude of the small business community. The Ways and Means Committee passed a tax bill raising $27.2 million, primarily on items in the retail and grocery cart. The tax bill is regressive and continues to make Vermont less competitive with New Hampshire. The businesses along the Connecticut River Valley are again being "hit over the head" which will further put them "over a barrel". When businesses close, unemployment goes up. The legislature is clearly at odds with the goals of the Shumlin Administration to increase jobs and prosperity in Vermont. By late afternoon, the Governors Office made it clear they were not happy with the taxing scheme: I know that the House is working hard on the FY14 budget, and while I appreciate that they support funding many of my priorities, I disagree strongly with the manner in which the Ways and Means Committee has chosen to raise revenue. I have repeatedly opposed increases to income, meals, and sales taxes, and yet this proposal hits all three. Rather than reallocating existing funds more efficiently to achieve better outcomes as my budget recommends, the committee proposal increases Vermont's already high tax burden. Luckily, we are only part way through this legislative session and I look forward to working with the legislature to ensure that we end up with a responsible budget acceptable to all of us. House Speaker Smith was elevated to acting Governor as both Governor Shumlin and Lt. Governor Phil Scott were away. The Lt. Governor was attending the Lt. Governors National Convention and Governor Shumlin was taking personal time. Legislators thought perhaps this would be a good time to re-draft the state budget and perhaps repeal a few provisions on the books, all in jest. As Vermont tried to pull itself out of the recession, this week unemployment rates dropped slightly which by all accounts is a positive indicator. However, the state budget continues to grow; in 2011 to $4.67 billion, again in 2012 to $5 billion, to $5.016 billion in 2013 and an estimated 3% this year. The majority of the week was spent in the Chamber debating legislation and amendments. The "money" & budget committees continued to meet so that the revenue and spending proposals could be shored up to put bills on the floor next week. The Capital bill is dealing with Hurricane Irene re-building projects. Last year placeholders were put in the budget at $1 million but the Administration informed the legislature that the number was more like $8 million. Eight times the estimate makes fudging very difficult for committees that need to put a budget on the floor in less than a week. By the end of week, the snow began to melt, tax increases became clearer and yes, they will take the shirt off your back!

BUDGETS & TAXES H.528; An act relating to revenue changes for fiscal year 2014 and fiscal year 2015

The bill passed out of the House Ways & Means Committee proposes to make changes to Vermonts income tax, sales and use tax, meals and rooms tax, cigarette taxes, property tax, fuel gross receipts tax, and provider taxes. Regardless of the category of grocery or retail item, the Ways and Means committee doesn't have a problem taxing cigarettes, soda, water, clothing and even vitamins. Addition of 6% Sales Tax: " Soft Drink FY14 $2.8M, FY15 $3.2M " Candy FY14 $2.2M, FY15 $2.5M " Bottled Water FY14 $1.2M, FY15 $1.3M " Clothing >$110. FY14 $2M, FY15 $2.2M " Dietary Supplements FY14 $3.1M, FY15 $3.5M " Vending machines FY14 1.2M, FY15 $1.3M Excise Tax Increases: " Cigarettes by 50 cents (to $3.12/pack) FY14 $4.3M, FY15 $4.1M " Snuff & New Smokeless, equalized to cigarettes FY14 $1.7M, FY15 $1.6M Other: " Meals Tax increase by .5% to 9.5% (restaurants, deli and all prepared food) " Income tax bracket adjustments (eliminating the 8.8%, increasing to 8.95%) FY14 $4.5M, FY15 $27.4M " Cap the maximum itemized deductions to 2 1/2 times the standard deduction, 2013 deduction is $11,900 adding an estimated $29,750 cap. The bill was finalized after the committee took a lunch break. What happened over lunch? The tax bill before lunch was $26.3 in FY 2014 and $46.3 million in FY 2015, but after lunch the tax bill became even more bloated by increasing to $27.2 million in 2014 and $47.6 million in FY 2015. Makes you wonder what was on the lunch menu. The committee acknowledged that they didn't need the $1.7M increase and actually only were asked to raise $20M by Speaker Smith but there will be no shortage of uses for the additional $7.2M. The vote in committee today was 8-3. Does a two- year tax bill mean no tax bill next year? To add salt to the wound, the House Human Services voted today to limit the "Reach up" Program, a limit on the amount of time someone could be on state assistance, to 5 years. Currently, Vermont has no limit but Governor Shumlin asked for a 3 year limit in his proposed budget. While this is a net savings to Vermont, the House Ways & Means tax bill didnt account for it.

HEALTH CARE & SYSTEM TRANSFORMATION H.418 Vermont Health Benefit Exchange; subsidies and premiums-funding changes in House Ways & Means This bill proposes to establish state premium tax credits and cost-sharing subsidies for individuals purchasing health insurance through the Vermont Health Benefit Exchange. As introduced by the House health Care Committee, the bill would: " Impose an excise tax on sugar-sweetened beverages (SSB) " Repeal the employers health care fund contribution assessment " Consolidate the existing health care claims assessment and the health care information technology reinvestment fee into a new health care claims tax which would increase over two years from 0.999 percent of an insurers claims paid in fiscal year 2013 to 1.999 percent of its claims paid in fiscal year 2015. The bill became bogged down in the House Ways & Means Committee over the funding of the proposal. This week the committee considered alternatives to the SSB excise tax and sales tax. The committee was tasked with voting on a taxing plan before heading home for the weekend. The taxing plan will become part of the annual miscellaneous tax bill, separating the policy provisions with the tax components. The excise tax on SSB failed by a vote of 6-5. See Misc. Tax for new funding sources.

S.152, Green Mountain Care Board Authority The bill moves sole authority for approving, modifying, and denying health insurance rate requests for major medical insurance policies to the Green Mountain Care Board. It will also permit the Commissioner of Financial Regulation and the Green Mountain Care Board to modify the allocation of expenses for carrying out their regulatory and administrative duties and would require them to report annually on the actual allocation of expenses for the previous calendar year. The Senate Health & Welfare Committee moved the bill which has no opposition as the bill assumes the rate review and approval process will be more efficient. The bill was the result of a very long review process this past year where insurance carriers moved through both the Department of Financial Regulation and the Green Mountain Care Board.

EMPLOYER ISSUES H.99; Equal Pay-to ensure equal pay for Vermonters; passed 115 to 22 The bill attempts to address retaliations by employers against employees, pay discrimination and flexible work schedules. The prescriptive nature of the bill is not necessary and will likely create opposition against a bill that would otherwise be supported by legislators, the Administration and the business community at large. Remarks expressed on the floor ranged from the bill being anti-business to the concern that businesses would be discouraged from coming to Vermont and a repeated notion that this is a bill in search of a problem. Regardless of the prescriptive nature the bill it passed easily and is headed to the Senate for consideration.

TRANSPORTATION & CONSTRUCTION H.510; Annual Transportation Budget As many expected, the Transportation Bill H.510 rolled on through the House ending in a lop-sided vote of 105-37, clearing the way for final passage out of the House. H.510 is expected to bring in an about $36.5 million in new revenues from the gas sales tax. Without this revenue, the state will lose about $56 million in federal matching funds. This year will add the new 2 percent sales tax on gas and in 2014 it increases to 4%. With the gas prices where they are now, it is expected Vermonters will be paying roughly 7.5 cents more per gallon at the pump by 2014. The bill will also increase bonding for state transportation projects by $10.38M and cuts the transportation budget by over $5M. Of the spending cuts are $1.8M in maintenance programs, about $600,000 to paving and $600,000 to rail programs. Under this plan, 9 rail projects are on the chopping block. Several Republican Representatives offered amendments on the floor but they were swiftly defeated by large margin votes. House Speaker Shap Smith has said he supports the tax because the federal revenue is needed. H.510 now makes it way to the Senate Transportation Committee.

ENERGY & ENVIROMENT H.526 (formerly H.223) Shore land Protection, Buffer Zone bill passes out of committee 8-1 This bill requires the Agency of Natural Resources (ANR) to adopt by January 1, 2015 rules establishing shoreland protection standards for areas, "protected shoreland areas", within 250 feet of the mean water level of a lake. Beginning January 1, 2015, a permit will be required from the Agency of natural Resources (ANR) for new or expanded impervious surface or cleared area in a protected shoreland area. Municipalities with a shoreland protection bylaw or ordinance in existence on January 1, 2015 are given authority to permit new or expanded impervious surface or cleared area if certain conditions are met as long as the requirements are at least as stringent of ARN. A municipality that has not adopted a shoreland protection bylaw or ordinance by January 1, 2015 may be delegated authority for the permitting of construction, creation, or expansion of impervious surface or cleared area within a protected shoreland area if the municipality adopts a shoreland protection bylaw or ordinance after January 1, 2015 and meets certain conditions. Agricultural activities, silviculturalactivities, transportation activities, electric utility activity, and specified activities permitted by the Agency of Natural Resources would not be required to obtain a lake shoreland permit if certain conditions are met. http://www.leg.state.vt.us/docs/2014/Bills/Intro/H-526.pdf H.526 passed out of committee with the promise that Majority Leader Willem Jewett (D-Ripton) would continue to refine the bill as lake associations and towns still oppose the bill. H. 520- An act relating to reducing energy costs and greenhouse gas emissions The bill is designed to help Vermonters insulate their homes, save money on their heating bills and cut down on their carbon emissions. The bill requires the Public Service Board to coordinate and streamline existing weatherization programs, improved adherence to existing building codes, development of an energy rating for existing structures, strategies for development of a trained labor pool, and exploration of incentives for renewable heating fuels, such as biomass pellets. The legislation requires the Department of Public Service (DPS) to: " convene a working group to develop an energy rating tool for use in disclosing a buildings energy performance " convene a Thermal Energy Workforce Development Working Group to study workforce needs related to Vermonts statutory building efficiency goals " study issues relating to efficient renewable energy technologies for heating and cooling " The House also statutorily requires weatherizing 80,000 housing units by 2020 with a promise of funding in the future. This legislation requires the Public Service Board (PSB) to: " review the cost-effectiveness screening tool used by Vermonts energy efficiency utilities for opportunities to integrate renewable energy technologies for heating and cooling into the screening tool " complete a public process and report on the feasibility of applying new charges to unregulated fuels to support investments in the efficient use of those fuels The overarching goal of the bill is to weatherize 80,000 housing units by 2020

PUBLIC HEARINGS Thursday, April 18, 2013 - Room 11 - 6:00 - 8:00 P.M. Re: H. 208 Earned Sick Days - House Committee on General, Housing and Military Affairs.

Date Posted: March 25, 2013