• What's New

    Reflections

    With the Governor allowing the legislature’s third budget and tax bill to become law just in time for the new fiscal year to begin, the 2018 legislative session (and special session), came to an official close on June 29.

    At times, it seemed a long and detoured course to adjournment, with a number of policy differences between legislative leaders and the Governor. January began with quick passage of recreational marijuana left over from last year and the spring saw passage of several new firearm restrictions in the wake of the school threat by Jack Sawyer in Fair Haven. But what put the session into overtime was the standoff on the statewide education property taxes and whether they should increase or not, in a year when state revenues were higher than expected.

    Legislative leaders appeared to be willing to articulate their differences with Scott on a number of issues, from a $15 minimum wage to a new payroll tax to fund a family leave benefit. The Governor used his veto pen eleven times, tying Howard Dean’s record in 1994. Three of the vetoes were on the budget and tax bills as legislative leaders sought to see just how far they could go on property tax rates. In the end, residential property taxes will remain level for FY 2019, but the nonresidential property tax rate will increase by 4.5 cents per $100.

    The special session dragged on for a month (although most weeks included only one or two days of meetings). I am not of fan of prolonged sessions and as such, I forfeited any legislative pay during the overtime session. Next year, if returned to Montpelier by the district voters, I plan to introduce legislation that would only pay lawmakers for the 18 week regular session and not for an extension. Perhaps if the pay stops, the legislature collectively will be motivated to get its work done and make the necessary compromises with the executive branch in a more timely fashion?

    In agreeing to let the final budget & tax bill become law, Scott pointed out some of the many positives the legislation contained, including:

    • Eliminating the income tax on social security for low and middle-income households;
    • Lowering income tax rates to ensure Vermonters do not see a $30 million VT income tax increase due to federal tax changes;
    • Keeping average statewide residential education property taxes even with last year;
    • Dedicating $15 million toward paying down teacher retirement obligations;
    • Paying off the $3.9 million debt of Vermont Life Magazine (unfortunately publication will cease);
    • Establishing statewide bargaining for public school employee’s health care contract while reconstituting the board that directs it;
    • Establishing a commission to study student/staff ratios in public schools;
    • Setting a new default residential property tax formula to be the same as in the prior fiscal year unless the legislature determines otherwise.

    By letting the budget become law without his signature, Scott accepted a 4.5 cent increase in the non-residential property tax rate. This move violates his “no new tax” pledge, and in a statement he laid blame for the increase at the feet of legislative leaders saying he had no choice but to allow the bill to become law to avert a government shutdown.

    Putting forth a different spin, House Speaker Johnson and Senate Leader Ashe issued a joint statement following the tax standoff, where they said, “It’s a relief that the Governor is finally willing to accept the significant compromise the Legislature worked hard to put forward….The Governor and Legislature were originally $57 million apart, but the Legislature moved $37 million closer to the Governor’s position.”

    It remains to be seen how the budget standoff will play out with voters during the election.

    Democrats have fielded more candidates for the House than the Republicans with a goal toward winning a supermajority, which could seriously erode the Governor’s influence, if re-elected.

    All eyes now go to the primary on August 14 to see who the candidates will be on the November 6 general election ballot.

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  • Watching Paint Dry

    We all know the old adage, it’s like watching paint dry. In other words, a very slow, and perhaps boring, process. With three weeks into the special session, albeit only one or two days a week, and nothing to show for it thus far, it might be an appropriate metaphor.

    Legislative leaders put forth a new budget and tax bill taking out all but one issue of disagreement with Governor Scott, in hopes of averting a potential government shutdown at the end of the month with a promise to keep working on the issues surrounding education funding and property taxes.

    Scott, while initially intrigued by the approach, quickly realized that the bill would increase the statewide non-residential or non-homestead property tax rate by 5.5 cents (would hold average statewide residential rates even). Suspecting the legislative leaders will no longer have incentive to come to an overall tax and education funding agreement, the new budget bill faces an almost certain veto again.

    The Governor has maintained that with the state coffers showing a surplus this year, we shouldn’t be increasing statewide taxes. This past Tuesday state revenues were up again ($11 million for May). Scott quickly issued a statement and said, “This means the State will now have about $55 million in surplus revenue, in addition to $34 million in unanticipated settlement funds and $82 million from organic growth and economic activity. That’s a total of $171 million more than we had last year, and yet legislative leaders continue to insist on imposing a statewide property tax rate hike on Vermonters.”

    Senate leader, Tim Ashe, D/P-Chittenden, and House Speaker, Mitzi Johnson, D-Grand Isle, argue we shouldn’t be spending possible one-time money for ongoing expenses, like annual school costs, or we may face larger increases next year. Ashe likens it to spending on a credit card (although past legislatures and administrations have admittedly used one-time money for ongoing expenses).

    While some of the Governor’s education proposals to contain costs have not been well received, he has signaled support of several amendments in the House that were offered during the debate of the new budget as a way to break the log jam. In the end, they were voted down primarily along party lines:

    • “The Beck Amendments” – Both amendments to the tax bill would achieve cost savings by altering the yield to more closely connect property tax payers with implications of their own school budget votes. It could be used as an alternative to cost containment measures proposed in the Governor’s five-year plan.
    • “The Browning Amendment” – A bipartisan amendment to the budget offered by Rep. Cynthia Browning (D-Arlington) would ensure the budget met legislative leaders’ commitment to a budget that excludes all provisions related to property tax rates. (The budget currently does not meet that commitment). The Amendment also proposed paying off Act 46 merger incentives while holding statewide property tax rates level.
    • “The McCoy Amendment” – An alternative to the Browning Amendment, which also would have ensured the current budget met legislative leaders’ commitment to a budget that excludes all provisions related to property tax rates.

    The only possible path to conclusion, may be adopting a new tax bill (H.4) that irons out a compromise with the administration. Perhaps a tall task at this point, but with the clock ticking toward June 30, it is certainly possible.

    This past Friday afternoon, the House Ways & Means Committee gave preliminary approval to a proposal on a different bill that would increase the statewide residential rate by 2 cents and the nonresidential by 4 cents, moving further away from the Governor’s position. At the same time, the budget bill, H.13, was sent to the Governor, which may invite a veto unless a breakthrough occurs in the next few days on the new tax bill, H.4.

    A recent news report sums up the standoff:

    “I don’t want to see a shutdown…But it’s as much in their hands as it is mine,” Gov. Scott said. “I’m telling them what I’m going to do. I’m not signing a bill that raises taxes and fees, end of story.” Senate President Pro Tem Tim Ashe, D/P-Chittenden, told reporters that lawmakers will try to avoid a shut down. But he said they won’t be beholden to Scott’s demands and hopes the governor will “move in their direction.”

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  • The Saga Continues

    The special session of the legislature is now entering its third week (albeit only one or two days a week). The session was necessitated by the veto of the state budget and education funding bills passed in the regular session. Originally it was believed we could come to agreement and get the necessary budget and tax bill done in a few days, if not a week. Now, however, if the standoff doesn’t end soon, there may be no agreement prior to the start of the new fiscal year on July 1.

    In what might appear as a bit of gamesmanship, legislative leaders put forth a bill with no increase in the average residential property statewide tax, yet does default to an increase on non-residential property, clearly inviting another veto. The non-residential rate applies to apartments, second homes, commercial property, camps, etc, of which the majority are owned by Vermonters. Scott has been crystal clear that he will not sign any bill that increases taxes or fees. In meetings last week, he reiterated his resolve to hold the line. H.13, the new budget and tax bill, was put forth with the idea that the a budget could be passed and signed to keep the State running after July 1 in the event the disagreement over property taxes wasn’t resolved. However as noted, while H.13 holds average residential rates steady, it doesn’t keep non-residential from going up 5.5 cents.

    Scott has made it obvious that he is not afraid to use his veto pen. Now up to ten bills being vetoed, he is just one away from Howard Dean’s record of eleven in 1994. Whether one agrees with the Governor or not on holding the line on all taxes this year, legislative leaders have to know he is not bluffing when it comes to vetoing yet another budget and tax bill in the current form.

    From my perspective, it would be rather unfortunate to continue the stalemate. A proposal was put forth by Rep. Cynthia Browning, D-Arlington, that would have frozen state tax rates and likely been approved by the Governor, yet was voted down last Friday. As we write this column, another compromise that doesn’t increase taxes will be presented by Rep. Scott Beck, R-St Johnsbury, this Tuesday. If that doesn’t pass, the standoff will continue.

    As previously mentioned, I am an advocate for reaching the necessary compromises during the regularly budgeted 18 week session. So, I am not submitting for regular pay for the special session. We should have had our work done within the time frame allocated in the budget.

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  • To raise or not to raise taxes…That is the question

    Following vetoes on the $15 minimum wage, paid family leave, increased liability on outdoor recreational operators and medical monitoring, Governor Scott vetoed the education funding and the state budget last Friday. While the initial bills may have been political statements by the legislature, it is the property tax and budget bills that prompted the special session.
     
    It all comes down to whether the legislature and Governor will agree to raise the average statewide property taxes this year or not.
     
    When the legislature first adjourned on May 12, it sent the Governor a tax bill that increases the statewide average property tax rate by 2.6 cents (about $65 on a $250,000 home) and the nonresidential by 5.5 cents. The Governor has been adamant that he would not sign any tax increases this year, hence the standoff.
     
    Prior to the official call for a special session, Scott sent a letter to legislative leadership, insisting the two sides “are very close to an agreement.” Offering a different assessment, Senate President Pro Tem Tim Ashe said “Of course, we could maintain last year’s property tax rates that we put in statute. It would just be an ill-advised decision. So you would pour in one-time money, govern on a credit card, and find ourselves back in the same situation next year. That’s what the governor is proposing, which is effectively deficit spending.”
     
    The special session was gaveled in and out on May 23 and will return on May 30. It is anyone’s guess as to whether an agreement to move forward will be reached this week.
     
    The Governor and his team suggest that the $34 million they propose to use to keep average property taxes level will be paid back next year as reforms start to take hold. Lawmakers are not convinced, especially as it relates to a goal of increasing pupil to staff ratios.
     
    “Our student numbers, as you might know, are steadily declining,” acting Education Secretary Heather Bouchey told lawmakers. “But we have not seen changes in our staffing levels at that same time. And this just doesn’t make sense, based on pure logic alone.”
     
    Signs of a potential compromise on tax rates surfaced last week when House Committee Chair, Rep. Janet Ancel, D-Calais, suggested using $14 million of this year’s surplus to keep average residential property taxes steady for this year, while allowing nonresidential to go up 5.5 cents.  Rebecca Kelley, a spokesperson for the governor, said that Scott won’t support a proposal that raises nonresidential property tax rates. Scott has been resolute in his no new taxes campaign pledge this biennium.
     
    Failing to make the finish line
    A House passed bill that would have allowed roadside saliva testing for drivers suspected of driving while on drugs, was voted down by the Senate judiciary Committee, 4-1, with Sen. Alice Nitka (D-Windsor) casting the lone vote in favor of it. Committee chair Sen. Dick Sears (D-Bennington) said there are uncertainties surrounding saliva testing, which is still in its infancy and needs more work. Given the negative vote, it is unlikely to be resurrected during the special session.

    Vetoed by Governor
    S.105 - The bill would have put significant limitations in liability waivers that the outdoor recreation industry commonly utilizes. The legislation was opposed by Special Olympics, the Ski industry, the Vermont City Marathon among others.
     
    S.40 – Increases Vermont’s minimum wage to $15 over 6 years. Legislative leaders never attempted to compromise with the Governor on this one, suggesting the issue was more about politics than policy.
     
    H.196 – A new paid family leave program that would have enabled employees to take paid time off for the birth or adoption of a child (12 weeks) and for caring of a family member (6 weeks). The plan was to be funded by a new payroll tax on all working Vermonters, a nonstarter for Scott. Employer groups also expressed concern that the program benefits were under funded, potentially leading to tax hikes in the future.
     
    S.197 - An act relating to liability for toxic substance exposures or releases. In his veto message, Scott said, “The level of liability and uncertainty this legislation creates for employers could prove catastrophic for Vermont's fragile economy and the bill establishes a standard that does not exist anyplace else in the country. Under the extremely broad definitions within S.197, any individual exposed to a chemical-who may have an indistinguishable change in risk compared to the general public-would be able to receive unlimited medical monitoring, without any proof that a medical condition is even likely to develop due to the exposure." 
     
    H.911 – Increases the statewide property tax rates for education. Now the subject of the special session.
     
    H.924 – State budget. While the legislation passed by overwhelming margins in both chambers, the budget includes allocation of the surplus revenue to the teachers’ retirement fund that the Governor prefers to see utilized to hold down property taxes.
     
    Economic Development
    Several bills aimed at improving the state’s economy were signed into law in recent weeks by the Governor.
     
    H.719 – The legislation allows for a more favorable reinsurance alternative for U.S. companies who conduct business offshore. The bill builds on the leading role Vermont plays in the Captive Insurance industry.
     
    H.919 - Workforce Development: proposes to provide a framework for a public engagement process and succeeding steps to modernize and strengthen the State workforce development system. To create programs to better prepare Vermont's future workers.
     
    Several initiatives that did not make it this year:
    * ThinkVermont – funding for the administration’s marketing campaign to help grow Vermont were cut from the budget by the legislature.
    * Act 250 – A proposal to remove some of the duplicity in the Act 250 process did not advance this year. With a report due back in the fall on keeping Act 250 relevant, streamlining the environmental review process will likely be on the docket next January.

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  • Harrison Announces Candidacy for New Legislative Term

    Jim Harrison of Chittenden announces his candidacy for a new term as state representative for the Rutland-Windsor–1 district (Bridgewater, Chittenden, Killington and Mendon).  Harrison was first appointed by Governor Scott in 2017 to complete the term of former Representative Job Tate, who was deployed by his US Navy Reserve unit.

    Harrison, an independent minded republican, believes strongly in fiscal responsibility and advancing bills that will improve the state’s economic future. He brings a pragmatic approach to issues and knows how to compromise where appropriate.

    Jim is the former president of the Vermont Retail & Grocers Association, a position that prepared him well for the challenges of working with a broad group of lawmakers and representing members of the legislative district.

    “I pledge to continue keeping district residents informed through bi-weekly email updates, meet and greet sessions and weekly newspaper columns. I take the responsibility of being the state representative for the district very seriously.” said Harrison.

    Governor Phil Scott, who first appointed Harrison to the legislature, added, “Jim knows the process and is a respected voice in Montpelier. We need him back working for the people of Vermont.”

    A member of the House Government Operations Committee, he has sponsored legislation to improve the state’s economy, improve the efficiency of the legislative process and state government, lower taxes on Social Security benefits, streamline the Act 250 process, consumer protection measures for small businesses and allowing pharmacists to disclose the cash price of prescription drugs, among others.

    Since stepping down from full time with the association in 2016, he now works seasonally at Green Mountain Golf Course in Killington.  Jim and his wife, Pat, a registered dietitian, have lived in Vermont for over 30 years and in North Chittenden since 2006. They have two adult children and two grandsons.

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