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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