This is the point in the legislative session when the hard work of committees comes to the House floor. This week we debated a number of important bills including the budget. After a detailed explanation, the budget passed 139-1, indicating approval of not just the Appropriation Committee’s proposal but the process. Appropriations held numerous public hearings, solicited advice and suggestions from legislators and other committees, and worked with the administration’s recommendations.

Representatives each have their budget disappointments that more wasn’t allocated for their areas of concern, which are many. But overall the Appropriations Committee has done a remarkable job of moving state priorities with limited current means and some grim demographic projections.

Many other bills were also approved, including the Capital Bill which consists of $125 million in bonding, focusing on “bricks and mortar”: upkeep of state buildings, grant programs, clean water and housing. A workforce development bill, a critical child care assistance bill, and the broadband expansion bill passed as well.

The biggest fireworks were reserved for H.439 “The Home Weatherization Assistance Program.” Legislators are in nearly unanimous agreement that home weatherization provides great return on investment in terms of health, job creation, fuel savings, and participation in work and school. Disagreement comes on how to raise the money.

The existing program is funded through a 2¢ per gallon tax on heating oil, propane, kerosene, and dyed diesel fuel, and a 0.75% levy on natural gas and coal. The bill proposed expanding the program by increasing those charges to 4¢ a gallon, and 1% and 1.5% respectively. That would raise $4.6 million.

Heated debate (no pun intended) followed on whether this is a regressive tax, though my amendment to shift the program cost to a progressive tax on the highest income bracket was soundly defeated. There was debate on whether other fuels are similarly taxed – and they are, one example being the charge on our electric bills which pays for efficiency programs. And we debated whether this is a “carbon tax” in disguise.

On that question I side with those who say it is not. A carbon tax is generally understood to 1) be set much higher in an effort to influence behavior, which this does not do, and 2) to vary with the carbon content of the different fuels, which this also does not do. This is like the existing gasoline tax which taxes a specific produce (gasoline) to raise money for a specific purpose (highways).

In the end the bill passed with an amendment to exempt farming and logging operations, which I supported. All these bills and others now move to the Senate for consideration.

Hundreds of high school students converged on the Statehouse last Friday to stage a rally and a press conference, and to testify in various committees. They came to demand action on climate change. Those who spoke in the Energy Committee were articulate, informed, and frustrated. And they weren’t wrong.

The Legislative Calendar for Tuesday, March 19th is packed with 25 different bills for action or taking their place in the lineup. Some are minor adjustments to or streamlining of existing law. Some break new ground. None of them relate to climate change.

That doesn’t mean that climate change isn’t getting serious attention, just not the attention that it deserves. However, in legislative speak “attention” usually means money; how best to raise it and how best to spend it.

Two general ideas are getting a lot of traction. One is a proposal to increase funds for weatherizing Vermont’s old drafty housing stock, which has multiple benefits. In addition to reducing fuel consumption and saving money, warmer homes mean healthier people in them – less time lost from work and school, lower medical costs, and less family stress.

The other idea is a proposal to incentivize the transition to electric vehicles, a change that most major manufacturers will be making in the near future, worldwide. This also requires simultaneous development of a statewide system of charging stations, both publicly and privately owned.

Both plans have plenty of wrinkles to iron out. What are the specific goals? What is the most effective program? How much do we spend? For how long? What is the revenue source? Who is eligible to benefit? What are the consequences of acting? (Fewer gasoline engines means less gas tax money collected means less revenue for the highways.) What are the consequences of not acting?

I look forward to theses proposals taking their place on the House floor soon.

High speed internet is no longer a luxury. In addition to being indispensable for virtually all businesses, it is the lifeline for many of Vermont’s cottage industries or work-from-home artists, craftspeople, and start-ups. Unfortunately, for too many people it is a frayed and unreliable lifeline.

How did we get here?

In Vermont, electric and telephone service are provided by regulated monopolies. The agreement is that providers of both services will operate under tight state regulation in exchange for a designated territory. A look at the map of electric utility territories clearly illustrates the history of private electric companies expanding only into territories with enough population density to earn them money. It was left to the electric co-ops to provide this now essential service into the boondocks, which was only feasible with serious federal commitment in the form of the Rural Electrification Program. But it worked.

The growth of broadband service is following an identical track. But broadband is federally regulated – and the federal government is clear that they still prefer a lightly regulated “free enterprise” approach. Private companies like Consolidated, xFinity, and VTel will build out service where they can make money, or where they receive subsidies. Any area providing fewer than about 15-20 customers per mile just don’t interest them. Unless there are subsidies. Most telephone companies are offering service to their existing customers but that is often a copper wire-based DSL internet in rural areas which has many limitations.

So what can we do?

The House Energy and Technology has approved a bill which takes a three-pronged approach.

1. Currently, incentives for broadband providers to expand unto unserved or underserved areas come from the Connectivity Initiative. That is funded by the Universal Service charge on your phone bill – currently a 2% tax. But that tax first funds the E-911 service and some other programs as well. Then whatever is left over gets split and one of those portions is the available money for broadband expansion. In 2018 it was about $200,000. In 2019 it is forecast to be $0.

     The Committee’s proposal is to add another 0.5% to that tax; that would generate about $1.5 million annually. On my home’s phone bill it would be an extra 4.5¢ per month.

2) The bill also requires a feasibility study of electric utilities providing broadband service, as is already happening in some states. Certain synergies exist: electric utilities already service almost every building in the state. Utilities require more intensive data handling to become efficient real-time energy managers; they also require a comprehensive, high speed communications network

There are obvious challenges as well. Utilities do a good job operating within the regulated monopoly sphere. But broadband is lightly regulated and highly competitive, so we are asking utilities to operate two very different business models together.

3) Recognizing that to date, neither private enterprise or the state has been able to resolve these issues the bill also creates a “toolbox” to assist communications union districts and other entities to take on broadband network expansion and operation. Learning from the experience of EC Fiber we are offering three tools: a new technical expert position created to advise these entities; grants and low interest loans for planning and construction; and a streamlined process for “makeready” – getting wires onto the poles.

These three options are not the only ones, but they represent a variety of approaches. Different areas require different solutions, and hopefully these options will fit different needs in different places.

This week the House approved a compromise bill affecting deadlines for school district mergers under Act 46. The compromise allows a one year extension for some towns who have been working diligently but unsuccessfully to merge. The remaining towns that have not yet complied need to meet the July 1, 2019 deadline. That bill now goes to the Senate.

The bill generating the most passion is H.57, which would put into statute the current status quo for abortions. It is important to note that the bill, which has not yet come to the House floor, neither enhances nor diminishes access to abortion procedures in Vermont. Rather it establishes current practice as law.

This is an inflammatory issue, as evidenced at the open hearing last week in Montpelier at which 60 members of the public spoke passionately and eloquently – 30 opposed to the bill and 30 in favor. The debate is not just political. It is personal, ethical, spiritual, and social and it hinges on our beliefs in fundamental rights.

Many people on both sides of the debate have contacted me with their concerns, and I appreciate the input and the ongoing discussions. This bill is still a work in progress, and has already been modified.

My position is that while I do not promote abortion and in a perfect world I hope there would be no need for it, I do support a woman’s right to make that choice. Women have always sought out ways to end unwanted pregnancies. Roe v. Wade was not the start of abortions; it marked the end of women dying from them. The best way to prevent abortions is through education and readily available birth control.

This week the Vermont House passed H.57 codifying the right of “every individual who becomes pregnant to choose to carry a pregnancy to term, to give birth to a child, or to have an abortion.” Vermont had no state laws regarding abortion, so this bill creates a basic framework. The final vote in the House was 107-37. I voted in favor and the bill now goes to the Senate.

The Senate approved and is sending to the House bills raising the minimum wage to $15 an hour by 2024, and a bill exempting cars over ten years old from inspection emissions standards. The goal is to reduce the financial pressure on lower income Vermonters, many of whom drive older vehicles and who struggle to afford repairs. But that goal conflicts with the state’s environmental goals and EPA air quality standards. This makes for an interesting debate.

The Energy and Technology Committee is putting the finishing touches on an omnibus broadband bill with three approaches to expanding broadband access around the state. The first is to increase money available to existing underfunded programs by increasing the Universal Service Fee (telephone tax) by 0.5%. On my telephone bill that would be an extra 4.5¢.

The second approach is a study to allow (but not require) electric utilities to become broadband carriers. This has been done by some co-ops in other states but involves a fair amount of risk and very different business models; in Vermont electric utilities are tightly regulated monopolies while telecommunications are lightly regulated, and highly competitive.

The third approach is to assemble technical, regulatory, and financial assistance for Communications Union Districts and other entities which are expanding broadband into underserved areas.

The Legislature is operating under tight timeframes. Of over 800 bill drafting requests, only about 400 have been finished and sent to committees for consideration. Of these a very small handful have been passed by the House. Our deadline for bills to be passed out of committee (and some bills need to go through several committees) is March 15th.

The Legislature is not in session during Town Meeting week, which leaves us eight legislative days to take testimony, amend, and approve any bills we hope to move this year. After March 15th we will shift focus to shepherding those bills through House votes and then taking up whatever bills the Senate has sent over to us. We will also be taking a good look at which bills we want to take up in the second year of the biennium.

At the close of Town Meeting Week the Legislature is gearing up for some hectic activity. Friday, March 15th is crossover – the day by which bills need to be voted out of committee so they can “cross over” to the other chamber. The budget and tax bills get an extra week in recognition of their complexity.

What this approaching deadline means is that most of the record number of bills introduced this year will not see the light of day; including at least eight that I am a lead sponsor on. Four are energy bills, one is judicial, two involve government operations, and one is about tax incentives. But they aren’t entirely dead in that they could still show up as amendments to other bills or be taken up next year.

Some big bills, like the Act 250 overhaul, have proven to be just too big a lift for the first few months of the session. Remember we have 40 new House members, and a lot of changes in in committee assignments, so people need to get up to speed. On my committee six out of nine members are new to the committee, though several bring extensive prior knowledge in certain areas.

Bills that I expect we will see in some form this spring are minimum wage, paid family leave, broadband expansion (which I see primarily as economic development), and regulated cannabis sales. The legislature is also continuing to push forward on mental health treatment, addiction treatment and the many, many impacts on family, work, schools, communities: and trying to match workers to the 10,000 job vacancies in Vermont that exist right now. Simple solutions are complicated by low wages, difficult access to child care, and unaffordable housing.

As always please write or call with questions or comments. 282-5535

There is a lot of not-always-accurate information swirling around regarding savings from teacher healthcare plans. First of all, these projected savings are not dependent on the Governor’s proposal in any way.

The switch to cheaper health insurance plans for teachers is happening now and is unrelated to
the governor’s actions. The plans are cheaper because the benefits are less generous than
before. The projected savings, though the actual savings are unknown, are about $74 million.
Because the plans have higher deductibles and co-pays about $48 million is reserved to “make
whole” the teachers. The remainder is the $26 million that the fuss is all about.
The Governor’s plan to “reduce property taxes” actually uses only $8 million for that purpose
and the other $18 million gets spent on other commitments, NOT returned to the taxpayers. The
Beck amendment (the republican proposal) did not specify how the “savings” would be used
other than going into the Education Fund.

What the Beck amendment DID do was try to link the savings to changing teacher healthcare
contract negotiations from the local to the state level and claim state savings. While I am not an
expert on education finance, I do know that introducing a bill at the 11th hour that makes major
changes to decades of collective bargaining with no review at all by the appropriate committees
is a very bad idea.

The House did not pass this amendment but instead approved a democratic proposal which
makes no change in bargaining but directs 100% of the savings directly back to the local school
districts in reduced property taxes. The money would be returned only after school budgets had
been written and approved and can be applied only toward direct property tax reduction.
So we have a bizarre situation where the Governor’s proposal, which dedicates 30% of the
savings to property taxes, is seen as tax relief, and the Democratic proposal, which returns
100% to the taxpayers, is not. Very strange.

One other concern is the accuracy of the figure of $26 million. Even if the governor’s numbers
are correct the first savings would be accumulated over 6 months rather than a full year, so it
would be $13 million at the start. But the Joint Fiscal Office (the legislature’s non-partisan
financial analysis office) has not given confirmation of that number and because of the rapidly
rising costs of ALL health insurance policies that actually cover anything, I have my doubts
about the actual savings amounts.

“Savings” are achieved by teachers having higher deductibles and co-pays. After accounting for
that, further savings are found by utilizing fewer healthcare services. That is it’s own debate. But
the plan approved by the House last week returns ALL the savings, whatever they may be, to
the taxpayers. The Governor’s plan does not.

I have begun this Legislative Update several times hoping to have final news to report, but the negotiations in Montpelier are ongoing. The crux of the dispute is how to allocate $34 million in one-time money. Here is my best effort to distill it:

The amount of money needed for education funding is not determined by the legislature; rather
each school district passes their own budgets which are then added together; that number
equals Education Funding. Simple math. The legislature sets the property tax rates needed to
raise that money, supplemented by other dedicated sources. So any “funding gap” is not due to
Montpelier overspending but rather under-collecting revenues.

Besides property taxes there are a number of revenue streams for education, including
(traditionally) a large transfer from the General Fund to the Education Fund. This year the
legislature passed a bill to simplify that complex process, which instead dedicated 100% of
sales tax revenue and 25% of Rooms and Meals taxes to the Education Fund. It also created a
small income tax surcharge on higher incomes, and reduced property taxes across the board.
The Governor vetoed that as a “new tax” even though the amount of money raised remained the
same, just from different sources.

The legislature passed a very good budget package this year which restored some of the
governor’s proposed cuts to services for the most vulnerable Vermonters, provides state college
tuition to national guard members, boosts addiction outreach and treatment, eliminates most
taxes on social security benefits, and increases school security. The budget passed in both
chambers with a combined vote of 146-14. The governor vetoed the $5.8 billion budget and has
warned of a government shutdown unless we reallocate the aforementioned $34 million.
The legislature allocated those dollars toward the teacher’s pension fund (chronically
underfunded) which would save over $100 million in additional interest by 2038. This is
responsible financial planning. The governor wants to prevent a property tax increase,
essentially borrowing that one-time money to bridge the funding gap. This is to keep a popular
campaign promise.

To avoid the possibility of a government shutdown and prevent disruption of services, ongoing
road projects, and our credit rating, the House has approved a new budget with that $34 million
taken out and placed into a separate fund. We can then fight about that small amount without
risking a shutdown. The governor has indicated that he will veto this budget as well, because
removing that money also removes his negotiating leverage, according to his spokesperson.
The essential problem with ongoing negotiations is that the governor can’t compromise because
he has locked himself into an “all or nothing” position. So all movement toward resolution has
been on the part of the legislature. Part of the reason we have this gap is that last year, after the
budget veto, the gap was filled with one-time money (an action I opposed). To insist on fixing the
problem with the same wrong solution doesn’t make sense.

The governor has proposed various education reforms which could save money in the future,
but it would be irresponsible to spend speculative money now.

This view is reinforced in this commentary from John McClaughry of the Ethan Allen Institute:

McClaughry: The school property tax deadlock

What are your thoughts? Contact me.

This is a fairly lengthy post to offer insight into the budget battle that was waged in Montpelier for the last month and more. On Monday afternoon the House approved a budget for the third time and the Senate approved it right after; the Governor declared his intention to allow it take effect without his signature.

With that, a government shutdown was averted, significant compromises were made on all
sides, and no one is very happy. According to some, that is the proper function of government,
though I expect better. So what were those two budget vetoes, and the fighting, all about?
It is overly simplistic to say that the legislature wanted to raise taxes and the governor wanted to
hold them steady. Taxes are simply a tool to raise money to pay for services. So tax debates are
really debates about what services to provide and how to pay for them, not about whether taxes
are good or bad.

In the case of the education budget, neither the legislature nor the governor determine how
much to spend. That is determined in the decentralized process of voters confirming local
school budgets. But then the legislature needs to figure out how to raise that money.
There are several sources: sales tax revenues, 25% of the rooms and meals tax, and lottery
profits; the main source is the complicated formula of property taxes. So the legislature sets tax
rates to provide for that approved level of spending. 2018 school boards held their budget
increases to about 1.5%, well below the governor’s suggested target of 2.5%.
The structural problem underlying this is that 2017’s grand budget bargain, after 2017’s veto,
used some “one-time” money, revenue that we cannot count on getting again to hold tax rates
steady. So we started negotiations already in the hole, needing to raise rates to make up for the
use of one-time money last year.

That put the governor in a very awkward situation; he ran on a “no new taxes” pledge, but he
also knows that using one-time money to pay for ongoing expenses is very bad fiscal policy. In
fact, he opposed that too. The legislature chose responsible fiscal policy, the governor chose his
campaign tax promise.

So the fight began over $35 million from a tobacco lawsuit settlement, with the governor
insisting it be used to buy down taxes (which partially created this problem last year) and the
legislature marking it to pay off long-term debt (and save $100 million in long-term interest). One
is popular politics and one is good planning.

As the impasse continued, more “one-time” money was received and with it, more and more
suggestions on how best to spend it. The Legislature and the Administration are both looking at
long term approaches to restrain education spending: monitoring how Act 46 plays out, revising
special education spending, school consolidation, staffing ratios, and employee health care. But
in the meantime we need to fund our schools at the level those communities’ voters approved.

In the end, after much bluster and two vetoes, both sides compromised. Some of the money will
be used to buy down tax rates. Residential property tax rates will be the same as this year while
non-residential rates will rise less than they would have otherwise (“non-residential” confusingly
include rentals and 2nd homes as well as commercial property). And the cost is that we will start
next year with another revenue gap. Some of the one-time money will be used to pay off long
term debt, a responsible but decidedly un-sexy policy.

As campaigns gear up for for the November election, expect lots of jockeying for advantage
over who “won” or “lost”, but I say that we all won. Other than the disputed $35 million dollars,
the final budget is essentially the same as the first one, approved by Democrats, Republicans,
Progressives, and Independents by a vote of 146-14 (House and Senate combined).
Please contact me with questions or comments.

As the second week of the special legislative session crawls to a close, I am reminded of the old saying, “Hurry up and wait.” But how did we get here and where are we going?

Back in May the Legislature approved the 2019 budget by tri-partisan votes of 29-0 in the
Senate and 117-14 in the House. The Tax Bill was also approved, though by smaller
margins. However the Governor broke out his veto pen and nixed them and a number of
other bills. Since then the rhetoric has only continued to escalate with the governor’s
spokesperson Rebecca Kelly actually saying, “… the majority leaders will use every trick
in the book to impose a property tax hike on Vermonters.” Well that’s just silly. So what
is really going on behind the rhetoric?

Governor Scott really only had one problem with the budget that the Legislature so
overwhelmingly approved – it used $34 million in one time tobacco settlement money
(money that is not consistent like sales tax revenue) to make a payment an underfunded
pension plans. That is a responsible action, one that will, over time, save us $100 million
on addition interest payments. So… a good plan.

However the governor was elected on a “no new taxes” platform, and he knows the
history of those who break that promise. So he has backed himself into a no-compromise
position. School budgets approved across the state this year increased spending by about
2%, actually less than anticipated. But that 2% increase means that property taxes go up
by about $34 million, which is unacceptable to the governor.

Here is the thing: the legislature doesn’t determine education spending. The voters do that
when they approve their school budgets. The legislature adds up the total, looks at the
Grand List and sets the tax rate to raise that amount of money. We can artificially affect
the tax rate by adding more money to the Education Fund, which we did last year (like
this one time tobacco money) as part of the final bargain, or by moving certain expenses
in or out of the Education Fund (like pension payments, education in prisons, and
Flexible Pathways). But the voters determine the amount of money needed for Pre K-12
education.

So the real argument is over whether we follow the legislature’s fiscally prudent plan, or
follow the governor’s politically popular plan. The debate is muddied with talk of default
tax levels and with alternate proposals. The governor’s proposals are not compromises,
because he cannot shift his position at all, but they are policy changes with varying
degrees of merit. The legislatures proposals are compromises, but as such they seek to
meet in the middle, which is not far enough for the governor. He is talking about a
government shutdown if he doesn’t get his way.

A shutdown is really the nuclear option, so to avoid it the legislature just approved a
different kind of compromise: we voted on a budget bill with the $34 million taken out
and set aside to be settled in a separate bill. This way we can avert a shutdown and the
99.9% that we agree on can be approved; services will continue to be delivered, road
projects will keep moving forward, Vermonters will receive medical care, and our bond
rating will not suffer.
Governor Scott has said he will veto this bill because he is afraid if losing leverage to
negotiate the final $34 million.