This 2019 State Budget focuses on sustainability, supporting and maintaining a healthy economy, protecting vulnerable Vermonters and investing in our communities. The House Appropriations Committee set priorities early in the 2018 Legislative session that concentrated on responsible budgeting practices:
- Making critical investments to support Vermonters and the Vermont economy.
- Keeping the State Budget balanced – growth should be commensurate with revenue forecasts (the committee’s proposal came in under, growing at 0.5% of the previous year).
- Using one-time revenues for one-time expenses – this is critical for sustainability.
- Building State reserves in preparation for the next economic downturn.
- Paying down debt obligations – due to many years of underfunding of the State’s contribution to the Teachers’ Retirement Fund.
The end of the special session, called by the Governor, may have appeared chaotic to Vermonters. The proposed budget passed the House and Senate with tremendous support but was ultimately vetoed by the Governor – twice. The budget, being the only bill that must pass prior to the end of session, was used as a vehicle by the Governor to address property tax rates. The Governor proposed the use of one-time money, that became available to the state due to a tobacco settlement and upgrades in revenue due to federal tax changes, to artificially buy down property tax rates. While addressing property taxes is an important priority for all of us, using one-time money for an on-going expense only creates a bigger problem the next year and years to come. To find compromise with the Governor, and to mitigate excessive use of one-time money, the average residential property tax rates will be kept flat at last year’s rates and the non-residential rate will increase by 4.5 cents.
Included in the budget are protections for vulnerable Vermonters. The bill restores the cuts the Governor proposed to those with disabilities and who receive developmental services. The budget provides an important 2% increase to community service providers like Home Health Agencies, Area Agency on Aging – case managers, Adult Day Centers and increases funding for Meals on Wheels. It directs federal dollars to infant and toddler care. Strategic investments are made in the state’s economy, the justice system, and in families and individuals crippled by the opioid crisis and suffering from mental illness. Additionally, the budget provides help through insurance premium assistance for struggling dairy farmers to help off-set low milk prices. The budget also includes funding for broadened college tuition benefits for Vermonters serving in the Vermont National Guard.
Provisions in the budget focus on Vermont’s fiscal health and move the state into a stronger financial position. The rate of budget growth was held to one-half of one percent. Critical investments are made in state pension funds which will save Vermont taxpayers over $100 million in interest payments. These funds were sorely underfunded in the 1990’s and early 2000’s. All statutory reserves are filled as well as investments in other key reserves. These initiatives signal strong fiscal management which protects our positive bond ratings.
Every year, the Legislature must pass a bill making adjustments to the state property tax rates which provides financing for school budgets as voted on at town meetings across the state. In addition, this year the legislature quickly addressed the impact of the federal tax cuts which would have resulted in an additional $30 million in tax revenue coming from Vermont taxpayers.
The legislature made changes to simplify Vermont’s tax code and make the code fairer for low and middle-income taxpayers, working families and seniors. Highlights include:
- Expands the exemption of taxable social security benefits for single filers with less than $45,000 in adjusted gross income and married filers with less than $60,000 in adjusted gross income.
- Eliminates itemized deductions and creates a new Vermont standard deduction equal to $6,000 for single filers, $12,000 for married couples and $9,000 for heads of household
- Creates a new Vermont personal exemption equal to $4,150 per exemption, an exemption which benefits families
- Collapses top two income tax brackets and lowers all personal income tax rates by 0.2%
- Expands the Vermont Earned Income Tax Credit from 32% of the Federal EITC to 36%
- Creates a 5% tax credit on the value of charitable contributions up to $20,000
- Creates a Vermont Tax Structures Commission and a Staff-to-Student Ratios Task Force
AirBNB is one of several companies that assist over 4,000 Vermonters with listing short-term rental (STR) properties. A new law focused on STRs aims to improve compliance with the owners’ existing tax obligations, while providing information on health and safety and insurance coverage.
STR owners are required to post their Rooms and Meals tax account number on any advertisement for the rental. This change will improve the tax department’s ability to identify and follow-up with those owners who are non-compliant. Owners will be notified of state health and safety requirements and advisable insurance coverage. Postings in each unit will provide renters experiencing health or safety problems with contact information for the owners and state agencies handling enforcement. This legislation now treats all short-term rentals equally and put them on a level playing field with traditional Bed and Breakfast/Inns.
Each year a budget is developed to support Vermont’s statewide transportation system including improvements to roads, bridges, rail, aviation and public transit. The $612 million budget provides the State with 21st century infrastructure improvements that are vital to growing Vermont’s economy and creating new jobs. Since 2008, Vermont has moved from 45th in the nation to 13th for numbers of structurally deficient bridges. Pavement has also improved as road surfaces rated very poor have declined since 2008 from 36% to 11% in 2017. Funding allows for continued repair or replacement of more than 100 bridges and culverts along with over 200 miles of new pavement. Rail improvements total $29.6 million. Large roadway reconstruction projects totaling $52 million are proposed statewide including the project underway in Cabot/Danville on Route 2.
Vermont seeks federal approval to import drugs from Canada. S. 175 is an act relating to the wholesale importation of prescription drugs into Vermont. This bill shall have the Agency of Human Services, in consultation with interested stakeholders and appropriate federal officials, design a wholesale prescription drug importation program, including requirements of safety and cost. The program would designate a state agency to become, or contract with, a licensed drug wholesaler to import prescription drugs at a significant cost savings to Vermonters. The state shall submit the proposed design for the program to the Legislature by Jan. 1, 2019. The bill would direct the state to seek the appropriate federal waivers needed to implement the program. The state of Utah is also exploring importing prescription drugs from Canada.
H.624 increases protection for Vermonter’s personal data contained in the statewide voter checklist. When the President’s Advisory Commission on Election Integrity asked for voters’ personal information, the outpouring from Vermonters contacting the Secretary of State’s Office for individual data to be protected was by far the greatest for any issue seen since Secretary Condos took office. While our Secretary of State chose not to turn over voter checklist data to the commission, H.624 now expressly prohibits public agencies from knowingly disclosing the statewide voter checklist to any foreign government or federal agency or commission for the purpose of:
- Registering voters based on their information contained in the checklist.
- Publicly disclosing the information.
- Comparing that information to personally identifying information contained in other federal or state databases.
H.897 – An act relating to enhancing the effectiveness, availability, and equity of services provided to students who require additional support was the signature education bill passed by the legislature this session. The bill addresses the delivery of special education services to Vermont children and will allow schools to use their allocated state aid for special education dollars in more flexible ways with the goal of educating students who require additional support more effectively and efficiently. Schools will be released from the intensive record-keeping that goes along with the current special education reimbursement system, allowing professionals to use this precious time with students. Ultimately, after five years, all schools in Vermont will be allocated a block grant of special education money based on their total population of students. The bill also emphasizes Vermont’s obligation to students on Individual Education Programs.
S.3 – Sexual Exploitation of Students addresses separation agreements between school employees and employers that could put students at risk. This issue was brought forward following reports that some of New England’s most prestigious boarding schools were passing school employees along from one school to another, even though the schools knew that the employee had engaged in behaviors that could endanger children. The Agency of Education identified robust licensing requirements related to abuse and S.3 strengthens the law in the following ways:
- Prohibits a sending public or independent school, eager to remove an employee from their position, from agreeing not to share factual information about behavior related to endangering children. In fact, it requires that this information be shared.
- Provides immunity to school personnel for sharing this information if they acted in good faith and the information is factually correct. If this information is knowingly false, immunity does not hold.
- Creates a committee for protecting students from sexual exploitation.
- Requires the Agency of Education to work with the Vermont School Boards Association and the Council of Independent Schools to come up with a model policy on electronic communications designed to prevent exploitation of children.
The State Treasurer’s Office is responsible for reuniting Vermonters with lost financial property. Currently, $88.5 million in unclaimed property is waiting to be returned. This fiscal year, 17,665 unclaimed properties totaling $6.7 million were returned to their rightful owners. Financial property becomes “unclaimed” after a business or non-profit entity loses contact with a customer for a period of years. There is no charge to claim funds. Search at MissingMoney.Vermont.gov or call 1-800-642-3191.