SmartTranscript of Senate Finance - 2025-05-12 - 2:20PM

[Chair Ann Cummings]: Specific decision. And it's Yeah. Benefit use and But always be Okay. Committee. Yeah. The interesting papers. Just wanna make sure. Julia. Yes. We can always do this. Okay. This has been too easy. The tax department just told me they have two technical changes that are highly noncontroversial, so I was gonna find To get them in whenever we have ten [Member Scott Beck]: minutes. [Chair Ann Cummings]: Right. So we will see where we go. But this is property tax plus calculations. Yes. And this is calculations of the future state? [Witness Julia Richter]: Sort of. So so for the record, Julie Reichert Joint Fiscal Office. What we're looking at here for the next hour or so is I was asked to do some modeling about property calculate property impact calculations if there were a uniform rate. So, essentially, before going into the two printouts, I worked with tax to come up with some consensus underlying assumptions for calculating these rates. And, essentially, what we did here was to calculate if there had been a uniform rate in fiscal year twenty twenty five, what was the uniform rate then? And then compare that in terms of a difference because, this committee is and the bill is contemplating some sort of uniform rates. One piece one big piece of this or a couple big pieces of the assumptions before I go into printouts that I wanna name are the for estimates only, they don't reflect future years. They're based on the senate education construct of the foundation formula. Sure. No. Sorry. Let me take a step back. They're not based on the senate ed, type of issue of the foundation formula. Essentially, what we did is we used our f y twenty five yield model. That was that was all of the information and data that we had when the general assembly set the f y twenty five rates. Okay. So we said this is what the general assembly was looking at in terms [Chair Ann Cummings]: of revenues, expenses, what was the uniform rates Okay. So for discussion purposes, because we can't do this with the future until we set the districts. We know what the tax base is. We, you know, know what the weights and what the base and what the transportation money is, all of it's going to be. So what [Witness Julia Richter]: you did is you say, this year, given this year's school spending, this year's everything, if we gone to a uniform rate, this is what the uniform rate would look like. Precisely. And we did the the education spending that is underlined here is the same education spending estimate that the general assembly had on May tenth when you all closed out and and set the yields and rates. So it was about two million dollars higher than what you're it ended up coming in. But this allows us to have an apples to apples comparison because all of that data was what [Chair Ann Cummings]: was used instead of Yeah. So there was no seventy seven million of buyout. [Witness Julia Richter]: The same the same buyouts that were used in f y one five are being used here in the current Okay. All of this [Chair Ann Cummings]: is due. Oops. That is seventy seven million. So next year, unless we find another hundred million, if we did it next year, we couldn't This is [Witness Julia Richter]: this is looking at FY twenty five, not FY twenty five. Year. Oh, not next year. The seventy seven thousand is next year. [Chair Ann Cummings]: So okay. So next year, if everything remains the same, this is what it will look like. Mhmm. This is what your next tax bill that you're going to get mailed in July would look like. This is [Witness Julia Richter]: if there had been uniform rates in fiscal year twenty five, what would the uniform rates have been? The final caveat that I will add on this note is that you'll recall the transition of act one twenty seven included a cent discount. Right? And for districts that lost tax capacity, they got a corresponding number of cents off of their tax rate. So that we can have an apples to apples comparison. I apply the cent discount in all of the districts, the same discount that they've received in current law. So we This should have an apples in [Chair Ann Cummings]: the present waiting system. Yep. Yeah. And then you gotta step down for three years or five years. [Witness Julia Richter]: I'm looking at Jake five years, I believe. [Vice Chair Thomas Chittenden]: Not twenty seven. [Witness Julia Richter]: Who knows? The act of four twenty seven cent cent discount was a step down to forty two years. [Chair Ann Cummings]: How many years did we phase the the new wage? In after [Member Ruth Hardy]: act forty six, it was five years, I believe. [Chair Ann Cummings]: That's what I thought. We stepped it in the end. Alright. Now draw the ten percent cap. That's So so [Witness Julia Richter]: there's two there's two printouts on the commit page under my name. The relatively similar. This first printout that I'm gonna share is modeling of a uniform pass rate compared to f y twenty five. So it's the one that has columns a through I. I'll go ahead and share my screen. The really tiny print? The tiny print. Yes. Because I have more columns to fit onto the same size paper. [Chair Ann Cummings]: Sorry. [Witness Julia Richter]: So so that's what we're looking at here. So, essentially, what we're doing here is just walking through the spreadsheet. We've got county in column a, districts in column b. You'll note that perhaps because we have districts that span multiple counties, the county they're assigned to is just consistent with however AOE has coded the data. Column c, this refer represents if there were a uniform rate in fiscal year twenty five for homestead and nonhomestead. So completely doing away with homestead and nonhomestead classification and instead setting one property tax rate. These are all equalized rates, one equalized property tax rate across the state for all taxable property, which is estimated to be a dollar three seventy three. You see, for instance, that there are some districts that are not consistent with a dollar three seventy three. For instance, Addison Central, and the reason is what we just spoke about, the discounts have been applied. So there's apples to apples for the home separate. [Chair Ann Cummings]: Okay. [Witness Julia Richter]: Columns d, e, and f are representing the homestead rate comparison. So column d is representing the district's equalized FY twenty five homestead rate. And then columns e and f are your comparison columns. So e is showing you that relative percent dis difference between the, uniform rate of a dollar three seventy three and the current law equalized rate. And you also see in callback the dollar difference. So just two different ways of capturing the difference. I try to keep the the formatting consistent with some of the others charts that we're looking at. So blue cells are representing a decrease in their average in their tax rate while white are representing an increase. Columns g, h, and I, these are not homestead. This is perhaps a little redundant, but I thought it would be helpful to show here. What you're seeing is you're bringing down the not homestead rate when going to a uniform rate compared to the current law non homestead rate. So the the current law non homestead rate in FY twenty five was a dollar three ninety one when comparing that against a dollar three seventy three. I just want to see a mix, please. So this is another way of looking at how different district districts would be impacted under under different scenarios. The piece that's worth noting is you'll recall that the homestead rate is locally adjusted under current law based on a district's per people spending. Right? So what you're seeing here is districts that are higher per people spending, technically spending for long term weighted ADM are going to be seeing a relative decrease, whereas districts with lower per people spending are going to be seeing a relative increase because you're bringing everyone to one uniform rate. [Member Martine Larocque Gulick]: Julia, on g looking over [Member Randy Brock]: at Beyond Homestead, g, h, and I. [Chair Ann Cummings]: Mhmm. [Vice Chair Thomas Chittenden]: Why wouldn't those all be down two cents? What's that? There's some that aren't. And under that. Why is [Witness Julia Richter]: that? Because I apply the set discount. We're looking at one uniform rate [Member Scott Beck]: Yeah. [Witness Julia Richter]: For homestead and not homestead. So for the districts, the entire uniform rate had the said discount applied against it. So you're looking at here in Addison Central, for instance, that's the top row. [Vice Chair Thomas Chittenden]: Okay. [Witness Julia Richter]: The uniform rate is a dollar three seventy three minus the cents that they are awarded for the Act one twenty seven transition. That dollar two forty three would be a reply for all properties, including, like, for non homestead properties. [Member Randy Brock]: Oh, okay. [Witness Julia Richter]: That's a modeling decision. That was a modeling decision to get to apples to apples. So far, there hasn't been discussion of how a sense would be contemplated. [Member Martine Larocque Gulick]: But in current law, [Member Randy Brock]: it would be [Witness Julia Richter]: In current log, it's only for the homestead rate. [Member Scott Beck]: Okay. [Witness Julia Richter]: But the choice the modeling choice is Yep. Do you completely disregard the send the send discounts so that your homestead are not apples to apples, or do you include the send discount for the uniform rate to get the apples to apples homestead, but then you're seeing a corresponding bigger decrease in the districts that would get the depreciation? [Vice Chair Thomas Chittenden]: Okay. I think I just wanna make sure I understood it. This [Chair Ann Cummings]: is not necessarily the future state. This is what a uniform statewide tax rate would look like in a model that has held everything as equal to present day reality as it is possible to do. Mhmm. There are two tweaks, but we decided last week that when the house version choked the the weights, the cost based weights, they came out with a higher number of spending than we are presently spending. And I think the understanding was that's because some schools were not using their additional taxing capacity to add service to certain students. They were using it to hold down their tax rate. And so our remember, we had the discussion that once you assume that all these services will be delivered to every student that gets them, that for those schools that haven't been doing it or been holding their rates down, probably because most of them are poor communities, then they would see a tax increase when you went to a statewide base. We we have a transition in the senate bill that would step up or step down in equal amounts, so they should hopefully kind of walk. The school spending so that no school these are not stepped because we haven't done a transition of step up, step down, or putting extra money in or anything. This is just if we do nothing. Yeah. This is what it would look like. Yeah. [Witness Julia Richter]: This is really just looking at a what a uniform rate would have looked like in f y twenty five. I did see on your agenda you've got transition mechanism on Tuesday, I believe. But to your point, madam chair, that's correct. The senate version has a a foundation formula transition mechanism. There's no tax transition mechanism, which would be a policy decision. And first, before doing any sort of analysis or think through that, one of the big questions is, well, what what tax would the transition be to? Right? So so this is looking at if there was a rate uniform across homestead and non homestead property. And then the other printout on the committee page under my name is similar, or I would say all of the same underlying assumptions. The only difference in this modeling is that is saying, what if the homestead rate were to be replaced with a uniform rate, but the nonhomestead rate in FY twenty five were to be maintained at a dollar three ninety one. So you're maintaining that through property classes. You've got nonhomestead where you're maintaining the FY twenty five nonhomestead rate and saying, what would the uniform rate be if we were trying to make up the same amount from from homestead? So what we're seeing here is that because the nonhomestead rate is higher than the homestead rate on average in a current law, the nonhomestead rates, would continue to be making up a larger piece of that pie if you were to maintain the f y twenty five non homestead rate. [Chair Ann Cummings]: Yeah. The [Witness Julia Richter]: so what we're looking at here is column c. This is reflecting if you were only to replace the homestead property tax instead of using your locally adjusted and spending per pupil homestead rate and move to a uniform homestead rate, it would be about, or modeled to be a dollar three fifty two. So you see that that's coming down because homestead is not making up as large of a share in this. D, column d, there's your current law. Wage twenty five rate. E and s, these are those changes, the relative percentage difference and the dollar difference. And, again, what you're seeing here is that districts who have, compared to the rest of the state, districts that have higher per rated people spending under current law have higher tax rates, dual wave to wave uniform is gonna be bringing that tax rate down. Whereas districts that under current law have lower per weighted people spending are going to have their tax rates brought up to wave uniform rate. [Vice Chair Thomas Chittenden]: And if I could build on that, I was I'm interpreting this, overlaying it with the other table from Ezra on which districts are getting more money. It tracks consistently. So the districts that are getting more money are seeing a property tax increase. The districts that will be getting less money are seeing a property tax decrease. [Witness Julia Richter]: And that that in that intuition makes [Member Scott Beck]: Yep. [Witness Julia Richter]: A lot of sense. Yes. Right? Because you have your lower spending districts being brought up, so they're getting more money. And your lower spending districts under current law have a lower rate because they're lower spending Okay. Where they're where they're being brought up. [Chair Ann Cummings]: And then the same in commission holding here for higher spending district. Until we get the final district saying what the spending is at that point, This is illustrated only. It sounds like the levers we can pull to adjust that. We can put more money in somewhere. We can always do that. Or when we separated homestead and nonhomestead in act sixty, which was probably the first session after this, we set the nonhomestead at a higher rate because they wouldn't their their argument was they didn't get to vote on school taxes, so they shouldn't have to pay for but they didn't have a voice in. And they have crossed in places. They have not in most places. So we can always adjust the rates, which I believe is what the study we just agreed upon is going to look at. If you you just keep it at homestead, non homestead. And if you do, how do you you set a homestead based on school spending right now. We're just taking what it costs to raise enough money to pay the base and the weights and categorical and whatever else. But we could also adjust the nonhomestand rates, either one or more than one. Or and we could because I think also in act sixty, your taxes couldn't go up or down more than a certain percent. I'm missing my muteness here, But I think there was a Percent [Member Martine Larocque Gulick]: or certain number of years. I don't know what the [Chair Ann Cummings]: number I don't know what it was, but I know I had towns that went from twenty eight cents to a dollar ten. That was something of a stater shop, so it was phased in. I don't remember how we paid for it, but that is all you know, we can transition. We can play with the nonhomestead rates. [Witness Julia Richter]: Yeah. And I think from my perspective in terms of thinking through some of the initial decision points, When moving if the decision is to move to a foundation formula, the way that the homestead property tax rate is calculated will no longer work under a foundation formula because the homestead property tax rate is calculated based on a local spending adjustment. Right? Once you walk away from a local spending adjustment and the homestead property yield, then there's the question of what fits into this in that stead. So I know you agree you just agreed on your property classification study. Then the question is, do you put in something now of how the homestead rate is going to be set? Is it is there a a uniform homestead rate and uniform nonhomestead rate? Is there one uniform rate? [Chair Ann Cummings]: Okay. And I I am remiss. I think it's been put up. Julia has done Julia and everybody have done this memo, which would list the big decision points we have to make and the questions we have to answer. And so and and that [Witness Julia Richter]: memo, if I may, is really some of those high level decisions. Yes. But then within each of those decisions, the minute that you go down one path, there likely will be other underlying questions that would need to be answered in order to get to the level of detail necessary for language and our modeling. [Vice Chair Thomas Chittenden]: Just a quick clarifying question, Trina. This I'm looking at this one right here. I think that's one's on board. Mhmm. [Member Martine Larocque Gulick]: What did you use for weights in here? Is this what came out of [Vice Chair Thomas Chittenden]: senate in or what came [Witness Julia Richter]: I did not use any of the proposals because what this is doing is what would the what would a uniform rate have been in f y twenty five? [Vice Chair Thomas Chittenden]: Waits are for how the money goes out. They don't apply to how the money Correct. State. Okay. Right? Correct. Okay. Thank you. Yeah. [Chair Ann Cummings]: Just to see if your tax bill would have been Would have been. [Member Scott Beck]: It [Chair Ann Cummings]: would have been, yes, when? Okay. So we [Witness Julia Richter]: know reform. Right. So we know that Excuse me. To to get into why we did it why we did this why we landed to do the modeling this way. At first, it's an easy question. Right? What would the what would the rates have been under the senate enterprise or under the house district? But then there's the question of when which revenues do we use? At what at what point are we booking certain revenues? Which spending decisions do we use? So that what is the cost of income sensitivity or the property tax credit? So this is a way of getting that. [Chair Ann Cummings]: But this is based on present day income sensitivity. [Witness Julia Richter]: Right. Under both under both proposals, it's the same cost of interest sensitivity. Everything is the same. It's just what was the local adjusted rate versus what would a unit rate then. Right. Okay. [Member Ruth Hardy]: Thank you. I that was part of my question is that this doesn't assume changes to the income sensitivity Correct. The exemption that we'd be talking about or anything. And one of the concerns that I feel like I need to talk this through with you more, may maybe not live on my tube, but it'll but I'm feeling a little our so our current formula and our current tax system is, you know, it's complicated and and all of that, but it is elegant in the way that it equalizes things, including people's tax rates across communities. And I am concerned about how we continue to be able to do that with a uniform tax rate or if we're able to do that with a uniform tax rate. And and so that's why I I I feel like maybe I need to talk this through with you a little bit more because I'm not quite I mean, is a uniform tax rate equitable? It's equal, but is it equitable? And that our current formula does a good job of making things equitable, and I'm not sure that this does. So that's what I'm trying to wrap my head around. [Chair Ann Cummings]: Yeah. I think that's a [Witness Julia Richter]: question that was a question for you, I'm happy to we we can certainly talk about it offline. And I think that that's sort of one of the big decision points that you have in front of [Member Ruth Hardy]: you that we that were that you [Witness Julia Richter]: all are grappling with. Right? It's what is the tax structure that is underlying the I mean, fully funding the education fund. And these are two ways of looking at what a uniform rate would have been. [Member Ruth Hardy]: And this is not adjusted for CLA. This is pre CLA. This is pre CLA for both. So, I mean, the CLA would continue to exist or at least I don't think we're talking about removing that. So these would then be adjusted based on [Chair Ann Cummings]: the Prices. Yeah. The Something else. [Member Ruth Hardy]: The no. The appraisal the property valuation [Chair Ann Cummings]: at the district. And then it's once it's on a cycle, then Yeah. [Member Ruth Hardy]: It would stay more useful. Play. Well, I mean, the CLA would still exist. [Member Scott Beck]: Yeah. [Member Ruth Hardy]: But I'm still just thinking about, like you know, obviously, we all just went and looked at our metrics because that's what human human nature does. But, you know, just seeing, like, such a huge increase, for example, and it lovingly makes sense, a huge increase, for Slate Valley. They are a district that spends a really low amount, and they haven't taken, it, you know, advantage of the path that you just spend more. They've taken advantage of it to to lower their tax rates, and that's completely reasonable Mhmm. Given the, you know, income level of many, many people in that community. But that huge tax rate increase for them would be a really hard pill to swallow. And I know this is just looking at, like, this year's comparison. So but I I'm still trying to to you know, on a when this is put into practice, like, what mechanisms do we have to make sure that the the tax rates are well, their lives Yeah. Appropriately. Was not [Chair Ann Cummings]: this figures in the cost of present day income sensitivity. Right? So this is the tax rate, but it's not the tax bill that somebody who is insubstentized would get. We spent a lot of time, and I'm trying to see which day we're going to do it this week. But we spent a lot of time on Friday, and I think we asked Julia to do multiple After this section. After this section. [Witness Julia Richter]: So once this section is tied out, then we're moving the that section. [Chair Ann Cummings]: Because that's the new tied it out today. Proposal. We can stick with the present system. Or there are several proposals out there for a homestead exemption, which seems to be easier to understand. If it's more equitable, we'll probably depend on if your taxes go up or down. But in the eyes of the beholder. But it is another way of calculating the balance between property value and ability to pay, which is what the goal when act sixty was done was that the majority of taxpayers would pay based on their income. And I think we were at something like seventy to seventy. No. It was at least seventy. May have been higher, and it has dropped into the sixties probably because we haven't tweaked out the housing values, if not the house. But the so that's that's the question we're grappling with on this one. [Vice Chair Thomas Chittenden]: I wanna build off senator Hardy's point, if I may. I I shared your revelation and concern. I don't know if it's a revelation for you. But last Thursday, I started to realize what the net effect of this in the current trajectory is gonna be. The districts that have been under spending are now going to get a higher tax rate. [Member Scott Beck]: Right. [Vice Chair Thomas Chittenden]: And they're gonna get more money. So we're telling the slate valleys, the berries, the pick the town that has traditionally voted down budgets, your taxes are going up because we're setting this at funding current hundred percent cost factor. And I also worry that we're simultaneously taking away voter involvement in these decisions. Because if we give them all this money, they're not gonna have that outlet to vote on that budget, to craft that budget. So maybe they will be able to influence the new districts. But I I feel like this the solution or the alternative path is to leverage to to solve that, to correct for that, is that to not do a hundred percent cost back. But then to do an adequate amount to term by evidence at what it takes to educate kids out there and then leave a teach district for that supplemental district spend and equalize if they choose to spend more than that equalized amount, then we equalize that through one of those other ratios. Because otherwise, all we're gonna do is raise taxes on the communities that always that traditionally built their budgets down. They're gonna get more money, and then we're also gonna give a tax discount to the communities that have been traditionally spending more money. They're also gonna get less money. But I feel like the solution is to have a foundation, which that word foundation, a hundred percent cost factor, this isn't a foundation. This is a total it's a whole house the whole house. We're building good in the whole house. But if we make it a foundation, a really high foundation, like what other states do, maybe eighty five, ninety percent, and then leave the difference to be localized to just those so that they'll only feel it in the districts that approve it. With that equalization amount, then I feel like we might accomplish the goal. Am I making any sense, ma'am? [Member Ruth Hardy]: I I I I understand what you're saying. I don't think it would accomplish I would have a problem with that because what it is saying is we the state is only responsible for funding eighty five percent of what we think is adequate, and then the rest of it is up to districts. And some districts will spend it, and some districts won't. And then we're immediately in a Brigham problem. [Vice Chair Thomas Chittenden]: I'd rephrase it this way. Sorry. [Witness Julia Richter]: Yeah. And and [Member Ruth Hardy]: so I think what I'm trying to understand is, you know, a tax rate it's supposed to be uniform tax rate. And, you know, I know you put the adjustments in there so that [Witness Julia Richter]: they're not all showing up as uniform. Senator Goulis can. [Member Ruth Hardy]: Can I finish my sentence, please? The the so if you're looking at a tax rate of one seven three seven three, does that is it equitable to say the tax rate in I'm just gonna pick on these communities because the one the they're the, you know, the tax rate in Stowe is the same as the tax rate in Whiting. You know? Is that is that equitable to say that? And I I don't know. That's what I'm trying to sort of wrap my head around. And and because that's what led to the court case literally from Whiting. Mhmm. [Chair Ann Cummings]: And yeah. The second goal of this is to provide every student with a good education. And I still would like to see the towns that are doing a good ex education. I've been told Edisburg used to be the poster child. Yes. But, arguably, are those kids getting the same exposure if they aren't using the tax capacity to provide special help to kids who we say need special help, then are those kids being treated justly, or is our supposition wrong? Do they not need special help? And we could do away with the whole thing. That's probably an education question. I've got Martine. [Vice Chair Thomas Chittenden]: I have a follow-up. I said I already know. [Chair Ann Cummings]: Now you're on the screen. I can see you. [Vice Chair Thomas Chittenden]: Can't hear you. There you go. [Member Christopher Mattos]: Thank you. Yep. I was getting my little cursor over to the audio button. Thank you for calling on me, and I I this is a great conversation. I'm glad we're having it. I wanted to sort of follow-up on what senator Chittenden was saying. I sort of had a similar revelation this weekend, and I I I think I kinda came to to the point with my district where I'm you know, I I feel like I need to tell people I don't see a universe where our per pupil spending isn't going to be lowered. So our taxes may come in a little bit lower, our tax rate, but I also think our per pupil spending is is just going to be lowered no matter what, because we are a district that has been spending more. We do pass our budgets. And in this in this equalizing formula or this, you know, this foundation formula that we're gonna be putting in, I just don't see where we aren't gonna drop down in terms of our per pupil spending. So, yeah, I I it was really just trying to tag on to what Senator Chittenden was saying that there's got these tax implications, but also this per pupil spending implication, which is gonna play out in a very interesting way around the state. [Vice Chair Thomas Chittenden]: Can I quickly Yeah? Okay. On what Senator Hardy said, I wouldn't see it as just setting it at eighty five percent of what we believe it cost to educate a kid in Vermont instead. And to build off what Senator Gulick just said, in my mind, it's a matter of determining to deliver a quality public school education amount, which I'm guessing is somewhere between eighty and ninety five percent of what we're currently spending, which the assumption there is and this is what I said the other night. The assumption is that maybe we are spending too much in our schools today in Vermont. And if that's if that if we agree to that, then we could set it at what we think and based on evidence, what it would cost to educate our kids. And with a new future state notion, if Burlington, based on the appetite of their voters, wants or South Burlington, the company, where I live, wants to supplement and wants to spend above that, as long as we equalize just that option through some Brigham calculation as we're contemplating. [Member Scott Beck]: Mhmm. Then I [Vice Chair Thomas Chittenden]: feel like we're Brigham compliant while we also involve the voters so that we're not doing that. [Member Ruth Hardy]: But then the bill already do that? Because there is a supplemental funding formula part [Vice Chair Thomas Chittenden]: of the bill. But the key point for me is right now, we're at hundred percent funding. So what that hundred percent is doing is it's still spreading. So all of these low spending districts will see their poverty tax increases. But if we find an evidence based amount that's at a dollar twenty or a dollar twenty five, that is empirically derived, not that we're targeting it, but that is justified based on what the evidence shows us. That's where we set the amount. And then if districts wanna spend above that, like some do, South Burlington involved in Burlington, as long as we equalize that through the state guarantee or the recapture rate, I think we're Brigham compliant and still meeting our objectives. The last piece I'll say while I have the floor is the biggest argument I heard from both Scott Beck, Kurt Wright, as well as others. And even senator Bruce said this on the radio, that the the merit of the foundation formula is to better connect voters with the consequences of their spending decisions. My biggest concern with with with this is I I don't think we're doing that. And with this, we're taking a lot of that say out of voters' hands if we found that a hundred percent. [Chair Ann Cummings]: But this is this is not this is based on the cost right now. [Vice Chair Thomas Chittenden]: Yeah. [Chair Ann Cummings]: And I think one of the premises we went into this with is we are spending on a national standard significant out of the box more on our students, on our education system than all the other states. The goal is to go from this cost based model to an evidence based model, which says but to do that, we have to find a way to transition into the savings. [Vice Chair Thomas Chittenden]: Yeah. [Chair Ann Cummings]: And the prime primary way that we've been told we can do that is we're going to have to go bigger, probably not Chittenden County. Maybe you've got a neighborhood school somewhere. But some of our smaller districts, we are going to have to combine in order that you don't have five principles for three hundred kids, that you don't have a superintendent for three hundred kids, that you don't, you know, that you the evidence model according to the people that are promoting it says that we could give every kid more. The kids in Slate Valley or Barre City have the same right to advance math or science or technology or arts or music or anything as any other kid in any other district. So that's where we're trying to get in the future state. [Speaker 8 ]: Sorry. I didn't hear. [Chair Ann Cummings]: The road to the future state is a bit foggy. And, you know, I feel like we are looking for Shangri La wandering through the mountains of Tibet, but we have to think we'll get there. It's not worth it. These numbers are probably irrelevant to the future state because by the time we get there, these school districts won't exist in the present form. Chittenden County may be one school district. Right. I [Member Martine Larocque Gulick]: so I I agree. I think that it will be very problematic to show a sleep alley at the enormous increase. [Speaker 8 ]: And I [Member Martine Larocque Gulick]: think funding the foundation in a hundred percent is I don't [Vice Chair Thomas Chittenden]: think any states even come close to that. [Member Martine Larocque Gulick]: I'm not sure what the highest is, but I think it's, like, around seventy five percent. So that What [Chair Ann Cummings]: do you mean by that? [Member Martine Larocque Gulick]: That they actually would provide a hundred percent of what [Vice Chair Thomas Chittenden]: a school district spends without a local well, so that includes that. They're all tag monies and other states. Yeah. Exactly. [Member Martine Larocque Gulick]: So I think that I think that all sounds right. As far as, you know, the Brigham concern, I mean, if if funding a foundation is eighty five or ninety percent is a Brigham violation, then we are in a massive Brigham foundation right now because our yield is only probably sixty percent of what the average district spends. So we're gonna but I don't think we are. As long as that supplemental spend, as [Vice Chair Thomas Chittenden]: long as there's an equalization ratio, [Member Martine Larocque Gulick]: I think we're fine. As to the the question that Julia threw out there, do we do a uniform rate or a uniform homestead and a uniform nonhomestead? I would really hope that we would do a uniform homestead and a uniform nonhomestead. It gives us two levers. And I think it's pretty well understood that the the nonhomestead and the the commercial tax base and valuation does not necessarily go the same direction as residential bills. We're in the same magnitude. And I would really worry that if we got into just using one, if one took off, they you know, I think that would be very hard to work with. So I would really argue for a a non a uniform non homestead and the uniform homestead instead of the one. I I think it's [Chair Ann Cummings]: been assumed in both of the other things that they would be the same as well, they'd be the same as present law this year, which varies by ten. And then going forward, no one has broken them out into any kind of tax rates because we don't know what we need to raise. So we don't know what levers we're gonna need to pull. So Yeah. Martin, is that a new hand? [Member Christopher Mattos]: It is. Just briefly sorry, Julia. I'll I'll be sure. But, you know, I just wanted to reiterate what senator Cummings was talking about in terms of capacity and scale, we're still not bringing down education costs if we're not looking at the cost pressures, deferred maintenance, health care inflation, mental health supports that we're paying for. We also, you know, we haven't talked a lot about getting back to, like, a meat and potatoes public school system. There are pressures on the Ed Fund that come from early college, dual enrollment, adult education, money that goes to private schools, and I'm not talking about our four academies, outside of our four academies. And, again, just the mental health supports that are extraordinary and therapeutic schools, a lot of money going to therapeutic schools. So until we deal with all those other things, I don't see our cost pressures going down. [Chair Ann Cummings]: Thanks. I'm done. Yes. No. No. There are cost pressures in the schools. [Witness Julia Richter]: So so one one piece I was gonna say to help from my perspective in terms of grounding the conversation into what I've heard from the chair sort of, like, these distinct bucket in terms of thinking about and I I I recognize that they're all very interrelated. Right? The rates are dependent on how much needs to be raised. The the bill itself prior to coming to this committee had a uniform rate that would be adjusted per four factors, right, the three nonhomestead factors and the homestead factor. Because you all made the decision to move away from implementing that change and moving that into a study. Now the question is on the table. Are there how how are if if the if the assumption is that you want to have a uniform homestead rate and a uniform nonhomestead rate, that is a decision point in itself from my perspective. And then the next decision point is Right. If there are any decision right now, one way or another, how those are set in relation to each other or not. But first first, it it is a decision point to staff. Are you agreeing to have a uniform homesick rate and a uniform not? Okay. [Member Ruth Hardy]: What what so it I I mean, I heard what senator Pat said. It what's the yep. It there there's the two different tax rate or the two different classifications, homestead and nonhomestead. But within those, are you asking would we have varying rates of homestead and varying rates of nonhomestead? Or [Witness Julia Richter]: I mean, these are all policy choices. What I'm asking is because right now, you don't have a way to distinguish within nonhomestead. [Chair Ann Cummings]: Right? It's it's whoever declares their homestead. It's homestead is [Witness Julia Richter]: the homestead declaration. That's the homestead property. Everything else is not homestead. So my just my question is, is there one uniform rate? Homestead, not Homestead. Would they be saying that the same? To name property tax rate, or would it be Homestead would be paying one rate? Non Homestead would be paying [Chair Ann Cummings]: a different rate? And we have to make that decision at this point. [Witness Julia Richter]: Those that's completely up to all of you. [Member Ruth Hardy]: I mean, that's just the decision. It seems I would agree with senator back because that those are the only two levers that we lacked because you didn't want to in include the new classifications in there. No. We don't have the ability to [Chair Ann Cummings]: pulling this year. We're going forward with the two classifications. When we come back in January, we will have the report that will tell us how we break those out, how we deal with the multi use units, how if we deal with outer state, in state, how you define. But until if I guess, for me, originally, we said the nonhomestead, and you'd have to look at you know, within that non homestead, how would we divide it out? But that's been our lever, and that would be could be our lever to get as we move from the present state to the future state. How that's we have timelines in both bills. Mhmm. The senate is more aggressive than the house, but I'm not sure until we get closer to the future state and we have actual numbers as to this is what the district size is going to be. This is how it can be organized. We're not gonna be able to expand, contract, or do anything with schools in the near term. So I think in the near term, we probably are gonna have to say, we're gonna be looking at that nonhomestead in whatever form as a way to help fund that transition. [Witness Julia Richter]: So am I am I correct, for instance, looking at the two sets of modeling and looking at the two sets of modeling that I showed today, one being a uniform rate for everybody, the other being a uniform homestead rate and then a different uniform perhaps different uniform, not a homestead rate. Am I correct in understanding that that is the direction that the committee wants to move right now? I [Chair Ann Cummings]: don't know that any Who's my first one? Wants to. John, you have something? [Witness Jon Gray]: Yeah. I I just the course of the conversation suggests to me that you want to maintain a possible separation between the two rates. You're because you're waiting on your bank information that lets you know, say, like, the second model, which is this homestead rate and a slightly different nonhomestead rate. Or you could receive information back that makes clear to you, you could just provide outright one uniform rate across both classes of property. So what I'm hearing, but I don't want to dictate to the committee, is that you want two different rates, but not to specify what the relationship between them might be. Unlike so right in the Yeah. In the current draft, we have, like, different factors. And the idea that in the future, you would say non homestead will relate in this way to homestead, and this particular class will relate in this way to that class. What we would do here is just set out that there are two rates, but not explain how they relate to each other. [Chair Ann Cummings]: I think until we get closer to the future state, we're not going we're gonna have to get the numbers. Next year, we're gonna have to set the tax rate as we move into this. We're also gonna have to deal with whatever our economy looks like and our revenues, And then we're gonna know what we need to do, and we'll be looking at the cost. We'll know what the cost of health insurance is going to do this year. We'll know some of those blanks, and then we can start [Member Randy Brock]: That's a very [Vice Chair Thomas Chittenden]: related point, if I may. And this is really brought out now, so this is a reduced likelihood that we're here late on Thursday. One thing that I think the house did not do that I think we definitely need should do on this. I personal opinion, let me hear your thoughts. I really like what senate Ed did with the phasing of the amounts going out. So is the seventy five, fifty, and twenty five over three years. What I don't see in the bill that we have is for these benefits, tax rate and, benefits and tax rate increases, a similar transition. And I'd love to model it, after what the senate end did, which would affect is that is that something that we that we wouldn't want if this all happens? [Chair Ann Cummings]: Step tax rates up or down. Correct. And the same way we're stepping funding the schools up and down so that Yep. Yep. You won't suddenly get a thirty percent deep increase and a thirty percent decrease that you'd step down at five percent and up at five percent a year or whatever the percent once we know the numbers, but that we would walk your tax rate down and walk your tax rate up. Because the thirty cent increase is going to cause extreme sticker shock. [Vice Chair Thomas Chittenden]: Yeah. Just don't have John to do that Thursday night at ten PM. So if that's do them often. Sure. [Chair Ann Cummings]: Oh, okay. Yeah. And Martina never handed that part. [Member Ruth Hardy]: The that transition of the senate committee put in its kind [Witness Julia Richter]: of only thing that they did. [Member Ruth Hardy]: I do like in the bill that they did. But, John, I have a question for you. It's the the house version included the four classifications and that included the ability to set them relative to each other, but it didn't require that they'd be set relative to each other. [Witness Jon Gray]: That's right. I'm sorry. I didn't introduce myself. I'm John Grad, opposite of the council. You know? [Member Ruth Hardy]: It's nice to meet you, John. That's right. So they it did require that they be relative to each other. [Witness Jon Gray]: It it didn't specify what and and what it did is just set a factor of one for each. So in effect, it was a uniform rate. Right. And it just applied across different classes of property. But the thinking, of course, was that you would, in the future, with greater information, set rates relative to each other. [Member Ruth Hardy]: Right. But they could evolve and [Witness Jon Gray]: Like, they could [Member Ruth Hardy]: this thing. Right? [Witness Jon Gray]: They could [Member Ruth Hardy]: be uniform or they could be by this type. But since we only are apparently gonna have two classifications potentially Well, that's that this then the ability to to set two different rates is kind of similar to what we have now, basically. Like [Witness Jon Gray]: Exactly. And I wouldn't do it in a table. Like, the the thinking behind the house is that you have a table that includes the homestead in the three different categories of nonhomestead classification. And the thinking was that there might be, in the future, a fixed relationship among the different categories of nonhomestead property. But that each year, the legislature, much like it has today, would have the ability to shift liability between nonhomestead and homestead rates by changing or notwithstanding the factor for the homestead rate. So, you know, in fact, it was saying we're gonna continue to the thinking was that you might continue to tweak the relationship annually between the homestead and nonhomestead rates. So it doesn't make sense to have a table for something like that, which is We could do that now. [Chair Ann Cummings]: These are the dears senator McConnell used to talk about. [Vice Chair Thomas Chittenden]: Which keeps mentioning senator McConnell, so [Chair Ann Cummings]: I think you missed it. He he was the muse. When it came down sixty You're just talking about that. Memorized, and he knew why they did everything. And I'm probably glad he's not here to watch us destroy his wife's work. But It's the ball. We we did set that ratio. They would increase as school spending went up. The nonhomestead goes up at the same ratio. I'm I'm not sure how that got calculated, but we have done some balancing over the years. For now, I don't see. We are setting a tax rate for next year. We will have more information in January. I think what I'm hearing is we want the ability We're not yet. We want at least two levers, and we want the ability to make adjustments for the future. But to make those decisions now, and we want a transition formula or the tax rates. We have a proposal just for the schools getting more or less funding. We would like a equal a similar transition for the tax rate. Is that [Member Martine Larocque Gulick]: Yeah. Yeah. Okay. [Member Randy Brock]: Give me a moment. [Vice Chair Thomas Chittenden]: Can I make one of the similar similar points? [Member Scott Beck]: Yep. [Vice Chair Thomas Chittenden]: So I I respect why you did the penny penny discounts because that makes a lot of sense sense. It's in law right now. But as I understand the timeline contemplated by both senate ed as well as the house, as I roll it out, that the pennies, if I'm not mistaken, go away f y twenty nine. It'd be down to twenty percent in f y twenty eight. So I I think it's fine that you did it, but I'm just wondering with with it when this were if this were to take effect, the penny is effectively gone. Do you think it's worth modeling without the pennies just to get a better feel of what this actually looks like? [Witness Julia Richter]: That's up to you. The we don't know what tax rates will be like in f y twenty nine even if the currency's not existing. Right? We don't know how sales use is gonna perform. We don't know spending. [Vice Chair Thomas Chittenden]: But if I may Yeah. In your table, which I love love the love the discerning itself too. It'd be great. Right now with the pennies, you have variable rates. And I feel like as we as this circulates around the building, I think it will be, easier to explain and contemplate if those rates are all the same because that's what we're contemplating here is a universal homestead universal non homestead rate. And if if they are if there's an agreement that the pennies are phasing out a long time when this is contemplated to take effect, it might be a better apples to apples peg comparison for people to consider. Look. [Witness Julia Richter]: I can certainly do that. The the consideration is The pennies cost money. Yep. Right? So the the uniform rate, if there were no pennies, could be lower because you would be pulling more from the interest with the pennies. So the question is then when looking at f y twenty five current rates, should those current rates should the pennies be added back to those current rates? Right? Because if you would have a district that may have ten cents off their FY twenty five current law tax rate. But if you're assuming that the cost of that cent discount no longer exists in a uniform rate, then you can have a lower uniform rate. [Chair Ann Cummings]: So I think this might be getting Okay. Too into the weeds with the present rates. [Member Ruth Hardy]: The house is The house is here. [Member Randy Brock]: So it's [Vice Chair Thomas Chittenden]: all actually [Speaker 8 ]: must be a topic. [Chair Ann Cummings]: Oh, But [Witness Julia Richter]: we can I can talk offline about it? But I [Chair Ann Cummings]: think I mean, we're we're talking apples and oranges here. We we're talking if we apply the rate, it's illustrative. It helps us see what we knew that the low spenders are gonna go off. We gives us, in some cases, a shocking nap and, amount and that the high spenders are going to go down. We know that the high spenders are not want going they're still gonna want their sports complex, and they're still gonna want okay. How we deal with that will be future. We have to account for Brigham. So we have not got to we have freedom and the equalizing mechanism. And do you allow spending over and above? And we have our next topic, which is the equalizing, the which is the homestead exemption or the present income sensitivity. Both goals are to kind of equalize one's ability to pay with one's property value. [Vice Chair Thomas Chittenden]: The only point I really hope I made with that previous I'm finally leaving the pennies in, but I feel like there's a revelation that's gonna occur with many of the hundred and eighty legislators that what we're contemplating is a new common universal statewide based tax rate. And with the pennies adjustment, that is somewhat lost in different communication, but I I I'm not [Chair Ann Cummings]: I wouldn't go necessarily handing this out. That is true. Because it it can cause panic [Vice Chair Thomas Chittenden]: Yep. [Chair Ann Cummings]: Before their reason to panic, usually. And to senator [Speaker 8 ]: Brodsky. Early earlier in our discussion, we talked used the term evidence case quite frequently. Yeah. In the last fifteen minutes, I've I've not heard that at all. The thing that worries me probably more than anything else, if we talk about fixed rates Right. For multiple districts is the performance levels of these in the fundamental thing that we're trying to do is educate kids are wildly disparate. There are some people who spend the same amount of money and get entirely different results Yeah. Both at the high level and I suspect also at the low level. And one question is, how can we tie what we're doing to evidence based? If you give and and some of these are money based, but some of them are based on on on other factors that have nothing to do with money where we have wildly disparate results spending the same amount of money both up and down. And I'm not sure are we looking at that somewhere? It's not necessarily us because we're not the committee of jurisdiction that looks at education, but when we're spending money, they ought to be looking at performance that we get with what we spent. [Chair Ann Cummings]: All I can tell you is I have heard from the agency of education, who's really the agency charged with ensuring that kids are getting educated and that they aren't you know, that you aren't over and under. I have been told that we don't have a lot of accountability in this state, that that needs to be tightened up about how we can have them in. But I think, yes, as part of this, the expectation is kids all kids are gonna get a bet a good education. Some of them, we're quite sure, are not getting it now. Not a good education in respect to what is needed to be a productive human being in today's world. We are not living in our agrarian pets. And it I would like to know what the low how many low spending, low or high performing schools we have. One of them may just have a couple of gifted teachers or a gifted superintendent. But how do we learn from them and That [Speaker 8 ]: that's that's the this is the issue of performance based. [Chair Ann Cummings]: Yeah. [Speaker 8 ]: And, theoretically, the Department of Education is doing that. My suspicion is they're not effectively doing it. [Chair Ann Cummings]: I don't think they have the staff to [Member Martine Larocque Gulick]: do. [Speaker 8 ]: Because, you know, we've looked at this in past, and we've had situations in which they've been very low spending, not just schools, but low spending districts with high performance and high spending districts with poor performance. [Member Ruth Hardy]: That's also extremely variable based on the types of students you're talking about. [Chair Ann Cummings]: Mhmm. [Member Ruth Hardy]: You know? Yeah. Poverty is a huge Mhmm. Indicator. And and I I don't know if this is still true, but for many, many years that the number one indicator about of us or correlate, you could is the mother's education. Mhmm. And so there are just different students from different circumstances around the state. So just looking in a vacuum, comparing Well, the vacuum would have [Member Randy Brock]: to be a, I think, relatively large banking. [Member Scott Beck]: Well, I mean, there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's there's [Member Ruth Hardy]: there's there's there's there's there it has to be taking into consideration holding things equal, like, upholding poverty equal, things like that. How do we apply success? [Chair Ann Cummings]: Since we don't Mhmm. Alliance and we are getting We can write into this, our intent, to have our standards high and enforcement of those standards. [Speaker 8 ]: Mhmm. Or at least know the results. Mhmm. There is nowhere we have a problem. Nowhere where something isn't measuring up to what we want and what we're spending and hope to achieve for that spending. [Member Ruth Hardy]: Well, some of that stuff was in the bill, in the house version of the bill, and then our senate education of May took it out. So Oh, good effect. [Chair Ann Cummings]: Okay. Stuff. On property tax calculations. [Witness Julia Richter]: I'd say from our We know. Oh, sorry? [Chair Ann Cummings]: No. We know that we are going to have a problem with low spenders. You're gonna see Sure. If we do nothing, if we just put a statewide tax in today based on what we're spending today, that low spending towns would see some of them a significant increase, and high spending towns would see a decrease in their tax rates. They probably will also see a corresponding increase in their funding and a decrease in their funding. [Vice Chair Thomas Chittenden]: Tracking with their tax rates. [Member Scott Beck]: Mhmm. [Chair Ann Cummings]: The goal is that every child has the same access to the same amount of funding within the state based on that child's individual needs. But until we know the districts and so we know what kind of property wealth we're dealing with. Until we know the homestead exemption or that equalizing thing, until we know the recommendations and how feasible it is right now that all the bills hold homestead and nonhomestead in the future stay the same. But we're, I think, all reserving the right to adjust those rates based on the reality we're seeing when we get I keep seeing linking up with the spaceship or something like that. When we get to the future state and we link up, we will have to make decisions about how we balance out that tax rate. [Vice Chair Thomas Chittenden]: Okay. So what this comes back to is, I think, the the evidence based versus the cost function. And I just brought up Amy Colby's slide. I guess this question might be for I think John might be, you know, where he's in the room. But, there really had one slide, talks about the ways to do it, which is professional judgment panels, input based, evidence based models. This is from Tammy Colby. Yeah. Evidence based models, and then there's education cost functions. Okay? So she did the education cost function. I understand what they did, but there was agreement that we wanted to go to evidence space. What's unclear to me, because what I heard you just say, madam chair, is how we tweak this, how we adjust this. I'm just gonna go back to the legislators who are all generalists, and, I don't think we're expert, and maybe senator Hardy is. But, other than that, you know this material better than a lot of people. I wonder, did the house or the senate do they have because in that same slide, it says it's accepted practice to pair evidence based with professional judgment panels to estimate costs, sort of adding a body to tune these things that is not a hundred and eighty legislators. Is that in the house version? Okay. They have a professional judgment panel. [Witness Jon Gray]: So what I can offer on that front is that they have a their rollout starts with a cost factor foundation formula. Right? And then it poses transition to an evidence based model. The transition to the evidence based model is based on meeting particular contingencies, among which is one that professional judgment panels have developed and assessed that evidence based model that would be rolled out. [Vice Chair Thomas Chittenden]: I like the contingency piece too because my other worry I'll bring back to our earlier discussion, which is very germane to this, is if we go forward with this foundation, but then the school districts don't get consolidated, I'm not even gonna say I think we'll be in the same situation. I think we'll be in worse because the districts that get the benefit are gonna be demotivated to to try and take on to to expand their arms around their neighbors without some sort of mock or directed school district rationalization. [Chair Ann Cummings]: No. I actually Okay. [Vice Chair Thomas Chittenden]: You're okay. [Chair Ann Cummings]: I mean, I think everybody so far has kind of left it to there will be an organic change. I know. Once they see, then they can't do it on their but [Vice Chair Thomas Chittenden]: I don't think it will I [Witness Julia Richter]: don't That's not possible. [Chair Ann Cummings]: I don't know, though. I I do not [Vice Chair Thomas Chittenden]: Well, for this, you can say, again, in a rate decrease Right. Yeah. [Chair Ann Cummings]: So Which are the high spending districts? But which districts you know? At some point, I'd have said in the commission on future public education, one thing I think we agreed upon is it is not fair to ask the locally elected board to vote to do something that will cause their friends and their neighbors to stop talking to them. [Vice Chair Thomas Chittenden]: Yeah. We have to do [Chair Ann Cummings]: And they will. [Member Scott Beck]: Understood. [Chair Ann Cummings]: So we have got to give them enough leeway. We've gotta decide what decisions they make, but we've got we give enough direction before we leave here next year so that we can achieve that. Because if that was the mistake we made with that forty six. We did not we didn't follow through. We left it at emerging school boards. Yeah. Looking they had they had to figure out how to close stools and that they'd, you know, get rid of five principals in ten miles, and they didn't do it. And so we have to make we're gonna have to deal with the school construction issue because we can't make them do it if there's no place to consolidate the kids. [Witness Julia Richter]: Sorry. Do they make this decision? From a staffing perspective, I'd say so. [Member Ruth Hardy]: You chatted it off your list, Julia? [Witness Julia Richter]: To be at seven, I'm keeping a list. Yeah. So [Vice Chair Thomas Chittenden]: what what are you thinking about that we have? Statewide homestead and statewide non homestead? Is that fair? [Chair Ann Cummings]: I mean What decision? Yeah. [Member Ruth Hardy]: The decision that we were talking about whether we have a uniform homestead and a uniform non homestead, but the ability to have differences between the two [Member Scott Beck]: Yes. [Member Ruth Hardy]: Like we have now. Right. And I I think that's the only thing. I still need to talk to you a little bit more about the tax rate things and I'm wrapping my head around it correctly, I don't think. But [Witness Julia Richter]: Absolutely. Yeah. I would say that from my perspective, from staffing perspective, one of the big the big question was uniform homestead, uniform non homestead potentially could differ. That's determined at some point in the future. Okay. And then just presenting the modeling to show you sort of what it would look like. Happy to talk offline. Yeah. Does does that mean would you like to pivot the the remaining final? How many [Chair Ann Cummings]: on the agenda? I think we're not gonna make a final decision on those property tax calculations until we know basically everything else. [Vice Chair Thomas Chittenden]: We do, like, a transition mechanism of your Mhmm. Okay. [Chair Ann Cummings]: Mhmm. Yeah. [Witness Jon Gray]: We'll have to think about Yeah. [Witness Julia Richter]: Yeah. The appropriate model. [Chair Ann Cummings]: Even if it's our intent to put in a transition model so that nobody's tax rate would go up or down more than Try [Vice Chair Thomas Chittenden]: not to have a new legislation on Thursday night. [Witness Jon Gray]: No. No. For sure. I I appreciate it. And I part of my hypothesis is just the difficult thing of thinking about raising you're holding a fixed cost. Right? Like, we have to generate these particular revenues, and then you're differentiating the rate that each. It feels complicated to me mentally, but it's better than them to help them then. [Member Ruth Hardy]: We did it during Act forty six. We we rolled it in. [Chair Ann Cummings]: Okay. [Member Randy Brock]: Yeah. From both approaches. [Member Scott Beck]: I think [Witness Julia Richter]: that they're I think that the the the big piece here is that Act forty six and Act one twenty seven have sent discounts. When thinking about a percentage [Member Scott Beck]: Yeah. [Witness Julia Richter]: Difference, that's where we really introduce challenges because, you know, the property taxes are that flexible lever to build the education fund. [Member Ruth Hardy]: We could do it on a cent basis. But I don't not sure what that would be in the form. [Chair Ann Cummings]: But I [Witness Julia Richter]: wanna think about it. We can we can certainly think about it. We don't have [Chair Ann Cummings]: to make a final decision before we go home this year because [Vice Chair Thomas Chittenden]: this year Yeah. Great transition could be for next year. [Witness Julia Richter]: Yeah. And and the the other [Member Ruth Hardy]: way put up till next year. I can remember that the second year of the bank goes really fast. [Vice Chair Thomas Chittenden]: In the eye and say, this is what I voted for. It's overnight major property tax rate change, that could be [Member Randy Brock]: No. Harder. Oh, yeah. Yeah. I think. [Witness Julia Richter]: So we we can think about a a set of transition mechanisms and work with some of you who might be touch base with tax in terms of administration and feasibility of of doing that. Absolutely. And I think just a reminder in terms of setting up the tax rates, the language does maintain, and this will also hand you some of your decision points over the coming days, but it it does maintain a December first letter where there will be information coming out. Mhmm. And as long as property tax since the bar, the flexible lever in order to ensure the education fund is fully funded, they will need to be calculated annually. So this conversation has been I think has it has addressed a lot of the the bigger picture questions in terms of of the property taxation. Okay. Okay. [Chair Ann Cummings]: I just thought of something that [Member Ruth Hardy]: I thought about this the other day is reserve funds. Right now, individual school districts have reserve funds that they can use similar to the way we do it to buy down property taxes or to save money for school construction projects, school maintenance projects. They have different types of reserve funds, and they're all subject to different, requirements. Would school districts still have reserve fund, and how could they use them? They wouldn't be using them to buy down our property tax rates anymore because we would be setting their property tax rates totally. But could they if, for example, a district doesn't spend that much money right now and gets more and they're like, oh, wait. We have all this extra money left in reserves. What it what could they do? Does that concept still exist? And would they use it yeah. I mean, school construction is one thing that they could use it for. I think so. Yeah. [Witness Julia Richter]: We've heard a they've heard a job on that one. [Witness Jon Gray]: Yep. We we don't have anything to build that speaks specifically to this, but that is also saying it also doesn't, as far as I know, repeal anything that currently authorizes that to occur. But we don't have anything that speaks to restrictions on uses of the funds that you receive, for instance. So it could be that the foundation amount you receive has to be spent right in. That that's not something that's mandated, but you could have voices to have you do this. So I would say the bill is agnostic as to the approach on the reserve fund. [Member Ruth Hardy]: Uh-huh. Because I think their ability to have reserve funds is still really important for financial management, and they could save it for it could be another mechanism to save for school construction costs. [Witness Jon Gray]: And and if school construction costs if it turned out that the only way funding could be raised for it, which we don't know, is through the supplemental district spending, and that's capped at a relatively low figure, you would almost have to have people safe on each. [Chair Ann Cummings]: Right. Yeah. But this with accountability, we need to track that because, a, we need, you know, that school is producing what our standards say they produce. And if they are, they're still saving a lot of money, then maybe we need to go in and reassess well, we should find out what they're doing, but also reassess our base rate. [Member Ruth Hardy]: Well, yeah. I mean, is the mechanism what there is there was a mechanism in the the there's a mechanism in current law and in the house version of the bill, senate education committee took it out, to recalculate the the weights of base Mhmm. Every five years. Yeah. And that is part of what it does. It's to say, oh, well, actually, it's too high now because we've achieved those efficiencies. We can lower the base rate or we can lower the weights because [Chair Ann Cummings]: we whatever. If we, you know put that well, with decide that Well, [Member Ruth Hardy]: I think part of it is because the senate education committee did a sort of mix and match foundation formula, and it's hard to recalculate weights that are just kind of pulled out of the hat. [Chair Ann Cummings]: So Right. But I think also and we're running at the same thing. There's a lot of things. We'd like to spend a week exploring, and we have an hour. Martine has her hand. [Witness Julia Richter]: Martine. I'll be I I [Member Christopher Mattos]: I just think the question of, a reserve is a really good one because we always our school district almost always has a reserve. And I mean, are we, you know, are we gonna make a judgment as to whether or not that sound fiscal policy? Because, actually, it is. So I do think it's something that we need in this bill, and I think it's important that districts have the ability to have a reserve. [Chair Ann Cummings]: Okay. I I think that may be more detail than we need to get into this year. If we can set the rates in the base. [Vice Chair Thomas Chittenden]: But it fits exactly into our earlier conversation because that's what I expect will happen just knowing human behavior and the the liberties of these districts that are now gonna have a higher tax rate and more money. That doesn't mean they're gonna all of a sudden change their approach to school cover to what they'd spend. So I think they're gonna accumulate lots of resources in reserves because they're not necessarily gonna just go on a spending spree. The I think the real answer is what you just said, madam chair, which is thinking of a base amount that is evidence based that is eighty five, ninety percent. So if they do wanna spend more, they have to ask their districts to do so. [Chair Ann Cummings]: Well, I've I mean, to me, we're giving you a base and weights that says this is what the evidence says it costs to produce to to educate your students well. It's going to depend, and we probably should write it in here somewhere, on the Department of Education being staffed adequately to evaluate and to set up an evaluation and an enforcement system. Because if you're just putting the money in the bank and you're not hiring an English as a second language teacher, and you're not providing any extra counseling for the kid who just lost his entire family in a car accident, and you're not, you know, providing any special ed and your, you know, your test scores are no one is what are we now? Competent? No. Permission. Permission. Yes. If no one's proficient, then that's the time there is a thing for the department dev to take over school management. [Vice Chair Thomas Chittenden]: There is. Yeah. [Chair Ann Cummings]: Yeah. I mean, it's you should have I do. [Member Ruth Hardy]: I think that tomorrow, we're slated to get into the in-depth conversation about the foundation formula. Right? So Okay. [Chair Ann Cummings]: I guess we're slated to do the homestead exemption. And Right. That's what And I would love to talk to you about your Yeah. But I I it it probably, if it isn't in there already, would be who must do have a section that talks about the importance of standards and evaluations and actions that this is a transition, but we do need to monitor whether or not we got the numbers right. And we do need to to monitor whether or not our kids are coming up in proficiency no matter how you measure it. [Speaker 8 ]: I'm not sure what Are our kids graduating? Yeah. Are kids doing well on standardized tests? Our kids advancing to other occupations or colleges. Are are they completing the That's it. And and and whatever we do and whatever we set as measures, they want to be publicly available and distributed as opposed to in the balls of department of education Yeah. Where if we can find it. [Chair Ann Cummings]: It's And what do [Speaker 8 ]: it for a pile of stuff that goes to legislators who don't typically read it off. [Chair Ann Cummings]: What are they required to be able to do in order to graduate? [Member Ruth Hardy]: So I've got I've [Chair Ann Cummings]: got Martine and then Sandra Hardy. [Member Christopher Mattos]: This is a little aside, but I'm getting a lot of emails about the sparsity weight. And so if we could at some point address that, that would be really helpful. And I think people are ill informed, but it would still be helpful. Thanks. [Chair Ann Cummings]: And that's not on the agenda for today, but we will get into that. [Witness Julia Richter]: Yeah. I think that a lot of this is on the agenda for tomorrow to focus on the foundation for tomorrow to focus on the base, the weights, which putting on the varsity weight and then the supplemental district spending. Would would it be helpful do you want to I I hear people talking about the HOPEZ exemption. Should I have it, folks? [Chair Ann Cummings]: I I think we've decided I think what we've asked to see go in here right now is if we can put in a transition for tax rates, if they are x percent apart, we wanna step them up or step them down from the prior year's tax rate whenever we pull the trigger on this. That's it for now. And and and that's helpful because you have transitioned on the agenda for later this week. On Wednesday, we'll see how we'll be doing and remembering what we did. Okay. [Witness Julia Richter]: Your staff is taking care. Kofi is the out story conversation. So totally not totally. Slightly shifting gears. Yep. Still within the world of property taxes, but now moving to the homestead exemption. So on Friday, the committee asked for me to come back with some modeling with that proposed structure. The slides are posted on the committee page under my name. The first slew of them are going to I'm now a part of this then. So Sure. The first slew of them are I actually did not update that outline. All the same just so that they're all existing in the same place, a review of the property tax credit, what a homestead exemption is. I'm not gonna go through all of these unless that's helpful. The same model assumptions that we've used here, applying the property tax credit in the same year that it's earned, comparing against current law estimated property tax bills. We're using the same filer groups that we've been using throughout the session, only looking at households up to one hundred and fifteen thousand of household income. This is the same table looking at the filer, filer groups. We're still comparing against the same net education property tax in fiscal year twenty five using those assumptions, right, that the property tax credit applied in the same year that it's current. So this is what we're comparing against when we're looking at how people would be impacted. [Member Scott Beck]: Do you want [Witness Julia Richter]: me to go into any more detail about all of those? Those are all familiar. No. Okay. So I so I did two iterations, which I've titled a and b just for simplicity, reflecting the conversation. So this is homestead exemption a. So this was requested by the committee to put these different change the household income groups into these brackets and then have this corresponding house site exemption. You also included the house site cap. That's what exemption b is. It it applies to house site cap on top of [Chair Ann Cummings]: this exemption. Which Four hundred thousand? What what are you [Witness Julia Richter]: Yeah. This this homestead exempt house homestead exemption a does not use a cap. That's coming later in the slides. This is if there were no cap, but if this were to be the structure. Okay. Right. So zero to twenty five thousand in interim group could exempt seventy percent of their entire house state. Twenty five thousand to forty thousand could exempt sixty percent of their entire house site. So doing this modeling, it's estimated to cost approximately twenty six million less than income sensitivity would under current law. Right? So before, we were looking at a cost of forty five million more than income sensitivity. So this would be less costly than income from the company under current law. Okay. We lowered the percentage. You were able to deduct. Correct. If you've lowered the percentage exemption. There are all of the model that we've looked at in the past. I put in the appendix of the slide deck. I didn't assume that the twenty six million was used to lower tax rates for the same reason that senator backhand can't reveal. So we have to hold in our mind that there this exemption would cost twenty six million less than current law. This is the graphic, right, the staff structure, and this is the impact. [Member Ruth Hardy]: So Wait. Wait. The the I'm sorry to stop you there because I I was reading that twenty six million. It's twenty six million less than current law, not twenty six million less than the house's version? Correct. And the house's version is forty five million dollars more than current law. Correct. Wow. That's a huge difference. [Vice Chair Thomas Chittenden]: But this is without the cap? [Witness Julia Richter]: This is without the cap. Yes. So the houses proposal starts at ninety five percent of houses. [Member Ruth Hardy]: Yeah. So we have room to move here because there's a lot of losers in this if you scroll forward. [Chair Ann Cummings]: Well, you're going to have to reach consensus with the house and senate ed before we leave this building. [Member Scott Beck]: So [Member Ruth Hardy]: Well, yeah. But, I mean, in just in terms of trying to minimize losers without spending more than current law, we have twenty six million dollars. It's [Witness Julia Richter]: So what you're seeing here, same way to read this chart as we read earlier charts, blue represent a decrease in the average tax bill. White represent an increase in the average tax bill. So the way you read this is if your household income is between zero and twenty five thousand, then you would see an average increase of fifty nine dollars. And this is the more granular look. So what you see is that the households the lower income households and the households with lower property value would see decreases. The higher income households would see decreases, and also the households with above five hundred thousand while the decreases. The others would see increases. [Chair Ann Cummings]: Should shall I keep moving forward? Alright. [Witness Julia Richter]: So homestead exemption b, following the exact same structure as homestead exemption a that the only difference is now I've applied the house site value path. Right? So this has been applied in the way that the committee was talking about it. You can apply the house site exemption on the first four hundred thousand of your property. For instance, if your household income was twenty thousand, then you could exempt the first four hundred thousand of your house site by seventy percent. This is estimated to cost sixty one million less than current law income sensitivity. [Vice Chair Thomas Chittenden]: Wow. Looking to save money. [Member Ruth Hardy]: How does it jump that much? Why does from even from a to b Yeah. With just the cap that saves Yeah. [Chair Ann Cummings]: That much money. Thirty five to sure. [Member Ruth Hardy]: That's that's surprising because under the houses version, just putting the cap at four hundred, say, to ten million dollars. [Chair Ann Cummings]: We might wanna check as to where those houses are. They may be clustered in I think there's seven skis area counts. How [Vice Chair Thomas Chittenden]: confident are you, Julia, in that number that percolated on your Friday discussion about the cap just saving ten million dollars? As you dug into these numbers, it would would the cap actually in Friday scenario save more than ten million dollars? Because this is thirty five million by applying the cap, which is proportionally much larger. You understand my question? [Witness Julia Richter]: I do. I'm happy to revisit it. That was modeling done on the house, ways, and means back [Chair Ann Cummings]: Mhmm. [Witness Julia Richter]: Couple of months ago. I'm I'm more than happy to revisit it. [Vice Chair Thomas Chittenden]: And I would echo senator Arnie's point is with sixty one million, I I would love to fluctuate some more to keep to give that to those lower income individuals in a similar way to where the house is. I'm not trying to how do you do this hamster wheel over and over and over again? But I wonder if we've restored some of those with the cap. Can we get it to a a zero increase of the relative to the PTC current amount? Does that make any sense with that statement? I feel like I'm just babbling. [Witness Julia Richter]: Can you say that one more? [Vice Chair Thomas Chittenden]: Yeah. So I'm similar to what senator Hardy said, I'm now seeing that with these new numbers, that sixty one million dollars could be reconsidered, reapplied to this in a similar way to the house by raising those amounts, that seventy percent to that step function. [Chair Ann Cummings]: Degev at the lower end. You can't deduct eighty percent, not seventy. What and the house had ninety. [Member Ruth Hardy]: And we can also be more granular, not jump to twenty five thousand right away too because that is that first row is where the problem has been. The those first couple rows all along, so we do, like, zero to try to write it out again to ten. [Vice Chair Thomas Chittenden]: Like the cap. I like the cap of four hundred thousand. And then I'd like to just have it be revenue neutral. So not it cost us more than what the PTC currently is and not save us money so that we're sort of holding harmless, the current system. [Chair Ann Cummings]: I'm based on question. Right now, people could choose for paying on their income or their property value. But I think we've seen in the past that for some lower income people, it's better to pay on their property value if it's low. Are we figuring paying on your income here? Is that at a is that going to be an option in the future state, or is it just your income determines the percentage of your So [Witness Julia Richter]: the way that this is currently structured is it would be repeal of the current income sensitivity. So this is replacing current income sensitivity with a homestead exemption that would be based off of your household income. Okay. [Chair Ann Cummings]: So different calculation. [Witness Julia Richter]: I wonder [Chair Ann Cummings]: Okay. Is the pay more pay less based on this year's, on the income sensitivity, what you'd be paying under the present system? The blue people would be paying less than they are under the present systems. Okay. [Member Ruth Hardy]: Is it possible to sort of to, I I think, reiterate a little bit what senator Chen was saying? [Vice Chair Thomas Chittenden]: To say. [Member Ruth Hardy]: Yeah. I was saying to keep stay within the current dollars, but use it all up with the four hundred thousand dollar cap and see how how how much we can erase some of that white or blue out some of that white, especially at the lower income levels. Like, it may be going down. [Witness Julia Richter]: So with the yes. We can I can work on that? One of the questions is, how important is uniformity across steps? Like, do you always want it to be a step down by x percent? Like right? Because you're introducing that question of how big of cliffs and where are the cliffs? What is the step structure look like? So if you wanted to target only the lowest income, then you could have a really high exemption [Member Scott Beck]: Mhmm. [Witness Julia Richter]: A much higher exemption to the lowest income folks compared to the others. [Member Ruth Hardy]: But then you would see You meant you'd have a pledge. [Witness Julia Richter]: This step function would not look like this. It might look something like that. [Member Ruth Hardy]: Yeah. I mean, I think having those kinds of pledge are not a good thing because then you can have one dollar more in income or whatever or a house one dollar more in value that you'd fall off the cliff. So I like the steps better. Could you [Chair Ann Cummings]: do smaller steps at the bottom? [Member Ruth Hardy]: Short? Yeah. I mean and you could start instead of going to zero to twenty five. You can go to zero to ten or zero to fifteen or whatever. But I think the more uniform it is, the better, I think. [Chair Ann Cummings]: But but I I How many people in the zero to flat income paying property taxes? Do we know? I assume we know. [Member Martine Larocque Gulick]: Yeah. Right. They're forty seven thirty and ninety seven. [Chair Ann Cummings]: Of seven hundred and thirty. [Vice Chair Thomas Chittenden]: Like what Hunter already said, that I've been not trying to send to the yet. [Chair Ann Cummings]: So but that that group is kind of the outlier. They're very small. Yeah. So put them together and then baby step it down to where are we, the thirty thousand? It's the [Member Ruth Hardy]: Yeah. The seven thirty and nine seventy, you put them together at zero to ten thousand, and that combines those two. And I think and rather than giving you, like, specific instructions about where it it it's because I don't want you to come back with something that we're like, no. Tweak this thing. [Witness Julia Richter]: So if you had to if you had to choose between blue and smooth, [Member Ruth Hardy]: Blue. That is a good question, I think. [Witness Julia Richter]: Which would you choose? [Member Ruth Hardy]: Blue. Probably blue. But as long as the cliffs aren't too big. [Vice Chair Thomas Chittenden]: I wanna see more blue. [Chair Ann Cummings]: Right. It's [Vice Chair Thomas Chittenden]: I mean I'm joking here. [Witness Julia Richter]: No. No. I agree with you. [Chair Ann Cummings]: Let's see more if I see more get all the same lower. Right? [Member Ruth Hardy]: You don't wanna have the, like, weird and subtle things to not get a raise or not put a porch on your house or something. I don't know. [Vice Chair Thomas Chittenden]: And and the other thing I was I mean, I'm glad Jake's in the room, if I may. The the original proposal from the administration had that thing for seniors. So if we're playing with sixty one million, I don't know how that [Chair Ann Cummings]: That is the other thing you could do. [Vice Chair Thomas Chittenden]: But we use some of that sixty one million. I'm just thinking of the [Member Ruth Hardy]: I'm just gonna reiterate what I said to you about that the other the the tax bill that s fifty one has a lot of tax relief [Chair Ann Cummings]: for older providers in it. So depending on how all that Yeah. Also for lower income providers. Yeah. But, I mean three inquiries. Right? [Member Ruth Hardy]: Yeah. There there are there. Anyway Yep. It feels like that is and this yeah. But Did [Member Martine Larocque Gulick]: you did anybody did you try to model what it would look like if we only protected the people that actually benefit from the existing PTC program? [Witness Julia Richter]: I did not. And I did not because I don't know how to set that structure up [Chair Ann Cummings]: because it's based on family size and children. No. It's based on whether their PTC credit is less than [Member Martine Larocque Gulick]: or or greater than or equal to the extra rate they pay right now. [Chair Ann Cummings]: It's getting kinda. I mean [Member Ruth Hardy]: But that you you would have to somehow model the hamster wheel into that. [Vice Chair Thomas Chittenden]: No. I wanna review the extension. [Member Ruth Hardy]: I know, but I know there's not. [Witness Julia Richter]: Okay. So it sounds like we may [Chair Ann Cummings]: use some really tiny steps down, combine the first two income groups, and then tiny step them down to where they get to a group that's [Witness Julia Richter]: So are you interested in continuing to pursue a homestead exemption and exploring a different structure? [Member Ruth Hardy]: What do you mean? Like [Vice Chair Thomas Chittenden]: I'm ready to support the version of this. [Member Ruth Hardy]: Yeah. Okay. [Vice Chair Thomas Chittenden]: The version of this that just gets more blue. [Member Ruth Hardy]: Yeah. I'm [Chair Ann Cummings]: with Tom. [Vice Chair Thomas Chittenden]: The only way to get blue is to get white. That's generally [Chair Ann Cummings]: Well well well, no. [Member Ruth Hardy]: We have sixty one million dollars. That's how that's what well, we're supposed to be saving what we spend now. But but I think that the the point you know, the house's version spends forty five million dollars above [Witness Julia Richter]: what we're currently spending. [Member Ruth Hardy]: So if we can just get back to spend what we're currently spending, then we're sort of even in terms of the money, but have a potential rational system. So [Vice Chair Thomas Chittenden]: that's Sixty percent of the people are better in the system already getting the benefit from it. That's not a rational system. But would you agree that this new contemplated system might give us more rational controls over addressing that in years to come than our current lag PTC [Member Martine Larocque Gulick]: that doesn't work with our new foundation. Homestead, a house site exemption is far better than [Speaker 8 ]: what we've seen. [Member Ruth Hardy]: But I also don't think that that's an entirely accurate statement, what you said. Because my my understanding, around Sure. That's how I like, you make the adjustment, people get the one that is better for them, whether they pay on income or pay on [Chair Ann Cummings]: Right. [Member Ruth Hardy]: On their property value, assuming they've filed for the credit. Right? [Vice Chair Thomas Chittenden]: They're unfair to me, that was [Chair Ann Cummings]: Okay. And We we we're hitting we're hitting a decision here. I wanna write okay. We have decided that we want to go to a homestead exemption. Right? Mhmm. Okay. So that's okay. Then we are still playing with white and blue shaded areas. Have we decided that we want to spend the same amount we are presently spending? I do. Or would we like to reduce it a little bit? We would like to see more blue area and smaller steps at the low income level? [Vice Chair Thomas Chittenden]: What what I would say to that is I do agree that there are things we could do to reduce costs in the system. I don't think the best place take it is out of our income sensitization. I think it's in the consolidation of districts, efficiencies through administration, curricular debt. So that's where I'm not looking to squeeze Okay. Money out of the system. Less income sensitizing our approach. That's how I'm currently thinking. [Chair Ann Cummings]: This is the equalizer. Equalizer. So I'm gonna let it Julia's gonna bring us back another blue shade, grayish. [Witness Julia Richter]: Yeah. I I have another question on that, if I may. Does it matter where the blue is? [Vice Chair Thomas Chittenden]: I'd prefer it be with the lower income. That's what I'm after. So those [Chair Ann Cummings]: I think that's what it [Speaker 8 ]: like to the pain on the lower income folks. [Witness Julia Richter]: Yep. Across all have state values? [Chair Ann Cummings]: Well, I think he Which set Which parts? [Member Ruth Hardy]: The left hand upper left hand corner is probably the most important part. [Chair Ann Cummings]: I wanna know what is that The only one person there. Value button. [Vice Chair Thomas Chittenden]: I wish this was blue. So I almost want to [Member Randy Brock]: Wow. Wow. [Vice Chair Thomas Chittenden]: I wish, like, all the blue was up here. But I think you would need a proportional ratio, and that would make it more involved it's a center broad [Chair Ann Cummings]: you would get to. [Vice Chair Thomas Chittenden]: Because up here, you're gonna have the lower income individuals. And as they have higher houses, they would pay more. But am I am I wrong? Isn't this who we care the most about? We care about all the monarchs. Okay. But we're thinking about income sensitization. [Member Ruth Hardy]: Yeah. Yeah. I think there's, like, [Chair Ann Cummings]: it's I think we don't wanna see white in those top those top positions. Yeah. [Speaker 8 ]: Okay. I don't wanna add complication to this. It was just an aside, but messages get sent by card. Blue doesn't mean anything. Like, green does means it's good. Yellow means it's it's getting dangerous, and red means it's bad, period. Okay. Some people So [Chair Ann Cummings]: put the blue over there where the numbers are and put the green. [Member Ruth Hardy]: Poor Julia. She's got [Witness Julia Richter]: So one of the red. Because I [Chair Ann Cummings]: one of the charts has red. [Witness Julia Richter]: The administration was tired. I've [Member Scott Beck]: read it. [Speaker 8 ]: Crazy. Yeah. But it does people do I make infusions based [Witness Julia Richter]: on what they see. I hear you. I am I am certainly, adjust color is the only thing I would flag, and all of the charts thus far have had this color. So Yeah. We're we're we're not confused. I will also say, depending on where I am, I get different color guidance. So I never [Chair Ann Cummings]: know We've gotten used to this one. Yeah. Okay. So if you change it, they will you'll have to explain it to us all over again. I wanna know what is that little one? Three dollar increase? What we got? [Vice Chair Thomas Chittenden]: Yeah. [Chair Ann Cummings]: That's On average. On average. If we can calculate that close. Okay. [Witness Julia Richter]: So should I [Chair Ann Cummings]: go plant new bushes or just let them rot? Let's see if I can get in and out of the three dollars. I think we have done our task for today, have we? I'm looking at the AskMasters. Tomorrow, we will have more fun. From the. I'm ready to do work. I [Vice Chair Thomas Chittenden]: gotta say, when senator Mattis are out, we're quite efficient. [Chair Ann Cummings]: Yeah. Watch on YouTube. [Member Ruth Hardy]: That's [Member Martine Larocque Gulick]: That's a chatterbox. Okay, Sage. [Chair Ann Cummings]: Oh, okay. What do you mean? Oh, so many things. No. You said it's just simple and little. [Member Ruth Hardy]: It is. And then my my laptop powered down so really You need a power cord? Does well, thanks to Jake. For the record, Rebecca Samrock, deputy commissioner of the tax department. [Member Randy Brock]: Jake Feldman, team fiscal highlights. [Member Ruth Hardy]: And I I can send an attachment around, like, right after I show [Chair Ann Cummings]: it to you guys or the committee page. But maybe in the meantime, [Member Ruth Hardy]: Charlotte, I could grab the Zoom link, like, [Member Randy Brock]: if you, of course, need it. Are we turning that number one and number three in that package? [Chair Ann Cummings]: Yeah. Yeah. You wanna get the [Member Ruth Hardy]: high level? Yeah. You launch. [Member Randy Brock]: I'll share. Well, so we'll we'll show the language in a second. But the house Yeah. Has I think that's where where it the language came up is that, basically, the tax department would take over a function that AOE has been doing since I had sixty, which is directing property tax revenue from towns to school districts. And that is a complicated endeavor. We don't do anything like that now. It it you know, there there's much more to it than just that. There's a lot of balancing of of and it's fun, money. We don't wanna take it on. We want it to stay with AOE. We appreciate that we appreciate that some people in the house think that we're talented and competent, but that's that's an AOE function. So the first bit of language I think is about that. We really would like that to return to AOV. [Member Ruth Hardy]: I think it was a compliment to [Chair Ann Cummings]: you guys. Shut it up. [Vice Chair Thomas Chittenden]: Anything else about it? [Member Ruth Hardy]: Our colleague, Abby Shepherd, made us a helpful side by side. So the the piece that Jake just described is down here. This is a side by side comparing the four fifty four senate ed amendment to what what we would suggest changing. So I'm just gonna You can tell she's worked for LegCat. So So these instances that you see highlighted of secretary of education is where the current age four fifty four, transitions these responsibilities [Member Randy Brock]: to the commissioner of taxes. [Vice Chair Thomas Chittenden]: Besides being incredibly talented and highly respected, which is absolutely the truth, I I think what also might be weighing in, which is not on my mind, is all I keep hearing about how this agency of education is understaffed, like, like, to the point where they've been gunning since two thousand eight. They just don't have the capacity. I haven't heard that about the tax department. Do you have a do you do you understand the point I'm trying to make? [Member Ruth Hardy]: Yeah. I mean, I can certainly speak from, that we are we are maintaining adequate staffing in the tax department, but, you know, [Member Randy Brock]: we won't be paying anything as the agency. [Chair Ann Cummings]: Like a lot. [Member Randy Brock]: But, you know, that work is a [Member Ruth Hardy]: it's that's work that that's happening under current law today versus fiscal care. [Member Randy Brock]: I I personally would not have concerns with having the agency continue those those roles. [Vice Chair Thomas Chittenden]: Do you see my point, though, if anything they're trying to lighten the agency of education's load since they are digging on a lot and they seem to be understaffed a little bit to the tax department? [Member Randy Brock]: Yeah. I mean, it's just really not it's very different than any work that we do. So, like, you know, I I can I can understand that? I think there's a lot of departments and agencies in Vermont state government that are have problems, but that doesn't mean that's the tax law that you put them on. Like, it it sounds similar. Like, oh, the property taxes, that has to do with taxes, that has to do with the tax department, but it's really quite quite different. I think we would need at least one more person. Like, I I can't do it myself. [Member Ruth Hardy]: Do you know where in the bill this language is, what section or page you Yes. From? This is section thirty six in the bill, [Chair Ann Cummings]: and I think there are maybe I don't know if there's a section. Sorry to oh, it's not. She had a bone. [Member Ruth Hardy]: Education thing. Page seven seven of the house. Looks like that section changed a good view. [Member Martine Larocque Gulick]: Yeah. I'm looking at the [Member Ruth Hardy]: pass by the house version. Oh. This is as amended by senate education. [Member Scott Beck]: I'm looking at I'm looking at pass by the house version. Oh. This is as amended [Chair Ann Cummings]: by senate education. I'm looking. Next, Bill. Sorry. [Vice Chair Thomas Chittenden]: In the I'm looking at page seventy six of I think I'll look at page seventy six of page four fifty four passed by senate. [Chair Ann Cummings]: Yeah. [Vice Chair Thomas Chittenden]: Probably that's that's existing law. [Witness Jon Gray]: It it's on the bottom of page seventy seven if you're looking in the senate version, and it's just a request not to update current law from secretary of education to commissioner. [Vice Chair Thomas Chittenden]: I'm not against this, but I'm wondering, will Zoe come in, secretary of education, Saunders? She could go in and make the case to definitely make this change to get it off. [Chair Ann Cummings]: We don't have time. Yeah. [Member Scott Beck]: Can [Witness Jon Gray]: I offer where I think this to have originated from, which is the the way that I I had understood this was a directive from ways and means thinking that it was intuitive to house this functions at part of the tax rather than a burden with the interest rate? [Vice Chair Thomas Chittenden]: I I get this. So you guys do the [Member Martine Larocque Gulick]: Yeah. You you guys do the tax rate. [Member Randy Brock]: We got [Vice Chair Thomas Chittenden]: This is just the education spend. Okay. This is [Witness Jon Gray]: this is, like Okay. [Member Randy Brock]: You know, town, Hartford, you owe Yeah. This much money to your school district, and you owe this much money to that fund, and you owe this much money to You [Member Martine Larocque Gulick]: don't wanna do that. [Member Randy Brock]: Yeah. Yeah. [Vice Chair Thomas Chittenden]: We don't wanna do that. [Member Randy Brock]: That's a major orchestration [Vice Chair Thomas Chittenden]: of things. It's it's unlikely to nature. But you'll still determine the tax tax marks. Oh, yeah. Got it. Okay. [Chair Ann Cummings]: This is just who Who [Vice Chair Thomas Chittenden]: ships the Yeah. Who ships [Chair Ann Cummings]: it all. Okay. So we'll do that. Request. If Yeah. Wants to scream, we'll write it out in the conference. [Member Ruth Hardy]: Yeah. And that's part of [Member Randy Brock]: the the ask. I would love [Chair Ann Cummings]: for this to be discussed. Enough for you right now. Yeah. Alright. That would be great. The [Member Ruth Hardy]: this one's produced during the coronavirus department. It's all it's about based on the side related change of one year. But this is now ancient history and act one eighty three of last year. The legislature created an education fund advisory committee that had a a lot of, like, parallel responsibilities with the education commission, that's currently active and also some additional, like, recurring every three year responsibilities, like, weighing in on weights, on potential property tax credit reform, on, you know, a lot of a lot of the things that are just happening right now as part [Member Randy Brock]: of the legislative process. And the commissioner [Member Ruth Hardy]: of taxes is committed to calling the first meeting just in a couple months in July fifteenth July fifteenth. So, you know, it's it's, I think, it's a bigger question, like, what what we [Member Randy Brock]: want this group, what the policymaker want this group [Member Ruth Hardy]: to do. But we would ask at [Member Randy Brock]: the very least that it just be bumped, to, next summer because we [Member Ruth Hardy]: have a lot of fun things to do this summer that are feel [Member Randy Brock]: a lot more relevant to [Chair Ann Cummings]: Having dealt with the commission who is going through in the time frame we sent them trying to come up with recommendations, and my NACHA last summer was the legislature is going to patch next year. The the pressure is so intense that we will do something. And the challenge is going to be to make sure they get coordinated. And this and it it hasn't. I mean, the the the commission is working very hard, but I think that's just what what are they supposed to be doing. This one, to me, would be the same kind of thing until we get to the future state. I mean, there's just so many things up in the air this year to have them try and make any recommendations or decisions just seems premature. [Member Ruth Hardy]: Yeah. I mean, I think this makes sense to move it at least till next year, maybe even till twenty seven. But this was a thing that actually in the senate version of what was to become at one twenty seven, the people waiting study, This was a group that we established, and it was actually, senator Brock and I came up with it. It was partly because it was supposed to be an accountability oversight over the education fund. It was sort of like the December first group, but a little bit expanded and also supposed to recalculate weights and do a lot of the sort of oversight that doesn't seem to exist to cross agencies all the time with the ed fund. And then it didn't get included in act one twenty seven in the end. The house took out, and then it got back in last year after the sort of ed fund kind of full blown up last year. So I think it's an important accountability mechanism for the long term, but I agree that it's not necessary yet. So I think you would be out, Steve. Yes. Or even It's not. I guess sort of know what things are gonna continue to happen. As of right now, there's not anything for it to do. [Member Randy Brock]: Okay. Okay. Yeah. Yeah. [Chair Ann Cummings]: I guess Yeah. [Member Ruth Hardy]: I feel we wrote in twenty twenty six here, but certainly open to a different future date. That feels most relevant. Yeah. I mean, I think twenty seven could even make [Chair Ann Cummings]: sense. Okay. Can I [Witness Julia Richter]: ask a question? [Chair Ann Cummings]: Yes. There you are. You're a little bitty again. [Member Christopher Mattos]: Yeah. Does the, does the existence of this group hinge on the existence of the commission? [Member Ruth Hardy]: No. This group was created before the commission was a thing. [Member Christopher Mattos]: Okay. Thank you. [Member Ruth Hardy]: And they have a different function too. Oh, see. Much more about finance. So [Chair Ann Cummings]: So we have agreed we agreed on twenty six or twenty seven on this. [Member Christopher Mattos]: Twenty six. [Chair Ann Cummings]: Twenty six? Okay. We'll wait for now. We have to move that. Thank you. Okay. [Member Ruth Hardy]: There's one more thing that I'm really just, like, effectively queuing up for John because this was the, a more heady legal conversation between our two legal minds. But there is some wording in section thirty six, that you'll see to the left. And, the department's recommendation was to replace a specific statutory reference with, broader language, the Education Fund, just to make sure that it was appropriately inclusive and feel like John understands a lot more about [Chair Ann Cummings]: this. Yeah. [Witness Jon Gray]: I can explain this one. Your the this is the language that's describing what you need to raise with your statewide education property tax. And so what you see in the senate education proposal is a rate sufficient to cover expenditures from the Ed Fund under sixteen VSA forty twenty five. So it that is your Ed Fund section. The request from tax relates to the fact that we may have some statute where we'd not withstand the ad fund statute and have a one off expenditure. And so you're trying to capture all expenditures from the ad fund. And if you had the cross reference specifically to expenditures under forty twenty five b, it would cut out those one off expenditures. So it's just a request to make sure you pick up all expenditures from that fund. [Chair Ann Cummings]: Okay. Makes sense. So we agreed on the tax department's really heavy duty changes. Alright. Thank you. Awesome. [Member Ruth Hardy]: Yeah. And those are our, you know, super technical, tasks that you'll have in the supplement search again next week that, we'll want, for help. [Chair Ann Cummings]: Okay. Thank you. Committee to wrap up, we have agreed on the regional assessment districts as presented by Kirby and on the property classifications going to study with the intent that we are going to have to make a decision once we have better numbers on how we're gonna do tax rates and how, if at all, we're gonna divide the non homestead. Under property tax calculation. So for our what we'd like to see is a similar transition for tax rates as we have for schools, getting school money up and down. And, again, this is one until we get everything else set and get closer to the future state. But the numbers again today said that the schools that are low spending will see a property tax increase, and the schools that are high spending will see a decrease with similar amounts of money moving up and down. We have agreed to the miscellaneous tax changes that Kirby went over, and the homestead exemption, we're agreed that we are going to go to a homestead exemption. We're still looking for the final version to have perhaps more blue at the lower income level and some smaller steps up there and then move it on out. And I think we just agreed to the tax departments. So tomorrow, we're doing base and weights base and weights. We're having some committee discussion, and we're going to do supplemental district spending. So that's Tuesday. Yes. So tomorrow is gonna be a pretty heavy duty day. But we have floor in the morning. We can't Tammy can't be here. Alright. So we're gonna we've got Ezra and John, and Tammy can't be here until quarter of. Okay. So we will be starting at one o'clock tomorrow. Bring your lunch if you have to.

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