MONEY TALKS
As the House Appropriations Committee works to wrap up the FY2025 budget, all eyes are on the House Ways and Means Committee as they churn out new tax proposals. As a reminder, some new taxes that have been on the table for years – sugar-sweetened beverages, candy, and software – are still on the table. But this week, the House Ways and Means Committee brought out three new tax increases. The committee approved proposals to double the property transfer tax on homes over $600,000 ($17.5 million), increase the top marginal income tax rate to 11.75 percent (a three percent increase that would raise $74.9 million), and increase corporate taxes from 8.5 to 10 percent and add back currently deductible Subpart F corporate income ($33 million). If approved, Vermont would have the highest corporate tax rate in the country. The House Ways and Means Committee is also contemplating a surcharge on short-term rentals ($37.8 – $47 million). Meanwhile, both chambers are likely to add a new tax on video
streaming services (on top of the sales tax). On Thursday, Tax Commissioner Craig Bolio sent a letter to lawmakers raising the alarm about the new proposals, highlighting that they come at a time when property taxes could increase by an average 20 percent and a new $80 million payroll tax for childcare will take effect in July. All told, these increases add up to nearly $500 million.
MEDICAID EXPANSION
The House Health Care Committee advanced H.721, which expands Dr. Dynasaur eligibility to 19 and 20 year olds and pregnant individuals up to 312 percent of the federal poverty level. The bill also expands income limits for the Medicare Savings Program. The bill requires the Agency of Human Services to complete a technical analysis of further expanding Medicaid in the future, increasing Medicaid rates to providers and to make recommendations on how to structure Vermont’s health insurance markets in anticipation of federal subsidies ending.
All these provisions are estimated to cost $21.9 million. The House Ways and Means Committee advanced an amendment to the bill that raises $39.2 million in new taxes including the corporate taxes mentioned already in this report and $6.2 million from increased securities registration fees. This leaves an extra $17.3 million in revenue that lawmakers have discussed investing in creating new positions in the judiciary. The bill will be up for action on the House floor next week.
DATA PRIVACY
On Thursday, the House advanced H.121 through a unanimous roll call vote of 139-0. This omnibus data privacy bill incorporates a contentious component—the Private Right of Action (PRA). Vermont’s business community, including local technology companies and major national corporations, has long expressed significant concerns regarding this provision. They have repeatedly warned legislators that the inclusion of a PRA is poised to lead to a surge in legal actions, disproportionately impacting small businesses. This concern is grounded in observations from other states, such as Illinois, where similar PRAs have resulted in increased litigation.
T-BILL
The House passed H.868, the annual transportation funding bill, or T-Bill. H.868 approves an $878 million transportation program for FY2025. The bill invests in paving, bridges, public transit, rail, aviation, bike paths and electric vehicle infrastructure, among other things. The bill requires the Agency of Transportation to increase reporting on project delays and cost increases. It also establishes a funding study on declining state revenue sources and potential new revenue services. Ensuring the state has matching funds to draw down federal funding is a top priority for the legislature and the Phil Scott administration.
FY2025
As of this writing the House Appropriations Committee continues to work to finalize the FY2025 budget. With the new tax proposals and spending increases that are being approved in policy bills, the FY2025 budget is currently not the only spending bill in play, at least for the moment. This is somewhat unusual, as the legislature generally pulls all appropriations into the budget bill. This may still happen in the Senate, which will start work on the budget after it passes the House, presumably next week.
EDUCATION SECRETARY
On Friday Governor Scott announced the appointment of Zoie Saunders as Vermont’s next Secretary of Education. Secretary Dan French vacated the position nearly a year ago, and Deputy Secretary Heather Bouchey has since been serving as interim.
Saunders currently serves as CIO of Broward County Schools in Florida. She is set to start on April 15, but there is already concern being expressed by public school advocates about her background as an administrator with Charter Schools USA.