Legislative Update Issue 16

Legislative Update Issue 16

Legislative Update Issue 16

Author:Jane Clifford | Organization:EJC Consulting | Date:May 13, 2019

WEEK 17

This will be the last newsletter for the session.  I will do an end of year wrap-up after adjournment to report on what passed and what did not.

With adjournment looming the legislature worked to get bills passed and committees of conference formed.  A committee of conference is comprised of 6 members, 3 from the Senate and 3 from the House.  The committees of conference are charged with ironing out the differences between the Senate version and the House version of a bill.

Adjournment could possibly be this Friday or Saturday, however, there are some that are suggesting it could go to May 23.

Included this week:
S-96
H-541
S-160/H-525
S-23
H-107

WATER QUALITY

S-96 An act relating to the provision of water quality services

S-96 passed the House last Friday morning on a vote of 126 to 14.  The bill will now go back to the Senate to see if they will concur with the changes that the House made, if the Senate does not, the bill will go to a committee of conference.

Below are the sources for funding:

  • Property transfer tax surcharge $6.1 million
  • Escheats (bottle redemption money) $1.0 million
  • 4% of the revenue from room and meals tax $7.6 million

This brings the total to $14.7, just shy of the $15 million requested.  The Governor had proposed using the property transfer tax and the escheats money but also included money from the estate tax.  Ways and Means chose not to use the estate tax but rather the room and meals tax.

The other part of the story is that the 4% room and meals that had gone to the Education Fund previously is leaving the education funding short.  The Ways and Means committee decided to tax “prewritten soft-ware,” the cloud, and use that money for the Education Fund.  The tax on the cloud is estimated to bring in about $6.2 million.

H-541 An act relating to changes that affect the revenue of the State

The Senate made several changes in the revenue bill.  As reported previously there was concern over the changes House Ways and Means had made to capital gains.  Below are the changes that the Senate made, including capital gains, medical exemptions, tax brackets, estate tax, property transfer tax and land gains tax:

  • Capital Gains Exclusion
    • Keeps the capital gains exclusion at 40% of certain assets but reduces the cap to $250,000             Effective July 1, 2019
  • Estate Tax
    • Keeps the state exclusion at $2,750,000
  • Medical Exemptions
    • Provides a deduction from personal taxable income for medical expenses equal to the amount by which the taxpayer’s federally allowed medical deduction exceeds the Vermont standard deduction and personal exemptions taken by the taxpayer
  • Personal Income Tax
    • Returns to a five-bracket system as used in taxable year 2017 and earlier. Rates for taxable year 2019 and after would be: 3.35, 6.60, 7.60, 8.75, and 8.9
  • Property Transfer
    • Makes several changes suggested by the Tax Department, including changes to provide a separate return for controlling interest transfers due to the Commissioner of Taxes, rather than the town clerk.
  • Land Gains Tax
    • Puts back an exemption for land transferred with a primary residence on it.

AGRICULTURAL DEVELOPMENT

S-160 An act relating to agricultural development/H-525 An act relating to miscellaneous agricultural subjects

S-160 passed out of the House Agricultural committee with the following changes

  • Creates a Soil Conservation Practice and Payment for Ecosystem Services Working Group
  • Repeal of Sunset of Fee for Pipelines in Wetland
  • Maximum fee, for the construction of any water quality improvement project in any Class II wetland or buffer, $200.00
  • Maximum fee for the construction of a permanent structure used for farming, $5,000.00, provided that the maximum fee for a waste storage facility or bunker silo shall be $200.00 when constructed and maintained in accordance with Natural Resources Conservation Service Conservation Practice

H-525, which has passed out of the Senate Ag committee has created a “summer study” committee consisting of members of the Senate and House Agriculture committees and the Senate and House Natural Resources committees.  The group will have at least 6 meetings throughout the summer and fall to clarify the language around wetlands.  It is hoped that the group will have language for the next legislative session for wetlands.

MINIMUM WAGE/PAID FAMILY LEAVE

S-23/H-107

These two bills have been and continue to be high priorities for the Democratically controlled House and Senate; however, as we near the end of the session there is a possibility that neither of these bills will pass and if they do pass they will be very different from when they were introduced.

Minimum wage is now in House Appropriations where the discussion is around moving the date to 2027 instead of 2024 for $15 an hour and allowing credit to be given for other benefits such as housing, higher education, etc. provided by the employer.

Paid Family Leave has passed the Senate with major changes that might not be supported by the House.  Then there is the option that the Governor might veto one or both.