Growing Our Economy
We are entering a hopeful time. Our state and national economies are showing signs of a sustainable recovery. Economic growth and expansion are real possibilities for the first time in years. And, we are already seeing results in increased tax revenues and forecasts. It is still a delicate time, so we must be careful to encourage and support continued growth.

The House worked this year with the new administration, our industries and advocates to lay plans to support our economic future. Working on a broad range of initiatives, we were able to form a strong tripartisan consensus on sustainable ways to help our economy grow.

We want to grow more food and more cell towers. We want to grow more business capital and grow more jobs and job skills. We want to grow new opportunities for our veterans and the unemployed. And, along the way, we want to grow consumer protection – for both individuals and businesses.

The keystone of our work this year was returning agriculture to its rightful place as an economic development priority of our state. Significant provisions of the jobs bill will grow the farm-to-plate movement, community-supported agriculture, and value-added enterprises that transform farm products into consumer products.

We also recognized that our future economy will rely heavily on broadband internet access and cell phone coverage and stability. The telecom bill focuses on our agreed goal of reaching universal broadband access and cell phone coverage by the end of 2013. This is a challenging goal, and
accommodations were made to expedite the permitting of cell towers and coordinating the significant federal telecom resources that are now flowing into Vermont.

This was a good year for Vermont’s consumers. We adopted several important bills that extend and enhance consumer and business protection for Vermonters. Most notable was the propane bill that improves competition in the industry and prohibits many practices that were unfair and expensive to consumers. We fully expect this bill will lead to better service and pricing for propane customers.

Other areas included workforce training to support our changing economy; means to improve access to capital for job creation and support of specific industries and more careful and coordinated planning for our economic future.

Palliative Care

Three years ago Aetna, a health insurance company, conducted a pilot project that provided expanded hospice care to a subset of their subscribers. Two groups of patients with a terminal illness, i.e. with six months or less to live, received two different amounts of hospice care. Both groups had trained nurse care managers providing care management services to meet the comprehensive needs of the patients at the end of their lives. One group met the Medicare life expectancy requirements for hospice, with six months or less to live, and had to give up curative care. The second group was allowed access to hospice earlier, with a life expectancy of 12 months, and, if needed, continuation of curative therapy while on hospice.

Hospice utilization increased in both groups with high patient and family satisfaction. There was a decrease in the use of acute care, intensive care, and ER services, particularly in the Medicare group. In the enhanced hospice group the increase in hospice utilization and decrease in acute care represented a net cost decrease of 22%. Overall, not only were the outcomes better, but they cost less.

The Vermont legislature passed a bill that encourages all health insurers operating in Vermont to provide this type of service and asks the state to apply for a Medicaid waiver so expanded hospice services can be a part of the state insurance plan. As health care cost continues to increase at $1 million a day, with end-of-life care a substantial portion of this cost, providing expanded hospice care makes sense.

Investing in Our Technology Infrastructure

Whether it allows students to use state-of-the-art learning tools, seniors to make purchases from the comfort of their own home, or companies to communicate halfway across the world, the legislature and Gov. Shumlin recognize broadband coverage as a vital need for all Vermont residents, businesses, and schools. In 2010, Vermont received $174 million in federal grants and loans to fund major broadband initiatives.

The 2011 Telecom Bill streamlines the permitting process for developing communication technology infrastructure like cell towers and fiber optic lines, which ensures that this stimulus money is utilized effectively over the next two years. The bill also allows for wireless Internet and cellular providers to apply for permits for multiple towers at once rather than permitting them individually. This helps get more Vermonters connected faster. The Telecom Bill also includes a reorganization of the Vermont

Telecommunications Authority Board, allowing the oversight body to better coordinate state efforts to bring broadband to the last mile and bring cell phone service to targeted highway corridors. The state has committed $10 million in capital construction funds to further the goal of providing accessible, affordable cell phone and broadband Internet service to all Vermonters by the end of 2013.

Vermont’s Transportation Program

Vermont’s road conditions rank close to the bottom in the nation. Commuters and tourist alike experience this fact each day. Our state roads and bridges managed to make significant progress with the assistance of the federal stimulus funds. Results moved our national rating from 46th to 42nd on the national picture. Our infrastructure condition requires us to make the correct investments.

Vermont’s $554 million infrastructure budget makes a strong investment in a safe, efficient and fully integrated system. Transportation investments work to expand economic opportunities and improve quality of life. They create many local jobs and improve our roads and bridges for residents and visitors. Town programs: Class 2 paving ($7.2 million) and Town Structures ($5.8 million) continue to be strongly funded in this budget, regardless of the evaporating stimulus funds. These record-high funding levels were established as policy and will become the permanent base level amounts going forward. An exciting new municipal sidewalk program struggled to be created, and in the end needed more time for review of funding sources, but it will be a good starting point for next year’s discussions.

Government Transparency – It is your right to know!

Under the Vermont constitution, all government officers are accountable to the citizens of Vermont. One way Vermont attempts to achieve this constitutional requirement for accountability is by providing open access to public records. This bill tries to address the balance between the public’s right to know and the boundaries of personal privacy.

Its central piece orders judges to grant attorney fees to those who are wrongly denied access to records. This should send a signal to local and state officials to keep good records and respond in good faith to requests for Information.

It also establishes a study committee to review the 215 exemptions to the Public Records Act. Some of the exemptions are difficult to understand or interpret, thereby creating confusion. The intent is to clarify whether a document is public or not.

Funding Home Renewable Energy Projects

Many Vermont towns have eagerly awaited the “Property Assessed Clean Energy Program.” This is a law that enables voters of a municipality to establish a special “Property Assessed Clean Energy” district, in which residents can make energy-saving improvements to their properties with funds borrowed through the town. Participating property owners then repay those loans over a period of up to twenty years through a regular payment as with their property tax bill, which allows them to spread out their payments and reap net annual savings at the same time. When the property is sold, the payments, like the annual energy savings, stay with the property until paid off. The bill provides strong safeguards to this program, including a system of loan loss reserve funds, underwriting criteria, project guidelines, and vital technical assistance for participating towns through Efficiency Vermont. This program is the first meaningful way for homeowners to afford important energy improvements, both electrical and thermal, in a time of sky-rocketing fuel prices. Twelve Vermont towns have already voted to become PACE districts, and we expect many more to sign up, especially with Efficiency Vermont now acting as an important facilitator.

Keeping our roads safe from drunk drivers

The challenge presented to the legislature to prevent harm to Vermonters and their families and friends by chronic DUI offenders was taken on in H.264. It is helpful to understand that it is a small but hardcore population that challenges us. While 50% of first offenders don’t offend again, larger percentages of second time offenders, and even larger percentages of third and subsequent offenders re-offend. These folks are the focus of this legislation.

An escalating scale of penalties has been set in place for these offenders. A third DUI conviction carries with it a term of imprisonment up to five years of which at least 96 consecutive hours of imprisonment must be served. For the conviction of a third or subsequent DUI offense with death or serious bodily injury resulting, a term of at least five years will be imposed and probation, parole, furlough, or any other type of early release will not be allowed.

Additionally, this legislation holds accountable anyone who allows someone who is under the influence of drugs or alcohol to drive his/her car. Anyone who violates this will be subject to a fine of not more than $1,000 or imprisoned for not more than six months or both. Should death or bodily injury result, a fine of not more than $5,000 or imprisonment of not more than two years would be imposed.

It is important to understand that efforts are made at each junction to avoid arriving at the second or third conviction by providing the CRASH program, alcohol and substance abuse treatment programs as well as new programs such as the ignition interlock device. In some very few cases, these initiatives are ineffective and result in the devastating accidents that prompted this bill.

We had a lengthy discussion that night about principled behavior vs. political theatrics and back room negotiating. Little did I know that the next morning, one of my bills was to go through some significant gamesmanship by a senate member who would attempt to finagle the bill into extinction through procedural maneuvers, a member of my own party, no less. My side was able to prevail by anticipating his moves and deploying procedural rules in response. Nothing here was illegal or unethical; just using the rules for one’s own agenda.

Both of us had good intentions, I assume, just different. He was doing an end run to help a constituent who wanted to own an unknown number of white tail deer and moose held in a captive hunt facility. I was working to put all of our wildlife in the public trust, insuring that our wildlife could not be reduced to private ownership. So who was right? What is the balance between doing what local constituents ask of you when it may stand in conflict with values held by Vermonters outside of your community? At times, we are servants of two masters: our individual towns as well as our state as a whole. This is no more evident than in our ongoing debate about fairness in funding of public education.

In our small state, politics are at play, but not as strongly as in other states. I spoke with gentleman who had served as legislative counsel to the U.S. Senate and later as a lobbyist in the Massachusetts legislature. While politics were at play in Washington, this paled in comparison with Boston’s back room deals. He figured the balance was about 15% principle and 85% politics. In Vermont, I would say it is the opposite, 15% politics to 85% principle. Most deliberations happen in the open and only a small handful of legislators are constantly working to secretly manipulate the system.

Now that I have seen three legislative sessions adjourn, I am no longer innocent enough to assume that politics are not at play. At the same time, it is not my style, I don’t respect it and it will be unlikely that I will be the instigator of such behavior. That said, I also like to keep in mind the words of Otto von Bismarck: “With a gentleman, I am always a gentleman and a half; and when I have to do with a pirate, I try to be a pirate and a half.”

I will be returning to my work as a special educator in Williston this week, ending our Tuesday mornings at Bruegger’s. I am available by appointment and can be contacted at KLWebb22@mac.com.

The most interesting place to be right now is the Senate with the budget and the tax bill passing last week and the unified health care bill slated for this week. Parodying the voice of Hamlet: to tax dentists, or not to tax dentists; to increase taxes on the wealthiest Vermonters, or not to increase this tax; to increase the tax on cigarettes, (although “not to tax” was never considered) – by 27 cents as passed the House, or $1 as passed the Senate Finance Committee? Following seven amendments and heated debate, the tax bill passed, raising about $24.5 million in new taxes, which included a 53 cent tax hike on cigarettes and the dentists were, once again, spared.

In contrast, H.441, the appropriations bill, often referred to as “the big bill,” passed easily with only one dissenting vote, resolving the $176 million budget gap for 2012 with the largest cuts to human services.

These bills will return to the House this week where changes between the House and Senate-passed versions will be reconciled in the House Appropriations Committee for the budget bill and House Ways and Means for the tax bill. These committees will then have three or four options.

The first option is to concur with the Senate’s amended version and bring the bill back to the floor with a recommendation to pass the bill and send it on to the Governor for signature. The second option is to concur with further proposal of amendment. The bill goes back to the floor of the House where it must pass and then return to the Senate for approval.

The more likely option with bills that have undergone significant change would be that they do not concur with the version passed by the Senate. At this point, House Speaker Shap Smith and Senate Pro Tempore John Campbell will each appoint three members from their respective chambers to a “committee of conference.” A fourth option is to do nothing. As this is the first year of the biennium, the committee can hold the bill and pick it up again in January. In the second year, any bill that has not been sent to the governor dies. This is not true for the budget in either year, however. The Legislature cannot adjourn until a budget is passed and sent to the Governor.

I have found this process not to be for the faint of heart. This process is set either by the Constitution or by the Joint Rules of the House and Senate and I have not seen any other alternative to get this work completed in a timely fashion. Nonetheless, major decisions can be made by a small handful of legislators and if you don’t keep your eyes open, tricky things can happen. Even though these committee meetings are all public, it is challenging to be in several places at the same time, thus it is important to have a very good network of contacts who are closely watching the different conference committees.

The original adjournment date was slated for May 7th with the option to add Saturdays and Mondays to our schedule to meet this deadline. Although there is great pressure to complete the universal health care bill and many, many others, the only bill that could truly delay adjournment is the budget bill.

Feel free to email questions to me: klwebb22[at}mac.com and if appropriate, I will post answers on this website as they come in. Send to my email rather than replying on this site. Messages left on this site get lost in the hundreds of spam that come in.

I am planning to put some links on my website (www.katewebbvt.com)  to help people get answers to their questions and follow the action unfolding in the Senate.  This should be up before the weekend.  In the meantime, I will field questions related to your situation by email: klwebb22@mac.com.  The more specific and focused the questions, the easier it will be for me to get back to you. Do remember that the only staff I have is myself.  There is extensive information and a list of frequently asked questions on this website: http://www.leg.state.vt.us/jfo/healthCareReform.aspx that I will also post on mine.

Of ongoing concern to everybody has been “how much will it cost” and “how will we pay for this?” We do not know what it will cost yet, but we do have a starting place.  We know what we are spending now ($4.7 billion) and we know where we are headed in the 2013 ($5.9 billion) so we do know that whatever we build needs cost less than this. Businesses know that if they are spending, perhaps $500 rising to $700 then  $1000 per employee per month with no sign of letting up, there must be a more efficient and effective use of these dollars that also allows them to focus on their own business and not the business of health care.

Throughout this process, there has always been a balance between the competing interests of accuracy and speed in developing a financing plan. The faster the plan is developed, the broader the assumptions must be.  To develop an accurate plan, to allow for public participation, and to build confidence in this plan, it is important that it not be rushed.  This is why a full picture of the financing is not expected to be in place for at least two years.  The future board will look at a variety of sources: payroll tax, income tax, consumption taxes, provider assessments or other new or existing options.  Nothing here is set as of yet.  How it will come about will be subject to a lengthy study and opportunities for continued participation.  Those of you frustrated by this, please stay engaged, keep asking questions and giving input.

Other more specific questions can be answered and here are a few I heard that night.  As the bill stands today, Medicare is untouched.  Those who are receiving retirement benefits would not be required to change. Union-negotiated benefits may continue to bargain benefits if they so choose.  Other questions need more time for thought such as what to do with students in Vermont colleges, adult children up to age 26 and out-of-state networks available to Vermonters.

I voted for and continue to support H.202, an act relating to a universal and unified health care system.  That said, I too am anxious to see how the details will be fleshed out and addressed.  I believe that within two years, we will have a better idea as to whether or not this will work as planned.  The bill is continuing to undergo change in the Senate and should a bill pass, we will likely be revisiting this legislation for years to come.  When we do, we will need to analyze the data and continue to question our underlying assumptions and adjust accordingly.  And in the end, “do no harm.”

Although there is much angst about H.202, one thing that seems to bring universal agreement is this: our current system is unsustainable.  We currently spend $5 billion per year on health care in Vermont and these costs are expected to grow at a rate that far exceeds personal income growth, state revenues and the ability of many businesses to pay these costs.

This is not to say that there are not many wonderful things about our current system, and much testimony pointed to concerns about losing the good things that we have.  The problem, however, is the way we deliver and pay for this system is so complex and chaotic, without broad reform, we won’t have the potential to find the savings that we must find and are likely to lose these good things in the process.

H.202 has three reform components that are implemented over a 5-7 year period with checks along the way.  First, it establishes a board whose charge will be to design a more sensible way to pay for health care.  The bill allows for multiple opportunities for public participation in the process.  While the Governor had wanted his office to appoint the board with Senate confirmation, the House felt this gave too much power to that office.  The House version thus mimics the process for the appointment of judges and Public Service Board members.

Second, it sets up an exchange system.  Federal health reform requires every state to either create a “health benefit exchange” or fall back to the federal exchange.  The exchange is similar to websites that allow travelers to compare services and costs for airline travel, however here, purchasers can compare insurance company benefits and costs for one-stop shopping.  Exchanges act as engines for health care reform by implementing and simplifying administration and payment.

Third, it sets the stage for Green Mountain Care, a universal access to essential health care benefits.  If things go according to plan, this would be in place sometime between 2015 and 2017.

During the two days of debate last week on this bill, the primary division seemed to be whether we should start with the concept and then build in the details as H.202 did, or start with the details and then build the system as the opposition preferred.

I came to see that this bill is not a complete system but a first step to address health care delivery and cost containment.  Similar to starting a business, designing a house or marketing an invention, design usually comes first with financing later.  The newly created board would be responsible for developing the financing plan once the direction is more firmly established.  The coming months and years would likely indicate that further analysis would be required and adjustments made.

There are some answers we cannot know at this time.  That is the nature of pioneering work and it is easy to sew angst to try to derail it.

What is known is the current dollars being spent cannot continue. Certainly there is a more efficient use of these dollars that could be used to help us get well and stay well which could ultimately bend that curve on spending.

If one only catches sound bites, H.91. or “Public Trust bill, “ appears to be about whether a certain moose named “Pete” with friends on Facebook, gets a stay of execution or lives out his remaining years as a partially domesticated pet.  That is not what the bill is about although I would currently guess that Pete is going to be just fine.  H.91 puts in statute that the native fish and wildlife are collectively held by everyone as part of the public trust and cannot be reduced to private ownership.

The Public Trust Doctrine of wildlife is a bedrock concept of the North American Model of Wildlife Conservation and is why this country enjoys the greatest diversity, quality, and quantity of game animals and other wildlife in the world.  There is increasing evidence that this model is under siege around the country as landowners restrict access to wildlife for personal profit.  One way of reducing this likelihood is to formally put this trust relationship into statute.  It is important that states not only define these resources as state held, but also mandate responsibility to maintain these resources, for the wildlife itself and for present and future generations.  This bill does that.

H.91 was developed following public outrage from hunters, sportsmen and conservationists alike stemming from a deceptively small amendment to the Appropriations bill that slipped through in the final hours of the 2010 legislative session.  The pressure to save the celebrity moose resulted in far greater reach, changing the status from public to private control, not just Pete, but all of the native deer and moose in an enclosed hunting facility.

It was the belief of many, and over time, myself, that Pete was simply a tool for media hype used by a very crafty facility owner in an effort to resist the Fish and Wildlife Department closing in on him for lack of a permit, poor fencing and unwillingness to work with the Department to come into compliance for many years. It also drew people away from the reality that Pete was living at a facility in which native and non-native game are hunted for a price.

Also at the heart of the problem here is the grave concern of increased risk of disease being transmitted from captive deer to our vulnerable native population.  Chronic Wasting Disease (CWD), similar to mad cow disease, is an insidious disorder of deer, elk, and moose that is transferred through urine, feces, saliva, blood and food.  It has no cure; no vaccine and can live in the soil and animals undetected for many years.  CWD is not known to be transmissible to humans, but has had devastating effects on free-ranging deer in those states and provinces where it has been found.  Captive hunt facilities and the captive deer trade have long been implicated in the transfer of this disease.   There was conflicting testimony as to the degree of risk for Vermont.  That Vermont is still free of CWD allows us to view this disease as a theoretical problem.  In 2005, Oneida County in New York had a positive test for one deer in a captive hunt facility and two wild deer nearby.  Vermont Commissioner Patrick Berry told us that his counterpart in Maryland facing their first outbreak said that we must do anything and everything we can to prevent this from ever happening.

The second part of the bill will be session law that puts the facility back under the jurisdiction of Fish and Wildlife and gives the owner a generous 5 years to bring the native white tail and moose at his facility to zero and sets up a system for disease surveillance.

One hunter who testified before our committee reminded us of the importance of keeping wild things wild and the need to educate the well meaning public about the wildlife from which we are growing so far away.    I worry that my sons won’t have this, he said, that all of nature will be in a theme park, or experienced only through Internet or TV.

It is very unfortunate that this problem could not be resolved 10 years ago when the fence was erected, entrapping only 5-6 wild deer and moose.  A positive outcome, however, is the public trust doctrine for wildlife will now become state law should the bill pass.

Most of these priorities have been on the list for some time.  Most will also require additional dollars at a time when budgets are shrinking.  Funding from the EPA, often the biggest source of financial support for programs, is also on the chopping block in Washington.

As I reviewed the list, there seemed to be only one remaining “low hanging fruit” and that was restricting the use of phosphorus (P) in fertilizer on non-agricultural turf.  To implement this, there would be no impact on government spending, no financial impact on taxpayers, and would ultimately put some teeth in the 2007 educational campaign known as “Don’t P on the Lawn.”  I introduced this bill, H.26, in January and it passed the House on a unanimous voice vote on February25^th. It is now on its way to the Senate.

What is the problem with phosphorus anyway? Excessive amounts of phosphorus create a perfect breeding ground for toxic algae blooms that deplete the amount of oxygen available for aquatic life.  This begins a chain of events that has a disastrous environmental and economic impact.  Lake Champlain is now classified as an “impaired waterway” and earned a spot on a New York Times list of places in the world not to visit.  As nitrogen from the Connecticut River was implicated in causing dead zones in Long Island Sound, we included nitrogen restrictions in the bill as well.

While agricultural pollution has often been viewed as the primary source of phosphorus, developed lands are actually bigger contributors to phosphorus pollution.  According to the Lake Champlain Basin Program, 46 % of non-point P pollution comes from urban and developed land while 38% of the non-point P pollution comes from agriculture and 5% from forestland.

Each watershed area has its own breakdown.  The Missisquoi basin region contributes one-quarter of the non-point phosphorus pollution entering Lake Champlain while Chittenden County, including the Main Lake, Burlington Bay and Shelburne Bay contributes another quarter.  The sources of pollution from these two regions however are quite different.  While about two-thirds of the problem can be attributed to agriculture in the Missisquoi basin, agriculture in Chittenden County accounts for only 20% of the problem.  The lion’s share here then, is due to urban and developed land and one of those sources is excess fertilizer applied to turf.

H.26 restricts the use of phosphorus and nitrogen fertilizer to non-agricultural turf, i.e., our lawns.  Golf courses will be required to follow nutrient management plans. Phosphorus fertilizer will still be available when starting a new lawn or for patching when young roots are less able to access available phosphorus in soil.  There will be a fine of up to $500, not for the confused consumer, but for those consumers and sellers who knowingly and intentionally violate the law.

Stores will need to post signs explaining the law and reminding consumers to get a soil test (cost ranging from free to about $14) to determine whether P is actually needed.  If it is, you will be able to buy the product.  If it is not, you have either just saved yourself some money, or you can purchase phosphorus-free fertilizer products that work well to feed lawns and don’t hurt our waterways.  Nitrogen fertilizer will still be available but with restrictions in amount and type.

If this bill becomes law, we will be joining 12 other states that have already banned or restricted the use and/or sale of phosphorus including New York, New Jersey and Maine.

Minnesota enacted a law in 2004 and found that the amount of phosphorus applied through lawn fertilizers decreased 48% between 2003 and 2006.  There were not reports of the law being enforced by local governments; rather, the law created “teachable moments” for extensive yard care and water quality education.  By 2007, 82% of the fertilizer sold was phosphorus-free.

I do not expect to see fertilizer police hanging outside of Aubuchon’s.  Our real hope here is to decrease the amount of P that finds its way to the Lake by strengthening education and making unnecessary fertilizer less available.  With the cost of clean up of Lake Champlain estimated at more than $800 million and possibly 50 years, it seems like one small effort we homeowners can make.

For more information on fertilizer and water pollution, visit www.lawntolake.org

The budget process is an arduous one and traditionally goes like this:  1) look at projected revenues; 2) look at last years budget; 3) add for inflation and new initiatives; 4) ask, “where can we cut?”  In this model, the executive branch comes to the legislature with dizzying streams of numbers showing where the money will go but this isn’t very revealing, because it doesn’t tell us what results we will get for that money.

The problem with this long held tradition is the tendency to focus on dollars and positions rather than results.  By putting our energy into margins and cuts, we encourage hiding and padding.  We know each side is going to play this game and it becomes a vicious circle, a tit-for-tat and for many, an emotional roller coaster, not knowing whether their programs will be spared or cut.  Interest groups are pitted against each other in the scramble for dollars and citizens wonder who is representing their interests?  This process discourages innovation and often our highest priorities go under-funded after we have funded everything else. This can lead to people feeling like they don’t get the value they want from government.

Albert Einstein once said, “we can’t solve problems by using the same kind of thinking we used when we created them.”  In 2009, leaders from the legislature and administration hired the Public Strategies Group (PSG) to help find a different way to look at our budget challenges.  Instead of funding departments based on last year’s costs plus inflation, groups were formed to look at budgeting based on results.  From this joint venture, “Challenges for Change” was brought forth and was passed into law as Act 146 last May.

Act 146 has had its problems.  The development of outcomes and measures began too late in the session to allow for much public input or buy-in and has yet to generate the anticipated savings.  As a result, there are some forces that would like to see this process dropped, keeping the time-honored cut-or-tax budgeting.  I hope this is not the case, because there has been progress.

Since the passage of Act 146, the agencies have been reviewing identified outcomes, setting up programs and designing measurement systems.  The first quarterly report came out January 24^th and the information I have seen so far under the Regulatory Challenge is clear, easy to understand, and a measure of something of importance to Vermonters.

I do believe that outcome-based budgeting makes a great deal of sense.  Our early efforts here should be seen as part of the learning process toward a move to outcome-based budgeting rather than a failure.

The so-called Blue Ribbon Tax Commission was brought to life by the Legislature during the veto-override special session in 2009.  It called for a three-member panel to provide a structural analysis of the state’s revenue system and to offer recommendations for improvements, modernization and a long-term vision for the state tax structure.   Governor Douglas appointed Bill Sayre, Senate Pro-tem Shumlin appointed Kathleen Hoyt and House Speaker Smith appointed Bill Schubart.  The tax system was to be easier to understand, sustainable, equitable, economically competitive and “revenue neutral.” In other words, revenues added would be in direct proportion to revenues reduced.  The desire was to create a 21^st century tax system with a big picture perspective rather than picking away piecemeal at incentives and taxes.

On January 12^th, the Commission unveiled its 175 page report to the Legislature.  The report focuses on core concepts and purposefully does not get into specific detail.  The job of the Legislature, beginning with the House Ways and Means committee, will be to go through each concept and flesh out the details.  During this time, the committee will take testimony from experts, advocates and citizens and this can include you. .   I encourage you to go to the website: http://www.vermonttaxreform.org/library/ and click on “Final Report.”  For a quick summary go to page 15 to read the 3-page executive summary.

An interesting part of the report includes a review of our current tax structure.  They found that much of the conventional wisdom regarding Vermont’s tax system did not hold up under scrutiny.  These misperceptions were felt to have a deleterious effect on public debate resulting in recommendations for change based on misconstrued information.  In order to move the debate forward, the Commission needed to demystify these assumptions and focus on real vs. imagined facts. For example, the assumption that ‘some people don’t pay taxes” was not correct.   If total tax contribution is considered, lower income earners pay a greater percentage of their income on sales taxes while upper income pays a great percentage on income taxes.  Middle and upper-middle income taxpayers pay a greater percentage of their income on property taxes.

Over an 18-month period, the Commission held public hearings, completed careful study and participated in thoughtful deliberations, critically questioning every assumption in the tax system.  Though all three members found the process respectful and on the right track, they did not come to full agreement on all of the recommendations.  A dissenting view by Bill Sayers is in the report.

Over the coming months, and likely years, the Ways and Means committee will begin to look at the recommended changes to the sales tax and personal income tax.  As we move from a goods industry to a service industry, what are the implications of decreasing the sales tax rate from 6% to 4.5% but expanding taxes to services such as lawyers, landscapers, hairstylists?  Can we work with other states to change federal law to collect revenue on burgeoning Internet sales competing with our state-taxed merchandisers?

The Commission was in unanimous agreement that we should restructuring the personal income tax to align with surrounding states. By switching from Taxable Income to  Adjusted Gross Income, Vermont’s tax rate would compare more competitively to other states, simply by comparing apples to apples.  Does it make sense to take away deductions like the home mortgage tax and instead use a “residential tax credit?”

These questions and many more are likely to spur lively debate and certainly trigger anxiety as Vermonters wonder how they will land in the final package.  I trust that the  tri-partisan committee will do a thorough job in sorting this out.

Please join Joan Lenes and me at Bruegger’s on Tuesday mornings between 7:30-8:30.  I am also available by appointment.  Contact me at 802 233-7798 or klwebb22@mac.com