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Vermont Grocers' Association
Legislative Report
June 4, 2009
Prepared by
Wm. Shouldice &
Associates, LLC
The legislative reports are a member service of the Vermont Grocers’
Association and are distributed on a weekly basis during the Vermont
legislative session.
Special Session Report
At 9:49 pm Wednesday evening the 2009 Special Session of the General
Assembly adjourned. During the Special Session, the Legislature
first dealt with the veto override on H.441, the budget bill. The
Legislature made history in overriding the first ever budget veto by
a vote of 100 to 50, just meeting the 2/3 necessary to override the
Governor. The second course of action was to then pass a
“companion” bill that would amend H.441. Many Legislators said the
bill was developed in advance in order to achieve the necessary
votes to override the Governor. By the time the Conference
Committee agreed on the provisions that would be included in H.442,
misc tax bill, it pushed the Legislature into a second day of
work.
Controversial provisions included was the addition of two sales tax
holidays which are estimated to cost about $2 million, this
expenditure is covered through adjustments in the income tax rates.
Lastly, the Legislature did take minor steps in addressing the
shortfall in the Unemployment Trust Fund by increasing the
employer’s taxable wage from $8,000 to $10,000, freezing the maximum
weekly benefit at $425 and adding a legislative reform committee to
meet during the summer to provide recommendation to the full
legislature by January 15, 2010. The Committee also included a
“carve out” for farmers and wood lot owners to retain the full 40%
capital gains tax exemption. An amendment to reduce the “retiree’s”
carve out from age 70 to 65 was defeated on the floor by a vote of
40 to 79.
The $4.5 billion budget passed during the regular session was
increased during the Special Session to $4.53 billion, beginning
July 1, 2009. This budget includes American Recovery & Reinvestment
Act funds, special funds as well as increases the Capital Gains tax,
Estate tax, cigarette & other tobacco tax increases, taxes on
digital downloads and adds a sales tax on spirits. A portion of the
tax increases will be used to decrease the personal income tax rates
in a two step phase in.
A new bill (S.1) was introduced, a vehicle to make technical
amendments to the budget bill and H.313, the economic development
bill. In addition, a handful of other technical issues were
discovered so amendments to the technical amendments bill was
needed. During the floor debate, several members used this
opportunity to correct provisions that they did not support in the
original bills. No substantive amendments were passed in the
technical corrections bill, S.1.
A summary of H.442 is below for your review:
House 442 Fiscal Note
Sections 1-3 - Unemployment Reform Sections
·
January 1, 2010 – December 2010 wage subject to tax $10,000
·
Freeze on maximum weekly benefit at $425 from July 1, 2009 – June
30, 2010
·
12 member reform committee created to meet 8 times during the summer
to provide recommendation to the legislature by 1/15/10
Sections 4-7 - Clean Energy Fund – no GF budgetary impact
·
Specifies duties of the Clean Energy Development Fund Board
·
Houses the fund manager in the Department of Public Service for
administrative purposes, rather than the Treasurer’s office.
·
Allows the ARRA funds to be used, in part, for administration of the
fund
·
Clarifies rule making process
·
Clean Energy Development Fund is expected to receive over $30
million in ARRA funds in the coming months
Section 8 - Vermont Telecommunications Authority
·
Raised total available to $750,000
o
Increased general fund from $250,000 to $400,000 (from bottom line
of general fund)
o
Directs anticipated receipts of $350,000 from fines & penalties
(special fund)
Section 9 – Bridge Funding for Tobacco programs
·
Provides $1,500,000 in one time funding from tobacco fund corpus to
allow the Board the capacity to make orderly program reductions
Section 10 -11 Cost Reduction Authorization
·
Changes do not impact revenues
o
Requires administration to have plan approval if plan requires
reductions in force exceeding 1% of state workforce
Section 12 -13 – State Employee Retirement Incentive
·
Potential state fund savings of between $1,000,000 to $1,400,000
·
Different departments will experience differing cost impacts due to
uncertainty as to where layoffs and replacements will need to occur
Section 14 – North Link Funding
·
Provides $500,000 from general fund bottom line for North Link
preserving substantial federal funds
Sections 16a – 24 Tax Changes in Bill Proposal
There is a number of tax changes included in the companion bill. In
summary, these changes have approximately the same revenue result as
the H.441 tax proposals.
Income Tax Changes (effective FY 2010, 2011 and 2012):
·
Changes reducing revenue
o
The effective date of the capital gains provisions is changed to
July 1, 2009.
o
Capital gains from farms and timber retain the 40% exclusion.
o
Taxpayers over age 70 may elect to either take the 40% exclusion or
a flat $2,500 exemption between July 1, 2009 and December 31, 2010.
·
Offsets
o
The marginal rate changes are phased-in beginning with lower rates
in TY 2009 and then lowered further in TY 2010.
o
The capital gains exemption is lowered to $2,500 to offset the over
70 exemption while that exemption is in place
o
Beginning in tax year 2011, the flat exclusion will increase from
$2,500 to $5,000 and taxpayers over age 70 will receive the same
treatment as all other taxpayers.
Other Tax Changes:
·
There will be two, one-day sales tax holidays in FY 2010 (August
22 and March 6). The cost of this holiday is offset in the
other tax changes. The fund implications are
o
$1,470,000 in lost GF sales tax revenue
o
$100,000 in general funds to make up lost revenue for local option
towns and receipts for the pilot special funds .
o
$10,000 in general funds available to offset programming costs
though application to the tax department (last time the tax credit
was in place applications came in for hundreds of dollars not
thousands)
·
The education fund implication is ($744,000) which will be absorbed
in the fund bottom line leaving the reserve at 3.7% for FY 2010 and
moving up to 4% FY 2011
·
Corporations will be allowed a Research & Development Tax credit
that is 30% of the federal credit amount for Vermont based R&D
activities. This will have a FY 2011 impact.
Section 25 Next Generation Funding
·
Provides $1,500,000 split between VSC, UVM and VSAC
·
Funds come from Extra estate tax revenues which otherwise would have
gone to the Higher Education Trust Fund
·
Some funds will still go to the Higher Education Trust Fund
depending on revenues
Section 26 Information Center Funding
·
Provides $300,000 from excess ARRA TANF funds in FY 2009 for
information centers – rest areas due to a shortfall
Section 27 Waterfall Special Fund Assessment elimination
·
Adds to general fund waterfall elimination of special fund
assessment
Tax Changes in H.441
Provisions of the budget bill that take effect on July 1, 2009 that
were not changed by the companion bill, H.442 include:
·
Increases the Vermont cigarette tax by $2.50 per carton
·
Increases the other tobacco products tax from 41% to 92% of
wholesale price
·
Adds the 6% sales tax to spirits
·
Adds sales tax to digital downloads
There will be a floor tax on tobacco inventories June 30. As
additional information is available, VGA will pass it along.
Proposed Rules on ATV’s under Review
The Agency of Natural Resources is proposing rule changes that would
increase the access on state land for ATV trails. As some stores
might be interested in the issue, this is a summary listed in its
rule notice:
“As the current 600 mile Vermont All-Terrain Vehicles Sportsman's
Association (VASA) ATV trail system grows, ATV sales could increase,
as well as an increase in business activity for motels, gas
stations, restaurants and general stores with additional ATV riders
coming to a particular area,requiring goods and services that these
businesses provide. Additional income from repair service could be
generated by ATV dealers. Potentially, private enterprises could
benefit if they choose to begin to offer commercial ATV tours as a
result of Vermont having a complete, state-wide trail network.”
A copy of the proposed rule can be accessed at:
http://www.anr.state.vt.us/site/html/rule/AllTerrainVehicleUseStateLand.pdf
Written Public Comments on the Agency of Natural Resources Proposed
Rule to set up a process to designate ATV connector trails on state
lands. The Public Hearing is 7-9 pm on June 15 at the Pavilion
Auditorium in Montpelier and the deadline for Written Public
Comments is June 22. Written Public Comments should be sent to:
Warren Coleman, Esq.
ANR General Counsel
103 South Main St., Center Building
Waterbury, Vt. 05671
or
Warren.coleman@state.vt.us
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