by Representative Heidi E Scheuermann, R-Stowe On Thursday evening (April 5th), the House General, Housing and Military Affairs Committee, the committee on which I serve, will be having a Public Hearing on S. 40, the bill that would increase in the minimum wage to $15 per hour. I have written some about this topic in the past, and shared with readers my significant concerns about this legislation, but further investigation and testimony received about it have only served to solidify those concerns.
From what I understand, from the perspective of the proponents of the mandated increase, the underlying goals are simple, and include: 1) reducing poverty; 2) reducing income inequality; and 3) putting more money in the pockets of low wage workers so that things are more affordable for them.
Indeed, these are all very worthy goals. Unfortunately, this proposal will do little do address them.
First, with regard to reducing poverty: From what we heard from the longtime, very well respected economist at the Vermont Department of Labor, 50% of all Vermonters living in poverty do not have W-2 income at all. That means 50% of Vermonters living in poverty have no wages at all. So, these Vermonters would not be impacted at all in the form of higher wages with a minimum wage increase. In fact, because the cost of goods and services will undoubtedly increase if this proposal were to become law, their cost of living would also increase.
Given this reality, is this really the best proposal for reducing poverty in Vermont? I don't believe so.
Second, will this proposal reduce income inequality across the state? Again, the economist made clear that as much as he has been investigating that question and looking for any evidence that validates this claim, there is no evidence of such. There is no evidence from the experiences across the country to suggest that a reduction in income inequality will take place with an increase of this sort in the minimum wage.
And, finally, will this proposal make things more affordable for low-wage Vermonters? The simple answer is no. A wage increase is an increase in labor costs. And, if the wage increase isn't a decision of the business as a result of its success, but instead mandated from government, most likely this increase in the price of labor is going to increase the prices of goods and services. This inevitably means that the goods and services that all of us purchase, including low-income Vermonters, are all going to increase.
Imagine the impact an increase in the cost of fuel, transportation, utilities, food, and clothing will have on the purchasing power of low-income Vermonters. Imagine what it will have on middle-income Vermonters, and families and business across this state.
Imagine the impact these increases will have on the tourism industry - the lodging, dining, and recreation experience our visitors in Stowe and throughout the state enjoy.
Imagine the impact these increases will have on our small retail establishments - already struggling to stay competitive with online retailers.
Frankly, it isn't that difficult to imagine. In some cases, there will be a reduction in force, reduced hours, and reduced benefits. In others, there will undoubtedly be automation brought in. And, in several cases, doors will close.
Rest assured, as this proposal progresses, I will continue to be a vocal advocate of ensuring the viability of our small businesses - in this community and throughout the state.
Education Funding and the Income Tax
Two weeks ago, one of the most anticipated pieces of legislation of the year was considered by, and passed, the Vermont House of Representatives.
As one who was very intrigued by the discussion taking place over the first two months of the session with regard to education funding reform, I was disappointed with the bill that eventually emerged from the House Ways and Means Committee.. After all, much of what made the initial discussion so intriguing was that one of its main goals was toconnect more Vermonters to their education spending decisions - a goal I have had to the last 12 years. But that goal was a shadow of its former self in the version that came to the House floor. In fact, it haslittle to no added connection to budgets voted upon and money spent; and while there is a very modest reduction in property taxes, the income tax increase on middle and higher income earners is problematic.
In the end, I believe strongly that having more Vermonters better connected to their education spending decisions is theonly waywe will be able to ensure spending sustainability and long-term property tax relief, soI tried to amend the bill to do just that.
Specifically, I brought a very similar (though better) version of what had been discussed in committee to the floor of the House for consideration by all House members.
This amendment kept in place all of the sections related to the personal income tax changes that are being proposed to mitigate the impact of the federal tax reform law.It also kept Section 20 - the proposal related to teacher's retirement.
What this amendment specifically addressed was the education financing changes by striking all of those sections, and replacing them with new sections.
To be clear, though, while this document illustrates what would have happened if this proposal were to have gone into effect this year (2019), my amendment was designed to go into effect for 2020. So, while the numbers would be slightly different when implemented next year, they are a good approximation of what would have happened.
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First, the amendment proposed to reduce the average homestead education property tax rate to 25 cents.
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In FY 2019 this average reduction would have been be from $1.554 to $.893.
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This would have been an average reduction in the property tax on Vermont families of 42.5%!
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It provided a base spending amount to districts of $12,503 per equalized pupil, and it raised the yield to $4,626 on above-base spending.
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This means that Vermonters would have been less subject to the increase of spending above the base spending amount that occured in districts other than their own.
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Essentially, the people in high-spending districts would feel more of the burden of those high-spending decisions than they currently do.
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The amendment proposed to maintain the non-residential property tax rate as is ($1.591)
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And, it proposed to replace the income sensitivity system with two important things:
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A much-reduced property tax rate as explained above, and
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A housesite value exemption
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This exemption is explained under #5 of the JFO document. You will note that the housesite value exemption rates in relation to the household income brackets
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Now, the question became, how do we pay for this 42.5% reduction in the property tax on Vermonters, and the other changes? How do we ensure that the spending approved by voters at the local level are paid for through this state financing system?
Well, like, H. 911, the proposal was to institute a modest education income tax.
To be clear, I have always been reluctant to raise the income tax or institute an education income tax to pay for education. I worry about the volatility of the tax, and I worry about the impact it will have on our economy given our already high marginal tax rates.
But, the fact that this was a hybrid system is an important mitigation to those concerns. And, the fact that H. 911 had a much more modest reduction in property taxes AND an increase in income taxes proposed had given me cause for concern about the impact it would have on our overall economy was an important consideration at the time of this amendment, as well.
Simply, I believed my amendment was a better proposal than H. 911 in terms of long-term public policy.
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First off, the education income tax would have been on adjusted grow income, thereby ensuring it is as broad-based as possible.
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Households making from 0 to $30,000 for individuals, and to $35,000 for joint filers would have been completely exempt from the education income tax
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Individuals making from $30,000 to $47,000, and for joint filers between $35,000 and $47,000, would have seen a modest .4% education income tax rate
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For those making from $47,000 - $125,000, their tax rate would have been 1.1%
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And, for those making $125,000 - $4 million, their tax rate would have been 1.25%.
In the end, this amendment failed. But, I was pleased that it garnered as much attention as it did and that the entire House was able to learn more about the flaws in our current education funding system.
While I did not support H. 911 and have significant concerns about it as it passed the House, I am hopeful the discussions we have had this year will lead to more agreement and understanding that the system is broken and beyond repair. More importantly, I am hopeful it leads to the realization that the only way we willachieve true sustainability in the program and long-term property tax relief is to create a system in which more Vermonters are connected, better, to their spending decisions; that as many Vermonters as possible have skin the game - even the modest amounts I suggested in my amendment.
School and Community Safety
As has been widely reported, the effort that has unexpectedly risen to the forefront this session is that of school and community safety.
Following the tragedy at Marjory Stoneman Douglas High School in Parkland, Florida, and the near attack averted at our own Fair Haven Union High School, there has been a new kind of reflection by many in terms of school safety, and community safety in general.
As I mentioned in a previous newsletter, the first two pieces of legislation focused on modest changes to our state's gun laws were S.221 and H.675, both "Extreme Risk Protection" bills.
Essentially, these bills would allow for the court to order an individual not able to purchase, possess, or receive a firearm, and any dangerous weapon, if they are found to be a danger to him/herself or others.This would mean that if the individual is found to be a danger to him/herself or others, law enforcement could confiscate their firearms for a certain amount of time. In addition, the final legislation included aprocess for which law enforcement could remove weapons at the scene of a domestic violence incident. The individual would be provided due process, however, by ensuring that by the next business day, an arraignment would occur and the court would determine whether or not to return the weapons.
I supported this legislation, as I believed it was a common sense step to ensure we do all we can to keep weapons out of the hands of individuals who are deemed to be a danger to him/herself or others. And, I believe it does so by ensuring our constitutional rights are protected through due process.
S. 55 would put into place a few more changes to our gun laws that includeuniversalbackground checks, limits on magazine capacities, a ban on bump stocks, and an increase on the legal age to purchase a gun to 21 (with three important exemptions: if you are member of the military or law enforcement, or if you have successfully completed a hunter safety course).
This is an issue that raises a great deal of emotion on both sides. And, it is one that takes a great deal of listening and learning in an effort to truly understand the issue, and the impact certain provisions would have on Vermonters - both in terms of citizen safety, and in terms of a traditional culture
and individual rights and responsibilities.
With regard to S. 55 and its passage in the House, I had concerns abouttwo provisions in the bill as it came to the House floor.Specifically, Iwas concerned with the impact the universal background check would have onprivate sales.There seemed to be some reluctance expressed by licenseddealers to facilitate the private sales by doing a background check.So,I was hopeful we'd be able to modify it so that they could be facilitatedby law enforcement offices.Unfortunately, that amendment failed in the House.
In addition, the magazine capacity limit simply seemed unenforceable.After all, no magazines have serial numbers or any identifying marks to track theirsales.So, nobody would know where and when an individual purchaseda magazine that had a larger capacity. In addition, the initial proposalof a 10-round magazine limit seemed to be too small given many of thehandguns currently on the market especially.
During the bill's consideration, there were some changes made that addressed some of theconcerns above.For example, the magazine limit was increased to 15, andthere will be a study to determine how we can make the private sales withbackground checks work better.
In the end, on both days of consideration, while I still would have liked to see an additional change ortwo, that did not preclude me from supporting and voting for the bill.
I know this is disappointing to many, but, in the end, I simply felt S. 55 was a bill I could support at this time.
As I heard from so many constituents and people from throughout the state on this issue, I also couldn't help but think that everybody could, and should, be doing more to tackle the issue of the incredible violence that seems so prevalent in our schools and communities. After all, this is not just an issue about guns.
So, as we as lawmakers grapple with, and pass, changes to our gun laws, and upcoming school safety measures, I am hopeful that there are efforts by students, teachers, parents, the education establishment, and communities as a whole to ensure that each student in Stowe - and in your community - feels cared for and welcome. Far too often I see for myself, and hear from others about, young people being ignored, being picked on and made fun of, and feeling unengaged and uncared for. This does not just happen in the schools and during school time, but also in athletics and other activities outside of school and online.
The bottom line is,we need to take a cue from Laraway Youth and Family Services Director, Greg Stefanski, who recently commented eloquently that in order to get at the root cause of the challenge of anger and disconnect so many feel, we have to find a way to ensure individuals feel a sense of place; feel a part of something caring. Whether it's in our schools, at work, in politics, or in play, we need to be sure individuals are treated kindly and well, are engaged and respected, and truly feel like they are part of something.
I, for one, am hopeful that Vermont can be a leader in this regard.