Most of the state’s microbreweries should be pleased. After much work, the House voted out a bill reforming Vermont’s beer franchise laws as they apply to small brewers. There are a few other measures that received a thumbs-up from the House this month, but first a word on our craft brewers.
Vermont has over 55 craft brewers. The current rules concerning beer distribution were developed in the 1970s. They were designed to equalize the bargaining power between large breweries (Budweiser, Coors) and our local small distributors.
Today, the beer marketplace is significantly different than it was in the ’70s. So what evolved in the Legislature were rules that both continued to protect our distributors relative to the large breweries, and to recognize that those protections are not necessary in dealing with our craft breweries. Starting in 2022, small brewers will be able to negotiate their own contracts with distributors allowing for greater flexibility and fair termination clauses. This should help the craft brewers going forward.
The big political issue of the session has been gun control.
Two bills, one from the House and one from the Senate, permit the confiscation of firearms by law enforcement when it has been determined that an individual is a danger to themself and/or to others. These are positive actions that provide added safety for Vermonters.
Last Friday, the Fire Arms Safety Bill, S.55, was debated on the House floor for several hours. The bill has four major provisions. Unless you have completed a Gun Safety or Hunter Safety course, you will have to be 21 in order to purchase a firearm; if you have completed the course you can still buy a gun at 18. Bump stocks and high capacity magazines (over 10 rounds) will be banned. The bill will require background checks for all firearm sales. I supported this bill despite the fact that enforcement of the background checks and owning high capacity magazines will be difficult. My hope is that the Senate will clean up these sections.
The Senate will now take up the legislation passed by the House. We will know in a few weeks the final outcome of these measures.
Other measures that have recently passed the House include:
•  The House approved a 2019 State Budget. The budget amount requires no increase in taxes or fees and meets the anticipated state revenue projections. The budget’s grand total is $5.844 billion, which is a 1.1 percent increase over last year. The budget is in keeping with Gov. Scott’s goals.
EDUCATION FINANCE
The other major piece of legislation discussed last week was H-911, a bill that would change the method used to assess Vermont income tax and fund the public education system.
My previous update spelled out proposed changes to the funding of public education. Things have been revised since that report. What follows is an outline on the contents of H-911.
Changes to State income tax system:
•  Collapses the top two income tax brackets and lowers all personal income tax rates by 0.2 percent
•  Creates a Vermont standard deduction equal to $6,000 for single filers and $12,000 for joint filers.
•  Creates a Vermont personal exemption equal to $4,150 per exemption.
•  Expands the Vermont Earned Income Tax Credit from 32 percent of the Federal Credit to 35 percent.
•  Creates a 5 percent tax credit for the total amount of charitable contributions up to $10,000 of contributions, making the maximum tax credit $500.
•  Exempts taxable social security benefits from state income tax for single filers with $45,000 or in AGI and for joint filers, $60,000. It then phases out the exemption over the next $10,000 in income.
Changes to the public education funding system:
•  Adds an Income Tax Surcharge built upon the above reforms to our income tax code. The rates are 0.1 percent on the lowest tax bracket, 0.5 percent for middle tax bracket, and 1 percent on the highest tax brackets.
•  The Homestead property tax rates will be reduced by an average of 10 percent due to the revenue gained from the income tax surcharge.
•  A new formula was established for calculating spending-adjusted Homestead tax rates. Property taxes will increase proportionally to increased per-pupil spending. Higher spending equals higher taxes.
•  The non-resident property tax rate is maintained at its current level of $1.591.
•  Retains the property tax adjustment for lower income Vermonters.
•  Retains the Renter Rebate program.
•  Repeals the current law excess spending penalty.
•  Requires school districts to include the normal cost of Teachers’ Retirement in their school budgets.
•  Dedicates 100 percent of the Sales and Use Tax and 25 percent of the Rooms and Meals Tax to the education fund.
The state’s income tax rules were amended so that we could return to Vermonters the approximately $30 million tax dollars they would have paid due to the Federal Government’s 2017 Tax Cut and Jobs Act. The education funding revision was initiated out of a desire to reduce property taxes, especially in light of an anticipated tax increase for 2019.