Monday, May 18, 2015
It’s been two weeks plus since I posted to this blog; but there’s a reason for that. Let me explain. At the end of the session, especially after conference committees begin working on resolving differences between the two chambers, lots happens in the background. More than other times during the session, conversations happen outside of the committee room and off the record. Things move quickly and change often, too often actually. It’s hard to say where things are at any point in time. It’s best to do our work quietly and in one on one or in small group conversations.
The legislature adjourned as you know about 11PM Saturday. The funding for the judiciary held at $43,945,757 (H.490) even though the revenue bill deleted the $10 IFP fee. The legislature passed H.489 which includes increased fees mostly in probate cases to support the judiciary. The only change from the earlier senate passed version was the elimination of the $10 fee to apply for "in forma pauperis".My concern was that the predicted $35,000 that fee was to raise would be subtracted; didn’t happen.
As we’ve reported before, Dan and I reached out to his Representative Mary Hooper. We spoke to her on numerous occasions. She became a true advocate for the judiciary. After the roll call vote last night on the budget Mary explained her vote as follows:
Rep. Hooper of Montpelier explained her vote as follows: “Mr. Speaker:
Vermonters’ access to justice is protected in this budget. The Judiciary is receiving a $2 million increase which will ensure – unlike 6 years ago – our courts will be open every day.”
Also, the chair of the Senate Appropriations Committee addressed the same issue on the floor of the senate during its passage of the budget. She said that senators had heard from many members of the bar who raised concerns about access to justice and that spurred the committee to look for ways to fully fund the courts. In addition, Vermont Legal Aid had a cut from the house passed bill restored in the senate.
The conference report contains some policy language about the courts. It can be read on pages 2488-2492 here:
The capital bill (H.482) passed on Thursday with the Lamoille courthouse funded at $5M. The court's case management system will get $500K next year and $4M the year after. This is down from $750K next year and $5M the year after.
Real estate practitioners should be interested in what the legislature did to raise funds to clean up Lake Champlain. H. 35, a bill to improve the quality of state waters contains a .02% surcharge on the property transfer tax. Here is the language of the bill:
Property Transfer Tax Surcharge; Water Quality Long-Term Financing Report
Sec. 38. 32 V.S.A. § 9602a is added to read
§ 9602a. CLEAN WATER SURCHARGE
There shall be a surcharge of 0.2 percent on the value of property subject to
the property transfer tax under section 9602 of this title, except that there shall
be no surcharge on the first $100,000.00 in value of property to be used for the
principal residence of the transferee or the first $200,000.00 in value of
property transferred if the purchaser obtains a purchase money mortgage
funded in part with a homeland grant through the Vermont Housing and
Conservation Trust Fund or which the Vermont Housing and Finance Agency
or U.S. Department of Agriculture and Rural Development has committed to
make or purchase. The surcharge shall be in addition to any tax assessed under
section 9602 of this title. The surcharge assessed under this section shall be
paid, collected, and enforced under this chapter in the same manner as the tax
assessed under section 9602 of this title. The Commissioner shall deposit the
surcharge collected under this section in the Clean Water Fund under 10
V.S.A. § 1388.
Sec. 39. REPEAL OF CLEAN WATER SURCHARGE
32 V.S.A. § 9602a (Clean Water Surcharge) shall be repealed on July 1, 2018.
NOTE: the surcharge in Sec. 38 takes effect on passage.
So the date the governor signs the bill is the date to watch for. As soon as I know that I will let you all know.
I can report that three bills we were interested in this year have all been signed into law. They are the Uniform Transfer to Minors Act; the revised Uniform Limited Liability Company Act; and the Uniform Interstate Family Support Act.
So, for now, this wraps up my legislative reporting. I want to thank all of you for your help during this session. Tom Moody and Peter Erly led the effort to get the LLC bill through the process deftly and quickly. Penny Benelli helped the UIFSA to pass. Stephanie Willbanks and Joe Cook’ s efforts guaranteed passage of the UTMA. Without their help and willingness to volunteer their time, none of this would have happened. It’s a real testament to the members of the VBA and their service to our profession and to all Vermonters. You all make me proud to work for you.
As always, thanks for reading. Enjoy summer. The legislature will be back before we know it!
Yikes, I can’t believe I just said that.
Wednesday, April 29, 2015
H 489, the revenue bill and H 490, the budget bill are done and on the Notice Calendar. Action will occur Thursday and Friday; then both will go into conference with the House, hopefully late Friday. This sets adjournment for two weeks from Friday.
In H. 489, sections 33 and 34 contain the new fees that support the addition back of the 500K the administration wanted to cut. The language is on pages 29 to 35 of Addendum 1 to today’s Senate Calendar here:
Also, sec. 87 calling for a report from the Tax Dept. on extending the sales tax to services replaces the language we opposed yesterday in our testimony. Here is that section:
Sec. 87. SALES TAX PROPOSAL
(a) The General Assembly concludes that the structural deficiencies in
Vermont’s current revenue and budgeting structure, combined with a change in
the State economy from an economy based on goods to an economy based on
services, requires an examination and rethinking of Vermont’s current sales tax
(b) On or before January 15, 2016, the Commissioner of Taxes shall report
to the Senate Committee on Finance and House Committee on Ways and
Means on how the Department of Taxes would implement an extension of
Vermont’s sales and use tax to select consumer services, not to include
business to business services, most commonly taxed in other states. The
extension of the sales and use tax modeled in the report shall provide two
scenarios designed to raise both $15 million and $30 million in revenue in
Vermont on an annual basis. The report shall include a draft of proposed rules
which shall identify specific services by industry type that are taxable or not
(c) On or before January 15, 2016, the economists for the Legislative and
Executive Branches, with the assistance of the Joint Fiscal Office and the
Department of Taxes, shall file a joint report to the Senate Committee on
Finance and the House Committee on Ways and Means on the fiscal impact of
further extending Vermont’s sales and use tax to a broader range of consumer
services. The report shall analyze the short- and long-term economic impacts
to the State of Vermont of such an extension, and contrast those impacts with
the short- and-long term projections of Vermont’s current sales and use tax
revenues without the changes in the proposal.
In 490, read E. 204; this contains some of the "lighten the load" language the judiciary wanted. It also includes a statement of intent in E. 204.15 supporting filling the judicial vacancies. See pages 89-93 of today’s Addendum 2 to the Senate Calendar:
Here are the funding provisions for the judiciary in the Senate version (see Sec B. 204):
Sec. B.204 Judiciary
Personal services 35,212,260
Operating expenses 8,683,467
Source of funds
General fund 38,465,850
Special funds 2,667,462
Tobacco fund 39,871
Federal funds 473,301
Interdepartmental transfers 2,325,273
The Senate increased the funding by $758,000 over the total passed by the House. As I said above, we’re waiting for floor action tomorrow and Friday, followed by a committee of conference. It’ll be a while.
Thanks for reading.
Tuesday, April 28, 2015
So I just returned from the Senate Finance Committee where I was the first of 21 witnesses to testify about the latest draft of the tax bill. I commented on sections 49-54, the extension of the sales tax to services. I know some of you have already written to your senators stating your opposition and for that we thank you. I did not want to address the issue of the increased administrative burden on you if the tax is enacted. Instead, I went after language in the bill that I found confusing and troubling. Here’s some of what I said.
In Sec 49, the definitions section, “business to business” transactions are exempt. Over lunch today talking with a local lawyer he raised the following hypothetical. If he were to do title work, for example, for a husband and wife he would need to collect a sales tax. But if that husband and wife were to form an LLC or partnership, they would be exempt from the sales tax!
If “business to business” transactions are exempt that would mean that the tax would only apply to individuals who are perhaps the least likely to be able to absorb and afford such a tax. The tax would apply to a victim of domestic abuse hiring counsel to represent her. It would apply too a custodial parent trying to collect child support or enforce an order of the court. It would apply to the landlord trying to evict a tenant after going months without collecting any rent. Likewise, it would increase the cost to a tenant who needed representation in a case on uninhabitable premises. I told the committee that taxing Vermonters such as these is bad public policy and will only increase the number of self-represented litigants in an already overburdened court system.
Also, if you look at Sec. 54 there is troubling language that sets the tax rate at 4.75% “of the sales price charged…” Really? Is the tax on the amount billed or the amount actually collected? We all know those numbers are rarely the same.
Finally, I raised what I consider to be a constitutional issue in criminal cases. If I were to exercise my 6th Amendment right to “have assistance of counsel” in my defense, can the state tax me on what I pay my attorney? Isn’t that a tax on exercising my rights? Is it any different than taxing lobbyists and their clients?
In any event I think the committee will leave us in the bill as there is hardly time for deliberation, discussion and amendments now. The committee is hoping to vote the bill out tonight! Then it’s off to conference where I expect and hope the services tax goes away. The budget bill can’t be finished without knowing what the tax bill will raise. The capital bill can’t be finished until the budget is done. Stay tuned. As always, thanks for reading.
Monday, April 27, 2015
I received the following from the Chair of the Senate Finance Committee on Saturday. I am planning to testify at 1 PM on Tuesday but wanted all VBA members to be aware of what the committee will be discussing. Now is the time for each of you to weigh in if you have an opinion on this. Here is a link to the membership of the Finance committee; if any of these senators represent you please let them know how you feel about extending the sales tax to services. http://legislature.vermont.gov/committee/detail/2016/25
You are receiving this because you have expressed interest in this year's legislative revenue discussions as it relates to you, your organization or business, or your clients. Senate Finance has been taking testimony on and off all session on various tax considerations. As we move closer to a vote on a revenue plan, we have reserved two three hour time slots on Monday and Tuesday of this week for overall comment from interested persons on the draft bill, H.489. The meetings will be this Monday from 3-6pm and Tuesday from 1-4pm in Rooms 10 or 11.
We welcome specific or general comments about the FY2016 revenue plan, which primarily features the income tax revisions, and the FY2017 changes which primary relate to an expansion of the consumer sales tax and lowering the sales tax rate from 6% to 4.75%.
You can find Draft 4.2 here: http://legislature.vermont.gov/assets/Documents/2016/WorkGroups/Senate%20Finance/Bills/H.489/Drafts,%20Summaries,%20Amendments,%20and%20Fiscal%20Analysis/H.489~Peter%20Griffin~Draft%20No.%204.2,%204-24-2015~4-24-2015.pdf
You can find a plain English summary here: http://legislature.vermont.gov/assets/Documents/2016/WorkGroups/Senate%20Finance/Bills/H.489/Drafts,%20Summaries,%20Amendments,%20and%20Fiscal%20Analysis/W~Peter%20Griffin~H.489%20Section-by-Section%20-%20Draft%20No.%204.2,%204-24-2015~4-24-2015.pdf
Please let Charlie Enscoe know if you or someone you are affiliated with would like to book a slot before the committee. He can be reached at firstname.lastname@example.org
Monday, April 6, 2015
I apologize for having been silent on events in the legislature for the month of March. Due to a death in the family I spent the month in New York. VBA President Dan Richardson covered for me and devoted more time to our presence in the statehouse that he expected when he became President. The following summary on the judiciary funding issue is his.
As you all may already know, the House Appropriations Committee passed H. 490 two weeks ago that did three things affecting our conversation: 1) it created a study group that will work this summer to look to see how systematic changes can create the savings sought by the legislature and the administration; 2) It cut $500,000 from the judiciary’s budget but restored it for FY 16 with one-time money equal to $500,000; and 3) it implemented the proposed $600,000 pay act cut and the $900,000 in underfunding of existing judiciary obligations. Notwithstanding these cuts, the partial restoration of funds and the study group felt like a big lift from the house that was, as I explained at the last meeting, just ready to slash the budget and let the judiciary deal with it. These changes reflect a lot of efforts on the VBA’s part and on members’ part to persuade legislators of the problems.
Whether these cuts will stay in the Senate’s version is less clear. Last week, I testified in Senate Judiciary, and the Committee seemed supportive of walking back these cuts. Senator Tim Ashe, in particular, was upset with the idea that the $500,000 being called “bridge funding.” As he put it, a bridge is supposed to take you across that chasm and not drop you in the middle.
The Judiciary is not happy with the budget because of the $500,000 cut to their base budget, which without this year’s one-time funding will become a hole for them next year and every year thereafter to fill or cut. In other words, the Judiciary understands that the one-time funding allows them to dodge a bullet this year, but it comes with a price tag that any budget discussion next starts with a base budget at this lower amount. That means, the Judiciary, under the House bill, has less than one-year to come up with a permanent $500,000 cut to its budget for next year’s budget process.
More importantly, the $1.5 Million in cuts to the pay act and from the underfunding remain, which pose a serious problem for the Court beginning July 1st. The Judiciary’s remaining focus for the year is to undo the $500,000 cut (more semantics than actual money swapping since the money is already there for FY16) and to fight to restore the $600,000 through a mixture of fee increases and restoration of some pay act funds. If successful, that would keep the Judiciary where they are now, underfunded and relying on vacancy savings but able to fund its current operations. As I pointed out to Pat Gabel, the Chief, and Judge Grearson the problem is that now the Administration and the House are lined up behind this budget and the Judiciary will not only have to persuade the Senate to disagree these cuts but take the fight to the house and the Administration. It is a tall order.
The judiciary is supportive of the summer study/working group.
Despite opposition, the videoconferencing arraignment pilot project looks like it will be going forward. The House bill provides funding for a pilot project, and the Judiciary has begun to move forward. They have also heard the message from several corners, including the VBA, that they need to work with the various partners on this project.
The big news according to Pat is that the Administration has made it very clear that they want the long-term cuts to come from courthouse closures. Pat has stated in no uncertain terms that the Court does not support closing courthouses and will fight to keep them open, but that the Administration sees closing some courthouses as a necessary budget cut. Pat reported to me that the Administration made no bones about it, and that they would keep the budget pressure on the Judiciary until it closes courthouses. The important thing to keep in mind is that when we are talking about closing courthouses, we are also talking about laying off the court staff.
Judge Grearson is making out next year’s trial court rotation schedule, and he reported that with the four current vacancies unlikely to be completely filed by September 1st, the rotation schedule is going to have a lot of holes in it. These gaps will largely fall to the civil docket as resources will have to go to family and criminal. Even if the Governor makes new appointments, the new judges will take time to close their practices and receive training. Grearson estimates a 4 to 6 month process to put the new judges on the bench, hearing cases, after the appointments are made. On top of this, Judge Grearson indicated that there might be more vacancies coming in the late summer/early fall. So this is a problem that may get worse before it gets better.
Friday, February 27, 2015
So it’s now one week since I met with the Speaker of the House about the court’s budget and I’ve heard nothing from the supreme court about the suggestion of fees to reduce the cutback. I gather from the testimony of the court administrator (CA) yesterday at the house judiciary committee that the court is ignoring that idea.
She proposed other money saving ideas to the committee; well, sort of. The first is a proposal to add videoconferencing equipment to 7 correctional facilities to allow remote court hearings. The judiciary would have to purchase not only those 7 but 14 for the 14 courthouses. The cost would be $306,000. They are proposing a July pilot project in Chittenden County followed by expansion in January. This should help reduce the sheriffs’ transportation costs of $2.2 million by about 25-30%. But, there will be no savings in FY 16; there will be a net cost with savings to be seen in FY 17.
The court hopes to follow the lead of New Hampshire, Massachusetts, Connecticut, and Virginia.
This, as some of you may remember, has been tried before but didn’t succeed. The CA attributed that to lack of discipline in project management and the technology at the time, although New Hampshire has apparently been doing it for 18 years.
The court does desperately need to cut back on transport fees as over two million dollars a year is really not at all sustainable. But this proposal does nothing to help the cut of $500 K that’s about to hit the judiciary hard. I’ve spoken to some members of the committee who remain confused as to what the court intends to do for the fiscal year beginning in 4 months. You can read about the video proposal here:
The question was asked about attorneys meeting their clients. The CA responded that defense counsel could meet their clients before a hearing or could travel to the correctional facility and meet with and appear with their client from there. I wonder how that will work with some public defenders who may have clients out on bail and in the correctional centers; how do you appear for both say, for status conferences?
The court is having a bill drafted that will cover some other issues. I was not given a copy of it. I expect that it will bypass some appeals to the superior court and redirect them to the supreme court. I expect it to say that appeals from magistrate decisions will go “on the record” to the supreme court, bypassing the family court judge.
The proposal will also include probate hearings on the record and appeals to the supreme court on that record. You readers will have to tell me whether all probate courts are outfitted with the equipment needed to make that record.
In divorce cases with substantial assets at stake or complex business valuation issues, the court wants the authority to appoint a special master to aid movement of the case through the family court.
Finally, and I’m not sure just what this could entail, the CA spoke about the court seeking authority to change venue by rule. I believe she said “up to four counties”. This is part of the court’s repetition of “right sizing” the courts. Although the supreme court does not support closing courthouses. This proposal will require some study and comment when it’s on paper.
I expect the House Judiciary Committee will return to these proposals on Tuesday March 10 and Thursday March 12. Stay tuned.
This should shed more light on how bad things are:
Finally, the governor has made his appointments to the Judicial Nominating Board; now we’re only awaiting the senate’s three names. I expect legislative counsel will convene the Board after the senate appoints its three members on Tuesday, March 10th. At the first organizational meeting the Board will adopt rules and elect a chair. Then the governor is expected to ask them to fill one judicial vacancy.
So, this is my last report until after the Town Meeting break. Thanks as always for reading and don’t forget to buttonhole your reps and senators next week and ask that the court be fully funded.
Wednesday, February 25, 2015
It’s time I updated what’s been happening in Montpelier. First of all, the House chose its members of the Judicial Nominating Board. They are Bill Lippert, Maxine Grad, and Patti Komline. I spoke with Sen. Mazza yesterday about the Senate’s appointments. He is part of the three member Committee on Committees and said he’d urge Pro Tem John Campbell and Lt. Gov Phil Scott to make their appointments soon. And, we are still awaiting the governor’s two appointments. It’s hoped that then the new JNB is complete, at least one judgeship may be filled. If that means that the JNB will have to meet during the session, then that’s what will happen. By the time the notice of application goes out, followed by the interview period etc, it’ll be summer before names go to the governor. According to Chief Superior Judge Grearson, he’d like a new judge or judges to be ready to be on the rotation schedule by September.
So, where are we on judicial funding issues? After hearing many of you, some probate judges, trial court clerks, VBA Board members talk about increasing fees I took that message to members of the house appropriations committee. Some members seem interested in that conversation. Remember though that the fees (and fines) generated go to the general fund and not to the court’s budget. My approach was to ask that, in exchange for increased dollars to the general fund, that the court would be given a pass on the proposed $500K cut this year. In exchange the court could continue its meetings with its “justice partners” through the rest of this year and report to the legislature in January where to find efficiencies and potential savings.
Last Friday I made that pitch to the speaker in a one on one meeting. His response was that he’d be willing to see a “dollar for dollar” swap- any increase in fees would reduce the court’s cut. He wasn’t able to go further. I communicated that message to the chief justice an court administrator within minutes of leaving that meeting. To date, I haven’t heard from the court as to whether this is a direction they want to pursue. I know that the speaker talked about that idea to the chair of the senate appropriations committee Jane Kitchel; she is also interested.
Yesterday afternoon the chair of the Senate institutions Committee, Peg Flory, asked me to sit in on a 3:15 hearing on the “judiciary protocol for prioritizing of capital projects”. The question was whether to go forward with the $5.2 million capital project at the Lamoille courthouse or redirect that money to a case management system. The court administrator (CA) told the committee that the “priorities of the court are changing given the current cuts”. The commissioner of building and general services objected saying that substantial money had already been spent on engineering etc. Also, he said they have already rented space for court staff who will be relocating in April in preparation for the construction. She also said that redirecting that money will not result in any savings in FY 16. Sen. Mazza asked what the return on that investment would be; Sen. Rogers said that the cost of running IT systems is always higher than planned. Again the CA responded that some states claim a 20% savings. She doesn’t expect VT will see any savings because “we’re underfunded already”.
Senators Mazza and McAllister asked about increasing fees and again the CA didn’t really respond. All she said was that last year was the court’s three year cycle to have fees reviewed and, with the exception of removing the surcharge and rounding up the filing fees, the fees were not increased. So it seems as though the door may be open to moving forward on this.
Everywhere in the statehouse people interested in the judiciary are talking about the funding crisis hitting the courts. I’ve asked all of you at least twice now to talk with your representatives and senators about fully funding the judiciary. You should see many of them next week at your town meetings. Make sure they understand what this means for access to justice and preservation of the rule of law.
OK, back to senate institutions. The CA spoke to moving to increase use of videoconferencing, which of course would require an investment upfront. There were no details as to cost or timing. She also spoke to regionalization of termination of parental rights cases (TPRs). Sen. Flory asked about the experience with the use of video for criminal cases in the past. The CA responded that the technology is better today and these systems are in use in other states. She thinks a 25-30% savings in the cost of transport and travel if the money is invested in video technology.
The hearing ended with the CA repeating the well-known limitations in the paper filing system, data entry 30 year old system that our courts use. She also raised the issue of whether every county should have a “full capacity court”. Should some courthouses be outfitted with the newest technology and trials held there, even if it means taking a case to another county? I’ve run that idea by some trial lawyers and they seemed interested; this is especially true among those who practice in the federal district court. She repeated that the supreme court does not support closing courts.
Two final issues were raised: at what level are courthouses maintained? Should some of that cost be shared by the county? Finally security costs came up again. This time it was raised by Sen. Mazza. Earlier in the day in my conversation with Sen. Kitchel, she raised the same question.
So that’s where we are at the moment. I’ll continue to report any news. Thanks for staying informed and for reading these posts.