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Good Morning from Montpelier,
More progress was made this week in the Vermont Legislature on getting one of the PLC's priority bills through the Senate so it can be sent over to the House. Here is where things stand with S. 46, An Act Relating to the Taxation of Vehicles Used for Forestry Operations.
As you will recall, this bill was introduced by Sen. Rebecca White. As originally submitted, it would have exempted new and used heavy-duty trucks and parts used in forestry operations from sales, purchase and use taxes, lowering costs for loggers and forest truckers in the state and putting them on a more equal footing with those in neighboring states where such exemptions already exist. This bill is vital as the cost of trucks has more than doubled in the last decade due in part to the cost of mandatory Tier 4 engines designed to reduce emissions, yet that cost increase is preventing many in the logging industry from upgrading to these lower-emissions engines, thus defeating the intent.
Last week, the Senate Committee on Transportation raised two issues with the bill. One was the impact on tax revenue, which the committee felt would be too high. The second concerned the committee’s authority to approve the sales tax exemption because revenue from sales tax does not go exclusively to transportation, it also funds state education.
To address those issues, Committee Chair Sen. Richard Westman proposed amending the bill to reduce the purchase and use tax exemption to 50% and remove the sales tax exemption entirely. Last Friday, the amended version passed unanimously out of the committee and landed with the Senate Finance Committee. In passing the amended version, Sen. Westman noted there would still be opportunities to restore the full sales purchase and use exemption originally proposed, either by future committee action or floor amendments.
This week, the Finance Committee discussed the bill on Tuesday and received briefings on its expected impacts. While members were supportive of the idea of helping our industry in a difficult time, it quickly became clear that there are serious budgetary concerns right now in regards to the state's education and transportation funding levels, making any hit to revenue for those areas a tough sell. This effectively blocked any move to restore the original language of the bill to include the sales tax exemption and also imperiled the 50% purchase and use exemption.
On Friday, the committee met again on the bill and I testified and answered questions from the members to make our case again. You may view the meeting video HERE. I'm pleased to report that the committee then voted 6-1 to report the bill out favorably, with the understanding that a floor amendment to sunset it after a period - most likely 3 years - will be introduced. This keeps the bill alive, and gives us a chance to continue working toward the full tax exemption at a later stage. With that in mind, we will work to ensure that a sunset is not attached to the bill as inconsistent tax policy will not help our industry for the long run.
S.46 is now expected to go before the full Senate next Tuesday. If it passes the Senate, it will then go over to the House for deliberations. To that end, be ready to respond if we need you to reach out to your legislators to support this bill and the restoration of the original exemptions.
This week was the deadline for any appropriations and finance committee action before the Senate and House can move bills to the other body through what is called crossover. Next week we will begin to see that process.
Please reach out to me with any questions, concerns, or suggestions.
Dana