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Journal of the Senate

________________

Wednesday, February 20, 2008

The Senate was called to order by the President.

Devotional Exercises

Devotional exercises were conducted by the Reverend Diane Benjamin of Cheslea.

Message from the House No. 21

     A message was received from the House of Representatives by Ms. Wrask, its Second Assistant Clerk, as follows:

Mr. President:

I am directed to inform the Senate the House has adopted a joint resolution of the following title:

J.R.H. 46.  Joint resolution advocating withdrawal of proposed U.S. Treasury regulations that the U.S. Internal Revenue Service issued on September 28, 2007 eliminating the deductibility of reserves of a captive insurance company participating in a consolidated federal income tax return.

In the adoption of which the concurrence of the Senate is requested.

Message from the House No. 22

     A message was received from the House of Representatives by Ms. Wrask, its Second Assistant Clerk, as follows:

Mr. President:

     I am directed to inform the Senate the House has considered Senate proposals of amendment to a House bill of the following title:

     H. 737.  An act relating to fiscal year 2008 budget adjustments.

And has concurred therein.

Bill Referred to Committee on Finance

S. 311.

Senate bill of the following title, appearing on the Calendar for notice, and affecting the revenue of the state, under the rule was referred to the Committee on Finance:

An act relating to current use enrollment for conservation lands and ecologically significant lands.

Joint Resolution Referred

J.R.H. 46.

Joint resolution originating in the House of the following title was read the first time and is as follows:

Joint resolution advocating withdrawal of proposed U.S. Treasury regulations that the U.S. Internal Revenue Service issued on September 28, 2007 eliminating the deductibility of reserves of a captive insurance company participating in a consolidated federal income tax return.

Whereas, the cost  and availability of insurance are significant challenges for many businesses, prompting an increasing number of corporations to establish within their corporate framework insurance subsidiaries known as captive insurance companies, and

Whereas, more than 5,000 captive insurance companies have now been established worldwide including 823 licensed in the state of Vermont, and

Whereas, over 25 years ago, the state of Vermont recognized that many captive insurance companies, if offered a comprehensive, knowledgeable, and stable regulatory environment would locate in this state, creating professional employment opportunities arising from the management and regulation of their operations, and

Whereas, beginning with Act 28 of 1981, the Vermont General Assembly  adopted a series of laws, codified as chapter 141 of Title 8, that established a comprehensive, knowledgeable, and stable regulatory environment for the captive insurance industry, and

Whereas, the captive insurance industry now generates over 1,400 jobs (direct and indirect) in Vermont, and

Whereas, an additional incentive to organize a captive insurance company in the United States has been the ability, in accordance with existing U.S. Treasury Regulation § 1.1502, to take a current tax deduction for both the loss reserves and unearned income premium reserves that intercompany insurance transactions generate between members of a group of corporations filing on a consolidated basis, and

Whereas, these reserves represent an actuarially determined amount of funds that a captive insurance company must maintain under Vermont law to pay future claims and loss adjustment expenses, and

Whereas, on September 28, 2007, the U.S. Internal Revenue Service published proposed Treasury Regulation §1.1502-13(e) that for federal tax purposes would eliminate these reserves and would defer tax deductibility until a subsequent year in which the claim or expense is actually paid, and

Whereas, under the proposed regulation, affected insurance companies include members of a consolidated tax group (which by federal tax law excludes foreign insurance companies) that earn five percent or more of their premiums from insuring risks of other members of the group, and

Whereas, the finalization of proposed U.S. Treasury Regulation § 1.1502-13(e) would adversely impact a significant number of captive insurance companies domiciled in Vermont and their parent corporations, and

Whereas, the disallowance of this federal income tax benefit could result in captive insurance companies licensed in the state of Vermont and in other U.S. domiciles to consider relocating to offshore domiciles that the proposal does not affect, thereby continuing to enjoy the tax advantage of deductibility of reserves, and

Whereas, finalization of this proposed change in federal tax regulations would have a significant negative impact on Vermont jobs and would reduce state general fund revenue, now therefore be it

Resolved by the Senate and House of Representatives:

That the General Assembly urges the U.S. Treasury secretary and the U.S. Internal Revenue Service to withdraw proposed U.S. Treasury Regulation § 1.1502-13(e), and be it further

Resolved:  That the secretary of state be directed to send a copy of this resolution to U.S. Secretary of the Treasury Henry Paulson and to the Vermont Congressional Delegation.

Thereupon, in the discretion of the President, under Rule 51, the joint resolution was treated as a bill and referred to the Committee on Finance.

Bills Amended; Third Readings Ordered

S. 290.

Senator Giard, for the Committee on Agriculture, to which was referred Senate bill entitled:

An act relating to agricultural water quality financing.

Reported recommending that the bill be amended in Sec. 1, 6 V.S.A. §4828, by striking out subsection (b) in its entirety and inserting in lieu thereof a new subsection (b) to read as follows:

(b)  Assistance under this section shall in each fiscal year be allocated according to the following priorities and as further defined by rule by the secretary:

(1)  First priority shall be given to capital equipment or contract services to be used at a farm site, which is located in descending order:

(A)  within the boundaries of the Lake Champlain Basin;

(B)  the Lake Memphremagog Basin; and

(C)  the Connecticut River Basin.

(2)  Next priority shall be given to proposed improvements on all other individual farms.

And that when so amended the bill ought to pass.

Thereupon, the bill was read the second time by title only pursuant to Rule 43, the recommendation of amendment was agreed to, and third reading of the bill was ordered.

S. 291.

Senator Starr, for the Committee on Agriculture, to which was referred Senate bill entitled:

An act relating to the farm agronomic practices program at the agency of agriculture, food and markets.

     Reported recommending that the bill be amended by adding a new section to be numbered Sec. 3 to read as follows:

Sec. 3.  6 V.S.A. § 4824(a) is amended to read:

(a)  State grant.  State financial assistance awarded under this subchapter shall be in the form of a grant.  When a state grant is intended to match federal financial assistance for the same on-farm improvement project, the state grant shall be awarded only when the federal financial assistance has also been approved for awarded.  An applicant for a state grant shall pay at least 15 percent of the total eligible project cost.  The dollar amount of a state grant shall be equal to the total eligible project cost, less 15 percent of the total as paid by the applicant, and less the amount of any federal assistance awarded, except that a state grant shall not exceed 50 80 percent of the total eligible project cost.

And that when so amended the bill ought to pass.

Thereupon, the bill was read the second time by title only pursuant to Rule 43, the recommendation of amendment was agreed to, and third reading of the bill was ordered.

Consideration Postponed

S. 220.

Senate bill entitled:

An act relating to the confidentiality of library patron records.

Was taken up.

Thereupon, without objection consideration of the bill was postponed until the next legislative day.

Proposal of Amendment; Third Reading Ordered

H. 575.

Senator Ayer, for the Committee on Finance, to which was referred House bill entitled:

An act relating to small eligible telecommunications carriers.

Reported recommending that the Senate propose to the House to amend the bill in Sec. 1, 30 V.S.A. §227d(b)(4), by striking out the second sentence in its entirety.

And that the bill ought to pass in concurrence with such proposal of amendment.

Thereupon, the bill was read the second time by title only pursuant to Rule 43, the proposal of amendment was agreed to, and third reading of the bill was ordered.

Bills Referred

S. 209.

House proposal of amendment to Senate bill entitled:

An act relating to Vermont energy efficiency and affordability.

Was taken up.

Thereupon, on motion of Senator Shumlin, the bill was referred to the Committee on Finance to consider the House proposal of amendment.

S. 278.

House proposal of amendment to Senate bill entitled:

An act relating to financing campaigns.

Was taken up.

Thereupon, on motion of Senator Shumlin, the bill was referred to the Committee on Government Operations to consider the House proposal of amendment.

Consideration Postponed

S. 355.

Senate bill entitled:

An act relating to debt financing for the Vermont housing finance agency.

Was taken up.

Thereupon, without objection consideration of the bill was postponed until the next legislative day.

Adjournment

On motion of Senator Shumlin, the Senate adjourned until ten o’clock in the morning.

 



Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont


www.leg.state.vt.us