Senate Finance hears proposal to suspend ambulance provider tax for three years, backfill from pilot fund

Sen. Chittenden introduced S.31 to the Senate Committee on Finance, a bill that would temporarily suspend the ambulance agency provider tax for fiscal years 2026, 2027 and 2028 and direct the commissioner of finance and management to transfer an equivalent amount from the pilot special fund to the general fund.

The sponsor said the proposal is meant to put more money directly with emergency medical services providers while drawing on accumulated pilot special fund balances. "Since, like, I wanna say 02/1718, for a while, we've been taxing the state is taxing 3.2% to when an insurance company sends a reimbursement for an ambulatory service," Sen. Chittenden said, and she described the bill as a way to connect that revenue stream to local needs.

Jen Karger of the Office of Legislative Council told the committee the ambulance assessment is 3.3% of an agency's annual net patient revenue. "The annual assessment is 3.3% of the ambulance agency's annual net patient revenues for services delivered to patients in Vermont during the most recent annual fiscal period," Karger said, adding that the assessment is levied on reimbursements and was implemented in about 2016–2017.

Karger and other staff explained that many provider taxes are used to draw federal Medicaid match. Under federal rules, states may impose broad-based provider assessments and there is a commonly referenced 6% "safe-harbor" threshold on net patient revenue that helps demonstrate the assessment is not effectively returning the tax to providers in a way that violates federal requirements.

Sen. Chittenden and staff discussed the sums involved. The sponsor and staff estimated the ambulance assessment generates roughly $1.2 million annually for providers. Committee staff indicated the pilot special fund—used largely to provide payments in lieu of taxes (PILOT) to municipalities and other pilot-related disbursements—has accumulated a multi‑million-dollar balance; one committee member cited an excess in the neighborhood of $10,000,000 and Joint Fiscal Office staff said pilot revenues have recently exceeded pilot expenditures by about $3,000,000 annually.

Under S.31 as introduced, the Department of Vermont Health Access would not assess the ambulance agency assessment in those three fiscal years, and the commissioner of finance and management would transfer from the pilot special fund to the general fund an amount equal to the ambulance assessment revenue in fiscal year 2025 to replace the revenue the general fund would otherwise have received.

Committee members asked technical questions about whether the proposed transfers would affect what municipalities receive from local-option sales tax receipts; staff answered that the bill would not change local option tax disbursements to municipalities, but would change the fund source used to supply the general fund portion of Medicaid match. Members also raised concerns that eliminating one provider tax could prompt other provider groups to seek similar treatment and noted prior debates over whether particular provider classes (for example, home health) benefited from provider taxes.

Sen. Chittenden and staff said the measure is intended as a temporary, three-year experiment and suggested the committee solicit analysis from the Joint Fiscal Office and the Vermont League of Cities and Towns before advancing the bill. Committee staff also noted an ongoing EMS study committee created last year that is charged with examining stable funding options for ambulance services.

No formal vote on S.31 was recorded in the transcript. Committee members agreed to request briefing materials and testimony from Joint Fiscal Office analysts, the Vermont League of Cities and Towns, and EMS providers before deciding whether to move the bill forward.