Thank you to this week’s sponsor of our Advocacy Update:
April 15, 2022
Expectations are a down payment on disappointment, and many legislators and stakeholders are getting a crash course on that this week. The session started with a lot of promise, with hundreds of millions in federal funds to be spent and an almost $100 million in education fund surplus; however, we’re in week 14, and all the money is claimed, leaving some to look for new revenue for items on their wish lists.
In this week’s update:
- The difficult road to adjournment
- Workforce and economic development bills funding cut in Senate
- Revenue and spending debate
- Housing bills move forward with language that may hold them back
- The Laundry List
*big note: we worked to get this update out at the normal time, and many of these negotiations will be going until late this afternoon.
Cross Chamber Changes and Veto Pen Propensity Create Large Hurdles to Adjournment
We’re in the final stretch with some large gaps to close between the House, Senate, and Administration on many issues. Yes, this is not uncommon at this point in the session, where it looks as if things won’t come together, and then they do (usually); however, this year, the dynamics we’ve highlighted before are prominently in play.
We’ve described some major differences below. In all of these instances, the House has served up their version, the Senate spent the week responding, and the Governor is actively reminding both that their visions do not align with his, and the veto pen means he has the final say.
- Budget – the House budget came to the Senate with deficits and no revenue for the child tax credit. This week, the Senate Appropriations Committee worked to curtail some of their chamber’s legislation and continued to lean on the Senate Finance Committee to find more revenue. The Administration from the sidelines has remained adamant that new revenue is not necessary.
- Tax Relief – The debate continues on how best to spend $50 million in tax relief. We’ve covered the competition in revenue expenditures from the House and the Governor extensively since week four of the session. The Senate Finance Committee is still grappling with this discussion. Now the Senate Committee on Finance has been forced to play King Solomon and split the packages.
- Tax Revenue – while the House and Senate differ on where to find new revenue and how much to raise, the Governor has said he’s not willing to raise any in a year with record surpluses.
- Economic and workforce development packages – we continuously covered the many priorities of the House and Senate along with the inevitable collisions when they need to share the same portion of the budget; that time was this week.
- Housing bills – while making their way towards final passage, a committee of jurisdiction decided to keep controversial sections that would make the overall bill a veto target.
- New Challenges Around Per Pupil – The House has made changes to the per-pupil weighting bill sent to them by the Senate, which are not proving popular since they would recreate the chasm between districts with more English Language Learners (ELL) and the rest of the state.
Omnibus Economic and Workforce Development Bills’ Funding Slashed in Senate
As we previously covered, the Omnibus Economic Development bill, Workforce Development bill, and relief bill for arts and culture all moved independently of one another and with little consideration of what dollars could be spent.
Now, what we predicted has happened, and all the appropriations for the three bills have been wrapped into one bill, as seen below. The Senate’s version of the budget will have $111 million in funding for businesses, the economy, and communities; $10.2 million from the general fund, $15 million from the education fund, and $85.4 from the ARPA.
The biggest casualty was the Capital Investment Grant Program, which was cut entirely from the bill. The VEDA forgivable loan program was also cut by about $2 million, and then a carve-out of $5 million was created within that program for the arts and culture sector, depleting what was almost $35 million in grants and loans to only $20 million.
The bill is drafted such that if H.624, the arts and culture recovery bill. does not pass, the art and culture programs still receive some relief. The new version of H.159 does not include H.703, the workforce development bill from the House; however, it does carve out appropriations space. The Senate Committee on Economic Development is still taking testimony and considering components of the bill.
LCC testified in the House Committee on Commerce and Economic Development on H.159 at the same exact time the Senate Committee on Economic Development, Housing, and General Affairs was carving up that very bill downstairs. While LCC focused on the entire bill, much of the time was focused on the relocation, recruitment, and retention portions which are complementary to the workforce development bill that the committee has passed.
Revenue and Spending Debate
With $36 million to spend and about $100 million in spending proposals, the Senate Finance Committee had the arduous task of whittling a square peg until it fit in a round hole. The debate continued covering some of our own questions around how best to spend $50 million in tax relief. We’ve covered the competition in revenue expenditure between the House and the Governor extensively since the beginning of the session, and the Senate Finance Committee became increasingly wary of raising new revenue for the child tax credit, especially considering the larger goal toward child care funding that they anticipate guidance on in the form of a report in January 2023.
On Thursday, it looked as if they had reached a potential compromise package that carried some items from the Governor’s request and still delivered the child tax credit (CTC) to some Vermonters. The compromise could include:
- A $22 million version of a child tax credit with a quicker phaseout.
- Increase to the Child and Dependent Care Credit – the Committee decided that the CDCC covers a broader universe than the Child Tax Credit in H.510 because it helps parents with children over six years old as well as helping Vermonters with eldercare. The Governor wanted to match the federal credit at 65%, and the Senate proposal further matched at 100%.
- Student Loan Interest Deduction – the language they adopted was close to the Governor’s language, with a different income limit still to be resolved.
- Child Care Worker Tax Credit – the Committee has been leaning towards an appropriation to fund bonuses in this sector rather than a tax cut.
The Committee expects pushback on the overall funding, and as always, the conversation is in the context of the yield bill, corporate tax bill, and other revenue items, which will play out in Committees of Conference and ultimately in a meeting between leadership.
Housing Bills Move Forward with Sections That May Hold Them Back
The House is working on closing the three housing bills sent to them by the Senate; S.210, a rental housing rehabilitation bill, S.226, the housing omnibus bill, and S.234, the Act 250 modernization bill.
S.210 – The House Committee on General, Housing, and Military Affairs cut the funding for the accessory dwelling unit (ADU) section from $5 to $1 million in S.210 and expanded the Vermont Housing Improvement Program. A strong case was made to the Committee by one of its members to bifurcate the bill and pass the rental registry component separately, as the Governor has already vetoed this component and threatened to do it again. The Committee voted 7-2 to not do that. See the bill as passed by Committee here.
S.226 – is in three committees at once this week, with time in the House Committee on General Housing, Military Affairs, the Committee on Natural Resources, Fish and Wildlife, and the House Committee on Appropriations. The House General Committee amended the bill to include H.329, which they’ve worked on throughout the session, but did not make the crossover deadline, so the Senate will not have adequate time to vet this proposal when it comes to them. The Committee voted 6-2-3 on the overall amendment to the bill.
Act 250 – House General removed all the components of the Omnibus Housing bill that were being reviewed by the Natural Resources Committee, and that language will be added to the Act 250 bill, S.234. A recent draft of the S.234 sheds light on where Act 250 might be going. As we’ve long covered, breaking the impasse on the myriad of issues that have stalled this conversation for over four years is unlikely this session. The latest draft organizes several studies into one section under the title “Land Use Report.” If legislators were to peel away everything that is the subject to continued disagreement in bartering, this might be the only productive change that can make it through this session.
Universal School Meals Bill Will Study Revenue
The House Committee on Ways and Means came to a consensus on S.100, a bill creating a universal school meals program as a one-year pilot. At one point in time, the bill contained funding for the program with a tax on internet services, a sugar-sweetened beverage excise tax, and a tax on candy in future years, after this coming year in which, the yield bill appropriates surplus education fund revenue to cover the program. The bill calls on the Joint Fiscal Office to “prepare a report examining possible revenue sources including expansion of the sales tax base, enactment of an excise tax on sugar-sweetened beverages, and other sources of revenue not ordinarily used for General Fund purposes. The report shall include preliminary revenue estimates and other policy considerations.”
Worth noting that $29 million is needed for this version of the bill compared to the $36 million set aside in the yield bill to cover its cost.
- Here are links to our past advocacy updates from this legislative session: Week 1, Week 2, Week 3, Week 4, Week 5, Week 6, Week 7, Week 8, Week 9, Week 10, Week 11, Week 12, Week 13.
- The House Committee on Judiciary has decided that a bill allowing non-unaminous juries in civil suits, S.178, will not see further testimony or committee time this year.
- The Clean Heat Standard is expected to be voted out of the Senate Committee on Natural Resources about the time this update is published. The bill will not contain the lookback provisions that the Governor and some advocates have called for, which would have required the legislature to approve whatever the Public Utility Commission creates, primarily related to pricing impacts.
- Changes to the Renewable Energy Standard (RES) were a priority for some headed into the legislative session, however, they did not come about. The House Committee on Energy and Technology heard a report from the Public Service Department. Expect legislation to increase the RES to 100% next biennium.
- H.708, Burlington’s Charter Change allowing a tenant to extend their lease beyond its initial term, passed the House and Senate and is now headed to the Governor’s desk.
- In the last few weeks of the session, revenue proposals can disappear and reappear, so if you have not voiced your concern about a tax on internet services, please do so. You can find more information in last week’s update.