Thank you to this week’s sponsor of our Advocacy Update:
February 25, 2022
As we head into week eight, you’ll notice that this week’s newsletter is a little less about policy and a little more about dynamics. This is because we’ve covered a lot of the policy up to this date and there aren’t dramatic changes to that substance this week. The next legislative week is contingent on many factors outside of policy and here are some overarching dynamics affecting how policy is moving:
- Town Meeting week: this week was a mad dash to the town meeting week recess. Legislators will now spend some time away from their committee work to return on March 8th.
- In-person legislating: When legislators return from recess, it will be to a more crowded building as the Senate will join the House which has already been operating with an incrementally increasing in-person presence.
- Crossover crunch: Crossover is the deadline by which a bill needs to pass out of the Committee of Jurisdiction. This year, that date is March 11th for most bills and March 18th for bills from money Committees. This means that Committees have four legislative days when they return after Town Meeting to move their priorities.
- Veto pen propensity: the Governor’s veto pen has already been used multiple times this year and the threat of a veto looms over many conversations, including but not limited to, the Budget Adjustment Act.
- Everything must go: upping the stakes is the nearly unanimous consensus that the last of the State Fiscal Recovery Funds need to be spent this session. That’s a lot of money, many demands, and a great deal of pressure because…
- Finally, it’s an election year: after town meeting and crossover, the incentive exists to get out of the legislature sooner rather than later to start campaigning. Legislators who plan to retire, are facing a tough race, or are running for different offices want to make their mark before they leave and possibly have something to talk about on the campaign trail.
With all of that in mind, here’s what is in this week’s update:
- Budget Adjustment Act Contention
- Clean Heat Standard Passes out of Committee
- Omnibus Bill Chugging Along
- Act 250 Governance Bill Passes out of House Committee
- Corporate Tax Package Is Broken Up
- Property Transfer Tax Surcharge Alive
- Be Sure to Participate in Town Meeting Day
- Burlington’s Big Splashes
- The Laundry List
Budget Adjustment Act Contention
A Committee of Conference has been working to iron out the differences between the House and Senate passed versions of the Budget Adjustment Act (BAA). As if differences between the two bodies wasn’t difficult enough, the Governor has been making his displeasure with the bill known as well. On Tuesday, Governor Scott used his weekly press conference to discuss differences between his vision for the budget adjustment act and the legislature’s version.
One of the large areas of contention between the Governor and the legislature revolves around his housing proposals which he thought should travel within the BAA because then the money could get out into the economy and quickly work on that pain point. One such component is the “missing middle” program which legislative committees previously decided was not ready for primetime, however, have indicated will travel in this year’s budget (often referred to just as the “big bill”). Then there is another entirely sticky situation around the Vermont Housing Improvement Program (VHIP) which the legislature and Governor have a contentious history together on after the Governor vetoed the rental registry bill last session which also created his VHIP program. He was still able to initiate the program because an appropriation and limited enabling language for the program existed in last year’s budget bill. As a result, legislators weren’t too keen on giving more money to the program via the BAA and instead added this to H.210 alongside the rental registry to attempt to prevent a veto in their second attempt to pass a registry.
On Thursday, the report of the Committee of Conference was brought to a unanimous vote in the Senate. More information on the BAA can be found below.
Clean Heat Standard Passes
The House Committee on Energy and Technology advanced the Clean Heat Standard by a 7-2 vote and it’s headed to the Appropriations Committee next. As we covered previously, the legislation will regulate fossil fuel dealers in the state with an aim to ramp down emissions of the sector. The program will require a dealer to continually have a lower emissions footprint through a few possible avenues; they can sell less fuel than the year before in proportion to the requirement, pay a quarterly alternative compliance fee, or reduce that liability by offering fuels with lower greenhouse gas emissions, buying credits, or a combination of the two.
The Public Utilities Commission will spend about two years after the final passage of this bill working with stakeholders to generate the rules and regulation of the program in the context of what various fuel credits are worth, cost of compliance for the fuel dealers, and other details.
Even as legislators worked to finish the proposal this week, climate activists protested at the State House under the grievance that the Vermont legislature is not acting on climate change and calling this signature piece of legislation a false solution.
Committees continued work on the omnibus bills this week. Here is a quick fly-by of that work:
Housing Bill – The omnibus housing bill, S.226, had the lion’s share of the Senate Committee on Economic Development, Housing, and General Affairs’ attention this week. The bill is aimed at encouraging infill development and greater housing density in town centers. Conversations were had in Senate Natural and Senate Economic this week about the inclusion of Act 250 language in the bill and those discussions were more promising than in past years.
Economic Development Bill – The Committee spent little time on this bill this week other than a hearing on the Capital Investment Program. Scrutiny piled on to the program this week and what was previously a slightly contentious request from ACCD to increase the funding and decrease the restrictions on the program now looks imperiled.
Workforce Bill – The House Committee on Commerce and Economic Development continued to hear testimony on workforce challenges from different sectors. The Committee heard from the childcare sector and is considering creating a larger appropriation to facilitate the technical assistance work currently done by Let’s Grow Kids once they’ve disbanded in 2025.
These bills are subject to change and this tracker reflects the most recent versions available.
Act 250 Governance Bill Passes Out of House Committee
The House Committee on Natural Resources, Fish, and Wildlife voted out, on a vote of 8-3, H.492 which does the following;
- Restructures the Natural Resource Board (ERB) into the Environmental Review Board which will have five members with a full-time chair.
- Members of the new ERB would be nominated by an Environmental Review Board Nominating Committee which will have seven members; three from the Governor, two from the House, and two from the Senate.
- The ERB will hear appeals instead of the Environmental Court.
- Creates a new pre-hearing discovery period with non-expert witnesses which will be non-admissible later in the process.
- Makes the decisions of the District Coordinator the final decision if there is failure to appeal a District Commission jurisdictional opinion within 30 days following the issuance of the opinion.
The Committee felt that this process will be more citizen-friendly than the current process. The Governor has looked for governance changes to further professionalize the Board, however, this might not satisfy that desire. What has been passed here feels less helpful in our current housing crisis and might actually serve as an impediment to housing development. As we highlighted last week, their Senate counterparts have had little interest in addressing these components of Act 250 and have been more focused on priority housing projects and new jurisdictional triggers.
The Senate Natural Committee and the Senate Economic Committee Chairs have been consistent contact this week to attempt to make their efforts more complementary.
Corporate Tax Bill Moves with Concerning Changes
The Senate Finance Committee took out the single sales factor language from S.53 this week as well as the corporate minimum tax changes. Also officially removed from the bill is the cloud tax section which has sat idly by without the Committee planning to use it and the continually contested military retirement income deduction. While the removal of the corporate minimum tax language is welcomed news, the removal of the single sales factor is troubling due to the complementary nature of the original legislative package.
The bill will very likely be decided in a Committee of Conference and there are many indicators that the Senate Finance Committee has worked to position themself well for negotiations at that time. A section-by-section of the bill can be found here.
Property Transfer Tax Surcharge Alive In Multiple Places
An area of concern exists in the property transfer tax surcharge which is being discussed in both Senate Finance in H.437 and Senate Economic Development as part of their omnibus housing bill to pay for the expansion of the manufactured homes tax credit. The component got left out of legislation last year, and had been mentioned a few times here and there, yet came back in full force this week.
The proposed increase in credits is four times that of the previously proposed increase, so a worry would be that the tax would be increased to cover it. While the tax is being marketed as a “mansion tax” because it levies a surcharge of 0.5% on transfers of property by deeded title when the value of the transfer is over $1 million, this affects both residential and commercial properties, so that is not a completely accurate framing. While the amount may seem small, it can be big in a potentially large commercial transaction and can add one more tax to the list of costs to a transaction that can deter corporate decision-making. Finally, there has been a discussion of broadening the tax to be on controlling interest transfers, not just deed transfers.
Be Sure to Participate in Town Meeting
Town Meeting Day is Tuesday, so be sure to plan for how you are going to participate in your local government which can be the venue for policies that can influence your life the most. There is a lot of state fiscal recovery fund money floating around out there, cannabis on the ballot, and changes to participation.
Here’s an overview of what is going on:
- Almost 75% of Vermonter towns will utilize legislation passed this year allowing residents to participate in town meeting day via ballot.
- 40 towns will decide if they will permit recreational marijuana sales in their towns; 33 weighed in on the question last year.
- Colchester will consider a $17 million municipal sewer project for the second time; a similar item failed in 2019.
- Non-citizens will be able to vote this year in Winooski and Montpelier.
- There are 32 measures statewide that address how municipal positions are elected or appointed.
- In South Burlington, the City Council race has become about the recent land development regulations which will hinder housing development in the City.
- Burlington has some big price tag items up on the ballot (link below) as well as some City Council turnover.
- VTDigger published a nice overview of other items and trends around the state.
For information about engaging, visit your town’s website or the resource guide on the Secretary of State’s website.
This also is a good opportunity to catch up with your legislators who are on break. If you do not know them, they can be found here.
If you’d like to follow the results of the week closer and more minute-by-minute, you might find this Vermont Press List on Twitter helpful.
Burlington’s Big Splashes
Vermont’s Queen City is the big fish in the small pond that is Vermont and the splashes it makes have ripple effects far and wide. Here are a few recent splashes:
- Burlington Charter Changes: Previously in one bill, the bill was bifurcated into two separate bills which passed the House. H.708 contains the restrictions on rental properties’ lease lengths and rents in the City which has since been committed to the Senate Committee on Government Operations. H.448 contains the language around the carbon impact fee.
- The City wrapped a two-year process that created the most restrictive Short-term Rental restrictions in the country. STR regulation has been politically fraught over the past two years in Montpelier as well, with the Governor vetoing multiple attempts to create a statewide rental registry that included a short-term rental registry.
- The City will have some big-ticket items on the ballot this year and one potentially contentious school spending question that promises an increase in school spending yet a decrease in taxes by counting on reduced statewide property taxes from the legislature before that is a sure thing.
- Finally, the City Council opted not to extend its mask mandate by another month, meaning the mandate will expire on March 3rd. At the statewide level, the discussion of a mask mandate has evaporated.
For those new to our advocacy updates, the “laundry list” is where we give quicker updates and highlight interesting news. There are about 624-hours of legislative committee time each week and then additional conversations outside of committee, local news, and federal conversations. With all that, not everything makes it to a full newsletter item. Have feedback for us? Email [email protected].
- 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
- Last week, we flagged for our members that Homeland Security has recommended entities in the United States be more mindful of potential cyber security attacks in light of the current tension and uncertainty around the situation in Ukraine. The following link will take you to the Cybersecurity & Infrastructure Security Agency website. Please review the material and make sure your systems are robust. https://www.cisa.gov/shields-up
- We touched on the return to the State House briefly in the introduction this week, however, there is a lot more that goes on to make it possible. The Senate Rules Committee Thursday decided that when the Senate returns on March 8th, they will make use of pro forma (token) sessions to help transition into the new in-person/limited hybrid style. This will mean that for the first two days of the session the Senate will hold only committee work which should also help members adjust and make their pace needed to meet the looming crossover deadline. The House Rules Committee voted this week to tighten up the use of hybrid options for members, going so far as to want documentation from a doctor of a cause that requires a member to need hybrid accommodations.
- The Senate Judiciary Committee had an unstructured committee discussion on S.178, a bill dealing with non-unanimous juries in civil trials. The Committee does not seem to have the votes to advance such legislation, with two of the five members with jury experience expressing a lack of need, or negative consequences, as their reason and another seemingly in agreement. The Committee tabled the issue until they return on the 8th.
- The long-discussed discrimination bill, H.329 has a new draft which is conveniently presented in this side-by-side. LCC discussed this legislation in our most recent employment attorney roundtable.
- The House Committee on General, Housing, and Military Affairs did their first initial walk-through of the miscellaneous alcohol bill which covers the components discussed in last week’s update.
- The House Ways and Means did a walkthrough of their miscellaneous tax bill.
- VPR and PBS released the second part of their poll.
- A longer-term goal of LCC’s has been to improve the crossing of the Canadian border for our member businesses and tourists. VTDigger this week covered the over $200 million directed to modernizing border crossings in Vermont.
- We covered changes proposed to education funding last week, what are your thoughts?