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DRM Advocacy Update – Week 12 – 2023

This Update is Created by the Lake Champlain Chamber for Distribution by

March 31, 2023

When the dust settled from the last election, it became very clear that this session would be very different due to the supermajority that the Democratic caucus was able to secure. Governor Scott has not been shy in using his veto pen over the past six years, however, this session, we’re still waiting to see if a veto threat has any merit. 

This year, the Legislature took it slow and steady from the start. Welcoming the largest class of new legislators in history, with many of the returning legislators relatively new as well, and a massive change up in committee chairs meant leadership had committees take their time getting started and did plenty of education. However, when approaching major deadlines such as crossover, Legislative Leadership did not move those deadlines, meaning things were rushed through. Now the question is, will they try to keep the normal adjournment timeline? Will this Legislature really achieve success on major problems that eluded the much more seasoned and experienced legislators that came before them, and do it in less allotted time than those legislators would spend?

There are some big battles brewing on the budget, childcare, paid family medical leave, and housing as the Governor expresses his frustration with the Legislature’s preferred course. However, the battles aren’t reserved just for the Governor. The House and Senate are also in disagreement, at least at this moment, on all of these issues as well. 

In this week’s update:

Budget and Spending Debates Heat Up; House Passes Their Version of Budget  

This week, the House passed H.494, an $8.5 billion budget – for context, past budgets have been in the $7.1 billion range – on a vote of 98 to 34. This budget represents a 12% increase in spending over the base budget. The Governor used his weekly press conference to express outrage over this year’s increase in base funding as well as the inclusion of programs such as a mandatory paid family leave program and the clean heat standard in the budget. The Governor also continued to voice his frustration that more funding is not being reserved for the mandatory match required to make use of federal infrastructure funds coming to the state in future years. 

A last-minute amendment to the budget also takes $20 million from a $90 million line item set aside in anticipation of the Senate’s childcare bill and allocates that money to purchasing manufactured homes for those currently in Vermont temporary housing. While revenue is still coming in above forecast, economists have warned about storm clouds on the horizon. You can read more about the budget here.

Housing Bill Advances Without Substantive Changes to Act 250  

If you can forgive an analogy for a moment, we think you’ll understand why the housing legislation has consumed so much of our advocacy time this week. In chemistry, there is what is called the limiting reagent; this is the component of a chemical reaction that is completely consumed in that reaction, and if there were more, the reaction could continue happening. Without more of that limiting reagent, the other compounds in a chemist’s beaker just sit there doing nothing. In our economy, housing is the limiting reagent, and every other component that legislators are working on adding to our economy is not going to create the reaction they expect without increasing the limiting reagent of housing. Want more childcare, where are those workers going to live? Want to address the cost of living – how are you going to lower the cost of housing without more housing? 

S.100, referred to as the HOME Act (housing opportunity made for everyone), passed unanimously on Thursday after some debate about the bill’s provisions around Act 250. The amendment from the Senate Committee on Natural Resources and Energy, which pulled important housing components from the bill, received 11 no votes. On Friday, during the final vote on the bill, Senator Tom Chittenden made a plea to colleagues to restore a small amount of the relief from Act 250 that the Senate Committee on Economic Development, Housing, and General Affairs had added to the bill. His amendment would allow a homebuilder to create up to 25 units of housing within five miles within five years without triggering Act 250, while the status quo is 10 units within five miles within five years. 

On its way to the floor, the bill had been agreed to by the two committees of jurisdiction in a fragile compromise which also involved Chairs being pushed by Senate leadership not to vote for floor amendments or support provisions outside of the established compromise. This made getting votes for the Act 250 amendment a daunting task. In short, politics is what kept the amendment from proceeding – watch this discussion of the amendment in Committee to see the impact of leadership pressure here. The Senator brought the amendment to the floor, articulated the need for the amendment, and withdrew when the Chair of the Senate Committee on Economic Development brought a substitute amendment. 

To be clear, the HOME Act is still a step in the right direction. To continue our analogy at the introduction of this section, if housing is the limiting reagent for the economy, then Act 250 is a common limiting reagent for housing development. While all of the provisions in the bill are strong, they could be stronger and better achieve the necessary housing our state needs, if they were mixed with substantive action on Act 250. We recommend you reach out to your legislators and tell them to support the HOME Act and add substantive changes to Act 250.

SALT Cap Workaround Get’s House Committee Time 

The House Committee on Ways and Means had an initial discussion around S.45, a bill that would create a workaround to state and local tax (SALT) deduction that was created by the 2017 Tax Cuts and Jobs Act. The legislation represents a win-win for the state as it helps businesses save on federal taxes, in turn keeping upward of $15-20 million in the state while also bringing in $0.5-1 million in additional state tax revenue. Despite this, some members of the Committee expressed concern about business owners avoiding federal taxes and questioned if we should not be taking away tax revenue from the federal government.  

If you have an LCC, LLP, or S-corporation, you should reach out to this Committee and your representative to discuss with them the real positive impact this legislation could have on your business.

Conflicting Childcare Bills on a Collision Course 

S.56, the Senate’s childcare bill passed Thursday on a vote of 24-6. Even before the Senate had given their final approval for S.56, the House Committee on Health and Welfare had already begun their work on their own vision of the childcare bill. The Committee walked through H.208 this week. 

Both bills seek to solve our childcare crisis by increasing wages to those working in the field and offsetting those wages increases by raising both the eligibility for, and amount of, state subsidies to families paying for childcare. Some are questioning the efficacy of such legislation given the hiring market we are currently in and the unavailability of new workers. 

Outside of that similarity, the bills have a number of differences that will need to be addressed in the roughly six weeks left in the session. Some of those differences revolve around funding. While the Senate elected to repeal the child tax credit and levy a payroll tax, the House members are gearing up to defend that tax credit and, from the sounds of it, are not a fan of a payroll tax. Indications point to the House money committee looking to pay for any childcare package with consumption and corporate taxes. 

Bills on the Move Worthy of Your Attention

This legislative session is characterized by the sheer volume of high-profile, high-consequence bills that are moving rapidly through the legislature. Here are some of those bills. 

  • S.102, a labor bill creating a card-check amendment and a “captive audience” provision, passed the Senate Thursday. This is one of two problematic labor bills employers should be worried about this session) . 
  • The House Committee on Environment and Energy is working through S.5, the Clean Heat Standard, sent to them by the Senate. The Committee is having the same trouble that the Senate had wrapping its head around the total coverage of the legislation with regard to process fuels, such as those used in industrial processes. It remains unclear, at least to many, if the bill is covering fuel used for what you traditionally would consider heating fuels because they are used to control the temperature of a building or all fuel regardless of its end purpose. 
  • The House Committee on General and Housing began work on the homeless bill of rights this week, which is anticipated to be added to the housing bill, S.100, on its way over from the Senate. The bill creates potential liability for places of public accommodation, such as businesses, by creating situations in which enforcing rules can be seen as discrimination based on perceived housing status. 
  • H.158, the bottle bill was passed by the House with 115 votes and expands the state deposit program to new containers. 
  • The House Committee on Commerce and Economic Development continued to work on the privacy bill, H.121. The Attorney General brought suggested language to the Committee this week. The Committee is looking to take testimony on the bill next week. 
  • The House passed the yield bill this week, setting the property tax rate for the state with an increase of 3.84%. 

The Laundry List 

There are many moving pieces, and we do our best to add the ones that don’t get a section in the newsletter yet should be on your radar here. On any given day in the State House, there are about 175 hours of committee time outside of floor time, and then the hallway, cafeteria, or other time spent legislating. 

  • The Senate Committee on Finance had to postpone the perennial task of pushing back the sunset on 248a to regulate telecom citing at the Public Utilities Commission. They will take up the conversation next week. 
  • The Senate Committee on Economic Development, Housing, and General Affairs took up the topic of the sunset on the Vermont Employment Growth Incentive program in the wake of H.10 not making crossover due to the House Way and Means Committee. The program is set to expire soon if legislative action is not taken. H.10 represented a great deal of work and would have made some changes to the program, pushed back the sunset, and established a committee to study economic development incentives. 
  • The House Committee on Health Care took up for discussion S.54, a bill that would keep the individual and small group health insurance markets unmerged, making use of federal subsidies and saving small businesses on healthcare costs.