This Update is Created by the Lake Champlain Chamber for Distribution by
January 27, 2023
On a cold, dark Vermont evening, many of us turn to puzzles as a relaxing past-time. The first step to puzzling, after securing your favorite Vermont brew or spirits, of course, is dumping all of the pieces out on the table and taking stock of them. You likely find the corners and edges, then some distinct color patches, and work inward from there to build the final product. The legislative session is a little bit like that, however, not all the pieces are on the table yet, and the unique thing about this puzzle is that there are often too many pieces, as if the last person to puzzle just crammed multiple puzzles into one box and left it to be the next person’s problem.
Last week, many of the pieces that help make up the corners and edges of our legislative puzzle were added; The state heard a stormy revenue forecast, the Governor delivered his budget address, and the long-awaited report on childcare funding was presented. This week, the Budget Adjustment Act (BAA) has slowly been fitted together. Now, we need to start seeing some more pieces, in the form of draft bills, on the table, since the pace of bill introduction is at an unprecedented slow pace this year.
Once the bills start being introduced, there will likely be many, and not everything can be done. Leadership will, from the top, help distinguish what pieces don’t make it to the final product, and then the committees need to do the hard work of working inward from the corners and edges of the puzzle.
In this week’s update:
- Register for our first legislative breakfast before February 2nd
- Paid Family and Medical Leave bill released with a veto-proof number of sponsors
- Proposed bill would give unfettered access to internal workings of state contractors
- Committee reviews report on potential sports betting in Vermont
- Unique bill creating a federal tax break for Vermont businesses introduced
- The Laundry List
Paid Family Leave Bill Released with Veto Proof Number of Sponsors
This week, we finally got our first official view of the proposed Paid Family and Medical Leave program. H.66 boasts 103 sponsors, enough such that a veto of the bill could already be overridden if the sponsors stick to their proposal. That said, there is a lot of distance between the proposal the Governor is already working towards enacting and what the democratic caucus just put forward. The Department of Economic Development is collecting feedback from employers about the business community’s interest in participating via this short survey.
Sports Betting Report Delivered to Committee
This week, the newly designated House Committee on Government Operations and Military Affairs, which has within its charge liquor and lottery, heard the results of the Sports Betting Study Committee that met this past summer and fall. The Committee has recommended the legislature move forward with a state-controlled system of mobile sports wagering with several operators chosen through a competitive bid process. The Department of Liquor and Lottery would oversee the operators while The Department of Health would be tasked with ensuring Vermonters undergo responsible gambling and administrate programs around problem gambling.
The Study Committee also recommended that the state levy a high tax on the services, which could generate close to $5 million in revenue in early implementation and upwards of $10 million in revenue when the market reaches maturity. The study can be found here, and the JFO revenue modeling can be found here.
Proposed Bill Would Open the Books of Business with State Contracts
The Senate Committee on Government Operations took up S.9, a bill designed to give the Office of the State Auditor the ability to examine the books and records of businesses or nonprofits that contract with the State. The bill comes as a response to a Vermont Supreme Court decision in which the State Auditor was not granted access to records in a specific case of one large state contractor, however, the bill now looks at all state contractors. The language is broad as it gives the Auditor discretion to examine the records, accounts, books, papers, reports, and returns in all formats of any contractor that provides services to the State, provided they are relevant to the contract with the State. The bill does not identify criteria that make them relevant or how far that authority might go.
While the thrust of this proposal is laudable in that it seeks more transparency and accountability, the potential reality of this proposal due to its broad language might be audit creep, overreach, or political posturing.
Unique Bill Creating a Federal Tax Break for Vermont Businesses Introduced
A bipartisan bill to provide a long-time priority for Vermont businesses received an introduction in the House Ways and Means Committee today. This bill, H.61, would allow owners or partners in Vermont LCCs, LLPs, or S-Corps to work around the federal cap on state and local tax deductions created in 2017. This is a truly unique opportunity for the state of Vermont to pass legislation that affects how much in federal tax Vermonters pay. Our state should jump on this opportunity as 29 other states have and stop sending millions of dollars out of the state unnecessarily. But wait, there’s more, did we mention that the state receives additional tax revenue from this proposal? What’s not to like? You might call this a missed opportunity, however, some would claim that giving Vermont small businesses this federal tax break would increase wealth inequality.
Along with the bill introductions, LCC sent a letter on behalf of a massive coalition in support of this legislation. We have a great appreciation for Representatives Jim Harrison and Carol Ode for putting forth such pragmatic legislation. We should see a companion bill introduced in the Senate in the next few days.
Bills of Interest Thus Far
We follow a wide range of bills each session, as any issue that affects the day-to-day operations of our employers warrants monitoring. While many bills are still awaiting release for introduction, here are some on our radar.
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.
- Read past updates here – week 1, week 2, week 3, and the last session’s wrap-up.
- Mark your calendar! Tourism Day in the Vermont State House is March 22nd!
- The House Committee on Commerce and Economic Development this week started this week to review and understand the Vermont Employment Growth Incentive Program (VEGI) in reaction to a bill that threatens the program, which we covered in previous updates. This week, VTDigger published a commentary by the Presidents of the Lake Champlain Chamber and Greater Burlington Industrial Corporation outlining, as it is titled, there is no such thing as a failed VEGI application. In short, the crux of the commentary is that there is no losing in a program in which incentives are a proportion of the business’s tax revenue, and the incentives are only awarded after the economic advancements that were committed to are verified.
- Good news for Vermonters dealing with the economic pressures of today’s economy, effective April 1st, Vermont employers will see a decrease in Workers’ Compensation Insurance rates for the seventh year in a row. The rate reduction will save Vermont employers more than $11 million in premiums in 2023.
- The House Committee on Commerce and Economic Development submitted to the Appropriations Committee a letter outlining their priorities among the Governor’s recommended budget adjustment. Among their highest priorities were supports for new Americans joining the workforce, $3 million for the Governor’s Rural Infrastructure Assistance Program, and assistance to help stabilize the healthcare workforce. Read their letter here.
- The Senate Committee on Economic Development, Housing, and General Affairs continued their work on the Omnibus Housing Bill we previously covered. The latest version of the draft legislation, which is assumed to be a committee bill, can be found here.
- The House Ways and Means Committee took testimony on what has been a long-standing priority of theirs; taxing what online services Vermont doesn’t already tax. A few members of the Committee have put forward H.120, which would bring the state an estimated $18.4 million in revenue. Learn more about the cloud tax here.
- In D.C., our new Senator and our new Congresswomen finally have their committee assignments. Senator Welch has four high-profile assignments; the Agriculture, Commerce, Judiciary, and Rules committees. His predecessor sat on these committees in the past, and Vermont’s representation on them should serve the state well. Representative Balint was appointed to House Oversight and Government Reform Committee, with more assignments coming soon.
- The VEDA Short Term Forgivable Loan Program deadline to submit new applications is March 31, 2023 at 4:00 pm. If your business suffered economic harm due to the COVID-19 health crisis, visit VEDA FLP to determine if your business is eligible for financial assistance from this program. Existing VEDA Short Term Forgivable Loan borrowers can apply for loan forgiveness anytime up to 12 months from the date of receiving loan funds. Visit VEDA FLP to download a Forgiveness application to submit to VEDA.
- The first bill of the session has been signed into law. H.42, An act relating to temporary alternative procedures for annual municipal meetings and electronic meetings of public bodies, was quickly passed to accommodate the town meeting week that is rapidly approaching.
- If you haven’t seen it already, the Joint Fiscal Office recently released a report on the state’s demographics which should be of concern to everyone. The report highlights, “[s]ince 2010, Vermont’s population increased by roughly 20,000 people, including a big swell in older people, ages 65 to 79. But the number of children and mid-career workingage folks dropped.” This will have a massive impact on demand for state services, size of the laborforce, loss of economic activity, and a decline in tax revenues.
- This past month the state unemployment rate increased by 0.1% to bring the rate to 2.6%. The state now has the 6th lowest unemployment rate in the country. Read more here.
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