Final Update: 2022 Legislative Session

Economic, Workforce, Business, and Employment Issues

Routinely, we have many bills in this section; however, this year, there is most work from the economic committees is in one large omnibus bill carrying many of the issues that would typically flow separately. Not only that, issues that in past years would have garnered a great deal of attention and taken up days of committee time, such as minimum wage or paid leave, were just tossed into the omnibus bills with minimal discussion compared to the past. 

S.11 (H.159, H.703, & H.634) Miscellaneous Workforce and Economic Bill 

The bill(s) faced procedural hurdles and a bit of a shell game on its long journey to a massive committee of conference. The House Committee on Commerce and Economic Development and the Senate Committee on Economic Development, Housing, and General Affairs had some rather broad gaps to close based on ideological disagreements that are longstanding. On workforce, the Senate wanted to “fill the bucket,” while the House was focused on “plugging the bucket.” The reality is we need both, however, there is only so much funding. The final bill included $99 million in appropriations, with a thorough (though not exact) breakdown of those appropriations available here. 

What’s in the bill: 

VEDA Loan Program – $19 million 

After the economic recovery bridge grants developed last session proved to be cumbersome in their application for many businesses, the legislature needed to reconsider how to best deliver relief to hard-hit businesses forced to close or dramatically crucial their operations by government mandates to protect public health. The Administration put forward a proposal to have the Vermont Economic Development Authority (VEDA) administer a program that will give loans to qualifying businesses that then convert to grants. 

To be eligible for a grant, an applicant can show a 22.5% loss in its adjusted net operating income in 2020 and 2021 combined compared to 2019. Further, at least 50 percent of the reduction in net operating income must have occurred in 2021. The loans have a cap of $350,000. 

Stay tuned for more details about how to apply for these forgivable loans. 

COVID Paid Sick Leave – $16.5 million 

S.11 establishes a new program in the Department of Financial Regulation to reimburse part of the cost for employers of providing COVID-19-related paid leave to employees during the calendar year 2022. Grants may be used to reimburse employees for unpaid leave for COVID-19-related reasons and be equal to 67 percent of minimum wage or the employee’s regular hourly wage times the number of hours reimbursed, whichever is greater. The number of hours reimbursed cannot exceed the lesser of 80 hours or two times the employee’s average weekly hours. The maximum hourly reimbursement for an employee cannot exceed $27.50.

Stay tuned on further details of the program and how to apply. 

Community Recovery and Reinvestment Program – 10 million in S.11 and $30 million in budget 

The Administration sought to expand the Capital Investment Grant Program passed last session. While they did not see eye-to-eye with the legislature and final Treasury Guidance for the use of ARPA dollars changed the program’s direction, a final version did come to fruition. The latest version allows nonprofits and municipalities to apply. 

Stay tuned on further details of the program and how to apply. 

Unemployment Insurance 

Last session, a final compromise was struck between legislators to add an additional supplemental benefit to unemployment insurance. When that faild to be implemented because the U.S. Department of Labor intervened, the Senate wanted to find another way to deliver it. A final compromise was ironed out in the last week to raise the maximum weekly benefit by $60 for the next three years until $8 million is expended from the UI Trust Fund. 

Arts and Culture Grants – $9 million 

Grants to help those in the arts, culture, and creative economies recover from the economic impacts of the pandemic. 

New Relocating Employee Incentives – ~$3.1 million 

The bill allocates these general fund dollars in one large tranche to the existing program with the understanding they will be used over two fiscal years. The Program no longer requires that relocating workers must work in an occupation on the Vermont Department of Labor’s list of “Occupations with the Most Openings” in its “Short Term Employment Projections 2020-2022.”

Numerous Workforce Programs 

These programs range from grants for students staying in the state after graduation, assistance for professions in need, funding for vocational assessment for formerly incarcerated individuals, scholarships, and more. Read more about the entire package in this JFO breakdown here (beware that this is an approximation of the bill as it changed slightly in the final hours). 

The bill also contains language that was agreed to in the final days on preventing excessive robocalls to Vermonters and a study on sports betting in Vermont. 

What didn’t make it in the bill:

State and Local Tax Cap Workaround 

• The Senate added to S.11 language which would create the opportunity for those who have LLCs, LLPs, or S-corporations to work around the cap on state and local taxes (SALT) established as part of the Trump Administration’s tax cut bill. We covered this in detail last week. 21 organizations, and counting, signed on to a letter to the Speaker of the House imploring the House to concur with language sent by the Senate and join the growing list of 20 other states who provide this relief to their businesses. Read more here. The House did not concur; however, we will be back next year to make our case. 

Marketing Funding 

• Disappointingly, the bill did not contain any funding to market the state or assist in relocation concierge services with a statewide network as previously envisioned.  

Minimum Wage 

• An increase of the minimum wage to $15 per hour by 2025 was included in the Senate’s version of the omnibus economic and workforce bill, which the House struck down in conference Committee. The House heard that the prevailing effective minimum wage is $17.54 an hour. 

Study on Paid Family and Medical Leave 

The Senate was adamant this be a portion of the bill; however, the House felt that enough studying had been done on this issue. 

H.730 – Miscellaneous Alcohol Bill 

This bill was a quietly contentious battle, consistently boiling at high heat throughout the session without ever boiling over into public spectacle. The passed H.730, the miscellaneous alcohol bill makes a number of consequential changes in Vermont’s alcohol distribution.

Most notably, the bill creates a new category of alcoholic drinks for retail sale called “ready-to-drink spirits beverages,” mostly referred to as “RTDs.” This legislation paves the way to take this growing market segment out of the controlled state distribution. RTDs will need to be under 12% alcohol by volume (ABV) and would be required to come in containers under 24 fluid ounces and subject them to a new $1.10 cent per gallon tax, instead of the 5% that spirits would typically be subject to. 

The bill also makes changes to hard cider. Under current law, hard cider beverages pay the 55 cents per gallon vinous beverage tax. Section 28 of the bill changes this to make hard ciders with less than 7% ABV subject to the 26.5 cents per gallon malt beverage tax. This change is made effective for FY 2024. 

The bill has numerous other changes, such as special event permit change, allowing attendees more freedom to wander away from the vendor space, and changes to the structure of leadership at the Department of Liquor and Lottery. The bill makes changes to background checks and the raffle tickets for third-class licenses to access rare and unique products. Direct-to-consumer language did not make it into the final version of the bill and the Committee and Department of Liquor Control are struggling with all the implications. 

A major legacy of this discussion was some acknowledgment that our status might not best serve the state as a control state in which spirits and liquor need to be sold solely through the 80 statewide state-controlled stores. This was almost the subject of a study; however, along with other provisions that were pulled by the Senate Finance Committee, however, DLL can move those conversations and has expressed interest.  

More about the bill’s fiscal impact and overview can be read here. 

H.320 – provisions preventing continued employment after settlement of a case 

H.320 sought to prohibit agreements that prevent an employee from working for an employer following the settlement of a discrimination claim similar to those the legislature passed in the last few years around sexual harassment claims. Two prominent Vermont attorneys, often on opposite sides of these types of issues, found agreement on this legislation and testified that while they want to protect individuals who file these claims, the legislation would inevitably have unintended consequences that will at best render little aid and, at worst, serve as an impediment to those it intends to serve. Others testified to this effect. That’s because both sides benefit from these provisions, and from testimony from those representing both sides, they’d like to keep these provisions. The employee in the form of a more substantial settlement and the employer in the form of finality. We think an underlying assumption of advocates for this bill is that there is a coercive nature of these agreements when in reality, it is part of a negotiation between two parties represented by legal counsel and crafting an agreement that best serves their needs. In general discussion with attorneys on this issue, the feeling is that once a relationship is broken, it’s generally broken, and people don’t want to go back anyway. 

H.320 passed the House; however, the bill did not make it out of the Senate. The Senate Committee on Economic Development, Housing, and General Affairs worked on the bill in the final days, however, a promised floor amendment to add “card check” language likely kept leadership from bringing it to the floor for a tumultuous vote that would have split the caucus. 

LCC sat down with our recurring employment attorney roundtable during the session to discuss this bill; you can watch that here. 

We understand that these issues are sensitive, and the complicated nature of legislation such as this means that our work to find suitable solutions on legislation can be mischaracterized. If you have any questions or want to understand our position more thoroughly, we’d welcome you to reach out to us directly.

H.329 – Lowering the threshold for discrimination 

H.329 attempted to do three significant things. First, it defined “harassment” such that it does not need to be severe or pervasive to be ruled unlawful, nor does it need to be compared to the treatment or outcomes of similar employees. Second, it would create a six-year statute of limitations for harassment and discrimination within housing, public accommodations, and employment, thereby codifying the existing statute of limitations for contractual damages and extending it from three to six for personal injury damages. Third, as originally drafted and intended, an employee would not need, and to some extent was encouraged not to, go through an employer’s internal processes before filing a legal claim against an employer. 

This legislation missed the crossover deadline and faltered many times as the Committee grappled with unintended consequences and received heavy lobbying from schools not to be included in the bill. Ultimately, the bill did not make it over the finish line, however, the provisions around discrimination in housing ended up in S.226, and the provisions around the statute of limitations ended up in H.729, the miscellaneous judiciary bill. Most involved were not concerned about the statute of limitations language, given that most attorneys advise clients to retain records for the six years given that is already the term for contractual damages. 

LCC sat down with our recurring employment attorney roundtable during the session to discuss this bill; you can watch that here. 

LCC understands that these issues are sensitive, and the complicated nature of legislation such as this means that our work to find suitable solutions on legislation can be mischaracterized. If you have any questions or want to understand our position more thoroughly, we’d welcome you to reach out to us directly.

H.489 – Health Insurance Reduction for Businesses 

The Legislature once again pursued language to allow the large and small group insurance markets to remain unmerged for another year to take advantage of ARPA premium subsidies, lowering premium rates for small businesses, which saved small businesses $17.7 million last year. See language here. There was conversation around the need to find about find about $2 million to make that happen, however, this did not occur. The savings and success of this is contingent upon Congress continuing the Advanced Premium Tax Credit. 

Housing, Development, Energy, and Environmental Bills 

Early in the session, we shared a must-read for everyone working in Vermont environmental policy. Ezra Klien took aim at how “one generation’s solutions have become the next generation’s problems … the environmental victories of yesteryear have become the obstacles of this year.” In the piece, he discusses the housing issues of California in the context of their landmark 1970 environmental law that has “become an all-purpose weapon for anyone who wants to stymie a new public project or one that requires public approval.” The piece even has a specific call-out of Vermont environmental groups squashing renewable energy and makes a great case that in this day-and-age moderates are the true environmentalists. 

This is a perfect parallel for how this session went for environmental legislation as environmental groups held back Act 250 modernization yet again as well as joined with the Governor to prevent the Clean Heat Standard. We did a deep-dive in an earlier update into the issues of housing and every legislator in the building knew that from pressure from constituents and advocates that this was the number one priority that they needed to deliver on this session. 

S.234 & H.492 – Act 250 bills 

The end of the legislative session saw a massive skirmish over Act 250 and housing language. The House passed H.492 about ten weeks into the session, which looked to bring the state’s Act 250 appeals process back to the early 2000s. It restructured the Natural Resource Board into the Environmental Review Board (ERB), which would hear appeals instead of the Environmental Court, thus bifurcating the current consolidated appeals process. The ERB would have had a full-time chair and have five members 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 bill also created a new pre-hearing discovery period with non-expert witnesses.

When the bill arrived in the Senate around 30 high-profile Vermont names, including mayors and developers, sent a letter to Senators opposed to the changes to Act 250 governance proposed in H.492. At the same time, the House was passing H.492, the Senate passed S.234, which aimed to take a balanced approach to changes to Act 250. The bill included the following proposals;

• Forest fragmentation: new language creates a new jurisdictional trigger for natural areas in which the state feels development would lead to forest fragmentation. The bill also requires resource mapping for these areas.  
• Road rule: language also creates a new jurisdictional trigger in instances when a new road for a driveway or entrance to development exceeds 800 feet or 2,000 feet of multiple roads or driveways.
• Timeliness: If a municipality doesn’t respond with the impact of a project within 90 days, “the application will be presumed not to have an unreasonable burden on educational, municipal, or governmental services.”
• One-acre towns: the bill looks to clarify the Act 250 jurisdiction in one-acre towns in the fallout of legal proceedings that previously had substantial changes to the rule and have since been reconsidered. 
• Neighborhood development areas: under the bill a town may have a neighborhood development area if they allow four dwellings per acre. It also eliminates the requirement that the development within the NDA is currently served by sewer or wastewater infrastructure. 
• Flood zones: in an effort to allow smart growth in neighborhood development areas, flood zones can be part of neighborhood development areas with suitable infrastructure. 
• Governance: while the House sought to overhaul governance, the Senate sought to study it. 
• Other items: the bill creates a study committee on the program’s jurisdiction over agricultural businesses and makes changes to better accommodate the forest products industry.  

In an attempt to force their governance changes, the House consolidated the Act 250 bills and passed S.234 with H.492 in it and sent it back to the Senate. They also removed the provisions in S.226, which we’ll discuss later, that involved Act 250, and put them in S.234. This was all in an attempt to make this a must-pass bill and force support for the language the signatories on the letter and the Governor opposed. They did drop the road rule as well. This was met with pushback from those representing the constituencies signed on to the letter opposing H.492, which precipitated another letter with more signatories and a division within the Senate caucus. Meanwhile, the Governor threatened to veto the bill due to the forest fragmentation language. 

Ultimately, the Senate passed S.234 on a vote of 17-13, after everything except the forest fragmentation and governance language was added to S.226, as we discuss in the next section. S.234 will be vetoed by the Governor.  

S.226 – Omnibus Housing Bill 

If you haven’t read the section on S.234 (above), then this section won’t make sense. If S.234 was the Titanic headed towards an iceberg, then S.226 was the neighboring boat that saved the good work that was done on housing at the last minute. For four years, the Senate Committee on Economic Development, Housing, and General Affairs sought to make housing more affordable and easier to build with permit reform that always got pulled into the broader Act 250 bills that couldn’t make it across the finish line. That happened again this year when their work was pulled into S.234 by the House, which as we discussed above, saw enormous bipartisan pushback. The Chair of that Committee had had enough and crafted an amendment to move the entirety of S.234 to S.226, without the problematic forest fragmentation and governance language. That amendment can be found here in a comprehensive summary of what is now the bill S.226 which includes additional assistance to first-time home buyers, the “missing-middle program, and much more. The bill will be signed by the Governor. 

S.210 – Vermont Rental Housing Improvement and Rental Registry 

The contentious, multi-year battle over a rental registry, which began in S.79 last year and was vetoed, came to an amicable enough end. The rental registry got pulled from S.210 in a compromise with the Governor, and instead, $400,000 in ARPA funds were appropriated to support a complaint-driven version of the program. As we cover later, this will need a funding source in future years if it continues. 

The Vermont Rental Housing Improvement Program will be able to move with $20 million in funding to provide grants of no more than $50,000. The bill also carries $4 million for accessory dwelling units, ADUs with money carved out to help to navigate the process for those hoping to build them. 

S.113 – (Act 92) establishing a cause of action for medical monitoring expenses

This year, Governor Scott signed the medical monitoring bill, S.113, capping off an over six-year back and forth over that policy, involving dozens of versions and multiple vetos. This bill serves as a great example that, despite years of rhetoric that groups would obstruct any advancement of an issue, eventually, a reasonable conclusion can be found. 

The bill creates a cause of action for medical monitoring for those affected by contamination and would draw much of its language from the Crawford decision written for the Sullivan vs. Saint-Gobain case stemming from PFOA exposure in Bennington. Those who have followed our newsletter will remember that the decision is more closely aligned with LCC’s counter-position than the proposal from the legislature. The language proposed in S.113 goes beyond the proximate cause under the Crawford decision, which was problematic, however, by the end of the work on the bill, the language fit the Crawford decision more closely. More details about the bill can be found here.

H.715 – Clean Heat Standard 

In what might have been the biggest upset of the session, this legislation that passed the Legislature was vetoed by the Governor, and then the legislature failed to override the veto by one vote. The legislation was opposed by the Republican caucus, which you would expect; however, it took heavy fire from environmental groups on the far left fighting it for various reasons ranging from its inclusion of biofuels, to it not going far enough. Ultimately, the pushback from environmental groups was enough to peel off one vote and prevent the bill from becoming law. 

If you’d like to learn more about what the bill would have done, you can look back at past updates for more context. Put simply, it would have created a system by which fuel dealers in the state would need to switch to other energy sources, sell less fuel, or buy credits to offset their emissions. The battle at the end of the session revolved around the Governor requiring a way for the legislature to sign off on any final version of the program the Public Utilities Commission created over the two years after the bill was signed. The legislature conceded on this point only to have the Governor veto it anyway on the ground the check-back provision was not strong enough. This precipitated the failed veto override. 

Tax, Revenue, and Appropriations Bills

Yet another year of record federal funds available to legislators and surpluses above what was forecasted made for a difficult session, with more requests for appropriations than was available. We noted in earlier updates that this was a different kind of session because appropriators were able to put the budget together rather fast, while the committees  of jurisdiction had trouble agreeing on their tranche of appropriations. 

H.740 – Budget (Big) Bill 

We’ve covered the $8.3 billion dollar budget as it developed this session; here are some highlights of the final version. Here are some high-level items. 

• Broadband – $95m ARPA Capital Projects Fund, State Parks Connectivity – $1.6M ARPA Capital Projects Fund
• Housing – VHCB $50m ($30m ARPA, $10m GF contingent, and $10 in base), S.226 Safe & Affordable Housing provides $20m for ‘missing middle” and manufactured housing, S.210 provides $20m VHIP rental unit update program
• Community, Workforce, and Economic Development – $137.8m, including S.11 
• Childcare providers ($4.9m), Children’s Integrated Services ($900k), and Parent Child Centers ($1.5m) base increases 
• UVM ($10m) and VSC ($10m) base increases and VSC ($14.9m ARPA) transition bridge plan 

Here are some budget resources: 

• House Summary H.740 Conference Report
• COC Budget Summary – $ Amounts
• Senate Summary H.740 Conference Report
• ARPA Appropriations (G Secs and other bills)
• FY2023 General Fund Onetime Appropriations and Transfers

S.53 – Corporate Tax Modernization

The legislature picked up where they left off in the last session on corporate tax modernization, which was in the works ever since the state moved to market-based sourcing in the previous biennium.