Thank you to this week’s sponsor of our Advocacy Update:
April 30, 2021
There is no shortage of things to update you on this week, as action occurred on many fronts and the Lake Champlain Chamber testified in three committees in just one morning. We’ve covered what can fit in this update with more coming next week.
In this week’s update;
- LCC testifies in House on PPP tax as well as EITC and CDCC
- LCC testifies on unemployment insurance legislation, now moving with changes
- Budget moves through the Senate, Economic development bill gets paired back
- LCC testifies on need for more economic recovery grants
- Restaurant Revitalization Fund registration opens today
- Pandemic exit plan poised for next steps
- Unemployment work search requirement reinstated May 9th
- Joint hearing on unemployment experience for employers and employees
- Bridge Grants Announced
- The Laundry List
LCC Testifies Again on PPP Taxability as well as Federal Link Up Issues
The saga continues as LCC tries to turn back the language in Act 9 that made forgiven PPP loans taxable. The Senate seems to be leaning towards making forgiven PPP nontaxable, however, the House is still worrisome. Please take a moment to write to your legislators today and urge them to make forgiven PPP nontaxable.
- LCC’s testimony to Senate Finance
- FAQ sheet on forgiven PPP loan taxation
- Infographic – “where did the forgiven PPP money go?”
- Joint Letter from over 55 Vermont organizations to prevent PPP taxation
LCC’s Government Affairs Manager testified in House Ways and Means Monday morning on the federal link-up issues of the Earned Income Tax Credit, the Child and Dependent Care Credit, and taxation of PPP.
LCC made two main new points in the discussion around PPP taxability;
- All conversations around taxing PPP are, by the assertions of legislators, conversations about raising new revenue, not losing revenue. This is because the revenue forecast they built is based on factoring in PPP not being taxable and they insist that they have not made a decision yet. To say any change would have the state lose money would be to contradict the “placeholder” narrative.
- The question; “why should federal decisions influence state policy?” has been part of this discussion and LCC turned that question around and asked; “why should the state insert itself into a rescue relationship between the federal government and a Vermont business?” especially when the state does not need the revenue and already received a great deal of benefit from the program in the form of income, payroll, and other taxes from downstream economic activity. The State certainly has the right to set its own tax policy, however, the pandemic is an extenuating circumstance in which there is no reason to interject and interfere in this relationship.
The day before this testimony, the Senate Committee on Finance met to discuss the link-up issue. They stated that it would be part of the miscellaneous tax bill which they will pass out next week.
EITC and CDCC
Two other issues linger where the state is out of conformity with the federal tax code and will need to decide what to do before adjournment: the Earned Income Tax Credit and the Child and Dependent Care Credit. On the EITC and CDCC, LCC supported linking up to the federal tax code as both represent opportunities to prevent economic scarring from the pandemic and corresponding recessions. We understand that the Committee may have concerns around the expanded federal benefits existing in perpetuity, however, we feel that is a conversation to be had at a later date as Congressional intent and feasibility of such a situation becomes more clear. In the meantime, this is part of a comprehensive package from the federal government to help states move out of the pandemic without longer-term damage. We feel Vermont would be best served by leveraging every element of that package to its fullest, especially when the cost of doing so can be creatively offset with the accompanying flexible federal funding provided in ARPA. Furthermore, leveraging federal programs is always preferable to starting new programs.
LCC is engaging with stakeholders to understand interactions between the Vermont childcare subsidies and the CDCC, as more investment in subsidies means less recovered via CDCC by families. If the CDCC is extended in perpetuity, it might be an interesting factor to consider in the study this summer on the future of Vermont’s childcare.
LCC Testifies on Unemployment Insurance Legislation Now Moving with Changes
As they have done with other pieces of legislation so far this session, the House Commerce and Economic Development Committee was able to take up legislation with the full context of the American Rescue Plan Act (ARPA). The Committee was presented with evidence in testimony last week that ARPA provides robust dependent benefits to all Vermonters that far exceed what could be provided by a new benefit built in the UI system. This week, this was confirmed by their Joint Fiscal Office (see here a couple of scenarios). LCC has long said that fully leveraging federally funded programs, which can be done at a low marginal cost, is preferable to standing up new state programs at a high marginal cost and low marginal impact. In light of this, and the realization that benefits will certainly increase due to anomalous pandemic factors, the committee cut the dependent benefit from the UI trust fund.
As LCC has testified to the Committee previously, 2020 was an anomalous year. Such a year created two artificial situations; first, there is the artificial pain in the form of an artificial spike in rate schedules and second, there is an artificial gain of benefits due to the fluctuation in average weekly wage caused by the pandemic which pushes up the maximum weekly benefit.
Both come at a cost to employers and the Committee decided to solve the artificial pain to employers and keep the artificial gain to employees. The artificial pain is resolved by removing the year 2020 from the calculation for the UI trust fund, which will mean rate schedules do not jump too high too fast. We thank the members of the House Commerce Committee for taking this action.
Restaurant Revitalization Fund Registration Opens Today
Registration for the Restaurant Revitalization Fund (RRF) will begin Friday, April 30 at 9 a.m. EDT and SBA will begin accepting applications via the application portal on Monday, May 3 at 12 p.m. EDT. The application portal will remain open to any eligible establishment until all funds are exhausted.
As we covered last week, the program is broader than one would think, as a business that receives 33% of gross receipts from a restaurant-style food operation is eligible, which means that not just restaurants, but also brewpubs, food trucks, coffee shops, bars, and lodging establishments could benenfit. It is important that everyone apply!
In preparation, qualifying applicants should familiarize themselves with the application process in advance to ensure a smooth and efficient application. Follow the steps below.
- Register for an account in advance at restaurants.sba.gov starting Friday, April 30 at 9 a.m. EDT. If you are working with Square or Toast, you do not need to register beforehand on the application portal.
- Review the sample application, program guide and cross-program eligibility chart on SBA COVID-19 relief options.
- Watch one of the webinar trainings recorded and posted on SBA’s YouTube channel.
For more information, visit sba.gov/restaurants.
Budget Moves Forward in Senate, Back to the House Next Week
One indicator of when the session is coming to a close is when the budget bill, or “Big Bill” as it is referred to, makes its way through the Senate to be sent back to the House. This year, it might need to be called the “Huge Bill” as it encompasses normal state funds, remaining CARES Act funds from last year, money sent to the state as part of the CAA, more than $200 million in surplus revenue, and new ARPA funds. The plan uses all but roughly $515 million in flexible ARPA funds and about $113 million in ARPA capital funds to be used in the 2022 legislative session.
Some highlights of this budget;
- $100 million for broadband expansion
- $115 million for water and sewer projects
- $31 million for climate action investments
- $20 million in Economic Recovery Grants
- $150 million from the general fund to pension liabilities
- $52 million in updates to the state IT system
An overview of the budget can be found here. The bill also includes about $53 million in workforce initiatives that move funding to the state college system. As we covered last week, the Governor and legislature hold many of the same priorities, however, some differences are prominent and could put the budget at risk of a veto showdown.
Economic Development Bill Limited by Budget
The House Economic Development bill has been pared back to accommodate the limited budget the Senate Appropriations Committee gave to the Senate Committee on Economic Development, Housing, and General Affairs. Nearly all items were cut back dramatically in their spending under the Senate’s version of the bill.
LCC Testifies on the Need for More Economic Recovery Grants
LCC’s Government Affairs Manager testified Wednesday morning in the Senate Committee on Economic Development, Housing, and General Affairs around three priorities;
- Gaining more grant relief for businesses affected by the pandemic.
- Requesting a report from ACCD on the usage and likely oversubscription of the Bridge Grant Program after the legislature adjourns for the year as well as the opportunity to appropriate additional funding to the program to meet that oversubscription in the off session.
- Providing ACCD with more flexibility to meet the needs of various sectors, sub-sectors, and individual businesses’ unique circumstances by adjusting the program’s grant caps, covered period, and other variables.
As mentioned above, the Committee had their share of ARPA dollars to cut by the Appropriations Committee resulting in only $20 million in grants available.
LCC submitted a letter to House leadership today, ahead of them receiving the budget, requesting additional funding, more flexibility in ACCD administering the program, and a method to backfill any grant program if it is oversubscribed.
Pandemic Exit Plan Poised for Next Step(s)
The State is in a strong position to move into the next phase of the Vermont forward plan, as case rates have dropped precipitously to the tune of 61% each day since April 1, the steepest drop in daily numbers in a year. To date, over 60% of Vermonters have been at least partially vaccinated (note the graph below is from Tuesday, however, it shows trajectory well).
Be sure to encourage, to the extent you can, others to get the vaccine. As we covered last week, tax credits to provide a day of sick leave to get the vaccine are available to employers now. Vermont is on a steady course and doses from the federal government are on a steady schedule over the next few weeks, with an increase of J&J doses expected. In the coming weeks, expect more pop-up clinics which has been described as the vaccines coming to you, instead of you going to the vaccine.
Work Search Requirement Reinstated May 9th
The Vermont Department of Labor announced this week it will reinstate the work search requirement for unemployment claimants beginning May 9, 2021, for all claimants in regular UI and specific claimants in the Pandemic Unemployment Assistance (PUA) program. Claimants will be required to conduct three qualified job contacts for each week they claim unemployment insurance. Additional information and resources will be available soon.
This means UI claimants will need to actively apply for, or reach out to, about 3 different job inquiries per week and prove these inquiries when they input their weekly information for claims. There are exemptions for hardship and certain COVID-qualifying exemptions created under Act 91. Refusing a job offer can lead to the expiration of benefits. For those claimants on the PUA system, because they are self-employed they will not be required to show proof of searching for work, as the state will follow the federal government’s lead on how those individuals will prove that they are actively looking to get back in the workforce.
More info at http://labor.vermont.gov.
Joint Hearing on Unemployment Experience for Employers and Employees
On Tuesday, May 4, 2021 from 5:00 p.m. to 7:00 p.m. the House Committee on Commerce and Economic Development and the House Committee on Government Operations will hold a joint public hearing to listen to employees and employers in Vermont about the issues faced with unemployment insurance during the COVID pandemic. The public is invited to register to speak at the hearing or submit written testimony.
To register as a speaker at the hearing, please sign up here. Registrations will be accepted on a first-come, first-served basis, and testimony time will be limited to two minutes per person.
To submit written testimony, please email an MS Word or PDF file to [email protected] The hearing will be live-streamed on the Legislature’s Joint Committees YouTube channel here.
Bridge Grants Announced
As we’ve covered previously, H.315, enacted as Act 9, appropriates $10 million of funds from the American Rescue Plan Act (ARPA) to ACCD to provide priority funding to businesses that have not received prior State or Federal financial assistance. To the extent that funds remain available, the program is also intended to provide funding to businesses that have suffered a tax loss even after receiving State or Federal aid. The Act requires ACCD to post guidance for the program 10 days after enactment, and that public guidance can be found at the ACCD COVID-19 Recovery Resource Center today.
It is important that even if you feel that you will not be prioritized for funding that you apply for this program to do two things: first, hold your place in line for future funds, and second to help demonstrate the complete economic toll the pandemic and the restrictions needed to combat it, have had on the Vermont economy. Further guidance and information regarding the launch date for the program, application portal, FAQs, and translated versions of materials will be posted soon. The application portal will be live in early June.
- Last week’s newsletter
- The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021. Learn more here. Have more questions around employment and vaccinations? Watch this employment attorney roundtable discussion LCC hosted on the issue.
- LCC was scheduled to testify this week, however, was unable to due to scheduling conflict, on S.62 which seeks to build on the State’s Remote Worker Program and the later Relocated Worker Program by consolidating the two initiatives and making them permanent. LCC’s testimony would have focused exclusively on the issue of geographic restrictions, and we hope that the program, which is designed to bring in more statewide revenue through payroll tax, be extended to every corner of the state.
- The Emergency Broadband Benefit is a Federal Communications Commission program that will provide a discount of up to $50 per month towards broadband service for eligible households and up to $75 per month for households on qualifying Tribal lands. Eligible households can also receive a one-time discount on the purchase of a computer or tablet.