Thank you to this week’s sponsor of our Advocacy Update:
January 29, 2021
This week brought some good news around COVID-19 and a clearer view of what the next few months of legislative action will look like. Vermont saw a decrease in COVID-19 cases and more than 32,500 people aged 75 or older signing up to receive the COVID-19 vaccine. 40,000 Vermonters have received at least one shot! On the legislative front, things are relatively quiet as committees continue to spend much of this week absorbing the proposals put forward by Governor Scott in his budget address. In this week’s update, we’ll focus primarily on the Governor’s proposed budget and the work legislative committees are doing in response to it.
In this week’s update;
Join Us for Our (Virtual) Legislative Breakfast Series
The first legislative breakfast was a great success! Thank you to everyone who joined us Monday! Our Legislative Breakfast Series is a staple of each legislative session, providing access and perspective into the inner workings of Montpelier. During these uncertain times, the format has changed; however, our team’s dedication to bringing you this access has stayed the same. We invite you to join us on the following dates:
- Monday, March 15, 2021 – 7:30 a.m. to 9:00 a.m. – Special Guests: Lieutenant Governor Molly Gray and Senate President Pro Tempore Becca Balint
Special thanks to the sponsor of our Legislative Breakfast Series:
A Deep-dive into the Budget
Typically, an administration’s budget roll-out, while still being one of the bigger milestones in a session, is restrained by typical limits of the state budget, and primarily about moving resources around and working within the margins of the budget from the year before. That is not the case this year. On Tuesday, the Governor unveiled his proposed $6.83 billion budget to the Vermont Legislature which his team has dubbed, one of the largest one-time investments in the community and economic development. Fueling this investment was about $218 million in one-time money.
Remember, the Administration began work on the budget in August using the revenue forecasts available to them. They asked agencies to present to them a level-funded budget and planned to use reserves to fill shortfalls. Since then, much has changed, and when the E-Board adopted their consensus forecast last week, the game changed even further with a great deal of one-time revenue available. Vermont is not necessarily alone here.
We foreshadowed in previous updates the potential friction over how to use the one-time revenues of this year; starting new programs or filling budget gaps versus one-time investments. As we’ve described before, these revenues are from the massive amount of money that flowed through the Vermont economy due to federal stimulus and can’t be counted on in the future. To that end, in his proposed budget the Governor prioritized deferred maintenance and infrastructure improvements, making the crack between him and legislative leadership wider since they have some priorities for the money that would be ongoing. The Governor’s budget does not hold out hope for additional funds coming in from the federal government, the Democratic legislative leadership is holding out such hope; both are stressing the need to stay flexible as things change due to federal actions.
Here is a look at what is in the Governor’s proposed budget in the context of community and economic development;
More Details on these programs can be found at these links
- Buy Local Vermont Consumer Stimulus Program |
- Create Better Places Grants
- Downtown Tax Credit
- Downtown Transportation Fund Expansion
- Manufactured Housing Replacement and Purchase
- New and Relocated Worker Program
- Placed Based TIF
- Vermont Housing Investment Program
- Dedicated Tourism and Marketing Promotion Fund
Housing Development, Downtowns, Infrastructure
Overall, there are many solid steps forward on our state’s infrastructure that the Lake Champlain Chamber has been advocating for over the years. We’ve highlighted some of this below as well as some substantial items not highlighted in the chart above.
- In addition to the $0 changes seen above around removing areas of enhanced designation from Act 250, the Governor’s budget proposes $500,000 to modernize Act 250 following the controversial Executive Order that reorganizes the Natural Resource Board. The Senate Natural Resources Committee voted to reject this Executive Order this morning.
- The $25 million brownfields investment has been a long time goal of our team and would likely cover almost all the needed brownfield remediation in the state. In past conversations around development, policy-makers and environmentalists have wanted to push in-fill development in downtowns, something LCC agrees with, however, we’ve always cited the fact that many of those locations are close to impossible to start a project on due to their brownfields status.
- $25 million for weatherization of low and moderate-income housing. Meanwhile, in the Senate, the Chair of Natural Resources and Energy has his eyes on a larger appropriation and is looking to commit $1.3 billion to weatherize 120,000 homes in the next decade from increased fuel taxes.
- $20 million in one-time funding to the Vermont Housing and Conservation Board.
- $10 million for community solar buy-in for low and moderate-income households
- $5 million for electric vehicle incentives
- Much of the conversation in the Senate Committee Economic Development, Housing, and General Affairs this week was around these proposals. The Committee also continued to discuss the merits of pursuing a housing bond again in the context of the Governor’s proposed funding for housing.
Funding Dedicated to IT Projects
Our state had many technological hurdles before the pandemic, however, many were very pronounced during the pandemic, specifically issues with the Department of Labor’s archaic mainframe system. To tackle all of these problems the Governor proposed $53 million in funding for state IT projects covering;
- $12.75 million allocated to the Human Capital Management Project
- $3.5 million for modernizing the Vermont Department of Labor mainframe
- $15 million to update the Department of Motor Vehicles IT system
- $9.5 million to the Agency of Human Services to create better information sharing and streamline information around Vermonters who are utilizing multiple benefit programs.
- $1 million Tourism Marketing – to seed a new Vermont Department of Tourism marketing fund in the next fiscal year with language that in following fiscal years would take a percent of any rooms and meals tax revenue above the General Fund’s target and apply it to the new fund. We could not be happier to see action on this issue we have been advocating on for the longest time.
- The Governor’s budget also invests a substantial amount into outdoor recreation including $5 million for trail work, $5 million for outdoor recreation grants to communities, $1 million to construct new, upgraded cabins at state parks, and $11 million for deferred maintenance at state parks.
- The proposed budget includes two new full-time employees for the Racial Equity Director as well as $200,000 for training.
- As the Governor has previously proposed, he put forward exempt military pensions in an effort to recruit skilled workers to the state. This likely won’t get much airtime and has been quickly dismissed in the past few years.
- As already highlighted in the Governor’s inaugural address, he gave more details on two of his education proposals. He proposed creating a property tax exemption for Pre-k this year, next year the exemption would extend childcare centers. The proposal would be paid for with revenues from I-lottery, multi-jurisdictional lottery, sports betting, and Keno machines. He also again put forward-moving the Child Development Division of the Department of Children and Families into the Agency of Education in order to streamline certain operations and oversight of pre-K and childcare.
- The budget contains a proposal to streamline the Manufacturing and Machinery Equipment Tax Credit. This involves expanding the exemption to include all equipment; a change from direct use standard to integrated plant theory.
What is not in the Governor’s Budget
- No additional business recovery grant money which LCC and partners responded negatively to the day of the budget address. Yes, the Administration did propose $10 million in the Budget Adjustment Act). However, with many businesses continuing to operate at far reduced levels due to restrictions, and previous grants covering losses only through September, additional aid is imperative especially in the absence of certainty with regard to when restrictions might be lifted.
- There is no additional funding for pensions’ unfunded liability. This proposed budget only funds them at the required amount. Likely many legislators would want to put some of that one-time money towards that enormous problem. Here is your periodic reminder that Vermont can’t have nice things because we already mismanaged other nice things. Treasurer Beth Pearce released a report recently outlining cuts that will likely need to be made to the state pension system which has a ratio of fund contributions to benefits collected which are quickly approaching 1:1. The Treasurer this week suggested reducing cost-of-living adjustments for retired state employees and eliminating them for retired teachers. IF the legislature did not want to do either of these things, they could put an additional $96 million into the fund annually, on top of the almost $130 it typically put in specifically for unfunded liability.
- The Governor’s budget did put $20 million to the state college system as bridge funding, $25 million less than what advocates for the system hoped for. This scenario played out with similar proportions last year with the legislature siding with the state college system.
Budget Adjustment Act
Meanwhile, work on the BAA continues. The bill passed the House with about $18 million in additional spending and now heads over to the Senate. LCC hopes that there is a proposal from the Administration to create Gap Economic Recovery Grant, that was not included in the House version of the BAA will get additional airtime in the Senate.
As we covered last week, the Agency of Commerce and Community Development rolled out a plan to deliver $10 million in what they called a Gap Economic Recovery Grant proposal in the BAA. The program is designed to cover businesses that were ineligible or received only partial funding from the PPP or EIDL grant program, prioritizing businesses that were established after February 15, 2020, frozen out of many programs. The proposal, unfortunately, received a skeptical reception in the House Commerce Committee due to timing among other issues and ACCD will make their case to the Senate Committees. The Senate will hold a public hearing on the Governor’s Recommended FY 2022 State Budget on Monday, February 8th at 1-2 P.M. and 6-7 P.M. If you are a business owner that would be aided by such relief, contact our advocacy team.
A COVID-19 Focused Session
This week, a commentary by our Chamber President was published in VTDigger urging the legislature to keep the focus of their work on dealing with COVID-19 until the pandemic passes. From LCC’s perspective, the work of the legislature must be about addressing the problems directly in front of us in the next six months. This is not to say that work cannot also build capacity for the future too. That kind of win-win is ideal, however, far-reaching plans are not appropriate for this session.
Vaccine Update and Answers on Employee Vaccination Policy
Starting Monday, Vermonters over 75 years old were able to access the vaccine via an internet registration system more than 32,500 people aged 75 or older signing up to receive the COVID-19 vaccine. This demographic was originally expected to take about 5-weeks to vaccinate. From there, it will work down the age bands by increments of 5-years. There are about 49,000 Vermonters 75 or older, 33,000 Vermonters 70-74, and 42,000 Vermonters 64-69. This should bring us to the spring with about 125,000 Vermonters vaccinated or 168,000 Vermonters vaccinated when you include healthcare workers that have already been taken care of in Phase I. In a press conference today, the Secretary of the Agency of human services said that target is likely to be reached by mid-March, not accounting for any increase in doses that might come to the state. That’s about 27% of our population! 40,000 Vermonters have received at least one shot as of today!
Join our member Primmer Piper Eggleston & Cramer PC on February 3, 2021, at 12:00 p.m., for a 1-hour webinar to review current legal guidelines on COVID-19 vaccinations, provide practical advice on developing a vaccine policy for your workplace, and answer questions from attendees.
Childcare Advocates Roll Out their Plan in Virtual Press Conference
Thursday, the childcare advocacy group Let’s Grow Kids, alongside coalition partners and legislators, introduced a three-year plan for access, affordability, and sustainability of our early childhood education system (covering ages 0-5 years old). Notably, the organization seeks to find the roughly $200 million in annual funding needed to ensure that families in Vermont pay no more than 10% of their household income to childcare costs. Among other things, they plan to raise early childhood educators’ salaries and invest in the IT infrastructure necessary to streamline the system. Advocates applauded the proposals within the Governor’s budget to address (as we outline above) their goals.
Over the past year, it has been nearly impossible to have any policy conversation without it relating back to childcare in some way, and do not expect that to change anytime soon. Childcare is front of mind for legislators especially after the last 10-months when the closure of childcare centers and schools has forced many parents, the vast majority being the female parent, to exit the workforce or juggle working remotely and educating their children. Many of these parents were left paying the monthly bills for childcare when they could not send their children to daycare in order to hold their spots.
Over the next three years, the organization will seek to have the legislature make commitments to provide subsidies to keep the cost of childcare below 10% of household income, create a study to find a funding mechanism for the changes outlined above, and eventually enact a funding mechanism. Despite this roadmap, it would seem that a funding mechanism has already been chosen; a 1-percent payroll tax split between the employer and the employee.
Unemployment Overview and Updates
The Senate Committee on Economic Development, Housing and General Affairs continued work this week on S.10, an act relating to extending certain unemployment insurance provisions related to COVID-19. The bill seeks to do two things. First, it clarifies reasons how an employer can get relief from UI experiences charges and accommodates unforeseen pandemic-related issues that would prevent a re-open and rehire. Second, it creates an application for the Department to process requests to be relieved from charges.
By way of background; the Vermont legislature passed Act 91 last year which (most relevant to this discussion) provided relief from experience rating increases for employers if they laid employees off due to reasons associated with the pandemic, provided they rehired the employee when their job became available again.
The crux of the discussion this week was around how to deal with positions at businesses reopening from an administrative level that maximizes the possibility of an employee currently on UI getting their job back. During one point in the pandemic, there were over 130,000 opne claims for unemployment, leading the Department of Labor to suggest that universal charge relief from March 15th to December 31st for ease of administration. They suggest that employers would not receive relief if an employee can show that an employer did not rehire them back and instead hired new employees.
The Committee ran out of time to complete the work on this bill this week and will take it up again on Tuesday.
- Read last week’s report here
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- Congress may move forward this coming week with additional relief by using the budget reconciliation process as we’ve highlighted in previous updates, however, it is still not clear how broad they will go.
- The Paid Family Leave proposal introduced at the start of the last session was re-introduced in almost the exact same form, including a 0.93% payroll tax to fund it. The bill garnered 81 sponsors last year and 72 this year.
- This week the Senate Committee on Finance was introduced to the Tax Structure Commission’s work. Read LCC’s comments on the Tax Structure Commission draft report here. We welcome any feedback you have as we will likely be engaging on these issues in the legislature in the coming weeks.
- Town Meeting TV and Seven Days are teaming up to host a virtual election forum with Burlington mayoral candidates on Friday, February 5, from 5:30 – 7 p.m. Learn more here.
- S.9, An act relating to extending certain workers’ compensation amendments related to COVID-19 has now passed both bodies and will now go to the Governor.
- A VTDigger story was published this week, it focussed on a particular segment of the market, homes over $1 million, which saw an increase in the last year. The thing that stood out to us was that “The average sale price for a single-family home in November 2020 was $352,537, according to the Vermont Association of Realtors. The organization said the average price in November 2019 was $279,528; that’s an increase of 26% year-over-year.”
- The House Energy and Technology Committee has begun work on a draft bill that would create the Vermont Community Broadband Authority, a State entity that would operate similarly to the Vermont Telecommunications Authority (VTA) to provide time-limited leadership for coordinating partnerships and developing innovative finance mechanisms and alleviate the Department of Public Service’s conflict as a regulatory body for existing providers in the marketplace.