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Advocacy Update – Week 5

Join Us for Our (Virtual) Legislative Breakfast Series 

We’ve had a fantastic legisaltive breakfast series so far featuring Governor Scott, and over 20 elected policymakers, and staff of the Congressional Delegation. 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, Speaker of the House Jill Krowinski 

Special thanks to the sponsor of our Legislative Breakfast Series:

LCC Testifies on Business Gaps in Recovery Grants and the Need for More Assistance

LCC’s Government Affairs Manager joined the House Commerce and Economic Development Committee on Wednesday to discuss a proposal from the Agency of Commerce and Community Development to deliver $10 million in what they called a Gap Economic Recovery Grant proposal in the Budget Adjustment Act. 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 and did not make its way into the BAA before it passed the House. The Senate is considering the proposal currently and we encourage those who would benefit from this program to reach out to their senators. Meanwhile, the House Commerce Committee is continuing to work on the proposal, with the work they are doing potentially moving as a stand-alone bill. This would be very unique as spending during a session typically comes in one of two ways; as part of the BAA or as part of the “big bill” in the next fiscal year’s budget. 

LCC also talked to the committee more broadly about the state of the economy and the need for more aid across all sectors of the economy. We encourage you to convey the same message to your legislators, as we cover in the next section. 

Talk to your Legislators about the Need for Certainty and Predictability 

The things that all communities, and by extension businesses, need are certainty and predictability. In the context of the next six to 10 months, certainty takes the form of grants to replace lost revenues for businesses that have had to close through no fault of their own; if they can’t count on business coming through the door, they at least know they can survive using the grants. The other side is predictability, which in this context boils down to operating guidance well in advance. We cannot open the spigot and expect a steady or sustainable flow unless we’ve primed the pump well in advance. Unfortunately, as things stand right now, we have neither. The less predictability businesses and communities have, the more certainty they will need; that is, the longer it takes us to have guidance for how to operate this summer, the more economic recovery grant money businesses and nonprofits will need.  

Everyone might have an optimistic view for the summer, however, businesses don’t know how many people they might be allowed to bring through their doors, what restrictions to expect with cross-state travel, and a whole host of other variables. This week, Commissioner Levine said he wants people to look at the spring and summer with optimism, however, marketing, human resources, and purchasing staff need long lead-ups to make a successful season, and cannot do their jobs based on optimism – they can do it based on guidance. Given that we have not gotten this guidance yet, we are advocating that legislators start preparing for a tsunami of unmet need that will require the legislature to produce more economic recovery grants.

Vermont businesses are proud contributors to their communities. There is still a great deal of demonstrated unmet need out there, however, the sooner we can get the guidance, the less demonstrated need the legislature will be asked to assist with moving forward. 

We recommend that you take a moment over the next week to reach out to your legislators and start to have this conversation. Need help connecting to your legislators? Let us know.

Vermont Doing Well on Vaccine Roll-out; Now Time to Plan Accordingly  

This morning, an article from the New York Times, entitled “The Left’s Vaccine Problem” if written by a Vermonter could have been entitled, “How a Centrist Governor Found the Middle Ground.” The article highlights how progressive leaders in much of the world that led the way in efficient response to the virus are now struggling to distribute coronavirus vaccines quickly and efficiently, blaming a focus on process rather than on getting shots into arms. 

In Vermont, a middle ground seems to have been found by focusing on protecting the most vulnerable and moving by age. This makes sense given that 93% of our deaths and hospitalizations in Vermont are associated with cases in people over 65. The move has resulted in what we’re hearing is an efficient and well-working system, with 58,219 Vermonters vaccinated (33,700 with 1st dose and 24,500 2nd dose). 33,100 have registered in the over 75 age band and  21% have had their 1st dose. 

Still, frustration is percolating across the landscape as we hear promising news on vaccines without corresponding forecasting of conditions this spring and summer. During this crisis, the vaccine was billed as our finish line, the glimmer of hope, the oasis in our desert of 2020, and now that it is here, many people are asking, wasn’t more freedom the whole point of the vaccine?” and others are bemoaning the underselling of the vaccine. Might we not be so strict and allow vaccinated people to avoid some restrictions as other New England states have? We need more than optimism and a plan of what the worst possible restrictions might be in an era of a new risk profile after the demographics representing 93% of our deaths and hospitalizations in Vermont are vaccinated.

Vermont is fortunate to have leadership that has handled and is still handling, this crisis in a manner second to none. This is not to say that we should completely go back to normal this summer; masking and other levels of risk mitigation are here to stay, likely until the next calendar year. Finally, this is not to say that if the B.1.1.7 or some other variant appears in Vermont or the vaccines are utterly useless in defending against them, that we should not recommit to stricter restrictions. What we are saying is that we expect to see “turns of the spigot” that are proportional to the level of vaccination we see in the state and that if those turns are not forecasted now, our communities will not be ready for them. We cannot open the spigot and expect a steady or sustainable flow unless we’ve primed the pump well in advance.

Democrats Use Slim Majority to Advance Biden’s Stimulus Package 

After 15-hours of debate, the Senate Democrats successfully pushed through a resolution that starts the reconciliation process on a vote of 51-50, requiring the Vice-President to vote and break the tie. The Senate adjourned at about 5:30 a.m. after considering over 550 amendments to the resolution paving the way to enact President Biden’s proposed relief package later this month or in early March by a party-line vote. 

So, what now? As we’ve explained, budget reconciliation is a tool that allows a simple majority to move on issues that address any of the three subjects – budget, spending, or debt limits – once a year. The limits on what committees can spend have now been lifted to levels that reflect what would be necessary to enact President Biden’s proposed relief package. This week, Senate committee chairs, among them our very own Senator Leahy as Appropriations Chair and Senator Sanders as the Budget Chair, met with President Biden at the White House where they were given instructions on how to move forward with the newfound spending authority to carry out the stimulus plan. It is expected that they will follow these closely. 

So, what does this mean for Vermont? Well, that is still a little unclear. We know that at a minimum, Vermont will likely see $500 million of the potential $350 billion in state and local aid, however, this is where it pays to have a strong Senate delegation that can advocate for stronger small state minimums. LCC’s advocacy team would advocate that a large portion of that funding go to further economic recovery grants; a conversation we’ve already begun and we’d encourage you to have with your legislators. In terms of the federal business relief with the package, LCC’s team has already advocated that the low-interest loans President Biden proposed be more like previous relief, with forgivable loans and grants. 

Among the many amendments in the debate last night were some notable ones. An amendment was put forward by Senator Joni Ernst to prevent an increase of the minimum wage to $15 an hour during the pandemic. Senator Sanders skillfully side-stepped the amendment by saying he agreed with it and he would not want to increase the minimum wage in one year as her amendment was drafted and instead over a five-year period. The amendment passed by voice vote. 

It is unclear if this item will be pursued further during the reconciliation process, however, the general consensus is that it runs afoul of the “Byrd rule” which limits this process from being used to pass any extraneous policy not directly tied to the spending, budgetary, debt, or similar matters. However, there has been speculation that the limits of the rule might be challenged and expanded under this new Senate, and pundits have theorized that Senators might find a creative way around that by, for example crafting the increase as a kind of reverse-Cadillac tax on those who don’t pay their proposed minimum wage, or by just pushing it through. This week, Senator Sanders in his capacity as Chair of the Budget Committee hired the economist, lawyer, and federal budget aficionado Bill Dauster who is perceived to be the person, if any, who could extend the limits of the Byrd Rule. His social media activity certainly indicates he’s ready and willing to give it a go. 

Clothing Tax, and Broader Sales Tax, Examined in Tax Committee 

The House Committee on Ways and Means heard from the Joint Fiscal Office this week on the subject of expanding the sales tax to clothing. The Committee has discussed this in previous years, though more narrowly focussed on luxury clothing to fund water quality projects and other needs. In the last 7-months there has been a greater interest in expanding the sales tax base in general, which would include not just clothing, but also services. 

Expanding the sales tax base was a suggestion of the Tax Structure Commission, which LCC pushed back on in comments on the draft report. Read LCC’s comments on the Tax Structure Commission draft report here. This week, LCC members heard from the Governor in a virtual question and answer opportunity that he does not support proposals to broaden the sales tax; adding that he is open to having this conversation but not during this pandemic and recession.

Consideration for Amending Machine and Equipment Tax for Manufacturers 

Last week, (wow that feels like forever ago) the Governor’s budget proposal was rolled out and included a switch 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.  In doing so, the Tax Department has conceded that at the status quo, it is difficult to comply with. This $700,000 revenue expenditure will provide a clearer path to compliance and as a result of that, encourage the state’s manufacturers to invest in new equipment and upgrade existing equipment. 

LCC’s advocacy team will be testifying on this issue this coming Thursday and we welcome any feedback ahead of that. From our perspective, tax policy should not create “gotcha” moments because it is not clear and such policy only stifles innovation and economic development. The integrated plant theory’s shift from a physical relationship of manufacturing inputs to the economic relationship creates greater predictability for existing businesses as well as any new businesses.

Housing Updates: Act 250 Reform, Mini-TIFs and Rental Registry 

The Vermont Senate rejected an executive order from Governor Scott that would have used the executive authority granted to him at the beginning of a new biennium to rearrange state government. Senate Pro Tem Becca Balint has said the Senate will hold hearings on the issue instead. The legislature spent the last legislative biennium discussing the proposal in the context of a large and extensive package of changes to  Act 250 that did not make their way across the finish line. The house is poised to take similar action, however, if they do not, it will trigger a legal challenge as to the question of whether both bodies of the legislature need to reject an Executive Order of this nature. 

The Senate Committee on Economic Development, Housing, and General Affairs began discussion this week around a proposal in the governor’s proposed budget that would create project-based TIF districts in smaller municipalities; this is colloquially referred to as “Mini-TIFs”. A bill on this subject passed out of this committee last year, however, was waylaid by the COVID-19 crisis. 

Also discussed in this committee this week was establishing a rental registry in Vermont. Housing advocates listed numerous reasons to have a central listing of rental units, including short-term rentals, in the state ranging from code compliance, health and safety, tenant placement, and landlord outreach. 

Proposed Broadband Legislation to Exclude Incumbent Service Providers 

The pandemic has reinforced the importance of High-Speed Internet availability, the critical role it plays in Vermont’s rural economy, and the fact that it was being underfunded in Vermont for so long. The House Committee on Energy and Technology is currently working to remedy the above-stated issues, however, we believe they are doing so in a manner that does not leverage all of the assets available to the state. The current broadband bill this committee is focusing on leans heavily towards creating new entities and funding their planning while freezing out incumbent service providers who can act quickly on broadband buildout if given additional resources. 

We understand the diversity of approaches needed to build out this service to every Vermonter. Incumbent service providers can act quickly to build out new infrastructure in areas they already serve if given the opportunity and there is a place for new entities in areas that have not previously been served. Failure to bring in all partners and stakeholders, or focus on a few at the exclusion of others, would short-sell our state. 

Laundry List 

  • Read last week’s update here 
  • A quick Friday shout out to our partners and members who are helping Vermont businesses get through the Paycheck Protection Program. This week, the VT SBA released data Vermont is again off to a fast start with our businesses are benefiting from the $240 million in new loans, making us the third highest in the US per capita as our Commissioner of Financial Regulation pointed out on Twitter. There is still time to apply, so contact your bank or credit union!
  • Senate President Pro Tempore Becca Balint poured cold water on the Governor’s proposal to use Keno to pay for childcare initiatives
  • The Senate Natural Resources and Energy Committee heard results of the Residential Building Energy Labelling Working Group this week which included recommending the use of the Vermont Home Energy Profile (VHEP) label for energy efficiency rating.
  • The House Ways and Means Committee has resumed work on potential changes to corporate income tax along the lines of changes investigated last year; primarily, changes to sales weighting factors and a switch from a Joyce to Finnegan method. A presentation from their Joint Fiscal office is available here. Contact our advocacy team if you would like to learn more and engage on this issue. 
  • On February 3rd, Governor Scott signed S.9, An act relating to extending certain workers’ compensation amendments related to COVID-19. Also this week, the Administration announced that Vermont businesses will see another rate decrease in workers’ compensation insurance in 2021. 
  • The House voted 108-40 today to reject an executive order from Governor Scott to bring the Agency of Public Safety which will consist of the Department of Fire Safety & Emergency Management, and a Department of Law Enforcement, which would bring the Vermont State Police and Motor Vehicle Enforcement under one roof.
  • Vermont was one of 47 states to reach a $573 million opioid settlement with McKinsey to resolve investigations into its role in promoting prescription opioid sales for drug companies. The State of Vermont will receive $1.536 million.
  • The Small Business Administration has begun rolling out the Targeted Economic Injury Disaster Loan Advance, which provides businesses located in low-income communities with additional funds. Applicants do not need to take any action at this time. The SBA will reach out to those who qualify. An FAQ document has been posted with additional information.
  • Last 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. 
  • 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. 

Concerned or need to learn more about anything in this newsletter? Email our team at [email protected].

We look forward to working with you.
The Lake Champlain Chamber Advocacy Team