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Advocacy Update – Week 6

Thank you to this week’s sponsor of our Advocacy Update:

February 12, 2021 

For legislators, lobbyists, and others alike, now is when a particular date looms in the future; the crossover deadline. As a reminder, crossover is a date set by legislative leadership by which bills need to clear their committee of original jurisdiction if they hope to proceed any further. The hopes and fears of all are reaffirmed or alleviated after that date, as the legislative pace and body of work become more predictable from that point on. As we look towards crossover this year, it has another new significance, as it is roughly the one year anniversary of the new normal we’ve been living in due to this pandemic. 

As we consider that, one can’t help but take stock of how things are not moving as we thought they would. When events, trips, and business plans were put on hold for the spring and summer it was with the idea that the spring and summer of 2021 would bring better times surely, as we’d have a vaccine, understand the virus better, and have more experience controlling it. As we approach the spring and summer, we’ve heard that type of optimism, however, we have not seen any guidance that would make that case and as such, is creating a new crossover-style deadline. LCC’s advocacy team is rallying partners to express to legislators that they may need to be ready to meet what we unfortunately think might be a tsunami financial need if businesses are asked to keep closed.  

In this week’s update; 

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:

Federal Update 

We got an overview of the small business support in the budget reconciliation bill this week as well as state and local government support. It’s important to qualify that all of this is an initial product, and will very likely be modified in order to comply with the Byrd rule or garner votes as it moves to completion in the US House between by the end of February and passage in the US Senate, hopefully by the first or second week of March. The language we see in the House is the product of current collaboration with the Senate leading us to feel reasonably confident that the product that gets passed the House will be similar to what passes the Senate. 

The good news is that so far state and local government funding, which has been contentious and not included in federal legislation since the CARES Act, will very likely be included in this package. If that happens, Vermont can expect $961 million total, with $655 million available to the state and $307 dedicated to local governments. This is less money than the state received from the CARES Act, and some of it is exclusively for local governments, however, it is generally much more flexible; the funds will not have a deadline, can be used to replace lost revenue, and can be transferred to private non-profits and public benefit corporations.

The House Committee on Small Business has been working its way through small business relief in the reconciliation process. Substantive items from that include more inclusion of nonprofits in PPP, a Restaurant Revitalization Fund, and a revival of the State Small Business Credit Initiative. Read more in the draft language here

Possible Vermont Economic Support Package Being Considered  

The House Appropriations Committee is considering a new economic support package that would provide relief to Vermont families and small businesses that cannot wait until the completion of the FY 22 budget (starting in July). This package will take shape over the next few weeks. 

While federal funding could have a role to play, a revenue upgrade, potentially in the ballpark of $100 million could come to the state from the continued use of FEMA bill-back authority. The state is still continuing the work of billing back items to FEMA as available by recent executive order and we hope that the potential CARES Act funding will be directed to economic recovery grants. LCC will be advocating that funding is used to provide additional relief to businesses. The Gap Economic Recovery Grants proposed by the Governor in the Budget Adjustment Act to provide up to $10 million in grants for businesses that have fallen through the cracks, did not make it into the BAA before it left the House, and since has not been added in the Senate. Both bodies’ Appropriations Chairs have assured colleagues that this funding will come through soon one way or another.  

Adding to the urgency of such a package, and to be included in whatever takes shape is some funding for Other Post Employment Benefit (OPEB). The State is going to bond sales in March and April and it is likely that the state might be facing a downgraded bond rating given the recent additional setbacks in our state’s pension system and the negative forecast generated by S&P this fall. Legislators may be hoping that tossing a few million in additional OPEB dollars will dampen the dumpster fire that is the state’s unfunded liabilities before creditors stop by. This is your weekly reminder that Vermont can’t have nice things, because we haven’t paid for other nice things. 

Child care Bill Taken up in House 

The House Human Services Committee began work on a bill that is part of a coordinated three-year plan to reform child care in the state. The bill has close to two-thirds of the House as cosponsors, tri-partisan support, and an impressive lobbying operation, making it as close to a legislative sure-thing as one can get. H.171 does the following; 

  • Expands the eligibility of the Child Care Financial Assistance Program; 
  • Appropriates funds for the implementation of the Bright Futures Information System modernization plan; 
  • Establishes scholarships and student loan repayment
  • Creates assistance programs for existing and prospective members of the child care workforce; 
  • Requires the completion of studies by the State Treasurer, Auditor, Joint Fiscal Office, Commissioner of Financial Regulation, and Tax Commissioner analyzing the cost and identifying a long-term funding source; 
  • Establishes an Early Care and Education Governance and Administration Advisory Committee to advise DCF on rules, policies, procedures associated with child care licensing, administration, and the Child Care Financial Assistance Program. 

The bill sets a goal of ensuring that families in Vermont pay no more than 10% of their household income to childcare costs. The nonprofit coalition advocating for this legislation has said the study committee will likely need to identify roughly $200 million in annual funding. However, many are skeptical of that number. Those with institutional memory in the State House recall previous studies putting the price tag at over $600 million, and the Administration this week shared that they believe the proposal would likely need anywhere from $300 million to $500 million. It would also seem the outcome of the study for a long-term funding source is a foregone conclusion; ask anyone close to the issue and they’ll tell you it is a payroll tax of at least 1%. 

While the goal of affordable child care is important and worthy, and child care is a significant hurdle for both employees and employers in our region, making commitments to do something before we have the price tag is eerily similar to our state’s experience with making promises on a single-payer system, which later suffered from sticker shock and was shelved. The lesson from that experience is clearly that we must not make promises before we’ve fully investigated the cost because we cannot afford for this crucial conversation to end because of sticker shock. 

Tourism and Marketing Funding Discussed in House Committee

The House Committee on Commerce and Economic Development took testimony from the administration this week on the modest proposal to allocate $1 million in general fund dollars to seed a tourism marketing fund at the Vermont Department of Tourism Marketing and then feed a portion of excess rooms and meals tax revenue to the fund in subsequent years. The money would come from the General Fund, and based upon the last five years’ receipts, forecasts would average an estimated $500,000 each year. 

The Commissioner of VDTM also gave an update on the #BuyLocalVermont program that was created with CRF dollars last year and discussed with the committee the proposal within the budget to expand the program with $1 million additional dollars. 

Unemployment Update 

As we’ve previously covered, the Senate Committee on Economic Development, Housing, and General Affairs has been working on S.10 involving rehiring provisions and experience rating treatment with the unemployment system for employers, now the Committee is turning their attention to balancing the tax rates and solvency of the system. It is likely that this work will be wrapped into S.10. 

The Governor put forth a proposal to do two things that will likely look pretty familiar to those who follow our updates. First, in the benefit year beginning July 2021 contributions would stay at a schedule-I tax rate unless in April the Unemployment Insurance Trust Fund balance drops below $90 million. As part of this, the tax rate schedule could not increase any more than two rate schedules in a given year, starting in FY 22. Second, hold the FY 22 taxable wage base to the FY 21 wage base of the first $14,100 of employees wages instead of increasing with inflation. This would also be paired with the same language around solvency except that assessment would be made in October. The estimated impact of this would be leaving about $36 million in foregone fund revenue circulating in the economy. 

The unemployment tax rate is automated, so the current rate schedule for the employer UI tax is at schedule-I because last year (before the pandemic), Vermont’s economy was doing very well and the 10-year lookback window that is used to calculate the rate no longer contained the last recession. Additionally, the taxable wage base was set to drop by $2,000 this January and did.  The system is designed to be self-correcting and because the fund was depleted so dramatically in the last 11-months, the tax rate would jump schedule-V (that’s schedule-5), the highest rate, if no additional action is taken.  

The legislature is on a rushed timeline now, as the VDOL will need this legislation before mid-to-late February so they can begin the work of rate scheduling for June. 

Laundry List 

  • You can read last week’s newsletter here.
  • LCC’s Government Affairs Manager testified in House Ways and Means this week on the tax treatment of manufacturing inputs alongside one of our members who did a fantastic job of making a complex issue more approachable. If this is of interest to you, reach out to our team.  
  • The Senate Committee on Economic Development, Housing, and General Affairs continued its work on S.33 this week, a bill that allows project-based TIFs. 
  • The IRS published updated FAQs about recent legislation that extended and amended tax relief to certain small- and mid-sized employers under the Families First Coronavirus Response Act (FFCRA). The IRS also announced a new Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals for eligible self-employed individuals to claim sick and family leave tax credits under FFCRA.
  • The Senate Committee on Economic Development, Housing, and General Affairs got a look at the draft language for the rental registry housed in the Department of Public Safety Division of Fire Safety we’ve discussed in previous updates. The creation of the registry will require some initial funding and then they expect fees to pay for the program.  
  • The Senate Finance Committee heard testimony on S.60, a bill that proposes municipal electric utilities and cooperative utilities to raise rates without going through the PUC rate case process, similar to the “alt regs” process. 
  • The House Corrections and Institutions Committee received a primer this week on the history behind the 3-acre general permit under which there are 700 projects affecting 8,000 landowners. The Committee heard that it is likely to cost landowners hundreds of millions of dollars and among those projects, DEC has identified at least eight state-owned properties needing upgraded stormwater treatment systems at a cost of $6.6 million for design and construction which will be funded via the Capital Bill. 
  • Want to get your staff more involved in the top issues facing our state? Applications for Leadership Champlain are being accepted now through April 19, 2021.

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