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Legislative Update – September 18, 2020

September 18, 2020

Legislative action will soon be coming to a temporary conclusion, both at the national and state level. With the Federal fiscal year ending on the 30th, a continuing resolution will need to be passed over the course of the next week, ahead of the body recessing for the Jewish holiday. While both sides continue to express interest in a deal on coronavirus relief, no deal is in sight. Both sides have vulnerable incumbents with voters that are asking for a deal, however, when you’ve staked out your position as strong as they have, it can be hard to find your way back to the negotiating table. As we said before, be prepared for nothing to happen until after the election.

In the Vermont legislature, both the House and the Senate have passed their versions of the budget and will now have to sort out their differences; it is unclear how long that might take, however, it seems unlikely for that to go past Friday of next week. Once the budget is agreed upon, the legislature will adjourn.

In this week’s update:

Governor Lifts Limitations on Hotel Occupancy, Adds Bar Service, Announces Technical Assistance 

Today the Governor announced the following changes to his Executive Order:

  • Effective today, lodging establishments can operate at 100% capacity. The science and data show that the travel map and restrictions are adequate to mitigate the spread of the virus and occupancy limits are not needed to mitigate it’s spread.
  • While there is no change to travel restrictions, effective Tuesday, the travel map will be updated every Tuesday, not Friday, to help people better plan their weekend trip and not have a change at an inopportune time.
  • Bar seating will be allowed at restaurants with the addition of plexiglass between the staff and the patron. Restaurants will still need to follow all other relevant guidance and six feet of distance will be required between parties at the bar.

The Governor admitted that these changes will help, however, not fully bridge the gap of what the lodging industry will experience as they displayed with the below graph.

lodging establishment graph

The Governor also rolled out new technical assistance programs for businesses who would like to connect with local service providers to overcome obstacles created by COVID-19 which can be found here.  

Budget Passes Senate with Notable Differences from House

Among the notable differences from the House version, are the numerous changes to the economic recovery grants and other aid in the Senate-passed version, outlined in the table below. 

While the budget still has a distance to go, it is relatively safe to assume that the package will have $73 million in economic recovery grants. Depending on when everything is finalized legislatively, within the next three-weeks version 2.0 of the Economic Recovery Grants program should be up and running. While there is not an exact formula just yet, the legislation authorizing the next tranche of money will require ACCD to focus more on unmet needs than a first-come-first-serve basis; outside of that, the Agency has greater discretion. That being said, this round of recovery grants will be very different, there will be a set time period in which a business supplies information to demonstrate a revenue gap from March to September while also demonstrating that the aid that they have already received did not bridge that revenue gap. This means the grant process will potentially require more information; they’ll be subtracting any and all aid such as PPP, EIDL, previous grants, and other COVID-specific recovery aid from your potential award. When the application period closes, all of the demonstrated need will be aggregated and the available funds will be distributed. This is to say that you will likely not know even a cursory estimate of your grant until it is ready to come to you. 

Another notable difference is the size of the hazard pay program, with the Senate appropriating $22 million and the House allocating $15 million; differences that represent who is covered and who is not.

Finally, the Senate included an additional $17 million in enhanced unemployment benefits which will equate to $100 per UI claimant for the four weeks already covered by the $300 enhanced benefit under the Lost Wage Assistance program from FEMA created by Executive Order. These benefits are retroactive to the first three, or potentially four, weeks in August. 

Save the Date – Our Legislative Breakfast is Going Virtual 

Out of an abundance of caution, we canceled our legislative breakfast in March, a week before the state’s first shutdowns. Now, with the legislative session coming to a close and so much to unpack, we are rescheduling it for the morning of Tuesday, October 13th. Mark your calendars and stay tuned for more details.

Thanks to NEFCU for their support of our Legislative Breakfast Series.

UI Trust Fund Update

As we have discussed in previous legislative updates, the unemployment tax rate will go up due to the effects of COVID-19, despite the fact that experience ratings are frozen, because of the fact that the UI Trust Fund is paying out so many claims. Our Trust Fund, which had upwards of $500 million in it, is now down around $300 million and winter is coming, a time which typically sees greater impacts to the fund due to seasonal employment. Even though we are seeing Vermonters going back to work, we still have over 30,000 people on UI and we want to ensure that the balance in the trust fund doesn’t dip below solvency levels. 

At this time, Vermont has used about 40% of its unemployment trust fund. Despite this, the current rate schedule for the employer UI tax is at schedule-1 because last year, Vermont’s economy was doing very well and the 10-year lookback window that is used to calculate the rate no longer contains the last recession. Additionally, the taxable wage base was set to drop by $2,000 this January. 

The system is designed to be self-correcting and because the fund was depleted so dramatically, the tax rate would jump to schedule-5, the highest rate. A move from schedule 1 to 5 would represent a rate tripling for some employers. The Scott Administration has put forward a proposal that would limit rate increase to no more than two tax schedules per year. 

The House Committee on Commerce and Economic Development put forward an amendment that was adopted by the House today to strike the balance between what is being paid into the trust fund and what is being paid out moving forward. This amendment would incorporate the Administration’s proposal and would keep the schedule from going to schedule-5, and instead to schedule-3, however, if the fund drops to 90 million the schedule will automatically go to schedule 5, the highest level, to protect the solvency. The Committee also decided to keep the taxable wage base where it is now rather than letting it decrease as it otherwise would by schedule. The Committee will hear from the Commissioner of Labor in March about where the trust fund is and the newest modeling to assess what further action must be taken.

Online Service Tax Battle Wages On

As we reported last week, the House Committee on Ways and Means decided to add a tax on online services, often referred to as a cloud tax, to the miscellaneous tax bill H.954. In the time since, LCC’s advocacy team helped coordinate a sign-on letter with many businesses and organizations as well as create significant constituent pressure on the Senate. As a result, the Senate included all of the provisions within H.954 into the State Budget, except for the cloud tax the House added, a move significantly reducing the leverage the House has to implement the tax. While this is a positive move, there is still a great deal of negotiating to be done before the session is over and many other vehicles for this legislation to move on. Additionally, it is clear that this conversation is not going away and businesses affected by this should be ready for further discussion when the legislature reconvenes for the start of a new biennium in January. 

Laundry List 

  • The Trump Administration has reversed its decision on a 10% tariff on Canadian aluminum following letters to the President supporting requests of Governors Scott, Sununu, and Mills to lift these tariffs as well as Congressman Peter Welch and Colleagues. Read more via VTDigger here. We sent a letter to Vermont’s Congressional Delegation earlier this year requesting their support to end the tariff.
  • The House and Senate reached a deal on S.54 to create a legalized commercial cannabis market after the bill was bogged down for ages in issues of advertising, roadside saliva, and seatbelt enforcement. The bill levies a 20% tax rate on cannabis products from a combination of a 14% excise tax and a 6% sales tax. Municipalities hosting cannabis businesses will not receive a 2% tax as hoped, however, will receive a portion of licensing fees. Read more from VTDigger here.
  • Yesterday, by a vote of 103-47, the Vermont House overturned the Governor’s veto of H.688 a bill that would create a climate council aimed at meeting Vermont’s greenhouse gas emission goals. The Governor’s veto message made clear that his issue was not with action on climate change, however, that the bill contained issues related to governance and liability that needed to be resolved. The bill will now go to the Senate where it is expected to receive the 2/3 vote needed to override there. 
  • H.926, a very slimmed-down version of the Act 250 bill focussing only on forest fragmentation and recreational trails passed the Senate this week. 
  • Landlords and property owners that have vacant, unused rental properties may be eligible to receive up to a $30,000 grant per rental unit to fix up and renovate rental units and get them ready for use again. Grants are available from the Department of Housing and Community Development utilizing CARES Act funding to improve the overall quality, availability, and affordability of rental housing throughout the state. Full details are available at the ACCD Recovery Resource Center.
  • The Buy Local Vermont program drew an overwhelming response as soon as the program went live last week. Almost 12,000 Vermonters received discount offers to support local businesses in their communities. ACCD has released a status report that shows economic activity happening above the average $30 gift amount per customer. Vermonters who have redeemed their gifts thus far have spent 53% more than the value of the discount, resulting in approximately $1.50 in economic activity for local businesses for every $1 invested in the program in just the first week.
  • Our advocacy team hosted our second meeting with members, partners, and the Department of Environmental Conservation concerning the role-out of the 3-acre general permit. Letters to property owners that fall under the new permit will be going out shortly notifying them of a need to comply. 
  • An amendment to the budget today gives the Department of Liquor and Lottery the ability to issue licenses on a rolling basis, rather than the current method in which all licenses expire on April 30th. This will also allow the Department to update its system to be paperless and easier to access. 
  • Last week’s update can be read 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.
Sincerely, 
The Lake Champlain Chamber Advocacy Team

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Tom Torti, President
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Cathy Davis, Executive Vice President
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Austin Davis, Government Affairs Manager