Thank you to this week’s sponsor of our Advocacy Update:
March 12, 2021
While we write this week’s update, we have to take a moment to realize that we’re just past the one-year mark of our canceled March 2020 Legislative Breakfast. On Monday, we’ll host our 2021 March Legislative Breakfast in a virtual setting. This week was crossover week at the Vermont legislature, so there is a lot to report, and much of it is being finalized after our update. We’ll do what we can today and give a more in-depth overview next week.
In this week’s update;
- Join us Monday for our Legislative Breakfast
- Governor turns spigot slightly, more turns and Guidance to come
- American Rescue Plan Act ensures $2.7 billion for Vermont
- New federal relief and slow state conformity have us hoping for a tax filing delay
- LCC’s Attorney Roundtable on employment vaccination issues
- Childcare bill clears first hurdle
- Unemployment Insurance Update – Join us for an information session
- The Laundry List
Join Us for Our (Virtual) Legislative Breakfast Series
We’ve had a fantastic legislative 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:
Governor Turns Spigot Slightly, More Turns and Guidance Coming
Governor Scott has said he will renew the emergency declaration for yet another month, making the coming month be the 13th consecutive month that Vermont is in a state of emergency. As vaccination rates rise, we’re seeing cases decrease accordingly, and the Lake Champlain Chamber has been advocating for more advanced guidance for businesses to plan to reopen. Herd immunity is not an on and off switch, it is more of a dimmer switch, and the economic reopening needs to be too. We’re confident that over the next few weeks we will see more restrictions lifted and guidance for this new interim period in which we see gradually more herd immunity until things can be back to normal. The Governor today plans to reveal a full vaccine timetable and more details on Vermont’s “pandemic exit strategy” by the first week in April.
The Governor made a couple more turns of the spigot this week, previously, vaccinated households were allowed to gather, as of today, two unvaccinated households may gather at a time. This means that restaurants can host up to six people from different households can now be seated together.
Federal Update – American Rescue Plan
Yesterday, President Biden signed the largest piece of economic legislation in the history of the U.S. Senate. The American Rescue Plan Act (ARPA) has within it over $1.9 trillion in economic relief. We’ll quickly breakdown what the bill does for Vermonters, the State of Vermont, and Vermont businesses.
For Individual Vermonters:
Direct Payments
– $1,400 direct payments per individual with $1,400 available per child.
– this will bring an estimated $731 million into Vermont as 89% of the state’s filers are eligible
UI Benefits
– $300 extra weekly benefit until September 6th, 2021 (Labor Day)
– first $10,200 of benefits not taxable
– American Rescue Plan Act pays 100% of the cost of premiums for those on COBRA
Child Tax Credit
– Possibly one of the biggest strides toward reducing child poverty in our country amounts to a guaranteed income to families with children:
– credit increase $3,600 for children under 6
– credit is now fully refundable
– credit should now be remitted in periodic installments
– 17-year-olds now included
Child and Dependent Care Credit and FSAs
– Makes the entire credit refundable for tax year 2021.
– The credit is also expanded: $4000 maximum credit per qualifying individual and $8000 for two or more individuals.
– Allows individuals to put aside $10,500 a year tax-free for childcare in an FSA, as opposed to normal $5,000.
Earned Income Tax Credit
– claimants can use 2019 income
– For tax year 2021, the maximum credit for individuals without children increases from $543 to $1,402.
– Repeals the maximum age limit of 65
– Lowers the minimum age from 25 to 19.
– Maximum investment income threshold is increased from $2,220 to $10,000.
Additionally, nearly every Vermont Household will see savings on insurance from ACA expansion and revisions in ARPA.
For the State of Vermont
Our little state is looking at a total haul of about $2.7 billion when most everything is accounted for in the American Rescue Plan Act. Vermont will bring in an incredible $1.36 billion from the state and local aid component of the bill that will have restrictions and flexibility similar to CRF dollars, however, with more flexibility and a timeline to spend it of about 3.5 years. Also different from CRF, the state will have $1.052 billion available for the state legislature to allocate and about $197 million reserved for municipalities. There is an additional $113 million for state infrastructure projects.
- $1.35 billion from the Coronavirus Relief Fund (includes $113 million for infrastructures such as broadband and $197 million for Vermont municipalities)
- $731 million in Economic Impact Payments to Vermonters
- $293 million for Vermont K-12 Schools
- $152 million for Rental Assistance
- $65 million for Vermont Colleges and Universities
- $50 million for Homeowner Assistance
- $47 million for Childcare Subsidies and Support for Childcare Providers
- $27 million for Vaccine Distribution
- $20.7 million for LIHEAP
- $14.3 million in Public Transit Funds
- $7.9 million for Burlington Airport and Vermont State-Owned Airports
The state would not receive all of the money at once, as it did with CRF, instead, it will receive it in two separate tranches; one with 50% within 60-days after the bill is signed (June) and another within a year. It is unclear what restrictions are exactly around those tranches, however, what is clear is that we are in for another late summer of fall legislative session to allocate the dollars.
The general consensus coming from the virtual Montpelier is that this is a golden opportunity. Vermont is faring much better than anticipated due to stronger than expected sales and personal income tax. This funding is being looked at less as a bailout and more as an investment to build Vermont back stronger, as indicated by the Secretary of administration, Susan Young in a letter to the Senate Committee on Appropriations.
For Vermont Businesses;
The APRA is less sweeping for businesses, however, it does open up some eligibility for PPP, fund the State Small Business Credit Initiative at $10 billion, and create a $29 billion grant program for restaurants. $5 billion of the Restaurant Grant Program is reserved for small businesses and restaurants can receive these grants if they already received PPP, they will just need to subtract that amount from their award.
The indication from D.C. is that the remaining need for businesses will need to be addressed by the state grant programs.
Not in the package, was an extension of the Paycheck Protection Program beyond the March 31st deadline. The House Small Business Committee came to a bipartisan agreement on Thursday to extend the program’s ability to accept applications two months (until May 31st) and process and fund those applications until three months (June 31st).
A comprehensive breakdown of ARPA can be read here.
What’s next from D.C.?
With the ARPA package passed by reconciliation, President Biden is now looking towards infrastructure and his promises to organized labor. Congressman Welch introduced the Connect America Act this week which would put $80 million into rural broadband efforts. The language from his bill was included in the LIFT Act as well.
New Relief and Slow State Conformity, Has Us Hoping for a Tax Filing Deadline Delay
All of the help coming from Washington is going to make tax filing much more complicated this year. Among the current uncertainty, businesses that took a PPP loan are already trying to understand how best to file in the state of Vermont. Currently, the State of Vermont is considering forgiven loans taxable, however, language linking the state tax code to the federal tax code is moving through the legislature and can change that. This leaves businesses guessing how they should file. The Lake Champlain Chamber advocated to the Tax Department that they issue guidance that Vermont businesses file assuming Vermont conformity and in the event of non-conformity, that there be a grace period to amend the filing free of penalties and interest. Update: find the requested guidance has been issued and can be found here.
Aside from that long-standing problem, there are a whole host of other issues related to the passage of the American Rescue Plan Act. The three most prominent are;
- Taxability of the first $10,200 in unemployment benefits is tax-free. We’re unsure if this is above the line or below the line; the answer of that question will have large ramifications.
- Vermont links up to the Federal EITC at 36%, so we are looking at up to about $5-6 million of $25-30 million tax expenditure. This would be an FY22 issue to be resolved.
- VT is 24% of the federal child and dependent care credit which costs the state about $3 million; due to this significant expansion, there will likely be greater take-up of the credit.
The IRS, by practice, does not comment or make policy on legislation that is pending, so now that ARPA is signed and enacted, we hope the tax filing deadline is delayed in light of these changes. It is likely that Vermont would follow suit.
LCC Attorney Roundtable on Vaccine Issues
With three highly-effective vaccines now available, an end to our pandemic is in sight, however, that doesn’t mean things necessarily got simpler. Vaccines bring about a whole host of new questions employers must ask and contingencies they must plan for. Our Government Affairs Manager Austin Davis sat down with two leading attorneys in the Lake Champlain Region to talk through some of these questions to help you develop some of your own answers and contingencies. In this short video, we discuss;
- If an employer can or should mandate vaccination;
- If an employer can incentive vaccination and how to do so appropriately;
- handling potential issues that may arise with employees or customers around asking vaccination status; and
- a quick update on the Families First Coronavirus Response Act (FFCRA) and changes being considered in Washington.
Childcare Bill
This week the House Committee on Human Services passed H.171, a childcare bill that LCC has been reporting on throughout the session. The bill seeks to invest $13.3 million in the sector, about $3 million more than what was proposed by Governor Scott in his proposed budget. The bill would direct $5.5 million next year to low-income families while putting caps on what can be spent by these families.
The bill also includes $1.8 million for student loan repayment for workers in the sector and $700,000 for additional workforce development and retention in the form of scholarships. The big change in the bill comes as a consultant wll need to report back by 2023 on the cost of the goal in the bill that families spend no more than 10% of their household income on childcare by 2025. This goal was originally envisioned as a commitment, despite the full cost not being understood, and was softened after a great deal of testimony from entities such as the LCC.
The committee is now moving on to cover H.265, which would create an office of the child advocate; an idea floating around the State House for some time to create a government office that suggests changes to the work of the Department of Children and Families and handles complaints regarding that department.
Unemployment Insurance Update
This week saw a conclusion to the long-debated S.10 in the Senate Committee on Economic Development, Housing, and General Affairs.
The original need of this legislation was to;
- pause the rate schedule increases in the coming benefit year
- Limit the rate increase in the 2022 benefit year to only rate schedule 3
- Provide universal experience rating relief to employers who had employees leave due to reasons allowable under Act 91
The Committee sought to go beyond this need to add additional benefits to the program, despite the fact that the federal government is providing additional benefits. S.10 now will take;
- increase the maximum weekly benefit starting July 2021 will be $635 plus a dependency benefit (of $50) if they are eligible.
- In July 2022, start calculating the maximum benefit to equal to 57 percent of the State annual average weekly wage.
- Change the calculation for benefits to now be derived by dividing the individual’s two high quarter total subject wages required under by 45 rather than 38 which is currently in statute.
- Add a dependency benefit of $50 on top of a claimant’s benefit if they claim a dependent on their taxes.
The UI Trust Fund operates as a counter-cyclical policy, meaning that when times are good, you put money into the program, when times are bad, you withdraw money from the program. The automated machinery of this policy was not created with this big dip or trough in the economic cycle. As we’ve discussed in previous newsletters, the House and Administration have sought to set a sustainable pace for pulling ourselves out of that trough by recalibrating the fund’s automatic policy; a pace that does not pull more money out of the economy than is necessary. Employers will need to pay dollars into the fund eventually, however, just less over the next two years.
Freezing the rate schedule and slowing the pace we build back the fund is not a handout and therefore does not need to be balanced with any increase to employee benefits. The additional benefits that the Committee created are a departure from the conversation about the pace at which we pull ourselves out of the trough and instead the committee has voted to dig the trough deeper.
Please register here to join us at 2:30 on Wednesday to discuss these issues and to craft outreach to your Representatives in the Vermont House who will need to consider this legislation soon.
Also this week, the Committee pushed through earlier in the week S.110, which then was moved at lightning speed through all stages of passage to get it to the Governor’s desk. The language allows individuals on PEUC 13 extra weeks – because there were 11 additional weeks of PEUC they allow the State to pass a law that lets them delay the onset of their second benefit year. This benefits the claimants by allowing them to keep their higher UI benefits potentially through September and benefits the state by allowing the state to keep people on PEUC rather than put them on federal benefits.
Currently (as of the last week of February), there are about 27,000 individuals on unemployment in Vermont and about 8,600 in the PUA program with the majority of people unemployed from our hospitality sector. About 20,000 have technically left the labor force at this time. Senator Sirotkin indicated this week that he expects the work search requirement reinstated on the week of July 1st at which time the maximum benefit would also automatically increase to $551. 3
Laundry List
- Read last week’s update here.
- The Senate Committee on Government Operations passed 4-1 S.51this week, a bill banning business contributions to those seeking political office. The bill also establishes a committee to look at the future of public financing. Notably, the bill does nothing to prevent a business from contributing to a PAC or political party with the end destination being the candidate of their choice.
- The Senate Health and Welfare Committee this week took up and passed S.20 an act relating to restrictions on perfluoroalkyl and polyfluoroalkyl substances and other chemicals of concern in consumer products. The bill affects a wide array of food packaging to which no current alternative exists and broadly classifies a large class of compounds not shown to all have the same properties. LCC signed onto a letter to the Committee urging caution.
- Senate Committee on Natural Resources and Energy has passed S.102, the Vermont Enhanced Energy Savings Act which creates a separate fund for the state’s weatherization efforts and goal to weatherize 120,000 homes. The bill directs $35 million to the funds, which have no long-term funding source. $23 million continuations of existing efforts. $16 million of this is in one-time appropriations the Governor put in his budget. The bill creates a Weatherization Work Group to resolve the long-term needs for workforce and funding.
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