This Update is Created by the Lake Champlain Chamber for Distribution by;
January 13, 2023
There’s a saying, slow is smooth, smooth is fast. Well, things in the Vermont Legislature are starting slow; does that mean things will then move smoothly? And when will things start moving fast?
This week, Committees got to know the relevant Agencies and Advocates that they will be working with over the next two years. LCC’s Director of Government Affairs sat down with three separate committees to have an initial, official connection.
In this week’s update:
- Join us for our Legislative Breakfast
- Paid Family and Medical Leave Returns
- Vermont’s Sole Economic Growth Program Threatened
- Return of Clean Heat Standard
- Governor Rolls out BAA, More to Come
- Prospective Property Taxes Rates a Pain Point for Legislators
- Legislators, Governor, Mayors Set Stage on Public Safety
- The Laundry List
Register for LCC’s Legislative Breakfast Series
We’re back in person! LCC is pleased to announce that we’ll resume our long-standing Legislative Breakfast series, sponsored by New England Federal Credit Union.
- February 6th – 7:30 to 9:00 a.m. at Hula
- March 13th – 7:30 to 9:00 a.m. at The Flynn
Paid Family and Medical Leave Returns, at Odds with Voluntary Version Already in Works
At the Tuesday morning Democratic caucus, it was announced that a mandatory new paid family and medical leave program would be introduced soon, funded by a 0.58 percent payroll tax, split between the employer and employee. This would raise an estimated $100 million. The program would be much larger than previously proposed, providing 100% wage replacement for 12-weeks of leave for a vast number of absences. The bureaucracy supporting this program would be housed in the Office of the State Treasurer, and about $20 million would be needed to stand up the program.
The plan is competing with the Governor’s voluntary plan, the Vermont Family and Medical Leave Insurance Plan (VT-FMLI). The Department of Economic Development is collecting feedback from employers about the business community’s interest in participating via this short survey.
While there are many fine details to be legislated, the major fault lines and the crux of most conversations will be;
- Should the state mandate such a program or facilitate a voluntary option
- Should the state-run such a program or contract a third party to do so
- What share of the program should be paid for by the employer or the employee
- How broad should the categories be for leave
Draft Bill Threatens Vermont’s Sole Economic Growth Program
This week, VEGI came under scrutiny in a story by VTDigger, which relied heavily on the concept that applicants or participants in the program might have received funds from the program after failing to hit growth targets by conflating a notice of agreed-upon future incentives with actual incentives. The VEGI program is designed to give participants of the program installment payments over four years, which are a pre-agreed-upon portion of the tax liability they’ve already paid if the company reaches their employment and capital investment goals. If, in any year, the awardee doesn’t hit the target, they don’t get any funds.
The story comes in response to a draft bill, H.10, which would effectively end the program in the state by, among other things, preventing applications when statewide unemployment is below 5 percent. The Lake Champlain Chamber and GBIC published a response to the story and the bill, which you can read here.
In a meeting with the House Committee on Commerce and Economic Development this week, LCC’s Director of Government Affairs noted the program as an example of something that has benefited many areas of the state and, instead of being eliminated, should be made easier to use so that it can be used in areas with smaller businesses.
Return of Clean Heat Standard; Contention Over Statewide Goals
Now rebranded as the “Affordable Heating Act,” this is legislation from last biennium – you can read a recap of that here. The long and short of the proposed legislation is that it failed in a veto override by one vote because more extreme elements of the environmental activist community pushed against the bill due to a belief that nothing should be burned for heat, including liquid biofuels and woody or nonwoody biomass.
This year’s version differs very little from what was previously passed, with the exception of a new concession to those extreme anti-combustionist (a term I’ve never typed and can’t believe I need to) that can create an alternative accounting process outside of the widely recognized Argonne National Laboratory 16 GREET Model, Intergovernmental Panel on Climate Change (IPCC) modeling.
The Governor had issues around understanding the end cost of the program and had wanted a “checkback” on the program by the Legislature to approve final costs. It’s unclear if the two branches of our government can come to a mutual understanding of this request or mutual agreement on how to accommodate such a request. The draft bill can be found here, and a mostly comprehensive list of what our state has already done to address climate change can be found here.
Governor Pitches His Budget Adjustment; Next Week Brings More Financial Considerations
In the “before times,” meaning before a virus changed everything we did and the federal government sent trillions of dollars to state governments to combat it, the process of adjusting the previous year’s budget was a less consequential process that handled a few million dollars. Now, with all of the once-in-a-lifetime funding in the state, it’s a $283 million conversation. The Governor’s staff spent the week pitching legislative money committees on using the money to tackle broadband, healthcare, and infrastructure needs. The Governor also announced three information sessions for legislators on public safety, energy and the environment, and economic revitalization and affordability.
On deck for next week – financial constraints and asks will be at the forefront.
- On Tuesday, the 17th, the long-awaited report from Rand will outline how much it will cost and how best to pay for stabilizing our childcare system.
- The E-Board will meet on Tuesday to receive a consensus revenue forecast.
- The Governor will give his Budget Address Friday the 20th at 1:00 p.m.
Prospective Property Taxes Rates a Pain Point for Legislators
We’ve known since December that there is a $65 million education fund surplus, with property taxes slated to rise despite this surplus. Similar to what we saw last year, the Governor wants to use that surplus to buy down property tax; a Democratic plan is not readily apparent, however, last year, there were a number of their own tax breaks the party looked to direct this surplus to fund. Ultimately, a balance was struck, which can be read here.
This week, legislators heard from the Department of Taxes that roughly two-thirds of towns have properties that are undervalued by the state’s metric, the Common Level of Appraisal, or CLA. This is due to the flurry of activity we’ve seen in the last three years in the real estate market, which pushed up property values. A statewide CLA could mean increased property taxes for some if – and this is the linchpin here – the state could find the human capacity to perform the CLA in this labor market.
Also this week, the Ways and Means Committee heard from the Tax Payer Advocate and others that the state’s property tax system is overly complicated and that households have trouble navigating our state’s property tax credits. The sentiment was echoed by a senior Senator that same day who remarked that Vermont “fails on all accounts” when it comes to having a simple tax system.
Added onto all of these variables, work done last year on the formula per-pupil education spending, will have a large reshuffling effect that will certainly have some winners and losers.
Finally, an off-session study committee tasked with researching the prospect of moving education funding from a residential property tax to a statewide income tax delivered their final report. The conclusion, “[i]t is challenging to make definitive recommendations regarding a theoretical tax structure that is without precedent in any other state” and “[a] change of this magnitude and complexity should be approached with great caution.”
Legislators, Governor, Mayors Set Stage for Conversations Around Public Safety
This week, the Governor hosted a briefing for legislators outlining a 10-point plan released last year. The Administration also rolled out a new heatmap based on Vermont’s pandemic response modeling showing the uptick in crimes and areas of concern. The 10-point plan calls for:
- Prioritize Vermont State Police (VSP) Mutual Aid
- Shift Special Teams Troopers to Coordinate with Federal ATF Task Force
- Better align and deploy state law enforcement resources
- Augment state law enforcement workforce
- Coordinate with Attorney General to allocate prosecutorial resources effectively
- Work with the judiciary to eliminate a backlog of cases
- Expand the role of the Fusion Center (Vermont Intelligence Center or VIC)
- Apply Vermont’s pandemic response model to public safety, social services, and mental health
- Reconstitute the violence prevention task force by executive order
- Appoint a director of violence prevention
In Burlington, Mayor Miro Weinberger released in two separate occasions his legislative priorities and his 16 near-term initiatives focused on four areas of priority related to public safety. Mayor Weinberger will also be present in Montpelier today for a press conference with the Vermont Mayor’s Coalition, where he’ll share his legislative agenda.
Also this week, the Judiciary Committees heard more details about the court backlogs that many are pointing to as one of the main drivers of current public safety concerns. As of last Friday, the 6th, Vermont has more than 1,156 felony cases and 2,205 misdemeanor cases awaiting justice for longer than two years.
The Laundry List
There are many moving pieces, and we do our best to add the ones that don’t get a section in the newsletter yet should be on your radar here. On any given day in the State House, there are about 175 hours of committee time outside of floor time, and then the hallway, cafeteria, or other time spent legislating.
- Read last week’s update here – week 1 and last session’s wrap-up.
- There has already been a conversation around taxing Cloud-based services (defined by VT Statute as pre-written software accessed remotely). LCC has defended against this tax for at least a decade, with the importance of doing so becoming ever more critical as businesses rely on internet services at an ever-growing rate. Learn more about issues around the taxation of internet-based services here.
- He might not have an effective veto pen anymore, however, Governor Phil Scott is the most popular governor in the country (again), according to Morning Consult’s latest polling. The Governor has an 81 percent approval rating and a 14 percent disapproval rating.
- Our first Congresswoman has been sworn into office after a long and drawn-out process to appoint a Speaker of the House. The process has many asking, “what does this mean for the future of our economy?” Likely, this means we’ll see a dysfunctional Congress that will be less likely to act with the relative efficiency we’ve seen in the past few years. This has some worried as an economic recession is on the mind of many, which would require Congressional action.
- We’re still looking for some feedback on the policy we expect this legislative session! If you want to provide your perspective on what will be happening in the State House this session, email us for a link to a short survey at [email protected].
- A reminder, the VEDA Short-Term Forgivable Loan program is still available to employers in need of financial assistance due to continued current and ongoing economic harm due to the COVID-19 pandemic. You can find more information here.
Hey! You read the whole update. You probably have some thoughts on the content or how we delivered it. Feel free to reach out with those at [email protected].