March 16, 2012 – Week 10

The week after Town Meeting always brings a more frenzied pace to the activity in the State House. Committees worked long hours to move bills out of committee to meet the crossover deadline. At press time for this report, many of the issues and bills we are following were still unresolved.

Don’t Tax the Cloud!
The House Ways and Means Committee may consider a bill that would impose a moratorium on the applicability of a sales tax on remotely accessed software. Meanwhile, the Senate Economic Development Committee is reviewing language that our organizations prefer that would explicitly state that these services are not subject to taxation. Action on this issue is needed due to the Tax Department’s issuance of Technical Bulletin 54 in 2010, which changed the applicability of this tax on these services. In the event the Governor and Tax Department do not act to rescind this bulletin, this legislation is needed by the end of the session. We support the Tax Department no longer assessing this sales tax by amending the tax bulletin to make clear that Cloud Computing/SaaS (Software as a Service) was never subject to taxation by the Legislature OR. This legislation clearly states that a sales tax does not apply to remotely accessed software dating back to 2006 and going forward. ACTION ALERT: Please contact key policy makers and your legislators and encourage them to oppose taxation of cloud computing to encourage this important economic sector for our state. For more information, click here.

Health Care Reform Moves to Senate
The Senate Health and Welfare Committee began their review of H. 559, this year’s health care reform bill. The bill was passed by the House before the Town Meeting Day break. The bill sets up a health insurance exchange, in accordance with federal law. While the House made favorable changes to the bill, including allowing bronze-level health plans and limiting the employers who will purchase in the exchange to those with fewer than 50 employees, we remain concerned about the impact the Exchange could have on our member businesses. The bill would mandate that small employers purchase their coverage through the Exchange only. We are concerned that the roll out of the Exchange and the mandatory path Vermont is choosing could make health insurance more expensive for small employers and their employees.

Permit Appeals Process to Be Improved?
Changes to the permit appeals process may be acted upon by the end of this week in the Senate Natural Resources Committee. Natural Resources Board Chair, Ron Shems, has been persistent in his efforts to reach out to a variety of stakeholders in an attempt to make the Act 250 permit appeals more efficient and citizen friendly. A bill draft was nearing completion which includes:

• A review of the record developed at the District Commission level by the Environmental Court rather than having to present the entire case, evidence and witnesses a second time before the Court.
• Clarification of party status such that it meets federal and state constitutional standards.
• A requirement that the burden of proof be upon the appellant instead of the applicant in the event of an appeal.
• Conflict of interest standards for the District Commission.

We support these changes and are appreciative of the efforts of the Committee and Administration to address this issue.

Labor Bills Move Forward
H. 762, the Workers’ Compensation and Unemployment Insurance bill which includes the sole contractor language, was referred to the House Ways and Means Committee since the bill includes a new fee. The bill will likely be considered by the full House early next week. The sole contractor provision of the bill would allow independent contractors without employees to register with the Department of Labor. The Department has, through increased enforcement, been requiring businesses to treat independent contractors as employees if they find the work the contractor is doing is related to the nature of the employer’s business. Registering as a sole contractor would allow the Department of Labor to treat these individuals as independent contractors as long as they could demonstrate that they operated as an independent business with a variety of clients and control over their own work.

Meanwhile, the Senate Economic Development Committee is working on another omnibus bill, S. 136. This bill may end up including a directive to the Department of Labor to develop a single definition of an independent contractor for the purposes of workers’ compensation and unemployment insurance. The bill may also include a requirement that retail stores, who require employees to wear clothing they sell, provide it free of charge. Changes to the Short Time Compensation program, used by employers to avoid layoffs, remain in the bill and there is a new provision that would allow persons collecting unemployment to seek training from an employer while remaining on unemployment benefits.

Yet Another RPS Bill Draft Considered
The House Natural Resources Committee is reviewing yet another draft of H. 468, which would implement a renewable portfolio standard in Vermont. This draft would require Vermont electric utilities to add new, renewable energy to their mix starting in 2014. By 2032, utilities would be required to have an additional 35% of their total power come from renewable sources. The bill also doubles Vermont’s standard offer program. A proposal to include cost-containment measures in the bill was not adopted. While the Chamber and GBIC support reducing Vermont’s greenhouse gas emissions, we remain concerned that this bill could lock Vermont ratepayers into unnecessarily high electric rates for the next twenty years.

Transportation Budget Out of Committee
House Transportation Chair, Pat Brennan (R-Colchester) presented what he described as the largest spending package ever for roads, bridges, rail, transit and paths. The plan is $103 million more than current levels of funding and is made possible due to a large amount of federal funding as a result of rebuilding efforts from the Irene disaster. Other revenue sources include $10 million from bonds and $6.3 million from transportation fees.

Property Tax Increase Needed?
Town Meeting week provides an opportunity for legislators to do the reality check with their constituents on various issues. It appears taxpayers are willing to pay more for their school systems. This year, school budgets fared well with a 97 % approval rate for those districts that have held their meetings. However, according to the Department of Education, voters were asked to approve increases of approximately 2.9 % statewide compared to the level funding of the two prior budget years. The Education Fund is becoming more reliant on property taxes as the other sources of revenue have declined. Therefore, the Legislature may be forced to consider an additional hike in the education property tax rate which is already proposed for a one cent increase.

Education Reform Initiatives
During the town meeting break, Governor Shumlin held a press conference with Education Commissioner Armando Vilaseca to discuss a proposal to require all high school students to take algebra and geometry. The Senate passed a bill (S. 194), with the stipulation to report back to the Legislature nest year, that would have the administration design a consolidation of supervisory unions roughly based on existing technical center service regions. The Senate Education Committee has been working hard on bills that would:

• Increase the mandatory age of attendance at high school from age 16 to 18 (S.233)
• Expand school choice for elementary and high school students (S.201)
• Require the Building Bright Futures Council to develop recommendations for increased access to early education programs and provide $100,000 for grants to workers in early childhood and after-school programs for professional development (S.218)

Quick Hits
On behalf of the House Commerce Committee, Rep. Michelle Kupersmith (D-So. Burlington) reported out H.272, a bill that in the absence of an agreement governing the maintenance of a private road, each person must contribute proportionately to the cost of maintaining the road and provides the right to bring civil action to enforce this requirement.

On behalf of the Senate Natural Resources Committee, Sen. Ginny Lyons (D-Chittenden Co.) reported out S.202, a bill that encourages better management and use of flood hazard areas and calls for state rules to regulate development that is located in a flood plain and now exempt from land use regulations.

The Senate Natural Resources Committee is set to pass out S. 143 which would require commercial and residential building owners to complete a building energy assessment if requested by a buyer. The assessment would be an online tool developed and maintained by the Department of Public Service. Assessments would also be stored in a statewide database. The Committee is also proposing to double the tax on heating fuels to raise $4 million in order to replace federal funding for low-income weatherization efforts.

The House was also scheduled to vote on bills aimed at protecting youths 18 years and younger. This included a ban on the sale of tobacco products/substitutes and paraphenalia (H.747) as well as the prohibition of the use of tanning beds (H.157) by minors.