January 13, 2012 – Week 2

The Governor’s Budget Address is always eagerly anticipated as it outlines his priorities and defines the winners and losers for the programs that will receive state dollars. Governor Shumlin said his budget was prepared with two major areas of focus: rebuilding Vermont and our jobs future. The budget as outlined closes a $51 million gap without raising broad based taxes and proposes adding money to the reserve fund.

Highlights of the budget address include:

• Investment of $8 million to promote innovative programs at UVM and the Vermont State Colleges
• Making more credit available to entrepreneurs by providing moral obligation support for the Vermont Economic Development Authority and $500,000 more for downtown tax credits
• Continuation of $4.8 million for the Next Generation Initiative
• Continued funding for tourism
• The largest Transportation budget in Vermont history – by increasing paving by 36%, the bridge program by 16.7% and town highway programs by 128.5% (including Irene projects) or 15.1% (excluding Irene projects)
• A call for reform of the state’s education system to include a reduction of supervisory unions, universal pre-kindergarten, expansion of school choice, the appointment of a Secretary of Education by the Governor and allowing high schoolers to enroll and get credit for college courses (all are Chamber/GBIC priorities)
• A proposal to reform the Act 250 permit process by providing for a record of a District Environmental Commission hearing rather than starting all over again at the Environmental Court for appeals – also a Chamber/GBIC priority

It is important to note that the Governor’s budget was prepared based upon revenue forecasts that are over six months old and therefore, it may need to be adjusted when new forecasts are available. Fee increases in the areas of transportation services and Agency of Natural Resources permits will be proposed. A redirection of $18 million from previously approved capital projects will also be used. Following the address, Republicans expressed concern about the magnitude of the 5.31% increase in the General Fund, the lack of attention on health care reform, and the potential impact of the education budget on property taxes.

The first task of the Appropriations Committees is to adjust the FY 2012 budget. The Administration’s proposal is for an increase of $19.9 million across all funds due primarily to federal match funds. It also includes a request for 47 new state employees, which is raising eyebrows. The Administration believes they need the positions due to the need for transportation employees to assist with Hurricane Irene recovery as well as increased demands for health care and social services resources. Revenue estimates for the state through December are about $2-3 million over forecast, with Rooms and Meals and Sales taxes on or above target. Corporate taxes and cigarette taxes are above the forecasts. Of importance to the tourism industry, there is approximately $180,000 requested for a customs and passenger processing area and the marketing of the new Porter air service to Toronto.

GBIC and LCRCC staff has been working with the Shumlin Administration on finding a solution to the Software as a Service/Cloud computing tax issue that has recently come to the forefront of conversations around the business community. The Governor, through Secretary Lawrence Miller, expressed his opposition to the tax, and we will continue to work with the administration to resolve this issue.

The House Health Care Committee received overviews of the health benefit exchange and federal affordable care act.  It appears that the Federal government may require the provision of lower cost bronze plans. Right now, Vermont’s health care reform act (Act 48) does not. Also, Health Care Reform Director Robin Lunge testified that the administration will be recommending that all employers having 100 employees or less will have to purchase insurance under the health care exchange that will be activated in 2014. Our organizations support a bronze plan option and a slower transition for the exchange, by having it only apply to employers having 50 employees or less at first.

The Green Mountain Care Board approved a work plan this week which includes:
• Developing analytic tools for evaluating system-wide performance and quality
• Overseeing development and implementation of delivery system and payment reform pilots
• Setting rates for health care professionals and engaging with provider bargaining groups
• Reviewing decisions of the Banking, Insurance, Securities and Health Care Administration Commissioner on health insurance rates, hospital budgets and certificate of need applications
• Hiring a communications firm to assist in getting the Board’s message out to the public

The Senate Natural Resources Committee has been considering numerous bills relating to enforcement, permitting and land use issues. Our organizations support having a formal record of review for Act 250 applications to avoid having to present the same information in the event of an appeal before the Environmental Court. Several trial lawyers expressed concern with this proposal in testimony this past week, despite the development community’s opinion that it will make the process more efficient and less costly for applicants and appellants alike. We will be presenting testimony in support of on the record review and interested members are encouraged to contact Dawn Francis at dawn@vermont.org

Per a ruling by the Environmental Protection Agency (and at the urging of the Conservation Law Foundation) the State must allow more public participation in enforcement actions for federally delegated programs such as the Clean Water Act. H.258 allows for a 30-day public participation notification and comment period on Agency of Natural Resources settlements and tickets for violations. Our organizations support the House passed version of this bill which was improved over the original version of the bill. The Senate Natural Resources Committee is expected to take action soon on this priority for the Shumlin Administration.

GBIC and the Chittenden County Regional Planning Commission presented early results from the economic development portion of the ECOS project to a joint session of the Senate and House Economic Development committees on Wednesday. ECOS is the result of a collaborative effort from numerous planning and economic development organizations in Chittenden County that worked together to win an award from the Federal Housing and Urban Development (HUD) Sustainable Communities Grant program. The grant aims to unite planning and implementation efforts designed to make our community more economically, environmentally, and socially sustainable. GBIC has been working with an economic consultant to produce an economic plan, a targeted industry sector analysis, and a new Comprehensive Economic Development Strategy (CEDS). The presentation focused on the base economic profile of Chittenden County, that is, factors relating to demographics, employment, labor force, housing, and GDP. Thus far, the analysis reports have shown that the county acts as a major economic engine for the state, producing higher wage jobs and a larger and more diverse economy, both of which contribute to state tax revenues. However, the reports also highlight that there are significant challenges in terms of inter-regional transportation, affordable housing and a dwindling supply of infrastructured industrial space in which to grow. The presentation was well received by both of the committees, and the Legislators actively engaged in questions and thoughtful discussion throughout the meeting. The next steps for the ECOS project will come when the analysis reports are complete and implementation projects are developed and agreed upon by the ECOS Steering Committee. The analysis reports are nearing their final status, and will be publicly available on the ECOS website.