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Legislative Update – August 13

August 13, 2020

The August 25th reconvening date for the Vermont legislature looms ahead and still, the next expected round of federal COVID-19 relief is nowhere to be seen as negotiations broke down in our nation’s capital. In an effort to exert pressure on congressional Democrats, the President signed an Executive Order covering many of the sticking points of the negotiations, though it may prove to be mostly hollow. Meanwhile, in Vermont, bleak revenue forecasts were dampened slightly this week, however, they still present massive challenges over the next two years. 

In this week’s update:

State Revenue Forecasts Slightly Better; Still Bad

This week the legislature’s economist said that the revenue forecast for the coming two fiscal years has improved since June but is still bleak. Forecasts show general fund losses of just over $180 million in FY21 and $100 million in FY22 with transportation fund losses of $32 million in FY21 and $15 million in FY22, and education fund losses of about $62 million in FY21 and $40 million in FY22. This all adds up to a $275 million deficit this year – a substantial improvement over previous forecasts but it still leaves legislative money committees in a difficult position when they reconvene in under two weeks and there is no federal relief deal in sight.

vermont state revenue fy21

The updated forecast will be wrong if nothing comes of discussions in D.C., as the whole forecast is based on the assumption that at least a half a trillion dollars will be appropriated in state and local aid. The economic data we now have shows us just how important this aid is to weather the economic storm. Vermont disproportionately benefited from federal aid, with over $2,000 per capita for Vermonters in relief as compared to about $388 in New York and other states. We’ve highlighted in previous updates that the half-billion Vermonters we saw in stimulus checks to individuals, as well as enhanced unemployment, meant we wouldn’t stop a drop in consumer spending but wouldn’t see a drop that would typically correspond with a double-digit unemployment rate. Now, we have data that shows that.

Unfortunately, while that consumer spending happened, it was mostly online or on necessities and didn’t help many of Vermont’s small businesses which have seen a substantial drop in revenue this year. The one silver lining is that if this crisis had happened just a few years ago, we might not have received the tax revenue from the sales that moved online.

percent change in small business revenue graph

We all knew it, however, now we have the data that shows that leisure and hospitality took the largest hit and the sector is going to need help until this is over. This is due to two factors- first, there are government restrictions lowering capacity and preventing travel, and second; there is consumer behavior relative to the virus and travel. The Legislature’s economist noted that a great deal of aid came to that state in the form of PPP loans, however, it did not make its way to this sector.

ppp loan funds distribution graph

Unfortunately, the realization the money committees and legislative economists have had is that any capacity that the state has to assist businesses would be contingent on raising taxes given the massive budget deficit we have and lack of federal support. The legislators serving on money committees don’t seem to want to make any sudden moves. Yes, they have the advantage of better data and a better forecast now then they did when they were making the budget for the first quarter of this fiscal year; however, they planned to come back August 25th to have that data AND a newly passed federal relief deal, which still has not happened. Even the simplest of actions to help the state is stuck in the national political quagmire; waiving restrictions on the roughly $225 million in Coronavirus Relief Funds to allow the use of that money to fill lost revenue. If this were to happen, the state might only be looking at a $50 million deficit and could get creative to close the gap. 


Next week, on Tuesday, the Governor proposes his budget for the coming fiscal year. There are already two opportunities to give public feedback on Thursday, August 27, 2020 from 5:00 p.m. to 6:00 p.m. and Friday, August 28, 2020 from 1:00 p.m. to 2:00 p.m. via videoconferencing. Learn more here.

Federal Update 

Last week saw little progress beyond what we outlined in our advocacy updates from previous weeks resulting in President Trump signing an Executive Order that will likely do very little. Now, most congressional observers are saying that it looks unlikely that a deal will come until September and the brinkmanship we’ve seen on both sides could bring us to the edge of a national government shutdown. The political posturing is coming at a real and painful cost to real people in the meantime and as we explained above, getting in the way of states’ recovery. 

Here is a quick breakdown of what the President’s Executive Order could do:

President’s Executive Order on Payroll Taxes, Unemployment, Evictions, Student Loans 

This weekend, the President made good on his threat to provide relief on issues related to the stalemate in the debate between the Democratic Party-controlled House and the Republican Party controlled Senate. This Executive Order could provide a payroll tax deferment, additional unemployment benefits, an eviction moratorium, and additional student debt relief, though the order is a true test of the limits of executive power, might be challenged, and provided solutions that seem unworkable for most. In short, the action might be merely a political statement.  

Unemployment Benefits

President Trump tried to play the role of King Solomon, however, he actually went through with the charade. What he created is a situation in which Governors, economists, and much more importantly – those on unemployment, are not happy. Under the provisions signed by the President, those on unemployment will be eligible for an additional $400 on top of their state unemployment benefit, provided their state pays $100 of that. Unfortunately, this will take at minimum a month, or realistically for some two, to get up and running resulting in people on unemployment not receiving enhanced UI benefits until late September or possibly October. Finally, the $300 the federal government has promised to kick in is paid out of $44 billion in funding from FEMA that would only fund the benefits for about a month. We shouldn’t forget that FEMA might actually need more funding in what is supposed to be an above-average active hurricane season

What does this mean for Vermont? Vermont does have about $225 million in Coronavirus Relief Funds appropriated to the state still available which could be used to cover the cost of the additional $100 benefit the executive order requires. This would cost about $4 million a week for Vermont. There is not much in writing, however, the state DOL had a call with the Treasury and U.S. DOL and has until September 10th to submit an application to FEMA. There are difficulties around a requirement that people need to self attest that they are unemployed due to a COVID-related reason which would exclude some Vermonters and VDOL would have to build this into their existing system, adding to the time it would take to actually deliver the funds. This cost of implementation can be covered by the grant application, however, that is subject to a state match.

Payroll Tax Deferment, Not a Cut 

While the President advertised this as free money, don’t count on this money. While the deferment could provide some liquidity, the order means you are just on the hook for it later. The same portion of the tax code that enables the Treasury Secretary to postpone the collection deadline of certain taxes during a federally declared disaster allows the administration to postpone remittance of payroll taxes, however, when they come due, business owners who fail to remit employees’ share of taxes altogether could face personal liability.

Payroll taxes are shared by the employer and employee. Each is responsible for a 6.2% levy that goes toward Social Security, as well as a 1.45% tax that funds Medicare. In 2020, the Social Security tax is subject to a wage base limit of $137,700. This proposal saw bi-partisan ire when the President pushed for its inclusion in the HEALS Act, for good reason; Social Security and Medicare, which are funded by payroll taxes, were already in a dire predicament with the Social Security retirement fund previously projected to run out of money in 2036 with a pandemic worst-case scenario possibly pushing that to 2032.

What does this mean for Vermont? Earlier this year, the Trump administration used this same authority to delay the due date for 2019 federal income taxes. While employers might be tempted to utilize this deferment, it will likely mean more headaches than is warranted to provide such a small benefit. LCC intends to sit down with financial professionals next week and provide further guidance to members as Treasury guidance is released. Please email your questions on this issue to [email protected]. 

Evictions

The CARES Act passed in March banned evictions in properties with federally backed mortgages and for tenants who receive government-assisted housing. While this action was billed as eviction protection, many have said it has done little to prevent evictions and the text of the executive order is less inflated than the rhetoric. 

What does this mean for Vermont? Vermont took its own, independent action to cease evictions and provide assistance to renters and landlords. We covered these in our session wrap-up which can be found here.

Additional Three Months Student Loan Repayment Relief 

While the CARES Act excused borrowers from making payments and pausing interest through September 30th, Secretary of Education DeVos in March had already waived student loan payments for 60-days without interest. As such, this might be the only executive action taken by the President this weekend which can fully function, as it does not require funding from congress or participation from the private sector. 

What does this mean for Vermont? Our research into the cost burdens on young professionals in our region shows that they typically are spending 10% or more of their monthly income on student debt, providing a significant obstacle to young professionals trying to settle in our region where housing and childcare costs are astronomical. This could provide a much-needed break for this demographic.

WEBINAR: New York Federal Judge Vacates Parts of DOL FFCRA Final Regulations

In an August 3, 2020 decision, the U.S. District Court for the Southern District of New York vacated multiple provisions of the U.S. Department of Labor’s Final Rule on the Families First Coronavirus Response Act (FFCRA).  It is recommended that employers that are covered by the FFCRA change their practices regarding the vacated provisions. Join the Lake Champlain Chamber and Primmer Piper Eggleston & Cramer PC for a conversation around the decisions and other FFCRA FAQs on August 26th at noon. 

The Court struck down four provisions of the Final Rule:

  1. The “work availability” requirement—that employees are not entitled to FFCRA leave if their employers do not have work for them to do; 

  2. The definition of “health care provider”—that employers in a healthcare field have broad discretion to exclude all employees; 

  3. That intermittent FFCRA leave can only be taken with the employer’s consent; and 

  4. The requirement that employees provide documentation before taking leave.  At this time, all other provisions of the Final Rule remain effective.  

Register for the webinar here. Information on FFCRA coverage is available here. More information around the decision can be found here.

Hazard Pay Program Live, Hurry If You Have Not Lined Up Already 

As of Tuesday, August 4, public safety, public health, health care, and human services employers whose employees worked to help mitigate or respond to COVID-19 may apply for hazard pay grant funds for their employees. The Hazard Pay Program allows covered employers to request funding to provide $1,200 or $2,000 in hazard pay to each employee who meets eligibility criteria. Eligibility is determined by conditions outlined by the Legislature in Act 136, including the risk of exposure to COVID-19, number of hours worked and employee’s hourly wage.

Grants will be awarded through an online application process and funds will be distributed on a first-come, first-served basis until the Program’s $28 million in funding is allocated. When employers who apply are approved, they will receive the award amount. Covered employers eligible to apply on behalf of their employees are defined by Act 136 to include:

  • Ambulance service or first responder service as defined in 24 V.S.A. § 2651.

  • Assisted living residence as defined in 33 V.S.A. § 7102.

  • Dentist’s office or a dental facility.

  • Federally qualified health center, rural health clinic, or clinic for the uninsured.

  • Health care facility as defined in 18 V.S.A. § 9432 or a physician’s office.

  • Home health agency as defined in 33 V.S.A. § 6302.

  • Homeless shelter.

  • Morgue.

  • Nursing home residence as defined in 33 V.S.A. § 7102.

  • Provider of necessities and services to vulnerable or disadvantaged populations.

  • Residential care home as defined in 33 V.S.A. § 7102.

  • Residential treatment program licensed by the Department for Children and Families.

  • Therapeutic community residence as defined in 33 V.S.A. § 7102.

  • Therapy provider contracted by a home health agency or nursing home.

For more information, to apply using the online application, and to sign up to receive periodic updates, please visit the Agency of Human Services’ website at humanservices.vermont.gov.

The Laundry List 

  • Please, please, please respond to the census and urge others to do so!
  • We’ve updated our Chittenden County Senate Candidate Survey to reflect the results of this week’s primary results, however, it could be too close to call sixth place yet, as the candidate in seventh place is only 40 votes behind and may ask for a recount. See the questionnaire here
  • The Department of Health has updated information regarding COVID-19 testing in the workplace. The Department of Health does not recommend requiring asymptomatic employees to test for COVID-19 or provide proof of a negative test prior to returning to work, unless that person is looking to end their quarantine period early. Visit the Department of Health’s website to learn more about when testing is and is not recommended for your employees.
  • Everyone Eats Program RFPIn response to COVID-19, restaurants, farmers and community organizations stepped forward to help feed neighbors experiencing food insecurity. These programs have helped stabilize communities by nourishing Vermonters, alleviating the surging demand on food shelves, and providing economic support to restaurants. The State of Vermont has allocated $5M from the Coronavirus Relief Fund (CRF) to a new program called Everyone Eats, which supports restaurants feeding Vermonters in need. Southeastern Vermont Community Action (SEVCA), the fiscal agent for the program, is requesting proposals from community organizations around the state to further these programs in the months ahead. Visit the SEVCA website for more information and to submit a proposal.
  • Economic Recovery GrantsFunds are still available to Vermont businesses who can demonstrate a revenue decline of at least 50% in any one-month period from March 1, 2020 to August 31, 2020, when compared with the same month in 2019. If you experienced this level of loss in July, you are encouraged to apply. The Economic Recovery Grants landing page has full details, including eligibility requirements, document preparation instructions, and a series of FAQs to assist businesses in completing the application.
  • Are you, or an employee, struggling to get the internet at home? Do you have K-12 students or need to work from home due to COVID-19? The Department of Public Service is issuing grants to eligible and qualifying residents to help extend telecommunications lines to their homes. Limited funds are available. Eligibility information, program guidelines and FAQs are available on the Department of Public Service website.
  • Operational Relief Grant Program, funded with $12 million from the federal CARES Act, to help child care programs offset pandemic-related expenses and losses. The application is open now through August 26th and award notices are anticipated by September 11th. Eligible applicants include child care and after school programs, summer day camps, parent-child centers, and agencies that serve as fiscal agents for local Children’s Integrated Services.
  • Tuesday Governor Scott and the Agency of Education released updated guidance around the safe and healthy reopening of schools and a path forward for fall sports at schools in the state.

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