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Legislative Update – September 11, 2020

September 11, 2020

The budget passed the House this week, bringing this unusual special legislative session closer to an end. The budget’s speed puts even more pressure on committees to finish up their work on priorities that may or may not be COVID-19 related. 

In this week’s update:

Save the Date – Our Legislative Breakfast is Going Virtual 

Out of an abundance of caution, we canceled our legislative breakfast in March, a week before the state’s first shutdowns. Now, with the legislative session coming to a close and so much to unpack, we are rescheduling it for the morning of Tuesday, October 13th. Mark your calendars and stay tuned for more details.

Thanks to NEFCU for their support of our Legislative Breakfast Series.

Budget Passes the House, Still a Long Road in the Senate 

This week the House passed the roughly $7.15 billion budget that covers all of FY 21. You may remember that the legislature only passed a budget for the first quarter of the fiscal year before adjourning in June. This budget includes those Q1 appropriations as well as the rest of the year. 

The budget represents 3% general fund reductions from items such as vacancy savings, use of federal funds, and a lack of in-person operating costs across state government, such as travel. None of these reductions represent a cut in the ability of agencies and departments to do their jobs. State economists, and other consulting experts, strongly recommended not making any dramatic changes, such as cutting costs or raising revenues through new taxes as any change will have a ripple effect and unintended consequences, so this budget remains level, in large part thanks to the $1.25 billion the state received in Coronavirus Relief Funds from the CARES Act, upwards of $200 million of which is represented in this budget bill. You can find several documents summarizing this budget here

Things will likely not be so easy in January when the legislature returns. The money committees left the state’s reserves, just over $228 million, intact to create capacity for the budget next fiscal year. This comes at a time when most Washington observers believe that both the Democrats and Republicans are fine to punt on more federal aid until after the election in November when the battle lines in Congress will be redrawn, and leadership knows whose hand will hold the veto pen. Barring more federal aid, or the economy rebounding enough to bring state revenues back up, the legislature will need to make cuts and raise taxes; and they are already leaning heavily on the idea of raising taxes on services that used to be goods, notably internet services and software as a service. See the section on online service taxes below for more information. 

The budget contains $100 million in business relief that we outlined last week. Of that, $100 million, $88 million will be appropriated to Economic Recovery Grants with greater flexibility for the Agency of Commerce and Community Development to allocate grants and amend criteria. 

The bill also contains $23.8 million in bridge funding for Vermont state colleges previously thought impossible with CRF. Due to crafty accounting by the state and college systems, expenses the colleges have were found that are eligible. This funding is intended to get these institutions to their next step. Also in the bill are $10 million to the University of Vermont and $10 independent private colleges of Vermont. 

The bill clearly lays out how funds that cannot be spent before the deadline, while the legislature is not in session, should be reallocated to other programs to prevent them from being sent back to the federal government.

The bill now heads to the Senate, where some sticking points are already showing. The Agency of Commerce is already lobbying the Senate to move some of the dollars that the House is allocating to grants to instead go to consumer stimulus programs, a proposal the Senate seems open to. Additionally, there is a discrepancy between the hazard pay program funding level the House passed and what the Senate would like to see. Finally, the House did not decide to allocate $20 million in funding for enhancing unemployment benefits and members of the Senate have expressed interest in seeing that funding.

Unemployment Trust Fund Troubles 

At this time, Vermont has used about 40% of its unemployment trust fund. Despite this, the current rate schedule for the employer UI tax is currently at schedule-1 because last year, Vermont’s economy was doing very well and the 10-year lookback window that is used to calculate the rate no longer contains the last recession. Additionally, the taxable wage base was set to drop by $2,000 this January. 

The system is designed to be self-correcting and because the fund was depleted so dramatically, the tax rate would jump to schedule-5, the highest rate. A move from schedule 1 to 5 would represent a rate tripling for some employers. The Scott Administration has put forward a proposal that would limit rate increase to no more than two tax schedules per year. The proposal was well received by the Committees of Jurisdiction which might address some of these issues this session. The Legislature will need to address many of these issues in January and might look into bringing other employees into the wage base.

Housing Omnibus Bill 

The Senate Committee on Economic Development, Housing, and General Affairs started work on a little affordable housing bill in January, which seems like ages ago. The bill was based on the findings of a statewide housing tour they conducted and a great deal of stakeholder input. The bill received very little attention and almost no pushback until it came to the Senate floor. It may have started on easy street, however, since this bill left the committee, it’s been on a highway to hell.  

The bill was stripped of some of its meatier parts around Act 250 jurisdiction in areas of enhanced designation and finally made its way to the House. It was referred to the Committee on General, Housing, and Military Affairs where it has become a hornets’ nest for the committee. The bill is very technical and has brought everyone who wears a planning hat to the table at one point in the short time it’s been under consideration. Making the bill more complex is the desire of some to wrap another bill, H.739, which would create a rental registry in the state, into the bill. 

As we outlined last week, H.926, the Act 250 bill, fell apart and since that bill contained the Act 250 provisions of S.237 that were pulled from it on the floor, LCC’s advocacy team pushed the House Committee to reconsider adding that language back to the bill and coordinated that message with other partners. Unfortunately, these critical and non-controversial changes to Act 250 do not have a home in any legislative bill at the movement.

Online Service Tax Pushed by House Committee 

The House Committee on Ways and Means is seeking to add a tax on online services, often referred to as a cloud tax, to the miscellaneous tax bill. LCC is working with members and other stakeholders to push back against such a tax. Economists have advised broadening the sales and service tax bases, however, they have also advised to not raise new taxes or cut services at this time. The budget that the House recently passed is not dependent on revenue from this new tax. The minimal amount of revenue that this tax would raise would come at a substantial cost and impact on businesses already hit hard by the pandemic. We request that the conversation of taxing prewritten software accessed remotely be delayed until a more robust conversation with affected business can be held next legislative session. If you’d like to be involved in our advocacy efforts on this issue, please contact us at [email protected].

LCC Submits Comments on BTV Short-Term Rental Plan 

The regulation of short-term rental units is crucial to the future economic success of Burlington. Our housing stock limits affordability as well as creates an obstacle to attracting and retaining residents. As Vermont grapples with issues of affordability, some of the nation’s oldest housing stock, and barriers to new home creation, so does Burlington. We must ensure that any progress made on these fronts is not eaten away by the addition of short-term rental (STR) units. LCC submitted comments on the City of Burlington’s proposed regulations on Short-Term Rentals and is asking others to do the same. 

We hope you can reach out to the Burlington City Council to convey your support for a balanced approach to short-term rentals in this city through common-sense regulations, and most importantly, levying a substantial fee in lieu of housing on rental units that take away from the city’s housing stock. 

Find the email address for City Councilors here and reach out to them with a simple message containing the following:

  • Your own experience with the difficulties of finding housing in the greater Burlington area 
  • How short-term rentals take up the precious, limited housing stock Burlington has and how they should contribute to more housing

Most Asked Question this Week

What do I do if someone in my business believes they had COVID-19 or had a positive test? 

Based on guidance from the Vermont Department of Health, if someone was exposed to COVID-19 at your business, a team of infectious disease experts will work closely with you and make recommendations to keep your customers and employees safe. In most cases, when appropriate steps are taken quickly, there is no need to shut down your business.

Here’s what you need to do:

  • If an employee or customer tells you that they have tested positive for COVID-19, have them call the Department of Health at 802-863-7240. Find out what you need to do if an employee tests positive.
  • If you are contacted by the Department of Health because a risk has been identified at your business, the team will walk you through the next steps.
  • If you believe your establishment has been exposed to COVID-19, please call the Department of Health at 802-863-7240.

You can learn more about the steps the Department of Health takes to quickly respond when someone tests positive. Visit the Department of Health’s website to get more information about preventing the spread of COVID-19 in your workplace.

Laundry List 

  • Governor Scott joined Governors Sununu of New Hampshire and Mills of Maine on a letter to President Trump requesting he reverse the decision to levy 10% tariffs on Canadian aluminum, which began in August. 
  • LCC’s advocacy team hosted the first of two meetings with the Department of Environmental Conservation on Tuesday to discuss the newly published 3-acre stormwater general permit. We will host a second meeting on Wednesday the 16th to go further into the permit details and what the Water Investment Division is hoping to do to assist those falling under the permit. If you would like to participate, please send an email to our advocacy team
  • The Global Warming Solutions Act passed the House with enough votes to override a veto if the Governor decided to do that. The bill is currently being sent to the Governor. 
  • S.337, which would allow energy efficiency utilities and programs to address greenhouse gas emissions in the thermal energy and transportation sectors, has now passed the House and Senate. 
  • During the Governor’s COVID-19 briefing today, DFR Secretary Mike Pieciak showed data that the cumulative positivity rate of coronavirus testing at colleges & universities is at 0.09% or 38 cases in total. This is a much better result than many predicted. 
  • Last week’s update can be read here.

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