This week’s Legislative Update is sponsored by:
April 24, 2020
As tensions rise across the country over the rate at which we re-open the economy, such a rift seems small or non-existent in Vermont. This week saw more good news, as the Governor did another turn of the spigot on the economy. Additionally, the Vermont Department of Labor successfully launched the Pandemic Unemployment Assistance program (the first state in the country to do so) providing relief to our state’s independent contractors, sole proprietors, gig economy participants, and others who traditionally don’t have access to unemployment benefits. And finally, a report by Moody’s on the ability of states to cope with the current crisis praising Vermont, combined with more potential flexibility with federal dollars allocated to the state, gives some reason to be cautiously optimistic.
With all this good news, we must remain diligent. Economists since the start of this pandemic have argued over what the curve of the economic recovery will look like. Will it be “U” shaped, “V” shaped, more of a “Nike swoosh”, or a “W”? This relates to how we climb out of the “trough” in our economy. In a perfect situation, we could potentially have seen a “V” shaped recovery, as we practically just unplugged our economy one day, and plugging it back in might see a return to normal. However, some businesses will not fully recover and the pandemic dictates a much more phased-in approach to restarting the economy; perhaps a “Nike swoosh”?
That would be great, however, if everyone does not adhere to the guidance our Governor’s administration has provided as we reopen the economy, it is likely that we would see another increase in cases which require placing more restrictions back on the economy and rendering our economic recovery curve looking more like a “W” as we see a second trough. To achieve the best-case scenario, it is incumbent on all of us to follow the mandatory health and safety requirements for all businesses in our work lives, as well as best practices in our personal lives, so the trajectory of our economy continues to climb at a steady rate and does not take another dive.
In this week’s update;
- Governor Scott opens the spigot on the economy another quarter turn
- Federal action recapitalizes SBA programs
- Federal CARES Act funding rules ease to help Vermont budgeting
- Pandemic Unemployment Assistance program now live
- Unemployment Insurance update
- Workers’ Compensation bill creates a presumption of eligibility for COVID-19
- The Laundry List
Governor’s Addendum Further Re-opens the Economy
The Governor announced today the latest in mild and measured steps based on science and data. Vermont will see an ease of restrictions on manufacturing and construction, as well as businesses in support of construction operations.
Construction crews operating outdoors and in unoccupied structures can now be up to 2-5 people. Supporting outdoor businesses, such as garden centers, will be limited to no more than 10 people in the store at a time, including employees. Non-essential manufacturing will be able to resume, however, no more than 5-people are allowed in the facility. Finally, the Governor also announced that farmers’ markets can start May 1st with more information on restrictions coming soon.
ACCD will be issuing guidance today dealing with health and safety in the workplace which will match closely much of what we’ve seen an heard to date and may require an employee to serve as a designated health officer on-site to ensure compliance. Employers can anticipate VOSHA will have a 5-10 minute video that employers will be required to have employees watch soon. Governor Scott anticipates testing capacity and contact tracing will increase as the spigot opens more.
SBA Programs Gain More Federal Funding
On your mark, get set, apply for more SBA loans! On Tuesday, the U.S. Senate passed by unanimous consent and the House Passed on Thursday a bill providing more funding for SBA programs. While the bill was less of its own piece of legislation and more of an addendum to the CARES Act, upsetting many people, it will add $484 billion in new, desperately needed, coronavirus funding.
The package includes;
$320 to recapitalize the Paycheck Protection Program. The bill guarantees $60 billion in tranches of money to smaller banks and credit unions with $30 billion for lenders with under $10 billion in assets.
$60 billion in total for Economic Injury Disaster Loans with $50 billion to cover more loans and an additional $10 billion for the advance grants.
$25 billion to expand testing capacity with $11 million being sent to the states
$75 billion for hospitals
One major request from the Democratic Party’s side of the negotiation was additional funding for municipalities; this was not included in the bill. Additionally, many in Washington hoped to see more new programs, a repeat of economic injury payments to Americans, and major comprehensive changes to the SBA programs. Conventional wisdom is that the next round of stimulus will start in the House. Senator Sanders released a whitepaper on a proposal he is calling the Paycheck Security Act this week.
The Vermont Agency of Commerce and Community Development will hold a webinar today at 2:00 pm focusing on the work of the Employer Financial and Technical Support Team, an action team of the Economic Mitigation and Recovery Task Force. A moderated panel of business advisors will talk about the financial assistance programs available from the U.S. Small Business Administration. Find more information here.
The Paycheck Protection Program came under intense scrutiny this week with the realization that many large, publicly traded companies made use of the program meant for small businesses. The U.S. Treasury issued guidance this week putting pressure on such companies to return the funds by May 7th. As we reported last week, Vermont was able to extract just shy of 7,000 applications and over $1 billion from SBA programs. Some Vermont utilities have made use of the program, which hopefully will keep down rate impacts.
It is important to take a moment to realize how impactful all the federal relief has been on the state of Vermont. Just looking at personal income alone, the PPP program will result in potentially $750 million in payroll in the state over the next 8-weeks while almost $32.4 million a week in federal PUC benefits are flowing to Vermonters on unemployment (we still don’t know how many will receive PUC benefits under PUA yet), and a little over half of the state will receive a federal stimulus check of at least $1,200 (more for those with children) resulting in a minimum of $440 million circulating in the Vermont economy.
Federal Funding Usage in Vermont
The U.S. Treasury released guidance Wednesday night and is expected to release more today that would allow greater flexibility for states to use the first tranche of funding released under the CARES Act. Meanwhile, the state received that first tranche and will handle the money in three distinct buckets:
Up to $60 million will be available to the Governor to spend at his discretion to cover the allocations already made and future imminent allocations needed to respond to COVID-19.
Up to $150 million will be available to spend at the approval of the Joint Fiscal Committee to cover time-sensitive, critical needs.
The remaining funds, over $1.2 billion, will be subject to appropriations by the legislature.
The ability to utilize CARES Act funds would be a godsend to Vermont and many other states facing substantial revenue shortfalls. Vermont is projecting its General Fund to be down $61 million, the Education Fund down $69 million, and Transportation Fund down $42 million. Per a recent Moody’s report, Vermont is one of 12 states that could withstand the stress of the COVID-19 crisis while facing no more than a 5% general fund budget shortfall if the economy follows the assumed baseline scenario. If our fiscal committee chooses to spend all of the state’s reserves over the next 15 months, there would be a 5%, or $82 million, gap for the state to make up with cuts or increased taxes.
Pandemic Unemployment Assistance Now Live
The Department of Labor announced Wednesday night that Pandemic Unemployment Assistance (PUA) was open and available to accept unemployment claims from those not eligible for the regular Unemployment Insurance program such as self-employed, sole proprietors, independent contractors, and others. We’ve heard mixed reviews as to how it is working; have you applied? How did it go? Send us a note and let us know at [email protected].
Individuals that are eligible for PUA are also eligible for the additional $600 weekly benefit through the Federal Pandemic Unemployment Compensation Program, which provides the additional benefit through July 25, 2020. Weekly benefit amounts will be determined by 2019 earnings and this week, S. 341, which allows the disclosure of tax information to facilitate unemployment assistance benefits, passed the House and will be headed to the Governor’s desk to be signed into law. The bill will make it legal and easier for the Vermont Department of Taxes to share tax information with the Vermont Department of Labor in order to verify claims.
More information on the PUA application process and eligibility can be found at https://labor.vermont.gov/pua.
Unemployment Insurance Update
All told, $52 million is going out to Vermonters for unemployment this week alone. The Vermont Department of Labor issued 46,000 payments this week after clearing tens of thousands of issues to meet a Saturday deadline the Governor gave on Friday. On Sunday, Governor Scott and Treasurer Beth Pearce cut more than 8,000 checks for $1,200 to individuals who had issues with federal regulations that stopped them from receiving benefits. The checks were meant to be an advance of the Pandemic Unemployment Compensation benefit.
With the economy opening-up, and many employers receiving PPP loans to bring people back on the payroll, a difficult situation, long predicted, is already playing out. Individuals who are making more on unemployment due to the PUC benefit will likely be reluctant to return to their old wages. Simply put, employees need to return to work if they are offered a rehire, and not doing so would make them ineligible for benefits unless they meet the criteria for a COVID-19 related covered absence from work as laid out in Act 91.
While many can return to work, it is likely that not all the hours will be there, so partial unemployment is still a viable option and will still make employees eligible for the federal PUC benefit (the extra $600). During the state of emergency, most employers will be relieved from UI experience rating increases.
One important thing to keep in mind, and possibly have a conversation with your employees about, is that many of them might be making more than they anticipated this year with all the federal stabilization benefits. This could potentially have an impact on their tax withholding as well as healthcare, childcare, and other subsidies. LCRCC flagged potential benefits cliff issues and incorrect withholdings for numerous members of the legislature and advocates this week.
Workers’ Compensation Changes Clear Senate Committee
The Senate Committee on Economic Development finished their work on a bill that would create a rebuttable presumption that certain “frontline workers” who contract COVID-19 did so at their workplace and are eligible for workers’ compensation. Frontline workers include firefighters, law enforcement officers, first responders, childcare providers, grocery store workers, healthcare workers, and workers in long term care facilities.
Additionally, employees not fitting into these job titles that had documented occupational exposure in the course of employment to an individual with COVID-19 or performed services at a residence or facility with residents or employees who were present at the time the services were performed and either had COVID-19 at that time; or were diagnosed with COVID-19 within a reasonable period of time after the services were performed.
The committee struggled with where to draw the line and how to tailor this legislation to those who need extraordinary access to benefits because they are truly most at risk. LCRCC raised concerns about this approach and weighed with a request that workers’ compensation be the remedy of last resort as the FFCRA sick leave benefits which were established and are paid for federally would be a better remedy for individual employees, employers, and the state economy in 80% of COVID-19 cases.
The bill also codifies orders the Department of Labor (DOL) has issued in response to the COVID-19 crisis that limits the ability of insurance carriers to deny the payment of benefits and to discontinue benefits.
Essential Workers Grant Program
The Senate Committee on Appropriations is set to vote on a proposed bill today that would send a $1,000 monthly grant to employees making less than $25 an hour at essential employers who meet criteria to show that they are a greater risk of contracting COVID-19. This program is intended to remedy the issue created by the Pandemic Unemployment Compensation program which adds an additional $600 on top of the state’s unemployment benefit resulting in many employees making less by staying at their job than if they left.
The program would include a two-part test: quantifying an essential employer and then establishing an eligible employee. Healthcare organizations, nursing homes, and home health service providers would have their benefits administered through the Agency of Human Services. Other employers will be contacted by a payment processing service that the state partners with and the employer would be responsible for identifying the employees, providing hours, and sharing taxable income information. Employees will need to work more than 108 hours a month for a full grant payment; employees under this threshold will receive a partial grant payment. This benefit would not go to anyone working remotely or working in state government, which has already received a pay increase via collective bargaining.
It is estimated that the program would cover 33,000 essential employees and cost the state about $110 million over the three months it exists and the intention is that the cost will be paid for by the money allocated to the state by the federal government under the CARES Act. The proposal is similar to one that LCRCC advocated for in the next round of federal stimulus and the state program would subside if such a program was created.
The Laundry List
Vermont’s response to the U.S. Census is lagging and could have very real implications for the amount of federal funding our state receives! Please, take a moment to respond to the Census this weekend!
The Department of Emergency Management has compiled a list of businesses where face masks can be purchased by the general public. Businesses offering masks for sale can be added to this list by contacting Vermont Emergency Management at [email protected].
Forbearance and other financial relief are now available to more Vermonters struggling to pay their student loans. A multi-state initiative to secure student loan relief options for thousands of Vermonters with privately held student loans. The relief, confirmed with several of the most significant national private student loan servicers, will expand on the protections already provided by VSAC and provided to federal student loan borrowers under the CARES Act.
VTDigger launched a searchable database of COVID-19 Related FAQs this week.
The Department of Taxes is providing temporary relief to Vermont businesses who owe Meals and Rooms Tax or Sales and Use Tax. Businesses that are unable to meet the April 25th filing deadline will not be charged any penalty or interest for late payment. It is important to note this is not an abatement of the tax, but instead a waiving of any interest or penalty for late payments.
ACCD wants to hear from all Vermont businesses impacted by the response to the COVID-19 virus. Please share these impacts via the ACCD Business Impact Form, which will help them assess the full impact as we work toward solutions.
The Department of Financial Regulation has developed a guidance overview of whether business insurance will cover loss of income and other issues caused by COVID-19. The NAIC has also posted an Insurance Brief (COVID-19 and Insurance) that provides a good overview of how different types of policies respond to losses related to COVID-19, including Travel, Health, Life, Annuities, Business Interruption, Workers’ Compensation, and other insurance. Contact your insurance agent or insurance carrier to verify the coverage on your policy.
Keep up to date with the Lake Champlain Chamber’s COVID-19 Business Resource Guide.
Concerned or need to learn more about anything in this newsletter? Email our team at [email protected].
We look forward to working with you this session.
The Lake Champlain Regional Chamber of Commerce Advocacy Team