Vermont Legislative Update 02-05-2021
An analysis from DRM's Government & Public Affairs Team
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Project based TIFs would expand rural redevelopment
The Senate Committee on Economic Development, Housing and General Affairs is considering S.33, a bill that would allow more towns to apply for project-based tax increment financing. TIFs allow municipal governments to fund new private infrastructure projects through the anticipated tax revenue that results from the new projects.
S.33 would create a pilot program limited to six projects with a $1.5 million cap per application. This bill was considered last year with a higher limit but was lowered to get the support of the Senate Finance Committee chair. Witnesses testified this week in favor of increasing the cap to at least $4 million.
Legislators continue to grapple with the so-called “but for” qualifier – the requirement that the town demonstrate that the private investment would not have occurred “but for” the TIF financing. The legislature’s economist Tom Kavet and Auditor of Accounts Doug Hoffer expressed skepticism about the program, arguing that all redevelopment would have happened anyway. A fiscal analyst from the Joint Fiscal Office said that there is no way to make that determination.
The committee heard from the planning commissioner for the Town of Westford who said the TIF program could help finance a much-needed wastewater upgrade. Brian Carpenter, a Middlebury selectboard member, shared a redevelopment plan for the town center that would provide parking, housing, office space and a reconfigured traffic pattern. Carpenter said S.33 could help finance the redevelopment plan.
The committee will take more testimony, and the bill is expected to move to the Senate Finance Committee.
House considers COVID-relief grants for business outliers
While the federal and state governments have provided substantial support for many businesses that have suffered financial losses due to the pandemic, some businesses have received no assistance due to eligibility requirements. These outliers include new and very small businesses, as well as some that chose an unfortunate time for expansion. The Agency of Commerce and Community Development has asked the legislature for $10 million to provide a lifeline for these businesses.
Under the proposal, businesses would be required to show that they were ineligible for PPP and EIDL grants and loans, that they did not receive state grants, and that they filed 2020 income taxes.
The House Committee on Commerce and Economic Development is currently considering this proposal as ACCD continues to gather information from individual businesses. Their stories provide reminders of the many challenges that businesses continue to face. There is no doubt that more financial aid is needed for many Vermont businesses if they are going to survive the pandemic.
Senate panel monitoring state data breach
The Senate Committee on Economic Development, Housing and General Affairs is closely monitoring a recent breach of data by the Vermont Department of Labor. As many as 44,800 1099G tax forms sent to Vermonters last week included the wrong person’s private information, including names, addresses and Social Security numbers.
In response, Governor Scott appointed a task force led by Deputy Chief of Staff Brittney Wilson, to work with Labor Commissioner Mike Harrington to address the issue. Wilson reported to the committee on Friday that they have identified the error, where it happened and how it occurred, but are “not going to give the specifics of that because (we) don’t want to start casting blame or get into the nitty gritty of how the data was jumbled.” She said steps have already been taken to improve quality control, including electronic verifications done by the Agency of Digital Services and the Tax Department and electronic and physical verification by Department of Labor staff of the data and the lists used to create the 1099G forms.
The labor department will mail out postage-paid, pre-addressed envelopes so that 1099Gs with the wrong information can be returned. The state is also procuring a firm to provide complete identity theft protection for those affected. The administration is estimating that the cost of the data breach remediation could be as much as $7 million but is examining what costs the state’s insurance policy will cover.
The governor also asked Vermont Auditor Doug Hoffer to investigate what went wrong. Hoffer told the committee on Friday that he is likely contracting with an outside firm that the state already works with to perform the review.
Unemployment Insurance Trust Fund report shows future rate hike
The Senate Economic Development Committee reviewed this week the Vermont Department of Labor’s recently released Unemployment Insurance Trust Fund Report. If there is no change to how the tax rate is determined, the historic payout of the trust fund this year and resulting 50 percent fund reduction will triple the tax rate for most employers by increasing the tax rate schedule from schedule 1 to schedule 5.
In order to prevent a rate hike during the pandemic, Governor Scott is proposing a one-year freeze on the rate schedule and base wage. If the proposal is enacted, the state would collect $110 million from employees, as opposed to $146 million under the current statutory framework. The administration argues that it would help the state’s economy if the $36 million foregone fund revenue remains in employers’ hands to enable them to bring employees back to work.
The committee will continue to take testimony on the issue, but Chair Mike Sirotkin, D-Chittenden, indicated that he would like relief not only for employers, but employees as well.
Senate panel grapples with major changes to school tuition policies
The Senate Education Committee heard from constitutional law scholar Peter Teachout this week that the longstanding practice of denying tuition to private religious schools may no longer stand.
Teachout testified that several recent state and federal rulings and an emergency injunction issued on January 22nd require that the state revisit policies regarding tuition to religious and other independent schools. He recommended that districts take immediate action to bring tuition reimbursement policies into compliance with the U.S. Supreme Court case of Espinoza v. Montana Department of Revenue, without violating the Compelled Support clause in the Vermont Constitution. Districts should announce that they will reimburse tuition upon receipt of a certification from the receiving school that the tuition will not “be used to support religious instruction, worship, other religious activity, or the propagation of religious views.”
The recent rulings suggest that requests for tuition reimbursement from all participating independent schools without regard to religious affiliation or status are valid as long as they can complete the certification. Teachout also said that the state’s dual enrollment program should not be withheld from students attending religious schools, as has been Vermont’s longstanding practice.
Committee members will consider whether to take legislative action or direct the Agency of Education to require districts to act. Legislators noted that there will surely be more court cases challenging any stopgap measures, and legislative counsel agreed.
Building energy labeling the focus of weatherization in senate committee
In testimony to the Senate Committee on Natural Resources committee, Richard Faesy, Principal, Energy Futures Group, Inc. presented an overview of Act 62, which established working groups to make weatherization recommendations to the legislature. The Residential Building Energy Labelling Working Group sought to create an easy to understand way to convey the entire energy picture of a home, and recommended the use of the Vermont Home Energy Profile label for efficiency rating.
Faesy argued that energy labeling transparency benefits both the buyer and seller of a home, and that the real estate market values premium energy performance. Under the working group’s recommendation, energy rating information would be consolidated in the HELIX platform, a third-party database that automatically populates home efficiency information into MLS listings. Faesy said the intention of the label is to incentivize investments in energy efficiency, and doesn't believe that a poor rating would necessarily kill a real estate transaction.
Not everyone who served on the working group agrees. Peter Tucker, Director of Advocacy and Public Affairs, Vermont Association of Realtors, acknowledged the recommendations put forth by the group as a whole, but criticized HELIX’s automated model that uses assumptions to estimate energy ratings. “A poor rating will stigmatize a property and crush its value,” said Tucker. Sen. Chris Bray, D-Addison, questioned whether a bad rating would actually affect the sale price of a home. Tucker replied that last minute investments in a home rarely affect the sale price.
In his budget address, Governor Phil Scott outlined $25 million in one-time weatherization spending: $20 million to accelerate weatherization in low and moderate-income homes, and $5 million for the State Energy Management Program to help municipalities make efficiency upgrades.
House committee wrestles with broadband expansion coordination
As the state grapples with expanding broadband fiber to underserved and unserved areas of Vermont, the House Committee on Energy and Technology continues to hear testimony from existing private service providers and from newly established Communication Union Districts. The legislature authorized the creation of CUDs to help make high-speed broadband available in areas of the state that may not be financially viable for local for-profit service providers, the so-called “last mile” of customers.
Most of Vermont’s smaller telecommunications providers rely on a Broadband Expansion Loan Program through the Vermont Economic Development Authority. Loans of up to $4 million may be made and can cover up to 90 percent of project costs. A bill before the committee incentivizes cooperation between CUDs and existing providers by making the VEDA loan program only available to CUDs. If an existing provider needs access to VEDA capital, it must partner with a CUD.
F.X. Flinn, chair of the Vermont Communications Union Districts Association and ECFiber, testified about the problem facing CUDs: in order to borrow the millions of dollars necessary to complete projects, CUDs must first raise investment capital to show that they are viable. Bond markets often want to see two to three years of financial performance before loaning funds. Flinn said ECFiber struggled to raise $6-8 million in investments before it could get to the bond market. Access to the VEDA program will be necessary for many of the CUDs.
Addressing concerns from incumbent service providers, Rep. Heidi Scheuermann, R-Stowe, confronted a sense of dismissal of the concerns of existing companies. Scheuermann asked, “How can I assure these folks that a CUD isn't going to come in and compete with them using public dollars that they’re not able to get?” Scheuermann also took issue with any requirement that private businesses must disclose confidential financial information when partnering with a CUD.
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