Updates
January 5, 2018

Vermont Legislative Update 1-5-18

An analysis from DRM's Government & Public Affairs Team

Vermont Legislative Update Quick Links

Merger Forgotten:  Work Accelerates

Bill Would Provide Flexibility For Three Acre Storm Water Rule

Senate Judiciary Committee Mulls Action On Arbitration Clauses

Federal Health Care Laws Create Uncertainty in Vermont

Federal Tax Reform Law to Reduce Provider Reimbursement

Appropriations Committees Review Small Budget Adjustment Act

Merger Forgotten:  Work Accelerates

The merger between the Department of Labor and the Agency of Commerce and Community Development as proposed by the Scott Administration is off the table, but work that was spawned by consideration of the idea has gathered momentum.

In a series of hearings this week before the Senate Economic Development, Housing and General Affairs Committee, a succession of witnesses that included Commerce Secretary Michael Schirling, Labor Secretary Lindsay Kurrle, Workforce Development Board Chair Frank Cioffi and Ellen Kahler of the Vermont Sustainable Jobs Fund described a collaborative process set in motion during the last session that has led to “unprecedented cooperation” among agencies and programs with a stake in matching workers to jobs.

“The perfect storm has come together that has convinced people to tackle this in a new and exciting way,” Kahler said. “The level, frequency and intensity of conversations around this is unprecedented. There is a new energy.”

In an indication of how far the work has come, Deputy Secretary of Commerce Ted Brady, who was under the gun most of last year over the merger proposal, was the last and most concise witness on the topic, which new Committee Chair Sen. Michael Sirotkin, D-Chittenden, later called “uplifting.”

The energy comes from a process laid out in Act 135 and led by Cioffi, Kurrle and a subcommittee of the state Workforce Investment Board. The study group will report its initial findings on Jan. 15 and make a series of short-term recommendations. It is also asking for an another year to fully understand which programs are funded from which sources and how they can be reconfigured.

Brady noted that the current system of workforce development was built to address concerns over chronic unemployment. The problem today, he said, is finding qualified workers for available jobs.

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Bill Would Provide Flexibility For Three Acre Storm Water Rule

The Agency of Natural Resources has asked the House Natural Resources, Fish and Wildlife Committee to endorse changes to a 2015 storm water management law that would provide more flexibility to owners of impervious surfaces totaling three acres or more. Environmental groups are opposed.

The water quality law required ANR to issue a “general permit” for unregulated areas with pavement and rooftops totalling three acres or more by Jan. 1 of this year. Effected landowners in the Lake Champlain basin would have to install storm water management systems by Oct. 1, 2023 or pay an impact fee of up to $50,000 per acre. Landowners in other watersheds would have until 2028.

ANR was in the process of promulgating the rule and held a series of meetings with “stakeholders” this summer, but then paused to ask for changes to the law.

ANR Secretary Julie Moore says the changes proposed by the Agency would allow it to target high priority pollutants and cost-effective mitigation strategies first. The proposed bill would add the Lake Memphremagog watershed to the earlier deadline, but allow owners to comply, in part, by managing storm water off-site or paying impact fees. The bill would also delay the deadline for the Connecticut River watershed until after the U.S. Environmental Protection Agency issues a Total Maximum Daily Load requirement for Long Island Sound.

Environmental groups say making changes now as the program is beginning to be implemented shows a lack of commitment to the goals of the program and sets a bad precedent.

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Senate Judiciary Committee Mulls Action On Arbitration Clauses

On Thursday, the Senate Judiciary Committee dove deeply into the issue of arbitration clauses that are commonly used in consumer contracts while reviewing S.105, a bill introduced by Sen. Chris Pearson, P/D-Burlington. The bill would prohibit forced arbitration in consumer disputes by labeling many common arbitration clauses as an “unfair and deceptive practice” prohibited by state law.

Prof. Myriam Gilles, Cardozo School of Law, gave in-depth and well-received testimony in support of the bill, stating that “forced arbitration clauses were foreclosing millions of citizens from vindicating their rights.” Gilles acknowledged that the Federal Arbitration Act, which allows for arbitration clauses to be enforced as written, would prompt an almost certain federal pre-emption challenge as soon as the first case is brought under the legislation if passed.

Regardless of this pre-emption threat, Attorney General T.J. Donovan told the committee that he supports the bill, characterizing arbitration clauses as tools used to “stack the deck against consumers” and that Vermonters should fully understand contracts that they are entering into and be allowed to say no to arbitration clauses.

Scott Klein, general counsel for the Department of Financial Regulation, seemed to rebut the fear of  harm caused by arbitration clause use in Vermont business sectors under his purview by telling the committee that there has been “no groundswell of consumer complaints over unfair practices.” Without any evidence of a problem, Klein told the committee that DFR prefers to take a cautious view of the proposal and would like to determine how Vermont businesses would be affected by the prohibition.

Despite Klein’s testimony, the committee was receptive to the proposal, to the extent that Committee Chair Sen. Dick Sears, D-Bennington, said that he would like to take additional testimony but “didn’t know where any opponents would be.” Enthusiasm for the proposal may not translate to action however, as committee members said they need to determine if they want to spend time on an issue that faces an immediate federal pre-emption challenge.

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Federal Health Care Laws Create Uncertainty in Vermont

The House and Senate Health Care Committees heard from Joint Fiscal Office Analyst Nolan Langweil and Legislative Counsel Jennifer Carbee Thursday on potential impacts to the state budget due to federal health care changes. The presentation can be found here. Langweil characterized these issues as “fluid” with significant risk to the state. These changes include:

  • The Children’s Health Insurance Program: Federal funding for CHIP expired on Sept. 30 and Congress has yet to reauthorize it. The estimated General Fund shortfall is $1.9 million in fiscal year 2018 and $21.6 million in fiscal year 2019. Both the U.S. House and Senate have proposals to reauthorize CHIP. Despite bipartisan support, this issue has become entangled with other issues in Congress.
  • Cost Sharing Reductions: The Trump Administration announced in October that it would discontinue cost-sharing reduction payments to health insurance companies. CSR payments are subsidies paid by the federal government under the Affordable Care Act to health insurers on behalf of individuals who purchase qualified health plans through Vermont Health Connect. Although the Trump Administration has said that it will no longer reimburse health insurers for providing CSRs, insurers are still required to provide payments to eligible enrollees under federal law. Vermont and several other states filed suit against the federal government to require CSR payments to continue. Their request for a preliminary injunction was denied, but the case is still pending.
  • Individual Insurance Mandate: The recently passed federal tax reform bill eliminates the Affordable Care Act’s mandate that individuals obtain insurance or pay a penalty. At this time there is no fiscal impact to the state budget; however, this repeal will adversely affect health insurance markets.

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Federal Tax Reform Law to Reduce Provider Reimbursement

The recently passed federal tax reform bill is estimated to add $1.5 trillion to the federal deficit, triggering automatic cuts to Medicare payments to providers and many other programs according to Joint Fiscal Office Analyst Nolan Langweil. Langweil said Vermont has one of the highest rates of Medicare beneficiaries as a percent of its total population. Reductions in Medicare payments to providers in Vermont would impose additional pressures on those providers’ budgets and could reduce access to care. Entitlement programs such as Medicaid and Social Security are exempt from sequestration.

Other areas of concern in the federal tax law include:

  • Federal grant funding for the Federally Qualified Health Centers expired on Sept. 30 and has not yet been reauthorized. FQHCs in Vermont face a loss of $14 million in federal funding, undermining the state’s efforts to increase access to affordable health care, especially primary care.
  • Home health agencies face a $1.3 million reduction in payments in 2018 and potential further cuts in 2019. The Medicare Access and CHIP Reauthorization Act of 2015 extended a rural add-on for home health agencies through 2017. These payments were designed to help agencies whose staff experience greater travel times but serve fewer patients because they are located in rural areas.

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Appropriations Committees Review Small Budget Adjustment Act

Department of Finance and Management Commissioner Adam Greshin visited both the House and Senate Appropriation Committees this week to review the administration’s proposed Budget Adjustment Act for this year. Greshin characterized the adjustment as modest, involving only $6.19 million of last year’s $5.7 billion budget.

The proposed Budget Adjustment Act would apply savings from lower than estimated use of Homeowners, Renters, and Current Use Rebates combined with debt service savings due to a delay in debt issuance to retire current program and department deficits. Greshin said the administration didn’t think it was wise to use the money for new programs or new appropriations. Areas receiving additional funding would include:

  • $300,000 to the Agency of Education to contract with the University of Vermont to perform an education weighting study that was legislated last session, but was not performed because Secretary Holcombe stated that the agency did not have adequate resources to conduct the mandate;
  • $3.18 million reserved to pay Vermont Life debt unless the governor chooses to use the funds for “other Vermont marketing efforts;”
  • $810,000 to the Emergency Relief and Assistance Fund for continued expected Irene claims; and
  • $410,000 to the Tobacco Trust Fund (which has FY19 obligations but zero balance).

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