Vermont Legislative Update Quick Links
Childcare bill becoming a heavy lift
The House Committee on Human Services is working through H.171, a bill that would create a comprehensive child care system governed and subsidized by the state. The system would take several years to establish. The work began in earnest last year.
There are two critical studies in the bill. The first is the creation of an Early Care and Education Systems and Administration Advisory Committee which would ultimately advise relevant state agencies regarding the delivery of appropriate services. This 20-member committee would include representatives of three business-related representatives: the Vermont Business Roundtable, the National Federation of Independent Businesses, and Vermont Businesses for Social Responsibility.
An Early Childhood Financing Study calls for the State Treasurer, Auditor, Joint Fiscal Office, Commissioner of Finance, and the Commissioner of Taxes to deliver a comprehensive report determining a reliable funding source to pay for the program.
The House Ways and Means Committee took up this portion of the bill this week and heard from the Auditor, who said he wasn’t an appropriate person to participate. The Treasurer agreed to participate but couldn’t lead the effort. Joint Fiscal Office said it would provide a critique but would not make decisions or recommendations, and the Commissioner of Finance agreed to participate. The committee discussed the scope of work for the study and expressed concerns about the group’s ability to complete its charge in the given timeframe.
There is a March 19 deadline to move the bill to the Senate, and the legislature is on break next week. Clearly, there is a lot to do in the next two weeks.
Limited reopening guidance for the hospitality sector
Representatives from the Vermont Lodging Association, the Association of Wedding Professionals and events businesses met with the House Tourism Caucus last week. They expressed their frustration with the lack of reopening guidance from the Governor’s office. Without this information, the hard-hit hospitality sector will lose its spring and summer business. They need to know by March 1 so they can begin scheduling events. The group has repeatedly told the legislature and governor’s office that they need lead time to schedule, prepare and hire staff. In the meantime, their clients are canceling plans and going to other states.
Legislators were very receptive and agreed to send a letter of support to the Governor. Hours later, the Secretary of the Agency of Commerce and Community Development sent a memo to hospitality companies stating that businesses can book summer events with a limited capacity of 75 people indoors and 100 people outdoors. While not a help for larger events, it is a start. Secretary Kurrle said the new rules could change if there is a spike in cases or if unforeseen problems arise with vaccinations.
In the meantime, Congress is finalizing its next and likely last relief bill that includes money the state can use for additional business grants, which continue to be desperately needed. Since last March, many hospitality businesses have been shut down, and their previous grants only helped to pay fixed costs through September. Businesses have struggled with mounting debt and cancelled reservations. COVID has impacted the mental and physical health of more people than those who contracted the virus.
COVID Relief Bill on the move
In an unusual move, the House passed an expedited budget, aka CRF bill, aka COVID relief budget, aka pre-budget bill. For simplicity’s sake, we will call it H.315, and highlights are here.
As its many names imply, the bill has drawn confusion in the legislature. It has been under consideration in multiple committees in the House and Senate, while only the House Appropriations Committee had possession of the bill. This is a unique and somewhat disorderly process, but COVID has created a unique and disorderly year. H.315 appropriates $48.9 million in one-time general funds and $13 million in Coronavirus Relief Funds, and reallocates $17.2 million in earlier CRF money.
Ten million dollars is provided in economic recovery grants for businesses that didn’t qualify for state or federal pandemic aid among the earlier allocations. This line-item is being met with skepticism in the Senate, so work remains to ensure that these businesses receive the lifeline they need to survive the economic shutdown.
The next round of federal aid should arrive in Vermont in the next few weeks. The American Rescue Plan Act of 2021 is expected to deliver about $1 billion to Vermont and will be one more hurdle for the legislature that is still hoping to adjourn in May. Never has the state been challenged with spending so much money in so little time, all of it via Zoom. The post-COVID research on how the influx of spending affected the state will take years to compile.
Welch tells Vermont lawmakers to get ready for more relief
Congressman Peter Welch addressed members of the Vermont House and Senate appropriations and revenue committees on Thursday to convey details of the new federal COVID relief bill. The U.S. House is expected to vote on the $1.9 trillion package on Friday. Welch said uses of the funds will be much more flexible than the CARES Act, although spending must still be tied to COVID. It will not require a date certain by which funds have to be spent–a big difference from prior COVID funding.
Many economists have said that when it comes to recovery spending it is best to err on the side of more, and the bill is intended to put states on the road to economic self-recovery once the country reaches herd immunity and states are ready to open up again.
Vermont is expected to receive $960 million in state and local aid. Provisions in the bill include:
- Small business relief, summary here
- Individual checks of $1,400 for income-qualified individuals
- Extended federal unemployment benefits
- Funding for vaccines and contact tracing
- Money for reopening schools
- Rental assistance
Sen. Randy Brock, R-Franklin, who has long been a champion of broadband expansion, asked Welch if the new bill will allow for a more long-term spending approach that could foster financing options for building out broadband throughout the state. Brock expressed frustration that lawmakers were being given significant funds but their hands were tied by restrictions when they try to make meaningful long-term investments. Welch acknowledged the challenge but said the bill is COVID-focused. The Congressman said there would likely be an infrastructure bill coming that will contain funding for broadband buildout.
Vermont Supreme Court defines “reasonable regulation” of firearms
The Vermont Supreme Court recently upheld the constitutionality of the state’s ban on large capacity magazines, defined as ten rounds of ammunition for long guns and fifteen rounds for hand guns as part of Act 94 of 2018. That law also required background checks for private sales of firearms to close the so-called “gun show loophole.”
The Court found that the magazine ban does not violate Article 16 of the Vermont Constitution, which provides that “the people have a right to bear arms for the defence of themselves and the State.” According to the Court’s decision in Vermont v. Misch, “…the proper standard for Article 16 challenges is a reasonable-regulation test.… [W]e will uphold a statute implicating the right to bear arms provided it is a reasonable exercise of the State’s power to protect the public safety and welfare.”
This is the first time the court has defined the scope of the right to bear arms under Article 16 and set forth the standard to determine whether a law infringes on that right. Legislative counsel walked through the court’s decision with the House Judiciary Committee and its potential precedence for gun legislation.
Legislative counsel further told committee members that the decision is more deferential to state legislatures than the standards federal courts have used in analyzing Second Amendment challenges.
Broadband bill approved by committee
The House Committee on Energy and Technology voted unanimously this week to pass an accelerated community broadband deployment bill. The bill establishes the Vermont Community Broadband Authority to facilitate the formation and expansion of Communication Union Districts throughout the state, appropriates one-time money towards various broadband connectivity programs, and transfers state-owned fiber assets to the CUDs.
A key section of the bill involving lending from the Vermont Economic Development Authority was removed. As written, State Treasurer Beth Pearce and VEDA had trouble supporting the bill’s proposed program increase from $10.8 million to $36 million. VEDA is the lender under the current program, but the organization itself does not take deposits. Before moving forward, VEDA’s own primary lender, a private financial institution, requires further negotiations regarding ownership of the moral bonding and loan loss authority under those provisions.
Committee Chair Tim Briglin, D-Thetford Center, stressed that approval of the bill without language expanding the size and scope of the existing program is temporary. After the town meeting break the committee plans to take further testimony from VEDA and the Treasurer and may offer an amendment to restore increases to the broadband program.
The bill also establishes the VCBA’s board of directors, authorizing two public persons selected by the Vermont Communications Union District Association and one person appointed by the Governor. An eligible public member may not have a financial interest in, or be an employee or governing board member of, an Internet service provider or CUD to serve on the board.
Ways and Means takes another swing at cloud tax
The House Ways and Means Committee this week took up H.261, an act to eliminate the sales and use tax exemption for prewritten computer software accessed remotely, the so-called “cloud tax.” The committee has wrestled with the issue for years, and this week’s discussion highlighted the difficulty of defining the term “prewritten.”
“Vendor-hosted prewritten computer software” means prewritten computer software that is accessed through the Internet or a vendor-hosted server regardless of whether the access is permanent or temporary, and regardless of whether any downloading occurs.
A common example is Quickbooks: The bookkeeping software purchased at a store or downloaded from the Internet onto a computer is now a taxable transaction, but a modern version of Quickbooks hosted by the vendor online and accessed remotely–where there is no download–is exempt from sales tax.
Tax Commissioner Craig Bolio told the committee that the governor does not support repeal of the exemption, citing the difficulty in distinguishing prewritten from custom software. “When does software become custom enough that it would maintain the exemption?” asked Bolio. Abby Shepard from Legislative Counsel responded that custom software is designed and developed by the author to the custom specs of a specific purchaser.
The committee also discussed a way of defining certain custom software as a manufacturer’s exemption and an exemption for business-to-business transactions.
Graham Campbell from the Joint Fiscal Office estimated that removal of the exemption would bring in revenues of $9 million in FY 2022, up from a previous estimate of $5 million in 2019, highlighting the fast growth of software as a service.
Senate committee considers ambitious weatherization bill
The Senate Committee on Natural Resources and Energy released a draft weatherization bill on Thursday, while noting that modifications and additions are needed before it’s finalized. Committee Chair Chris Bray, D-Addison, said he is committed to the bill making the cross-over deadline, so committee members will continue to work on the draft over the Town Meeting break.
As currently drafted, the Vermonters’ Enhanced Energy Savings Act would set a goal of weatherizing 120,000 homes within ten years, establish a thermal energy efficiency charge, and create the Enhanced Energy Savings Study Committee to study the creation of a complete system of delivery for services to reduce the cost of heating homes and businesses while also reducing their greenhouse gas emissions.
The study committee would also be charged with examining how to develop and sustain a skilled and well-paid workforce sufficient to meet the State’s building efficiency and weatherization goals.
Various players in the state workforce development field testified before the committee that substantial effort must be made in recruiting and training in order to meet the upcoming need. Sarah Buxton, State Director of Workforce Development for the Department of Labor, said that career pathway development is key to recruiting and retaining the workforce in the weatherization sector. Buxton also suggested adding apprenticeships and stackable certifications.
Omnibus economic development bill
The House Committee on Commerce and Economic Development took up an omnibus economic development bill that contains language from numerous other standalone bills on Thursday. The committee reviewed several key provisions including: creation of the Better Places Program, expansion of Downtown Village Tax Credits, creation of project-based tax increment financing districts – aka “mini-TIFs,” and changes to the Relocated Worker Program.
The Agency of Commerce and Community Development also pitched the creation of a Tourism Marketing and Promotion Fund. With the smallest tourism budget in New England, an increased investment will allow the Department of Tourism and Marketing to promote Vermont as a global tourism destination. The source of funds would come from a portion of any excess revenue between forecasted and actual rooms and meals tax receipts, and would be in addition to normal annual appropriations. If receipts failed to meet the forecast in any year, there would be no extra appropriation.
ACCD also proposed an International Business Attraction and Investment Program. The bill would appropriate $300 thousand for an office in Montreal. The agency reported that small and mid-sized businesses in Quebec have a natural inclination to explore Vermont as the site for expansion in the U.S. market. Increased investments in recruiting international businesses can lead to better wages, more attractive job opportunities, and broaden Vermont’s tax base.
The tourism department would also like to expand and continue the Buy Local Stimulus Program, a consumer purchase incentive program from 2020. The 2021 program would include restaurants, retail stores, entertainment businesses and attractions.
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