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Business
Short-term Rental Registry – The Senate Committee on Economic Development, Housing and General Affairs took testimony on S.210, a Rental Registry bill intended to replace last year’s S.79 which was vetoed by the Governor. This bill includes provisions for a Short-Term Rental (STR) Registry. In deference to the Governor’s concerns that a registry would burden “mom and pop” rentals, S.210 includes an exemption for seasonal camps and for owners operating no more than three units in or on the owner’s primary residence. The administration has asked the committee to consider exempting units that are rented for fewer than 120 days.
The committee heard testimony about concerns that the rise in STR business has exacerbated Vermont’s housing shortage. The committee will continue to work on this bill in the coming weeks.
Unemployment Insurance Task Force – The House Committee on Commerce and Economic Development reviewed the recent Unemployment Insurance Task Force Report. The overarching message of the report was that there are several ways to improve UI, but nothing substantial can be done until the IT mainframe is updated – a task that is quite daunting and an issue that the Commissioner of Labor repeatedly testified on last session. The IT mainframe is extremely fragile, and without funding for a complete overhaul, any adjustments to wage base, tax structure, or tax schedule could negatively impact the current benefactors of UI. Rep. Emilie Kornheiser, D – Windham, reviewed two actionable tasks that the legislature could address:
- Currently, non-profits are exempt from mandated participation in the UI system. The task force recommends a review of removing that exemption.
- They also recommend allowing the commissioner to waive penalty weeks and review what is considered fraud.
Legislative counsel also testified on the health of the UI trust fund, which took a big hit during COVID-19 but remains solvent and relatively healthy.
Report on UI Fraud – Ian Gunn, a senior consultant at Resultant, testified to the House Commerce Committee on unemployment insurance fraud and overpayment. While the state’s ability to respond to fraud and overpayment issues is hampered by the outdated IT mainframe, Vermont is currently experiencing a historically low improper payment rate. Gunn’s presentation called for an improved user experience, a more public understanding of fraudulent actions and consequences, and an overall improvement of unemployment insurance security.
Potential Cannabis Revenue – Brynn Hare Executive Director of the Cannabis Control Board reviewed the Cannabis Control Board Report with the Senate Finance Committee, including suggested fees and potential revenue. All numbers are estimates and depend on participation and fee structure decisions. There is concern that high fees will limit the participation of smaller businesses and that people could choose to operate in the illicit market if the fee structure is prohibitive.
Graham Campbell, Senior Fiscal Analyst, Joint Fiscal Office cautioned the committee that there are many demands for this anticipated revenue and other states have found that the proceeds have not been able to stand up major programs. He provided the committee with a detailed report: Cannabis Taxes and Fees: Estimates and Considerations
Economic Recovery Bridge Grants – House and Senate committees received updates from Economic Development Commissioner Joan Goldstein regarding last year’s Bridge Grant Program. The hospitality sector joined others last year in testifying that the proposed formula for determining economic need for the grants would not work. Their warnings were confirmed in last week’s update. Only about $3 million was able to be expended, leaving $26.5 million yet to be distributed. Testimony was taken on a recommended adjustment to this formula so businesses, still desperate for support, could receive recovery grants.
While legislative committee members understand the need to tweak the formula, the Department advocated to move these funds to its relatively new Capital Investment Grant program because the Bridge Grants are undersubscribed while the Capital Investment Grants are oversubscribed. This is only because the Bridge Grant formula is faulty. Hundreds of struggling businesses are depending on the legislature to support them by adjusting the formula and standing by last year’s commitment to helping them through this difficult time.
Retail Theft Bill – A bill meant to deter retail theft, S.180, was considered by the Senate Committee on Judiciary. Small business owners from Burlington shared stories of the brazen increase in shoplifting that is affecting downtown. Erin Sigrist, President of the Vermont Retail & Grocers Association, stated that increased fines do not deter crime; getting caught is the only thing that is effective. The two main drivers of this problem are organized retail crime and theft to feed an addiction.
More than 90 percent of retailers have experienced theft and property damage. The felony threshold is $900 per occurrence. Shoplifters steal from multiple stores so are able to stay below that limit. Marc Sherman, Co-owner of Outdoor Gear Exchange, said retail theft cost the store $200 thousand in 2021, up from $100 thousand in 2020. In the last six months thieves have become more violent when confronted and employees have been assaulted. Staff are afraid of retribution outside of work.
The Executive Director of the Burlington Business Association said she has had more than ten meetings with the Chittenden States Attorney’s Office but has not made any progress.
The committee will continue work on this bill.
Employee Misclassification – The Senate Committee on Economic Development, Housing and General Affairs reviewed an Employee Misclassification Report with Chris Curtis Chief of the Public Protections Division in the Attorney General’s Office and Chair of the Employee Misclassification Task Force. Sen. Michael Sirotkin, D – Chittenden, explained that many years ago concern was raised that employers were intentionally misclassifying employees to avoid taxes and contributions, potentially depriving workers of coverage. Changes were made so that the Department of Labor would coordinate with the AG’s office to provide joint enforcement.
Mr. Curtis reported that there are five cases of potential misclassification currently under investigation. Labor advocates asked for changes to the process but were unable to provide data that demonstrated need. Mr. Curtis stated there was no evidence that changes would help. The Attorney General’s Office estimates that between 10 and 14 percent of employees might be misclassified. Sen. Sirotkin posited that the number was closer to 20 percent and said that the cost was falling on those businesses doing the right thing. Assistant Attorney General Curtis restated that 10-14 percent was the estimate that was reported by the Vermont Department of Labor and that this figure is reflected in national reports. The committee will continue to work on the issue and gather relevant information.
Energy
A new performance standard for heating fuels – Vermont’s Climate Action Plan includes dozens of recommendations for legislative actions towards reducing greenhouse gas emissions and moving the state towards its climate requirements. A Clean Heat Standard would target emissions from the thermal sector which is responsible for 34 percent of the state’s greenhouse gas emissions. The new performance standard would be imposed on heating fuel suppliers and is meant to support and incentivize cleaner options for heating homes and businesses such as advanced wood heat, biofuels, and weatherization. The bill is likely to start in the House Energy and Technology Committee, and will direct the Public Utility Commission to come up with the program design.
Investments in electric sector and the grid proposed – The House Energy and Technology Committee heard testimony from electric utilities and VELCO, the state’s transmission utility, concerning projects to help the state’s transition to beneficial electrification and strengthening the transmission grid using federal dollars. Witnesses presented a memo outlining key funding needs totalling $2.2 billion. Utilities estimated it will cost $676 million to upgrade homes from 100-amp to 200-amp service to enable beneficial electrification such as Level 2 EV chargers. Ten million dollars would help accelerate the deployment of long-duration energy storage in key areas of the state. Cleaning up emerald ash borer damage and susceptible trees along rights of way could cost $178 million but will head off much more expensive damage in the future, according to a Green Mountain Power representative.
VELCO outlined key substation upgrades and transmission capacity building projects in distribution-constrained areas, especially in the northern part of the state. VELCO estimates $668 million in need but said they were hopeful that the US Department of Energy will fund some of these priority projects. The committee will continue deliberation and asked the stakeholders for help with further prioritization of these large but important requests.
General Government
State of the Economy – The Emergency Board (E-Board) met this past week to receive the consensus revenue forecast and review economic and revenue projections for this and two coming fiscal years. The main takeaway from the legislature’s and governor’s economists was that COVID-19 and the various public health measures and fiscal and monetary policies accompanying it continue to be the main drivers behind economic developments.
Federal COVID relief funds totalling $10.1 billion to Vermont have created a “supercharged” economy characterized by high inflation rates and supply shortages, which have combined to raise the price of essentials like homes and automobiles. While wages have increased, adjusted for inflation the spending value has decreased. Governmental efforts to tamp down this economy with increased taxes and interest rates could exacerbate some of these problems in the short-term.
Spending hikes will likely have a beneficial effect on tax revenues which are projected to increase slightly over the next two years (in the range of 1 or 2 percent).
Guns in hospitals and the Charleston Loophole – The House Judiciary Committee considered S.30 this week, a bill that would prohibit possession of firearms in a hospital building. Hospital personnel testified passionately about the charged and dangerous environment they are working under, further exacerbated by the COVID-19 pandemic. Representative Will Notte offered an amendment that would close the Charleston Loophole, so-called because Dylann Roof, shot and murdered nine people in a church in Charleston South Carolina with a firearm that he should not have been allowed to possess. The “loophole” allows a gun to be transferred to a buyer if the federal background check is not completed within three business days, called a default proceed. Sometimes background checks can take longer than three days to conduct, but because of the default proceed, a person prohibited from having a gun, such as the Charleston shooter, may legally be transferred the firearm. Governor Scott has publicly stated that he supports closing the Charleston Loophole.
Housing proposal addresses “missing middle” – A $5 million pilot program designed to incentivize the construction of middle-income modest homes made its way through several committees last week. The Department of Housing and the Vermont Housing Finance Agency spent the week explaining that there is a “value gap” in Vermont’s housing market – it currently costs more to build a home than it can be sold for on the open market. Builders are not focusing on the middle, and medium value homes have been priced out of reach for many potential buyers.
To close that gap the administration and VHFA hope to have the pilot program added to the annual budget adjustment using ARPA money. With details still in the works, developers would have access to upfront financing to spur construction, and a covenant-style subsidy could be attached to the home to “buydown” the cost to a buyer. That subsidy would stay with the home and be available to future owners.
Contractor Registry one step closer – The long-suffering journey of the contractor registry continues, but an end may be in sight. The dollar amount of materials and labor that would trigger the need to register has been the most contentious item in the bill. The Senate had amended that figure back down to $2,500 for any contractor performing a residential construction job. Last week the House put that figure back to $3,500. The House agreed with the Senate to exempt any technician already licensed with the Department of Public Safety from having to register. If the Senate agrees with the House change, the consumer protection bill will head to the Governor.
Updating liquor laws – Multiple bills have been introduced that update Vermont’s liquor laws. Wendy Knight, Commissioner of the Department of Liquor and Lottery presented the governor’s legislative priorities to the Senate Economic Development Committee. Among them is a recommendation to exclude the category of low-ABV spirits based ready-to-drink cocktails from department-only distribution. Currently, they are only available for retail in Vermont’s 78 liquor stores. Manufacturers of this fast-growing class have testified that many of these products have similar alcohol content as beer and wine, and should be treated the same way with access to stores via private distribution channels. Debate will continue over the maximum ABV content for these drinks, with the figure of 12 percent mentioned frequently.
Education
Public tuition to religious schools – A bill that seeks to provide clarity about public tuition to religious schools was taken up by the Senate Education Committee. The bill attempts to ensure compliance with the U.S. and Vermont Constitutions by clarifying when a school district can, or should not, pay public tuition to a religious school. Public tuition is allowed if the school has adequate safeguards to ensure that none of the public dollars will be used to support religious instruction or worship. The bill would prohibit public tuition for religious schools unless it complies with the same federal and state antidiscrimination laws applicable to public schools. Executive Director of the Vermont Independent Schools Association Mill Moore testified in support of the bill and said it aligned well with VISA’s policy opposing public dollars going towards schools that engage in discriminatory enrollment or hiring practices.
Act 173 implementation – Ongoing conversations are occurring in the House Education Committee to delay the implementation of Act 173 which reforms how special education is funded in the state and requires independent schools receiving public funds to provide special education services. Whether to delay Act 173 will not be decided until Agency of Education Secretary Dan French’s formal input in early February. The necessity of district-level Education Support Teams (ESTs) input and ongoing pupil weighting reform efforts on the Special Education Census Block Grant will inform that decision. The block grant is scheduled to take effect on July 1, 2022 and the requirement for independent schools is scheduled to begin on July 1, 2023. A recommendation from French to delay would push these dates back a year.
Health Care
COVID provision extensions considered – The legislature is working quickly to extend COVID‑related health care regulatory flexibilities and requirements that are set to expire on March 23, 2022. The House Health Care Committee introduced a short form bill, H.654, on Friday, and is hoping to vote the bill out by the end of the day on Wednesday, January 19th.
During joint meetings with the Senate Health and Welfare and House Health Care committees over the past two weeks, stakeholders testified that the ongoing impact of COVID on Vermonters and the health care delivery system necessitates continued flexibility. Included in their recommendations was extension of current temporary provisions that: allows the Green Mountain Care Board flexibility on budget, insurance rate and certificate of need reviews; requires the Department of Vermont Health Access to relax Medicaid enrollment standards; allows pharmacists to extend prescriptions for maintenance medication if prescription expired, and requires insurers to cover COVID-related testing and treatment.
This legislative update was brought to you by Downs Rachlin Martin’s Government Affairs Group.
Patricia Komline ⋅ Andrew Brewer ⋅ Rebecca Lewandoski ⋅ Gabrielle Malina
Alex Demoly ⋅ Jacqueline Qui ⋅ Mitchell Schroeder
