Controversial unemployment insurance bill continues on bumpy road

A controversial unemployment insurance bill that included expanded worker benefits was sent to the Senate floor several weeks ago. In response to strong opposition from Vermont’s business community, the bill was pulled back into the Senate Committee on Economic Development, Housing and General Affairs for revisions. The Committee’s amended bill passed the Senate on Tuesday by a vote of 18-12.

S.10 freezes employer UI tax rates at Schedule 1 (the lowest UI tax rate for businesses) and removes a proposed 20% increase in weekly UI claimant payments. A new $50 dependent benefit will take effect when the federal COVID UI aid ends and will sunset in 5 years.

The bill includes a confusing plan to "pay back" employers for their one-year rate freeze using UI trust funds. Since employers fully finance this fund, Sen. Randy Brock, R-Franklin continued to argue that this pay back is not a benefit.

The formula to calculate the necessary UI Trust Fund balance uses a 10-year average of UI rates. The business community sought to remove 2020 from the formula, arguing it is an anomaly and skews the calculations to require excessive employer contributions. Instead, S.10 includes a study to determine the appropriate balance.

Sen. Michael Sirotkin, D-Chittenden, intends to take up the issue next year. He said that any recommended UI tax decrease is an “employer benefit,” and therefore UI recipients will need to receive additional benefits as a quid pro quo.

S.10 now moves to the House Commerce and Economic Development Committee for further work.

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House Speaker abandons initial pension proposal

Speaker of the House Jill Krowinski, D-Burlington announced this morning that she was abandoning the initial plan for pension reform that had been put forth by the House Committee on Government Operations. In response to overwhelming reaction from anxious teachers, state employees, and unions who have urged legislators to slow the process down, Krowinski acknowledged a need to engage with interested constituents before making any final pension plan changes.

The Speaker charged the Committee with establishing a task force to address revenue increases, plan design, benefit changes and employee contributions. The Committee’s proposed $150 million infusion into the system will be held in reserve until legislators are prepared to address healthcare benefits.

Committee Chair Sarah Copeland-Hanzas, D-Bradford, said that the legislature cannot “in good conscience commit the general fund” to future fund payments until the state puts the pension liabilities on a more sustainable path.

The Committee will continue its pension governance work using recommendations from State Treasurer Beth Pearce and Vermont Pension Investment Committee Chair Tom Golonka. Under those recommendations VPIC would assume sole responsibility for setting actuarial assumptions, including the investment rate of return, inflation rate, and the smoothing method used for calculating actuarial valuation of assets or returns. The recommendations focus on four fundamental principles: (1) VPIC continuity; (2) equal representation; (3) transparency; and (4) independence from the Treasurer’s office.

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“Fast-track” budget bill slowed by disagreement between House, Senate and Administration

The so-called “expedited budget bill” took a route this week like a vehicle on a Vermont back road in mud season as it got deeply mired in conflict between the House, the Senate, and the Scott administration.

H.315, a bill intended to fast-track funds for COVID-related needs, passed the House with $62 million in appropriations, but left the Senate with a $128 million price tag and two additional funding sources – the federal American Rescue Plan Act (ARPA) and the Elementary and Secondary Emergency Education Relief (ESSER). In advance of receipt of the federal funds, the bill authorizes the Commissioner of Finance and Management to make anticipated receipt expenditures.

When the House Appropriations Committee took up the bill at the beginning of the week to begin working out the Senate and House differences, Commissioner of Finance and Management Adam Greshin told the Committee that the use of federal funds was very premature and risky without detailed guidance from the Department of Treasury.

Greshin added that the Senate’s use of ARPA funds was “a poke in the eye to the administration and to [him]” because the legislature has directly interfered with the administration’s authority to allocate and expend funds through the statutory excess receipts power. Nonetheless, the Committee agreed with the Senate’s use of ARPA funding where possible, stressing the need to preserve more flexible general fund dollars.

As the week went on, House policy committees wrestled with their Senate counterparts over differences in the bill, mostly offline and out of public view—in apparent violation of the state’s Open Meetings Law. By Friday afternoon, a draft strike-all amendment was reviewed and approved by the House Appropriations Committee on a vote of 10-1-0, after the Senate Finance and House Ways and Means committees came to an agreement on tax link-up language that exempts Paycheck Protection Program loans from tax deduction eligibility.

The behind-closed-doors discussions between the House and the Senate ensure that the House proposed strike-all amendment will be accepted by the Senate and a committee of conference will be unnecessary.

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Gap grants for businesses hit a snag

The slowdown of the “expedited budget bill,” H.315, is impacting one group in particular. The House approved the administration's request for $10 million in grants for businesses that missed out on previous federal and state recovery grants due to eligibility rules. Any funds remaining would be available for a second category of businesses that received de minimus amounts of federal aid.

The Senate removed assistance for the second group, which has left many Vermont small business owners without hope of a lifeline. Many are going deeper into debt as they await an announcement of Governor Scott's reopening plans.

The House and Senate are working out their differences based on a House amendment made behind the scenes that made it impossible for those affected to follow their discussions. COVID stress affects more than people's physical health, and it will take some people years to climb out of the economic hole the pandemic shutdown has created.

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Senate takes up curbside alcohol sales

The Senate Economic Development, Housing and General Affairs Committee had its first look this week at H.313, a bill proposing miscellaneous changes to alcoholic beverage laws. Passed out of the House last week, the bill allows for the continued temporary sale of alcoholic beverages for delivery and curbside pickup.

Introducing the bill to committee, Rep. Matt Birong, D-Vergennes, addressed the issue of packaging for mixed drinks that do not come in a bottle with a cap or cork. When accompanied by a food order, restaurants and bars will be able to sell alcoholic beverages for delivery and curbside pickup that have a securely affixed tamper-evident seal, a label that states that the beverage contains alcohol, and a listing of the ingredients and serving size. The temporary measure would last for two years.

The bill also creates a new “stand-alone” third class license for establishments that only sell spirits and removes a prohibition on waitstaff sampling of alcoholic products while on duty for purposes of product familiarity.

Finally, the bill clarifies requirements for festival permits which are needed for any event that is open to the public for the purpose of serving alcoholic beverages. The bill includes different limits for malt and vinous beverages, fortified wines and spirits. A festival goer could be served up to five 12-ounce beers at an event and not more than a combined total of six U.S. standard drinks containing 3.6 fluid ounces or 84 grams of pure ethyl alcohol.

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