Closing out Week 11 of the 2023 Legislative Session It’s the end of crossover week in Montpelier, meaning legislation needed to be voted out of committees by the end of today, or the legislation is done for the session. There are some ways around it; a committee can seek a waiver from the rules committee, legislators or a committee can add a piece of legislation that didn’t make crossover as an amendment to a piece of legislation that did make the deadline. Finally, money committees - Ways & Means, Appropriations, Finance - have another week before crossover deadline. Bills in those committees have until next Friday.  Crucial Housing Bill Gets Watered Down The Senate Committee on Natural Resources and Energy proceeded with an amendment that watered down, S.100, also known as the HOME Act, removing essential components of the bill for broad support. The amendment downgrades the positive changes to the Act 250 "10/5/5 rule" that were made by the Senate Committee on Economic Development, Housing, and General Affairs. The rule means that if a developer builds ten units of housing within five miles of each other within five years, they trigger Act 250. Senate Economic moved that threshold to 25 units. To counter this, the Senate Natural committee agreed to the 25 unit increase, but only within areas of enhanced designation which comprise only about 0.03% of the state’s land. This is a temporary provision that sunsets on July 1, 2026. The Senate Natural Resources Amendment also does the following;         Raised the required density in areas zoned for residential and served by sewer and water infrastructure from at least four units per acre to five units per acre.         The Senate Economic version would have removed the ability under the current law of any combination of 10 voters and property owners to appeal. The Senate Natural amendment restores that language, though restricts it to 10 individuals who have a “common injury to a particularized interest."          They also removed the cap on the number of priority housing units that are exempt if located in a downtown, growth center, or neighborhood development area. This also is a temporary provision that sunsets on July 1, 2026.         Senate Natural deleted the sections that would have eliminated duplicative local/ANR wastewater permit connection sections that they had previously passed. Here’s what was added in the Senate Natural amendment;         The Committee added the concept of Master Plan Districts in designated areas so that a town could pre-approve an Act 250 permit for a development area. Then, each new project in that area would be a permit amendment rather than a full permit.         They added an "enhanced village center designation." A town can receive the enhanced designation for a village center if they have permanent zoning and subdivision bylaws, municipal sewer and water infrastructure, and adequate staff. Priority housing projects located in Enhanced Village Centers require 50 or more units to trigger Act 250. This is a temporary provision that sunsets on July 1, 2026.      Energy Code. First it was out, but then back in - the amendment now includes a provision that says a town may adopt building energy code more restrictive than state RBES code, but only if it gets a charter change which requires legislative approval.  Housing advocates and VBRA recognize the Senate Economic Development committee version of S.100 as the bill that could truly result in a reduction in barriers to building affordable housing for Vermonters. Your help could be crucial in this effort. Click here to find your state Senators and Representatives and ask them to support the version of S100 "as it came out of the Senate Economic Development Committee." Childcare Bill Voted Out The Senate Committee on Health and Welfare concluded their work on S.56, the childcare bill. The fiscal picture and footprint of the bill are still unclear at this time, however, it is expected that the Committee will seek a payroll tax for about $100 million in spending under the bill for this year and then about $200 in the next fiscal year.  The bill provides full reimbursement for those making up to 185% of the federal poverty level (FPL) and then reimburses on a sliding scale up to 600% FPL or about $180,000 for a family of four. The bill also includes $7.3 million in grants distributed by the Department of Children and Families to retain childcare workers. As a potential alternative to the separate Paid Family Leave bill, Senator Jane Kitchel brought to the Senate Committee on Health and Welfare, as well as the Senate Committee on Economic Development, Housing, and General Affairs, a proposal to include parental leave only in the childcare bill. The proposal would cost about $15 million and would provide 12 weeks of leave to one parent. The plan would fully replace wages up to 200% of federal poverty guidelines, with a decrease in benefits up to a cap of 600% FPL. Meanwhile.. Paid Family Leave Passes Out of the House Committee on Ways and Means The House Committee on Ways and Means passed H.66, advancing what will likely be the most generous paid family and medical leave program in the country. Estimates are that the program altogether would cost $117 million per year, a number higher than previous calculations. The bill proposes 90% wage replacement for 12 weeks for an expanded list of eligible recipients. It would be paid for by a .55% payroll tax split between employee and employer.  As noted above, the Senate has already made movements to preempt the bill by adding parental leave only to their priority, the childcare bill. A House/Senate battle is sure to ensue.  Labor Bills Advance Out of Committee The Senate Committee on Economic Development, Housing, and General Affairs passed S.102 and S.103 this week, bills that have numerous consequences if they proceed to final passage. S.102 had language that would have ended at-will employment in the state and created a "good cause standard for termination," and would have  created new severance pay requirements. That language has now been removed, and the bill now does the following; “Captive Audience” provision – prevents an employer from penalizing an employee who does not participate in discussion on issues perceived as political. The provision is aimed at preventing employers from discussing the impacts of unionization with employees, however, it can have far-reaching consequences as well. Card Check Provisions – means that only 51% of employers would need to indicate interest in unionizing to move forward without an official election. S.103. Initial language that would have barred noncompete agreements has been removed. The bill now contains the following: It redefines harassment as one event rather than what exists under case law now; one severe event OR a series of pervasive events. The bill changes that definition to say that harassment need not be "severe or pervasive." A single incident could trigger litigation. As the bill stands, language attempting to define a "petty slight" and "trivial inconvenience" is too vague and leaves employers further exposed to lawsuits.   The bill also prohibits "no-rehire" provisions in settlements of litigation between employee and employer. Testimony from from attorneys representing employees and employers that provisions designed to prevent the rehiring of an employee after the settlement of a lawsuit should not be banned as they serve an important purpose for each side.   We encourage you to reach out to your legislators and vocalize your concerns on these bills. Liquor Legislation  The House Committee on Government Operation and Military Affairs passed the miscellaneous alcohol bill, which does the following; Increases the annual limit on fourth-class licenses allowing the Board of Liquor and Lottery to grant up to a combined total of 20, instead of the current 10, to a manufacturer or rectifier.  Repeals the sunset on the sale of alcoholic beverages for off-premises consumption or, as it’s commonly called, alcohol to-go. Replaces the term “cider” with “hard cider” in the Vermont statute when referring to alcoholic beverages.  The House Committee on Judiciary continued their discussion around dram shop legislation this week and passed legislation that seeks to assist in the high cost of liquor liability insurance. The legislation also requires all proprietors of businesses with a liquor license to acquire liquor liability insurance. The bill passed out of Committee unanimously and represented changes beneficial to Vermont businesses. It is estimated that this could lower VT’s ISO rating from it’s current 10 (the highest it can be) to something closer to a 6.

Closing out Week 8 of the 2023 Legislative Session

With only two weeks left until crossover and town meeting break sandwiched in between, many committees spent last week working on bills that they are hoping to get across the finish line this session.

Housing Bill

The Senate Natural Resources Committee took up the omnibus housing bill.  

The bill takes square aim at duplicative and onerous regulations that slow development in areas that already have water and sewer infrastructure. The bill is expected to have a rough ride in Natural Resources as the committee will also pay particular attention to several changes to Act 250 - including the 10/5/5 rule.  A section by section summary of the entire bill can be found here. A summary of the Act 250 changes can be found here. 

Residential Building Energy Standards

The Public Service Department is in the process of finalizing its recommendations to meet the states statutorily required updates to RBES codes. Several VBRA members have been very engaged in the process since last summer. Of paramount concern to Vermont's building community is the total absence of statewide enforcement of RBES.  VBRA is advocating for postponement of the updated codes until a plan for outreach, training, inspection and enforcement is in place to unsure compliance. 

Rep. Scott Campbell, D-St. Johnsbury has introduced  H.332 - The bill proposes to increase compliance with RBES and CBES by establishing a study committee to recommend the designation of a State agency as the authority having jurisdiction to recommend other compliance mechanisms such as incentives and enforcement. Recent estimates are that only 50% of Vermont homes are built to RBES code. This bill is a good first step in improving the states housing stock and leveling the playing field for the states responsible builders. 

Also on the RBES front, Richard Faesy, Energy Futures Group, is leading an effort to apply for a U.S. Department of Energy funding opportunity that has the potential to bring >$4 million to Vermont over the next three years. The grant money could help develop an energy code administration system and support our construction industry with training and technical assistance. The DOE has accepted a concept paper on the project and has "encouraged" the submittal of a full application, due March 27th.

Early Child Care Bill

Two committees continued work on the Child Care bill – the Senate Committee on Education working on the pre-kindergarten provisions and the Senate Committee on Health and Welfare focusing on the child care provisions. During testimony to the Health and Welfare committee, administration officials shared concerns stakeholders have expressed about moving away from a mixed delivery system, but said that the governor would support expanding weekly pre-k assistance from ten to thirty hours.

The expansive Paid Family and Medical Leave bill was taken up by the House Committee on Ways and Means after being passed the previous week by the House Committee on General and Housing. The committee heard from the Department of Taxes that administering a new payroll tax to support the program would require an additional fifteen full-time employees and $2–3 million in IT implementation funding. The total estimate for setting up the program would be $100 million.

Climate Change Initiatives

Last year’s “Clean Heat Standard” has been reintroduced as the Affordable Heat Act. The bill - paired with other incentives - would let businesses, fuel dealers, and others earn so-called clean heat credits for helping customers weatherize their homes or switch to eco-friendly heating sources like cold air heat pumps.  It would then essentially increase prices for fuel dealers and their customers over time if they continue to heat with fossil fuels including propane, kerosene, and heating oil.  The Secretary of Natural Resources projected the program resulting in about 70 cents per gallon of heating fuel. Many observers believe that estimate might be off by a factor of two.

In addition to their policy work, the House committees discussed FY2024 budget priorities ahead of the March 1 deadline to submit their recommendation letters to the Appropriations committee.

What to expect in Week 9 – February 27 – March 3, 2023

Note: The Legislative Committee Agendas are updated frequently throughout each day. The latest committee schedule can be found on this link. A list of weekly hearings for all committees can be found here.

Closing out Week 7 of the 2023 Legislative Session

The House Committee on General and Housing passed out H.66 Thursday, which would create the most generous paid family and medical leave program in the United States. Employees who have been employed with the same employer for a period of six months, during which time they averaged 20 hours a week, would be eligible. The bill provides employees with up to 12 weeks leave for their own health, maternity/parental, family care, safety, and bereavement (bereavement would be only two weeks), and provides a wage replacement of 100% up to the state’s average weekly wage of $1,135 per week. The program would be paid for by a 0.55% payroll tax split between the employer and the employee.  The Committee heard from the Office of the Treasurer that administering this program would double the size of their office, and they would need upwards of $100 million to stand up the program.

The House Committee on Commerce and Economic Development continued their conversation this week around H.10, which seeks to make major changes to the Vermont Employment Growth Incentive (VEGI) program that would render it inoperable.  The Committee walked through a counter proposal from the current director of the program with the new name “Think Vermont Investment Program.” which would simplify the program by providing an annual cash award of $5,000 for every qualified job created and an enhancement of $7,500 for each job created in economically disadvantaged areas over a period of three years instead of the current five year period. 

The Senate passed S.3 banning paramilitary training camps. Senate President Pro Tem Phil Baruth, D-Chittenden-Central said, “There haven’t been adequate levers for the state to intervene or prevent such a camp from forming. This bill gives the state the authority it needs to protect Vermonters from fringe actors looking to create civil disorder.”

After weeks of testimony, the Senate Natural Resources Committee advanced S.5 creating a Clean Heat Standard for the thermal heating sector on a 5-0 vote. The bill requires fossil fuel heating companies to acquire “clean heat credits.”  They could do so through incentivizing greenhouse gas emission-reducing actions such as weatherization, electrification through heat pumps, or fuel switching to their customers. The fuel companies could also buy clean heat credits to fulfill the obligation from organizations that deliver such clean heat activities. Many are concerned the program - initially intended to cover “heating” and “thermal” use -  could pull in all fuels, including “process fuels,” which will add cost to sectors such as farming, construction, and manufacturing. 

 

Public hearing on the Governor’s Recommended Fiscal Year 2024 Budget on February 21 at 3:00 and February 28 at 5:30 in Room 11 or via zoom.

For more information regarding pre-registering or watching the hearing see here.

What to expect in Week 8 – February 20 - February 24, 2023

Note: The Legislative Committee Agendas are updated frequently throughout each day. The latest committee schedule can be found on this link. A list of weekly hearings for all committees can be found here.

RBES Update -

The Vermont Department of Public Service will soon begin updating Vermont's Residential Building Energy Standards (RBES) and Commercial Building Energy Standards (CBES), with the target effective date of Fall or Winter 2023. The code update process will include multiple opportunities for stakeholders to provide input and feedback. 

Vermont's Building Energy Standards set minimum efficiency requirements for new and renovated buildings. The standards are designed to reduce energy use and emissions over the life of a building, saving money in the long term and helping Vermont meet its climate goals. 

There will be two RBES public stakeholder meetings and two CBES public stakeholder meetings, coordinated with the Energy Futures Group, taking place in April and late May and will be held remotely.  To participate please contact Liz Bourguet at the Energy Futures Group (ebourguet@energyfuturesgroup.com) with any questions. 

Golf! 

We have a date for the Annual VBRA Golf Tournament! Friday, September 16^th 2022!  This year’s tournament will again take place at the beautiful, family run Cedar Knoll course in Hinesburg, VT. It’s never too early to start practicing your swing! Save the date and stay tuned for more info.

Full report here Business The unemployment bill formerly known as S.10 - Business owners had their most challenging year in memory. Many hoped that the legislature, knowing this, would have sought to offset their challenges. Unfortunately leveling unemployment tax rates was considered by some to be too much help.   State taxing of 2021 Payroll Protection Program funds - Mid-session, the legislature passed H.315, which, among other things, exempted taxes on 2020 PPP but placed a state tax on 2021 PPP forgiven loans.   State Economic Recovery Grants limp across the finish line - Businesses, particularly those in the hospitality sector, were hit hard this year. The Governor’s Executive Order severely curtailed their ability to earn a living and for the events industry – shut them down altogether.   Economic development bill cut and pasted into budget - H.159 turned into the session’s Christmas tree bill for economic development. Originating as a stand-alone bill, the legislation funded a variety of economic development initiatives with one-time infusions of ARPA and general fund money. As the clock ran out on the session, most of the provisions were salvaged by being folded into the budget bill H.439.   Miscellaneous tax bill federal tax link ups and TIF District language - The miscellaneous tax bill was one of the last bills agreed to at the end of the session, when the House asked for agreement to add their proposed property yield tax back into H.436 in exchange for an agreement to reserve $14 million of the Education Fund in the budget bill for OPEB pending the Pension Task Force’s actions this summer.   Property transfer tax fails despite language in two bills - H.437, a miscellaneous revenue bill previously passed by the House, contains a tax surcharge on the sale of property transferred above $1 million. Currently, properties sold in Vermont (with exceptions) pay a 1.25% transfer tax plus a 0.2% clean water surcharge. An additional 0.5% surcharge would be added to properties over $1 million. The bill also expands the sales tax exemption on manufacturing equipment, and expands an affordable housing credit for manufactured homes. The bill, however, failed to advance out of the Senate.   Rental registry bill held up in the last day - Objecting to a registry to monitor rental properties, the minority party in the House refused a procedural suspension of the rules on the last day of the session, which prevented S.79 from passing this year. This is an ambitious bill that included a new short-term rental registry requirement for those who operate unlicensed businesses renting out property on sites such as Airbnb or VRBO.  Banking bill requires study of annuities -  S. 88, the insurance, banking and securities bill, requires a report and findings on the effect of raising the interest floor paid to people on forfeited annuities. Currently, under state law, a person surrendering an annuity would receive back what they’ve paid in (minus what they’ve received or loans taken against it) plus interest. The interest is calculated as the Federal Reserve Rate minus 1.25 percent, but no less than 1 percent. The 1 percent floor has kicked in due to low interest rates, the banking and securities industry is pulling back from providing annuities due to the poor economics of the product. Read about more business legislation

General Government Covid relief bill becomes law without full support of governor - The legislature took several months at the beginning of the session to draft and pass a covid relief bill in advance of the big budget bill. The bill, H.315, is a $100 million relief package that starts spending some of the $1 billion of American Rescue Plan Act money on its way to Vermont.   Big Budget - Before adjourning the first ever fully remote session, the legislature passed a $7.35 billion state budget for FY22 with almost $600 million of federal covid relief fund spending. Budget committee of conference deliberations were complicated by the Treasury’s release of the Interim Final Rule for ARPA spending.   Contractor registry stalls - In a flurry of activity during the last days of the session, H.157 passed out of three senate committees and survived second reading with a 20-10 vote. However, the bill stalled before the final vote over the uncertainty of gaining approval from the House on a last-minute amendment exempting businesses that are already licensed or registered by the Office of Professional Regulation or the Department of Public Safety. The bill will remain in the final stages of passage when the legislature convenes next.   Low-alcohol spirits will have to wait - Passed by both chambers, H.313 allows for the continued temporary sale of alcoholic beverages by delivery and curbside pickup, creates a new “stand-alone” third class license for establishments that only sell spirits, clarifies requirements for festival permits which are needed for any event that is open to the public and lowers third-class license fees for manufacturers of spirits. Read about other general government updates

Climate, Energy and Technology Communication Union Districts get their chance with broadband - The legislature passed H.360, which appropriates $150 million towards the goal of universal high-speed internet access, establishes the Vermont Community Broadband Board, and hires an Executive Director to carry out the task of achieving universal coverage. The Board is comprised of five members: two appointed by the Governor; one by the House Speaker; one by the Senate’s Committee on Committees; and one by the Vermont Communications Union District Association.   Investments in energy and climate - The budget bill contains multi-year funding priorities for ARPA including $250 million for climate change mitigation. Of that $250 million, a total of $50 million and $4.5 million in general fund (highlights below) was committed for FY 2022 for thermal efficiency including weatherization incentives, workforce development and to develop an ongoing, accessible financing model.   Transportation electrification - The transportation bill includes provisions to reduce greenhouse gas emissions in the transportation sector and expand the state’s fleet of electric vehicles and chargers.   Energy storage bill - Energy storage is increasingly deployed in conjunction with renewable energy and to help control the balance of supply and demand on the electric grid. A bill that provides regulatory and taxation structure for the burgeoning use of energy storage in the state’s electric system made it to the finish line. H.431 includes statutory definitions of energy storage and aggregation and clarifies that development of energy storage facilities are governed under Title 30 section 248 similar to other electric generation facilities. Read more

Education The year in education - This year in education was marked by students learning remotely, a focus on planning for learning recovery, and on the large amounts of federal money coming to schools.   School facilities and radon testing mandate - A bill to assess public school facilities and move towards state support of school buildings through bonding or other funding has been a longstanding priority of the Superintendents Associations and other public school stakeholder groups. Vermont is one of the only states with no state-sponsored ongoing support for its public schools’ physical plant. And many school buildings have suffered from deferred maintenance.   PCBs in schools - The legislature added a requirement in the budget bill for all schools built or renovated before 1980 to test for PCB (Polychlorinated Biphenyls) levels by no later than 2024. PCBs were widely used in construction for caulking and other masonry materials through the 1970s. The bill allocates $4.5 million in the Environmental Contingency Fund for the Department of Environmental Conservation for testing, and an additional $500,000 to the Department of Health.  Improving literacy - Literacy outcomes are considered a cornerstone of general education and special education. Act 28 provides $3 million and technical support to supervisory unions to improve literacy outcomes and encourages schools to use their ESSER funds for this work. The bill also encourages addressing Covid-related learning loss through summer learning and comprehensive afterschool programs.   Integrative services in schools - H.106 creates a pilot program and provides $3 million for public schools to become “community schools” that incorporate integrated services to address out-of-school barriers for students who struggle. Community schools may  provide access to services such as medical and dental care, mental health services, or access to counselors who can assist with basic needs such as housing or transportation.      Read more

Legislative Chess

It’s the time of year when the legislature plays chess. Sometimes it even plays speed chess, with programs, initiatives, and tax code changes flying in and out of bills as they move back and forth between chambers. Each chamber attempts to position its priorities to its best advantage, sometimes by holding the other chamber’s priorities as hostage.

A House committee may remove a section of a bill that its Senate counterpart spent months discussing. And vice versa. A committee may also attach one of these pieces to a different bill, using it as a “vehicle” to shore up its chances of survival. In non-COVID times, legislators play a version of three-dimensional chess, with players sitting on different floors in the Statehouse working their own individual chess boards.

When a bill goes to conference committee, the opponents finally sit across from each other and the gamesmanship gives way to final decisions.

Bill provisions that are of existential importance to an association or company can be deleted at the blink of an eye. What may seem like a callous disregard for the work that went into those bills – the days of testimony and hours of committee deliberation, the effect it has on individual lives and businesses – it is not personal. It’s likely just positioning in the game of legislative chess.

Vermont Legislative Update Quick Links

Business

General Government

Energy & Technology

Environment

Education

Business

Unemployment insurance – The House Commerce and Economic Development Committee passed an unemployment insurance bill, S.10, on a vote of 8-2-1. The committee removed 2020 from the UI Trust Fund calculation and removed the Senate's proposed $50 dependency benefit. There is no rate freeze, so employers will pay UI taxes using Schedule 3 next year and Schedule 4 for two years.

Committee Chair Michael Marcotte, R-Coventry, summarized his committee's changes by saying that eliminating 2020 is not a benefit to employers. It is an adjustment to the UI Trust Fund formula due to the anomaly created by the pandemic. He added that the trust fund is in a $300 million hole, and this has to be repaid by employers. To dig a deeper hole by adding a dependency benefit is unwise at this time. He also felt that childcare issues are best considered by the House Human Services Committee.

Some still believe that employers are getting a better "deal." Employers who struggled through this pandemic are still responsible for replenishing this $300 million through no fault of theirs. Employers are not benefiting from this change. To say otherwise is disingenuous.

2021 PPP Taxability – Senate Finance has added language to H.436 in Section 25 that repeals taxes on 2021 forgiven PPP loans.

Guidelines for bridge grants for "gap" businesses – Among eligibility requirements for bridge grants for “gap businesses, a company will have had to show a tax loss in 2020. That loss will be the ceiling for the grant it may receive. Further guidelines can be found here.

Economic recovery grants – The Senate is poised to pass limiting language for further recovery grants for businesses in H.159. As with bridge grants for "gap" businesses, to be eligible a business will need to demonstrate a 2020 tax loss. The Senate Economic Development Committee considered the grant formula this week. Sen. Clarkson, D-Windsor, and Sen. Ram, D-Chittenden, wanted more targeted and increased funding for lodging, wedding and events businesses since they were the hardest hit. Sen. Sirotkin, D-Chittenden, said this could be considered in the conference committee.

There is more than $500 million in unmet need since the government's enforced curtailment of business activities, but the Senate has only allocated $20 million for recovery grants. The health of Vermont's hospitality sector now lies with decisions that the House will make.

Economic development – The Senate Economic Development, Housing and General Affairs Committee has given initial approval to H.159, an omnibus economic development bill. The bill has become this session’s Christmas tree for economic development provisions. Two significant additions were added this week: a Capital Investment Grants program and economic recovery grants for businesses. Capital Investment Grants are for projects intended to be “transformational” to a region. The $11 million program would be capped at $500,000 per project, prompting concerns from committee members that the awards would not be large enough to have the kind of impacts that are envisioned. Twenty-million dollars would be earmarked for economic recovery grants distributed by the Agency of Commerce and Community Development. As ACCD develops a model for grant eligibility, business groups have expressed concern that the tax-return-based formula will exclude many businesses still suffering due to COVID-19.

Municipal Bylaws Modernization – S.101 began as a bill to encourage housing development by incentivizing municipalities to update planning bylaws, extending a downtown and village center tax credit program to neighborhood development areas, and eliminating a requirement of duplicative and costly state wastewater connection permits. This week, citing the need for more testimony, the section on wastewater permits was removed by the House Natural Resources, Fish, and Wildlife Committee, and the House Ways and Means Committee abruptly removed language expanding the tax credit program. Language that currently exists in H.437 that is being considered by the Senate Committee on Finance – a new property transfer tax surcharge on home sales greater than $1 million and a manufactured home credit – was added to S.101 as an alternate path for the language in case the Senate committee does not approve H.437.

Contractor registry – A bill to create a contractor registry, H.157, has been taken up by the Senate Economic Development, Housing and General Affairs Committee. Passed by the House after contentious debate, the bill calls for the modest step of registration for the state’s currently-unregulated builder and contracting profession. Any contractor who performs a residential building or renovation project that will exceed $3,500 in time and materials must register with the state every two years. A written contract and maintenance of liability insurance are also required. Representatives of the Vermont Attorney General’s office, the Office of Professional Regulation and the Vermont Licensed Plumbers Association all testified in support of the legislation. The committee will continue taking testimony next week.

Tax increment financing districts – The House Ways and Means Committee continued consideration this week of S.33, a bill relating to tax increment financing districts. Advocates spoke in favor of giving TIF’s a three-year extension due to the effects of the pandemic. Development has been slowed by increased material expenses, a shortage of contractors, and potential changes in building use and design due to societal changes caused by the pandemic. The federal government recognized the need to allow time for project completion as reflected by the lengthy timeline for ARPA spending.

The committee has not yet decided whether TIF Districts will be able to use the proceeds of debt to pay for debt service interest payments for a period of up to five years.

A pilot for project-based TIFs that would have benefited smaller municipalities was previously stripped out by the House Commerce Committee.

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Generall Government

Revenue bill – The Senate Finance Committee continued consideration this week of H.437, the revenue bill, but pulled up short of voting the bill out on Friday. As passed by the House, the bill includes three changes: a 1.75% property transfer tax surcharge on properties worth more than $1 million, clarifications for the sales tax exemption on manufacturing machinery, and an affordable housing credit for manufactured homes. Fiscal Analyst Graham Campbell told the committee the bill is expected to increase overall state revenues by $950,000 in FY 2022, $600,000 in FY 2023 and $250,000 in FY 2024. This impact would be split between the General Fund and Education Fund. The committee paused on their consideration of the bill when they discovered that the House Ways and Means Committee had also added the property transfer tax and the manufactured home credit to S.101.

Miscellaneous tax bill – The Senate Finance Committee is ready to vote out H.436, the Miscellaneous Tax bill, tomorrow afternoon. With a straw poll, the committee agreed unanimously to repeal language that makes Paycheck Protection Loans taxable. With the change, Vermont would follow federal tax law. The committee also agreed to link up State law to federal tax changes that expand the Earned Income Tax Credit and Child and Dependent Care Credit. The Joint Fiscal Office suggested that the lost tax revenue from the federal linkups could be paid for by ARPA funds due to recent Treasury guidance.

Post-pandemic Statehouse procedures – The House Rules Committee reviewed a draft resolution to extend the state of emergency and approve remote voting through May 22, 2021 and any subsequent 2021 veto session. The resolution would authorize the committee to adopt procedures for the House to meet, debate, and vote remotely or in a hybrid manner as pandemic-related circumstances require. Members generally support the resolution’s intent and will continue to prioritize public health and safety as their top concerns as they consider next steps.

Pension reform – The Senate passed H.449, an act relating to the membership and duties of the Vermont Pension Investment Commission and the creation of the Pension Benefits, Design, and Funding Task Force, in concurrence with the latest House proposal of amendment on Thursday. The bill proposes governance changes and best practices to address the state’s $5.6 billion unfunded public pension liabilities that resulted from underfunding, inaccurate return projections, low fund performance, demographic shifts, and healthcare and other retirement costs.

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Energy & Technology

Broadband deployment – The Senate Finance Committee unanimously supported a strike-all amendment to H.360, a bill to expand broadband deployment, on Wednesday evening. The committee amendment proposes to reorganize the House bill’s Vermont Community Broadband Authority as a three-member Board and expand grant program eligibility to include small communications carriers in addition to communications union districts. The Senate Appropriations Committee moved to strike the bill’s appropriations section—after confirming that the $100 million ARPA appropriation is included in Sec. G of H.439, the “Big Bill”—and voted unanimously in favor of the bill as amended.

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ENVIRONMENT

Water infrastructure – Department of Environmental Conservation Commissioner Peter Walke presented an overview of the state’s $1.9 billion “universe of need for water infrastructure” to the Senate Natural Resources Committee this week. Walke distinguished two of the largest areas of need – wastewater repairs and upgrades ($490 million) and drinking water repairs and upgrades ($374 million) – as already having some existing funding sources and aligning with the anticipated guidelines for the pending American Jobs Act. Other identified areas, such as stormwater-impaired waterways, mobile home park water and wastewater repairs and work on state-owned and privately-owned dams, are, as of yet, unfunded and were included in the governor’s proposal for federal ARPA spending.

The estimated cost of complying with the state’s 3-acre stormwater regulations is $260 million based on 5,320 total acres and an average retrofit cost of $50,000 per acre. This includes a mix of public and private lands. The funds allocated in the governor’s ARPA proposal would provide engineering support for 3-acre sites to help landowners anticipate construction costs and design projects to meet DEC requirements.

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Education

Public tuition for religious schools – The thorny and complex issue of public tuition for religious schools returned to the Senate Education Committee this week. Legislative counsel Jim DesMarais walked legislators through legal principles and analysis of tuition for private religious schools, laying out the sometimes-conflicting case law and constitutional issues. A recent article drew lawmakers’ attention to the fact that Agency of Education guidance to school districts had been quietly rescinded, leaving a gray area. The guidance explained how districts may provide tuition for religious schools by requiring schools to submit certification that public funds were not used for religious instruction or worship. The committee was told that AOE had withdrawn the guidance at the request of the State Board of Education to help settle active litigation.

The Senate has asked for input from the attorney general on legal options, which may provide some clarity about next steps for legislation. On the other hand, committee chair Brian Campion D-Bennington, said the subject matter is so complex that the Judiciary Committee ought to look at it, and it might be better handled in a summer study committee.

Radon testing in schools – The Senate has approved H.426, a bill to address public school facilities and construction issues across the state. The bill appropriates $4 million to conduct an assessment of school facility needs and costs. An independent third-party contractor will help schools coordinate pandemic-related health and safety facilities improvements. One-million dollars is available to supplement funding needs for schools to undertake improvements. The Senate added a new requirement for schools to conduct radon testing and report results to employees and students. Senators said that timing for the unfunded mandate was right because schools are receiving federal funding through ESSER.

The bill contains a new grant program for renewable and efficient heating systems for public and approved independent schools, with the funding source to be decided during the 2022 session.

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