This is the Campaign for Vermont May 15 legislative update.
The lead up to legislature adjournment on Thursday was filled with the typical last-minute deals, unforeseen circumstances, and passionate speeches on the floor that are to be expected. In the end, the legislature passed the first statewide code of ethics for Vermont, took a step towards fixing our pension and housing crises, and invested nearly $100M into workforce development needs. In doing so, we also avoided tax increases on middle-class Vermonters and changes to Act 250 that would actually make our housing problem worse. There is a lot to be happy about.
H.572 – Retirement Allowance for Interim Educators
S.572 was reviewed over the course of the week on the Senate Floor, the Senate Government Operations Committee, and House Government Operations Committee and others.
The bill allows currently retired teachers to come back to work without impacting their pension plans. There are some guardrails meant to “deter any misuse” that are outlined in our last update. The Senate Finance Committee believes safeguards will work and that there will be no impact on pension and a minimal impact on revenue. The Committee voted the bill out 6-0-1.
The bill hit the Senate Floor on Tuesday and was approved on a voice vote, sending the bill to the House.
The House Government Operations Committee took up the bill on Wednesday. A new provision would require school districts to pay an additional $1,300 assessment (primarily for new teachers) on top of the $2,500 fee to the Treasurer’s Office. Treasurer Pearce commented that she was still opposed to the bill and that the Vermont State Teachers Retirement System board was concerned about the impact to the unfunded liability. She is worried that the numbers have not been sufficiently vetted.
Pearce suggested that there is a better way – creating an incentive for them to stay longer prior to retiring. The Committee, however, was committed to doing something and this didn’t seem to go far enough.
Chairwoman Copeland Hanzas recommended that the school should pay into the pension fund the contribution that would have gone into the fund if they had hired a new teacher. The school would pay both the employer and employee contributions (plus health care). Currently, the new hire contribution is 6%. Assuming $66k/year the school is looking at about $4,000 in contributions to the pension funds. Under this proposal the $2,500 fee to the Treasurer’s office would be eliminated.
After consideration, the Committee agreed with this approach and substituted the fees to be paid by the school district. There were also several technical fixes relative to the Cost of Living Adjustments to reinsert language that was inadvertently omitted. The Committee voted the bill out 10-1.
The House Floor passed the bill on a voice vote later that afternoon. The Senate concurred with the the changes on Thursday and the bill will be sent to the Governor.
H.510 – Vermont Child Tax Credit and SSI Exclusion
H.510 was originally proposed to create a new Vermont Child Tax Credit of $1,200 per year for every qualifying child six years of age or younger. Half of the credit would be paid out in monthly installments with the remainder paid at time of tax filing. Originally the cost was estimated at $58.8M. The Senate didn’t like how the benefits ended up working because they weren’t sensitive to income and created a cliff as children aged out.
The Committee of Conference came back with a proposal to have a $1,000 credit for children under 5 with a phase-out for families with income between $125-175K. It would still help about 33k children and cost $39.7M. However, there would also be spending in other areas:
Increasing the Child and Dependent Care Credit to 72% of federal credit: $3.4M
Expand EITC from 36% of federal program to 38%: $1.5M
Student loan interest deduction: $2.2M
Social Security Income exemption: $1.7M
Other programs/tax credits: $2M
Raise securities registration renewal fees to $150: $3.6M in new revenue
The House and Senate both approved the amended bill on voice votes. The bill will be sent to the Governor.
H.737 – Homestead and Non-Homestead Property Taxes
The Senate arrived at a compromise over H.737 where $22M was allocated for the investigation, testing, assessment, remediation, and removal of PCBs in school buildings. The state may recover from PCB manufacturer’s monies expended from the reserves for this purpose. The Agency of Education, the Agency of Natural Resources, and the Department of Health shall submit to the general assembly a plan setting out a process for the disbursement of monies reserved for PCB remediation.
This was the result of a compromise with the House over S.100 which passed earlier in the week, allocating $29M to universal school meals. The House wanted to prioritize school meals and property tax savings whereas the Senate wanted to spend some of the $95M education surplus on PCB remediation.
In the end, $29M went to meals, $22M to PCB remediation, $15M to Career and Technical Education, $7M to teachers retirement, and the remaining $20M going into stabilization reserves and property tax savings.
The Senate approved the bill on a voice vote, sending it back to the House.
The House reviewed the Senate amendment on Thursday afternoon.
For FY 2023:
The property tax yield is $13,314
The income tax yield is $15,948
The Non-homestead property tax rate shall be $1.466 per $100 property value
The way the yields work is that your district’s education spending is compared to the yield amount to determine the percentage difference. That percentage, called the local multiplier, is applied to the statewide $1 tax rate. So, if your school district spends 20% above the yield amount than your tax rate will be $1.20. There are CLA’s, bonds, spending penalties, and other adjustments that are applied as well, but this is how the base calculation works.
The Joint Fiscal Office projects that this will result in a statewide average tax rate of $1.385 and an income tax rate of 2.32%, a decrease of about 9% from last year.
The House voted in favor of the bill on a voice vote. The bill will now be sent to the Governor.
S.226 – Expanding Access to Safe and Affordable Housing
The Senate Economic Development Committee reviewed S.226 on Tuesday. When the Committee met, the only land use provisions in the bill were water/wastewater and all the other land use language was still in S.234. The provision in the bill dealt with wastewater connection permits in Downtown Development districts and Village Centers. The bill also now included an amendment addressing discriminatory housing practices.
There was a great deal of confusion about provisions moving back and forth between the two bills. Chairman Sirotkin asked “if we are going to do anything to try to eliminate the duplication of permitting.” From discussion, it doesn’t seem like they will find consensus on this point for now.
The bill was put forward to the Senate floor on Wednesday with provisions protecting Accessory Dwelling Units (think in-law apartments) from stringent municipal zoning requirements, relaxing requirements for housing development in downtown areas, and providing grants to municipalities to update their zoning requirements.
During the floor reading, there were a number of procedural votes as pieces of the bill were questioned and amendments were offered. The net result was the following:
Tax credits for affordable housing through VHFA to finance down payment assistance
A first generation homebuyer outreach program (to make people aware of the financial assistance programs available)
Manufactured Home Improvement and replacement program
$2.5M for capital grants for infill development
$750K for repairs and rehabs
$750K for foundation grants, up to $15k each
A new program requiring the Department of Housing and Community Development to work with other stakeholders to incentivize development of inclusive smart growth neighborhoods.
A new Downtown Village Center Tax Credit Program for improvements to buildings at least 30 years old.
Changes to the Village Center program and new Town Center Development Districts to streamline permitting processes.
The launch of the missing middle-income homeownership pilot program, which appropriates $15M over two years to create affordable owner-occupied housing. Families under 120% of the area median income can receive a construction subsidy up to 35% of construction, acquisition, or rehabilitation costs.
In a last-minute change, a provision that was previously in S.234 related to the registration of construction contractors was added to the bill. A similar proposal was vetoed by Governor Scott last year and this could be considered a “poison pill.” The Senate raised the registration threshold to only include contractors who take on projects larger than $10k in hopes to appease the Governor. Provisions on unfair housing practices, the Vermont Land Access and Opportunity Board, and several other initiatives were also ported over from S.234.
The forest block language from S.234 was struck down and the road rule provision, which the Governor had previously objected to, was not even proposed. The Senate passed the bill 30-0 on Thursday and the House Concurred later that evening. The bill will now be sent to the Governor.
S.234 – Changes to Act 250
Senator Sears objected on the Senate Floor to a reference in S.234 implying that the Act 250 process was not “citizen friendly.” Spoiler alert, it depends on which side of the table you sit on. After much controversy, large pieces of the bill were split off into S.226 (see above). The Senate did end up eventually passing the bill on Thursday evening with a 17-13 vote, but the House failed to take it up. The provisions on downtown exemptions forest products, and land access were preserved in S.226.
S.210 – Rental Housing Health and Safety
S.210 was presented on the House Floor Wednesday, along with a fiscal note, by members of the Conference Committee. The bill focuses primarily on rental housing, with a $20M appropriation to create a Rental Housing Investment Program (VRHIP) and provide more inspectors to get rental housing online. The VRHIP would provide grants or loans up to $50k per unit to bring rentals online and also provides $1M in training and resources for homeowners to bring accessory dwelling units (ADUs) online as full-time rentals.
The bill was adopted by the House on a voice vote and the Senate followed suit later that day. The bill will now be sent to the Governor.
Workforce and Economic Development
S.11 – Omnibus Economic and Workforce Development
The Conference Committee met all week on S.11, the “new” omnibus economic and workforce development bill. There was some disagreement about what the State and Local Tax deduction (SALT) amendment from the Senate would cost, but generally projections are in the $8-9M range. The Tax Commissioner presented a slide that framed the problem well. His solution was to offer a 90% credit so the state doesn’t lose revenue but the taxpayer still gets a break on federal taxes.
The bill would appropriate $19M in General Fund revenues and $65.5M in ARPA funds. There are over 30 line item expenditures, but a full list can be found here.
The Senate felt that the need for paid leave related to health care was overstated so they asked to put that money into the Capital Investment Program. They also the cut the “Everyone Eats” program supporting restaurants and farmers to help feed the hungry. They agreed that it’s a good program and gets 100% federal matched, but they heard almost no testimony supporting the current need for it.
By Monday evening the Committee began marking up the bill.
The House struck out the section on CTE funding and governance. Not interested in compromising?
House struck out educator workforce development program
The House preferred a task force instead of a new state office to manage workforce development programs
The House agreed to keep the senate’s Work-Based Training program, but also wanted to keep their Secondary Student Credential Pilot Project
The House wanted to keep their trades loan reimbursement program with a $500K appropriation
The Think Vermont regional recruitment effort was struck by the House but the Senate wanted to keep the program
The House also wanted to get rid of the project-based TIF provisions that failed to pass last year
They agreed to delete the UI benefit bump that was in the bill because there is still $100M allocated from last year that hasn’t been spent yet. They reshuffled the $8M from that into various other programs in the bill. The $15M for Career and Technical Education that was in the House Version of the bill held (a win!).
There was an adjustment to the VEDA Short Term Forgivable Loans that are meant to backfill small business cashflow lost due to the pandemic. The qualification threshold was set at a 22.5% reduction in adjusted net operating income (NOI). This will also be the basis for calculating the loan amount that businesses are eligible for. The loss in NOI must be due to “the COVID 19 public health emergency.”
The Committee finally got to the original content of the bill, which dealt with robocalls (as a reminder, they rolled H.703 and H.159 into this bill last week). The Administration wanted more time to review the recent SCOTUS decisions so they could implement the bill more seamlessly. Senator Brock offered that an effective date for one year out would allow for the administrative adjustments early in the next legislative session.
There were also questions about automatic dialing equipment usage as it seemed those devices might be prohibited under the bill. Legislative counsel is working on language to address that.
The bill appeared on the House Floor Wednesday where the Conference Committee members shared the updates and changes agreed upon with the Senate. The fiscal note was distributed to members, detailing the $99.5M in appropriations. It also re-appropriates $25.5M in ARPA revenues.
One member was frustrated by the “glaring omission” of no raise in the minimum wage. But others were happy that the bill “does in fact support all Vermonters as we emerge successfully from this pandemic.” The bill was adopted by voice vote.
The Senate also voted to adopt S.11 on Wednesday and the bill will now be sent to the Governor for signature.
H.727 – Withdraw From Act 46 Mergers
The Conference Committee report on H.727 was presented to both the House and Senate this week.
A condensed side-by-side was prepared by the Joint Fiscal Office. The following changes were reflected in the report:
Major changes in the withdrawal process were realized, with the final process being streamlined considerably from original language.
AOE conducts an initial review of the withdrawal proposal.
The matter proceeds to a community vote.
The study committee decides whether to stop the withdrawal process or to appeal to the State Board of Education (SBE)
The matter only goes to a community vote if the SBE issues a positive opinion
If the SBE finding is negative, the withdrawal process stops and the decision is final
Additional changes dealt with towns already in the process of withdrawing from a merged district
Ripton: new school board decides whether to seek review of preparedness in 2022 or 2023. Submits report to SBE on or before July for review.
Lincoln: self-selected representatives (SSR) decide whether to seek SBE review of their withdrawal proposal in 2022 or 2023 and submits a report and plan for withdrawal to SBE.
Starksboro: same as Lincoln above after all initial votes regarding withdrawal are final.
The amendment offered by the Conference Committee was adopted by both the House and Senate on Wednesday. The bill will now go to the Governor.
H.456 – Strategic Goals and Reporting Requirements for the Vermont State Colleges
The Conference Committee looked at a proposal from the House on H.456 Monday. The bill would implement a 2-year pilot project to allow for staff and faculty participation on the Vermont State College Board of Trustees. A study would also be included to evaluate the outcomes.
Under the new proposal, the Joint Fiscal Office (JFO) would retain a consultant on board governance at UVM and VSC, who will make separate findings for each institution. This will be done by a non-profit non-partisan education consulting firm. They would look at current board structure and representation and an advisory group would provide input to the consultant (however they cannot vote on or alter the reports). Senator Hooker (an original sponsor of the bill) does not want another study, and questioned the need for it.
The Senate was not interested in a study, they want to come back next year and look at this issue in Committee again. After some back and forth, neither side was willing to compromise and the bill was deemed dead and will not move forward this session.