Editor’s note: The following is the Campaign for Vermont Feb. 13 legislative update.

Fiscal Responsibility

H.510 was up for a vote on the House Floor this week. The Ways & Means Committee had introduced a strike-all amendment that we covered in last week’s legislative update.

Representative Rob LaClair presented two amendments:

1. Reduce the income thresholds from $200k/$400k per individual/family to $100k/$200k per individual/family.
2. Take the resulting $11.5M in additional revenue and create an additional $950 per child credit for nurses to incentivize returning to work.

The Ways & Means Committee found both amendments to be unfavorable and the Health Care Committee did not have time to complete a review before the floor vote.

The first amendment was voted down 55/88 and the second was subsequently withdrawn. The underlying bill was passed on a voice vote.

Workforce Development

VSAC provided testimony to the House Commerce Committee on workforce development. Vermonter’s have $600M saved in college savings plans. In addition, VSAC administers an emergency grant program designed to keep students from dropping out of school and another grant is targeted at helping low-income Vermont students pursue training outside of traditional college. The most common person to take advantage of these programs is a single mom in her 30s who makes less than $22k a year. Coming out of these programs, at least 51% are making an addition $4 per hour or more.

VSAC also offers Advancement grants for programs not eligible for any federal offered funding programs. These would be ‘credentials of value’ that are a form of licensure such as a CDL and other certification necessary for meaningful employment. Other examples are programs for lineman, cosmetology, healthcare, technology, and other professions.

The Committee was about the benefits cliff: people could be negatively impacted by participating in these programs if they are getting wage increases and lose more money in benefits then they get in wages. VSAC has not heard of this issue when surveying past participants, but it may be beneficial to understand if this is a barrier to program entry.

VSAC is providing workforce development scholarships as well. Any resident making $50k or less can attend CCV tuition free after stacking the scholarship and other benefits – 1700 students are taking advantage of this now. Students come from every county in in the state and the income threshold covers 44% of Vermonters. The Governor wants to spend an additional $1.5M on this program to raise the income threshold to $75k. Students can take advantage of this program and transfer to a four year school as a way to leapfrog to a higher degree program.

Economic Development

Legislative Council provided an overview of the Omnibus Housing Bill (S.263) on Tuesday. The Agency of Commerce and Community Development (ACCD) would get $6M for the remote work program. The Department of Tourism & Marketing wants $8.5B to support the $1B tourism industry, but the Committee would like more detail about how it would be spent. The Governor is also looking for another $50M to assist with the shortfall in the Capital Investment Fund and $30M for grand list enhancement.

Most of these programs would be funded through a mix of base and one-time monies.

The Senate Economic Development Committee is considering adding project-based TIFs to the bill. They like this tool because it incentivizes clustered development and helps build infrastructure for housing. They also see it as a bargaining chip they can use in negotiating with the House.

The Committee also looked at economic recovery grants on Wednesday. While there was initial concern with the proposed VEDA loan program, confidence is growing.

The wedding industry has been hit extremely hard – lodging and tent rentals shave taken a big hit. She noted that many businesses need reserve funds to address capital issues. Lodging providers are under further strain having to compete with vacation rentals (like Airbnb) and are still recovering from the forced Covid-19 shutdown. Some companies have lost 50-80% of revenue as inflation drives up costs and labor is in short supply.

The Lake Champlain Chamber of Commerce noted that many event providers cannot adjust the prices on contracts that were booked pre-pandemic to reflect their new costs. This hurts these business more as these prices no longer reflect the actual cost of the event. We are heavily dependent on tourism which was particularly hard hit and restaurant recovery programs had 600 applications that were left unfunded – amounting to $120M in unmet need. They also agreed that the old recovery grants were too restrictive to be useful and are disappointed that BBB did not pass.

Representatives for VEDA echoed this, saying that many businesses are still in need despite previous aid. The new program needs to be flexible enough to meet the needs that exist.

Later in the week, Michael Pieciak (Commissioner, Department of Financial Regulation) provided testimony to the Senate Economic Development Committee on the Governor’s paid leave proposal in the Omnibus Economic Development bill. The Committee generally favors mandating paid leave for Vermont employees because they don’t see a way to achieve universal coverage without a mandate. Pieciak noted the administration is looking at New Hampshire’s RFPs to see what plans emerge. Currently the state is looking at paid leave for state employees before trying to get the public to buy into it.

Members of the Committee noted that most developed countries have universal paid leave policies, but with the number of small businesses in the state, business owners may be upset about being forced to provide paid leave for their employees while they may not get to enjoy the same benefit. This same principal might apply to state employees as well if the public is dis-inclined to provide this benefit to state employees if they do not also receive it (this argument doesn’t seem that strong to us given how generous the benefits packages already are for public employees). There are also issues with seasonal and part-time workers who may not be able to take advantage of this benefit even if they pay for it in payroll taxes – roughly 66k workers statewide.

The Joint Fiscal Office warned against a voluntary program because they are often unsustainable. Voluntary programs tend to lead to cost increases due to adverse selection (only people who are going to use the benefit paying into it).

Joan Goldstein (Commissioner, Department of Economic Development) testified about the Grand List Enhancement Program that is included in the bill. The program would help local municipalities by freezing the value of their grand list if the value of the grand list dropped by 25% over a 10 year period. There were only 51 towns that have above a 1% grand list growth, the rest were flat or declined (largely driven by commercial real estate values). Under this proposal, ARPA funds would be set aside for capital investment for towns that qualify in order to fix and rehabilitate declining properties. The idea is jump start municipalities that are struggling with investments. Priority would be given to business in hospitality and tourism. Arts and culture businesses or non-profits would automatically be eligible for ARPA funds.

It was reiterated that the state’s ARPA guidelines need to be made more flexible so the Department can get funds out to where they are needed.

The Senate Natural Resources Committee came back to S.234 (Act 250 reform) on Wednesday. The Vermont Natural Resources Council (VNRC) had a feedback on a number of points for the Committee. Most notably, they opposed the New Town Center designation in current law. They also strongly supported the addition of a road rule to prevent forest fragmentation (which may draw a veto from the Governor, the Committee is trigger shy on this). There was also a request to make downtown board decisions reviewable by appeal or some other mechanism.

VNRC has generally opposed shifting environmental review to municipalities, however if the rules and designations we have in place today existed when Act 250 was written the legislation would probably look quite different (the majority of municipal zoning laws were passed after the creation of Act 250).

The Agency of Natural Resources (ANR) supports the exemptions in the bill to allow for rapid growth in downtowns that can take advantage of ARPA funding window. They also offered some technical corrections around floodways and other zoning issues. They do not feel that S.234 represents “comprehensive” Act 250 reform, this opinion is shared by the Governor. The Road Rule in particular is not something the administration can support. There are also concerns around the volume of applications the Agency may receive and their ability to handle them. This is likely to mean that the speed of the permitting process will not actually improve because ANR doesn’t have the staffing to handle applications in a timely manner.

About 50 towns have adopted the highest standards for flood hazard mitigation which provides them with greater leeway in local permit referrals and also insurance compliance for federal funds in hazard events recovery.
Flood plain and river corridor management are being addressed to allow natural water backup and settling to avoid rapid run-of-channels and damaging flow rates.

Chairman Bray reiterated the purpose of this bill – we want to look at enhancing Smart Growth development and increasing our ability to plan for the protection of “green spaces” we have while a major pressure for development that is needed for housing. Balancing these, we have had three years of “inability to make progress on Act 250 issue.” Some parts of the bill are housekeeping catchups, but they may have to choose to leave some for another day as they seek to move something.

Another aspect the Committee discussed was the need for investments in municipal water and sewer infrastructure to support additional downtown development. Many existing municipal systems are at capacity now, but the Governor has included ARPA funding for this in his budget recommendation.

The Committee came back to this later in the day, hearing from the Vermont Housing and Conservation Board (VHCB). They support the priority housing project program and the regulatory incentives attached to it. Something they are concerned about is that many projects in the past have been targeted at affordability for 30% of median income, for these new projects they want a wider target band of 30-100% (preferably with a range provided within the same project). There was significant discussion on how to make these projects perpetually affordable.

There was a broader point around these programs, such as priority housing projects, only being effective if they market forces still created incentive for builders. The intent of these programs is to lower the barrier to entry and some of the friction to make downtown housing projects more feasible.

VHCB also supports S.200 which would create master site permits. However, there was some discussion about this bill becoming a vehicle in the event of a veto from the Governor. This way they would have a fallback bill.

The Committee began marking up (a process of revising the language in preparation for passage) the bill on Friday. Sabina Haskell (Chair, Natural Resources Board) agreed with the Administration that nobody wants to leave over $1B in potential ARPA funds on the table, however she believes that larger and more comprehensive changes should be postponed until we have a strategy in place to prioritize those ARPA and infrastructure projects (the road rule being one of these). She also echoed concerns about ANR and NRB staffing levels being able to support the influx of applications they are anticipating. The Committee aske her to come back with a recommendation about what to move forward with.

The Vermont Natural Resources Council reiterated their support for the road rule and also voiced support for additional staffing at ANR and NRB. The Committee discussed at length whether or not to include the road rule but did not come to a resolution. They will also need to decide whether or not to pursue forest fragmentation provisions as that is also likely to draw a veto.

Housing

Mara Collins (Executive Director, VHFA) provided testimony on the Governors affordable housing program to the Senate Economic Development Committee on Wednesday. She relayed that the Governor felt the need to signal to contractors that there will be help with creating affordable single-family homes. The price of homes has skyrocketed and more funding has gone towards affordable rental housing not owned housing. We make home ownership affordability complicated.

We have to build affordable housing to put more housing stock in the market – giving home buyers more money in a market that doesn’t have enough housing stock does nothing to help the home buyer. Collins noted that many native Vermont homebuyers are still being outbid (needing a mortgage puts you at a disadvantage). In addition, homes are selling for more than asking price in bidding wars, which prevents mortgaged buyers from competing because banks generally won’t allow them to pay more than the asking price.

This program would build more modest homes that are affordable and would be open to families who make between 60% and 120% of median income. It still costs more to build houses than they appraise for (i.e. building affordable single family homes is not economical right now without subsidies). The money would go to builders when a sale is made to a qualifying person which would navigate around the existing bidding war problem. VHFA would track appreciation on the house and would recoup some of the subsidy if it appreciates too much, this way they can pass it along to the next owner.

There was some discussion about where development might happen, but other pieces of legislation (and municipalities) guide those decisions. The Committee seems to be lukewarm on this proposal, but advocates seem to be behind it.

The Committee heard from the Vermont Planners Association on Friday in regards to S.226 (housing bill). Planners cited provisions from several different bills, but specifically proposed expanding the Downtown and Village Center Tac Credit Program and eliminating state water/wastewater permits if there is an applicable municipal one. They also proposed incentivizing more multi-family homes by removing water/wastewater permitting for accessory dwelling units (since the main structure is already permitted). They also encouraged more investment in municipal water/wastewater capacity as this is one of the largest limiting factors to growth.

There was discussion of how the state should determine if a municipality is capable of handling permits that meet state standards (the short answer seems to be that many, if not all, do). Several bills are in play; the House could send over H.511 (although that seems unlikely) and the Senate Natural Resources Committee is working onS.234. There are merits to keeping those bills separate from S.226 even though they would work in tandem.

Good Government

The Committee came back for discussion on S.171 this week. They questioned the applicability of what other states have done with ethics codes because most state constitutions all talk about separation of powers but none of them have the same authority for supreme court to regulate itself as Vermont does (this may or may not be true, legal experts have not reviewed this claim).

The Committee identified three different approaches to this bill:

1. Universal coverage with exemptions for specific departments, agencies, or branches of government.
2. Only cover specific departments, agencies, or branches of government (inverse of option 1).
3. Only cover public officials not currently covered by other ethics policies (such as the Governor and other statewide elected officials).

The Committee seems to be learning towards option 2. Essentially they would like (although there doesn’t seem to be universal agreement) to have different codes of ethics for each branch of government.

Campaign for Vermont issued an action alert this week on  S.171. Your input on this legislation is invaluable to creating a universal set of expectations for the conduct of public officials.

Education

Legislative counsel presented a strike-all of S.283 to the Senate Education Committee on Tuesday.

Key pieces of the bill include:

1. Determination of residency with 1 yr carveout for definition of refugee.
2. Amending the process for expulsion of students (creates a uniform process across public and private schools and prevents children under 8yo from being expelled).
3. Asks for a report on the impact of establishing common age for entering kindergarten.
4. Asks for a report on impact of creating statewide uniform school calendar.
5. Asks for a report on statewide remote learning attendance.

NEA supports the bill, particularly the refugees section. Suspension or expulsion of students is also an issue that has been around for a long time. They did raise some concerns about the Agency of Education’s capacity that were echoed by the Principal’s Association.

The House Ways & Means Committee took testimony this week on education finance restructuring. There are several different models that the Committee could consider: one looked at a base level of funding excluding Act 46 incentives, as these are about to expire. The universal base would then be weighted for rate of english learners (ELLs), rurality, poverty, grade level and other factors until a weighted level of funding was arrived at. Another model would exclude ELLs from the base but would instead issue an ELL grant of roughly $23,000 per qualifying student. The base spending would then be multiplied by the other weights to get the weighted cost per student and the ELL grant would be added in afterwards.

Essentially, the question is to stick with weights only or to break out ELLs as a grant (known as an equity payment). Most ELL students are in Chittenden County. The Agency of Education noted that in order to make the model work they had to make several assumptions that could lead to different levels of spending then what was modeled. However, there was no way to do the model without making these assumptions. The Committee does not have a clear sense which direction they would want to move at this time. The Senate Finance Committee seems to be further along in this process.

The Senate Finance Committee received another briefing on the Pupil Weighting Task Force report on Wednesday. The Agency of Education has not fully modeled what the options presented in the report (weighting vs cost equity grants) would look like for taxpayers but there was some discussion of using some of the surplus Education Fund monies to lessen the impact (would only last for a year or two).

The Committee reiterated that they are hoping the Senate Education Committee will take the lead on this, but they would like to see a side-by-side comparison of the two systems and what it would mean for individual districts. The Committee will come back to this next week to analyze the impacts of both proposals further.

The House Education Committee reviewed H.456 and H.377 – bills that deal with Vermont State Colleges(VSC) – on Friday. Sophie Zdatny (Chancellor, Vermont State Colleges) requested more time to review the bills before providing specific feedback, but was generally supportive.

A couple interesting things the bill would do includes:

• Requiring high school students to complete FAFSA prior to graduation.
• Asks VSC and Vermont Student Assistance Corporation (VSAC) to work together and share data.
• Strategic plans for investment from the legislature.

There may be some issues around personally identifiable information that VSC, VSAC, and the legislature may need to work out.

Things to watch for next week:

Statewide Code of Ethics (S.171) – Senate Government Operations on Tuesday

Strategic Goals & Reporting Requirements for VSC (H.456) – House Commerce on Tuesday

Omnibus Housing Bill (S.226) – Senate Economic Development on Wednesday

Act 250 Reform (S.234) – Senate Natural Resources on Wed and Friday

Changes to Act 46 – House Education on Wed and Thursday

$15/hr Minimum Wage (S.52) – Senate Economic Development on Friday

Paid Family Leave (S.65) – Senate Economic Development on Friday