House Upholds Veto of S.103

The House this week failed to overturn the first veto of the session when a 94-53 roll call vote fell four votes short of the two-thirds majority needed to override the governor’s action on S.103.  Three independents joined with 50 Republicans in voting to sustain the veto.

The vote was significant for several reasons. It was the first of what may be a number of override votes expected this session after Gov. Phil Scott expressed concerns in writing over more than a dozen bills. Second, it upheld a politically difficult rejection of a bill that was identified by its supporters as a vote against children’s health. Third, it sends a message to the legislature about the future of S.197, a bill creating strict, joint and several liability and a private right of action for medical monitoring for persons exposed to toxic substances.  

In his veto message Scott said that he was not opposed to everything in the bill and would sign it if it is returned to him without the objectionable sections. The Senate Finance Committee is expected to add such language to another House-passed bill, H.736.

Finance Committee Rejects Charitable Tax Credit Cap

The Senate Finance Committee has largely agreed to a tax proposal from Gov. Phil Scott that is intended to mitigate the $30 million state income tax increase that Vermonters would otherwise see as a result of recent changes in the federal tax code.

A key provision in Scott’s plan is a new state tax credit of five percent of charitable contributions. While the House adopted most of the governor’s proposal in H.911, it capped the value of the credit at $500 per filer. The Finance Committee rejected that cap on Friday afternoon.

Non-profit organizations responded with great concern to the House proposal, which was apparently intended to push non-profits to create a more egalitarian giving structure and to raise more money from lower-income individuals. The reality of actual contributions in Vermont is striking:

• Of the $289 million in charitable contributions that were deducted in 2015, $156 million (54 percent) was given by the top three percent of filers.
• The top 15 percent of filers contributed nearly 80 percent of the total deducted contributions.

(Figures from the Joint Fiscal Office)

On Friday, Jake Feldman of the Tax Department urged the committee to eliminate the cap on the charitable credit and raise the top rate slightly, from 8.6 percent  to 8.75 percent, to pay for it.  

Philanthropic advisor Christine Zachai gave the committee compelling testimony about the risks of reducing the tax value of charitable contributions, including the enormous significance of major donor gifts to the state’s non-profit organizations. She also offered anonymous comments from major Vermont donors.

Following Zachai’s testimony, the committee voted to strike the House-passed cap and retain the governor’s proposed charitable tax credit. The lost revenue will be offset by not collapsing the top two tax brackets and by reducing rates for the top two brackets by 0.1 percent (instead of the 0.2 percent reduction planned for lower brackets).

A final vote is expected on Monday.

Senate Committees Approve Brattleboro Retreat Funding

The Senate Institutions and Appropriations committees approved a total appropriation of $5.5 million for the Brattleboro Retreat this week to expand inpatient mental health capacity and treatment for the most acutely mentally ill. The provisions are included in H.923 and H.924, the capital and appropriations bills. The funds will allow the Retreat to renovate existing space and add 12 new level one inpatient beds to the system. The funds will be available once an agreement has been executed between the Retreat and the Agency of Human Services.

The funding creates a three-part plan for the Retreat: 

1. Reimbursement rates: the state does not pay the Retreat adequately and bears some responsibility for the current financial difficulties the hospital is experiencing. The state is currently analyzing what the appropriate rate should be.
2. Infrastructure needs: the investments in the plan will increase inpatient capacity. The plan addresses the current crisis and will allow the space to be utilized in the future for populations that could be covered by Medicaid.
3. Strategic Plan: the Retreat and the state will develop a plan to address the federal Institutes for Mental Disease exclusion. The IMD is a federal rule that bars paying for treatment in mental health facilities for more than 16 beds for individuals between the ages of 21 and 64.

Judiciary Committee Splits Liability and Medical Monitoring

The House Judiciary Committee has divided the question regarding strict liability and a private right of action for medical monitoring and the two provisions are set to travel different paths. They are both contained in the Senate-passed S.197.

The sections of the bill that would create strict joint and several liability for the release of hazardous substances into the environment were struck from the bill and will be attached to S.123, a bill dealing with liability protection for animal shelters. It also includes a provision asking for a study of insurance impacts. The bill is likely to be sent to the House Commerce and Economic Development Committee for further review.

The portions of the bill that deal with a private right of action for medical monitoring may advance to the House floor in a revised version of S.197. If passed by the full House, the bill will likely result in a conference committee, where both versions will be in play. The Judiciary Committee appeared ready to act on the two measures on Thursday, but committee questions about liability for lead exposure at shooting ranges delayed action until at least Tuesday.

Commerce Approves  "Right to Repair" Study

The House Commerce and Economic Development Committee approved on Friday afternoon, S.180, a bill that would create a five-member task force charged with considering future "right to repair" legislation. Independent repair organizations are pursuing bills nationally that would require electronic merchandise manufacturers to make public their product designs and schematics. Manufacturers have strongly opposed these efforts on the basis of product security and intellectual property concerns, and the legislature has decided to study the issue rather than enact changes in the law.

Under the Commerce bill, the task force would comprise representatives of the House, Senate, the Attorney General, the Secretary of Commerce and Community Development and the Secretary of Digital Services. It would be required to consider which products to include; economic costs and benefits; effects on the cost and availability to consumers of new and used consumer electronics; intellectual property and trade secrets; and legal, privacy, and security issues.

Entrepreneurs Wanted for PII Protection Plan

The House is advancing a Senate-passed bill to promote blockchain technology and cryptocurrency. The bill also proposes a first-in-the-nation structure for a new business that would protect personal information. The provision is included in S.269, which was approved by the House Commerce and Economic Development Committee this week.  

The idea for the new business came from a faculty member at Vermont Law School. According to the bill, it would allow someone to create a personal information protection company regulated by the Department of Financial Regulation. The company would develop a comprehensive information security program that contains administrative, technical and physical safeguards to protect personal information.

There is no similar program in any other state. Advocates admit that no such business currently exists, but they hope that a favorable regulatory climate will invite entrepreneurs. S.269 was also approved by the House Ways and Means Committee and will be on the House floor next week.

Despite Cost Uncertainty, Paid Family Leave Bill Passes Senate Panel

Despite continued confusion about the first-year implementation cost of the paid family leave program proposed in H.196, the Senate Economic Development, Housing and General Affairs Committee on Thursday voted 5-1 to approve the bill.

The initial cost estimated by the Joint Fiscal Office was $12.5 million for software development, but Doug Farnham from the Department of Taxes told the committee last week that software vendor Fast Enterprises could do it for $2.5 million. Farnham amended that estimate to $3.5 million this week, but frustration over unknown costs didn’t prevent committee chair Mike Sirotkin, D-Chittenden, from urging his colleagues to pass a bill that he had hoped would go further in providing paid leave to employees.

Under the proposal, employees would pay 0.141 percent of the first $150,000 of their wages into a state fund, and they would be entitled to 70 percent of wage replacement during their leave. An employee could receive up to 12 weeks of paid parental leave and six weeks of paid family leave. Unlike the House-passed version of the bill, grandparents would not qualify for paid leave. An employee who takes paid leave must be reinstated in the first available position comparable to the position that he or she held when the leave began. The employee would not be guaranteed his or her original job, and employers with fewer than 10 employees would be exempt.

The bill has been referred to the Senate Finance Committee, where it will receive further consideration.

Workforce Development Bill Moves Ahead

The Senate Economic Development, Housing and General Affairs Committee on Friday approved its version of H.919, a bill dealing with workforce development. The bill seeks to continue the work of the state’s Workforce Development Board toward building a more coordinated system for job training and to encourage better access to career and technical education for both secondary students and underemployed adults. The committee also added language it passed earlier creating an income tax credit for people who move to Vermont and work remotely. The committee fears that the bill, S.94, will not receive due consideration in the House.

Minimum Wage Bill Advances

The House General, Housing and Military Affairs Committee has approved S.40, the Senate-passed bill dealing with increases in the minimum wage. The bill will next be considered by the House Committee on Appropriations.

As recommended by the committee, the bill is little changed from the Senate version and calls for annual increases in the minimum wage that grow larger over time until the wage reaches $15 per hour on Jan. 1, 2024. The House bill would establish a new lower minimum wage for secondary school students which is $3 per hour less.

House Passes Mental Health Bill; Senate Panel to Amend

On Wednesday, the full House approved S.203, a bill that addresses improvements to the mental system. The bill endorses mental health parity in many areas of health care regulation, supports the use of involuntary emergency procedures in secure residential facilities, and requires hospitals to report data to the Department of Mental Health on patients seeking mental health care in hospital settings. It compels the Agency of Human Services to partner with Institutes for Mental Disease entities to report federal IMD spending on persons with serious mental illness or substance use disorders and possible solutions in response to a Centers for Medicare and Medicaid Services requirement to reduce federal Medicaid spending for IMDs. A summary of the bill can be found in this previous DRM Update.

On Friday, the Senate Health and Welfare Committee reviewed the changes agreed to by the House. The Senate committee will offer a further proposal of amendment that will require AHS to conduct a financial and quality review of each designated mental health and specialized service agency in the state. The review will consider changes in operating costs, caseload trends, and the fiscal health of each agency that will inform payment rates and the potential for a review  of agency budgets by the Green Mountain Care Board.

Committee Passes Publicly Financed Universal Primary Care Bill

On a vote of 6-5, the House Health Care Committee passed S.53, a bill related to a universal, publicly financed primary care system. The version passed by the committee was approved by the Senate Heath and Welfare Committee in early March. This version of the bill requires Accountable Care Organizations and Bi-State Primary Care Association to create a draft operational model for universal primary care that is taxpayer funded.

The committee declined to support the version approved by the full Senate. That bill would have required the GMCB to develop recommendations on how to achieve universal coverage through a combination of publicly-funded programs and commercial insurance.

Committee members supporting the measure cited their philosophical belief that all Vermonters should have access to primary care services without cost sharing or deductibles. Those opposing said that the state is implementing a new model of paying health care providers but it has a limited amount of money and resources to expend. The Scott Administration is opposed to the bill because it requires a new tax and conflicts with the state’s current payment reform efforts.

The bill has been referred to the House Appropriations Committee where its fate is unknown.

Panel Advances Drug Transparency Bill

The Senate Health and Welfare Committee on Friday approved an amendment to S.92, a bill related to interchangeable biological products and prescription drug transparency. The amendment adds a working group to analyze prescription drug pricing throughout the supply chain to identify potential savings for consumers and to increase prescription drug transparency by manufacturers, wholesalers, pharmacy benefit managers, and health insurers. A summary of the bill as passed the House can be found in this DRM update.

The House is likely to concur with the changes.

Pay Parity Added to Green Mountain Care Board Bill

The Senate Finance Committee on Friday advanced H.912, a bill that revises the certificate of need process for hospitals and other health care facilities. Sen. Michael Sirotkin, D-Chittenden, offered an amendment that requires the state’s accountable care organization to distribute payments to participating providers (providers affiliated with a hospital or independent) in a “fair and equitable” manner and disclose and justify any differentials. The committee agreed to the amendment on a vote of 5-2. A summary of the bill as passed the Senate Health and Welfare Committee can be found in this DRM Update.