Governor proposes $7.7 billion budget – Governor Phil Scott unveiled his proposed $7.7 billion budget for FY2023 in a virtual budget address to the legislature last week. Scott’s proposal reflects the themes of workforce development and housing needs raised in his recent State of the State address. It also takes advantage of the influx of COVID-related federal funding that Vermont continues to receive, funds that Scott referred to as “unprecedented financial resources.”

The proposal includes:

• $72 million more for water, sewer, and stormwater infrastructure;
• A $216 million package to address climate change and community resiliency;

• $15 million from the federal American Rescue Plan to encourage construction of homes for middle-income Vermonters;
• $25 million for grants to landlords to fix rundown and vacant housing, and $105 million to construct mixed-income housing;
• $8.5 million over four years to recruit workers to move to Vermont;
• $25 million for hospital and provider COVID-related relief;
• A $50 million progressive tax relief package and $45 million tax rebate to Vermonters;
• A $51 million plan that would install up to 100 cell towers throughout Vermont; and
• Debt reduction, including retirement of $22 million of transportation borrowing and payoff of $20 million in general obligation bonds for capital projects.

Business

Alcohol laws. Equal Treatment for Spirits – Last session, H.313 (Act 70) was considered a “must pass” alcohol bill for restaurants and bars. As a lifeline during the pandemic they needed and were granted temporary authority for curbside pickup and off-premise sales of alcoholic beverages. Several other considered proposals to modernize Vermont’s alcohol laws needed more time in committee and didn’t make the final bill.

Of the many alcohol bills introduced in the past two weeks, several are aimed at creating parity between how beer and wine are regulated compared to spirits based beverages. H.686 aims to  provide manufacturers and rectifiers of spirits and fortified wines with the same licensure privileges and duties as manufacturers of malt and vinous beverages. The goal of H.685 is to extend to the manufacturers of spirits a Tied House exemption that is currently only allowed for the manufacturers of beer and wine.

H.590 creates a new definition of  “low-alcohol spirits beverage” that would be included in the  regulatory structure of “vinous beverages.” This would mean these low-ABV, ready-to-go canned cocktails could be sold to Vermont’s grocery stores via private distribution channels, rather than only through Vermont’s 78 liquor stores. The bill currently defines these beverages as below 16 percent ABV. Last session committees considered 12 percent ABV as an appropriate threshold.

Spirits manufacturers have long hoped to be able to ship their products directly to consumers. H.591 would allow in-state or out-of-state consumer shipping licenses to be granted to a manufacturer or rectifier of spirits or fortified wines in the same manner as a manufacturer or rectifier of malt or vinous beverages. Witnesses have testified that direct-to-consumer spirits  would result in the same revenue to the state, and could increase the variety available to consumers and eventually the assortment available at Vermont’s liquor stores.

Prohibited Discrimination Agreements – Act 183 became law in 2018 and, among other provisions, prohibited agreements to settle a claim of sexual harassment from including provisions that prevent an employee from working for the employer in the future.

The House Committee on General, Housing, and Military Affairs will be voting this week on H.320 which will expand these protections to all discrimination cases, not just sexual harassment complaints. A former employee who settles a claim of discrimination would be able to re-apply for their job or for another role at the company.

Organizations would not be required to re-hire the individual, but they must be given the chance to apply and could be denied based on merit. The committee acknowledged that this is a legal grey area as it would be difficult for the company to prove lack of merit without seeming discriminatory.

The committee spent a tense hour discussing this bill last week. One member continued to object to a vote saying they wanted to hear from small businesses. Small businesses were invited but none came forward to testify.  A committee member who is also a small business owner offered to share their input but that offer was rejected. The Chair postponed the vote until this week.

Workforce Development – Strategies targeting positive workforce development were tackled by the House Committee on Commerce and Economic Development. Business sector witnesses, Betsy Bishop of the Vermont Chamber of Commerce and Jordan Giaconia of Vermont Businesses for Social Responsibility testified about the systemic challenges Vermont faces to improve its economic sector.

While structural obstacles certainly include the lack of safe, affordable housing and adequate childcare, the main problem concerns the inability of the State to recruit new workers. A more sustained and robust effort to market Vermont’s economic vitality is critical to future job recruitment and retention. Witnesses from the ski and construction industries echoed this sentiment.

Government sector witnesses testified about programs aimed at supporting these goals, including the Vermont Training Program and the Brattleboro Development Credit Corporation but stated that these current initiatives are insufficient and must become part of a more comprehensive state-supported plan to incentivize people to live and work in Vermont.

Workforce development discussions will continue in multiple committee this week.

Multistate Partnership Tax – The House Committee on Ways and Means discussed a section of H.527 relating to the taxation of multistate partnerships of over 100 partners (“partnerships”).  

If an IRS audit of a partnership advances far enough, the partners can either pay the federal IRS assessment all together at the entity level or separately on the individual level. If the second option is elected, the partners do not amend their tax returns for the original tax year – rather, the partners report their IRS payments as other taxes the following year. The partnership is given the same options on the state level, but under the second option, the partners must report their payment to the IRS in amended returns for the original tax year. 

The ability to choose different strategies on the federal level versus the state level allows majority shareholders to avoid paying a disproportionately large sum at the federal level by “divvying up” the assessment while simplifying the process of paying taxes in Vermont by paying all together. Delaying reporting of assessment payments on the federal level also grants partnerships some additional flexibility.

Health Care

COVID provision extensions approved by House Health Care Committee – The House Health Care committee voted out a bill on Friday that extends COVID-related health care regulatory flexibilities and requirements that are set to expire on March 23, 2022. The bill, H. 654, was requested by health care providers due to the ongoing impact of COVID on Vermonters and the need for continued flexibility in the health care delivery system.

Included in the bill is an extension of current temporary provisions that: allows the Green Mountain Care Board flexibility on budget, insurance rate and certificate of need reviews; requires DVHA to relax Medicaid enrollment standards; allows pharmacists to extend prescriptions for maintenance medication if those prescriptions expired, and requires insurers to cover covid related testing and treatment.

The bill also creates a short-term registration requirement for out of state providers practicing telehealth in Vermont. An upcoming telehealth bill will propose a long-term licensing requirement.

In coordination with the House Health Care committee, the House Human Services committee will likely be introducing an amendment to the bill that extends buprenorphine prescription flexibility.

Energy

Municipal Building Energy Program – A bill to provide resources for municipalities seeking to improve the energy performance of municipal buildings has begun its journey in the House Energy and Technology Committee. The bill provides grant funding and technical support for audits, engineering and design, weatherization, and fuel switching.

The Vermont League of Cities and Towns testified strongly in support of the bill pointing to the fact that municipalities own over 7,000 buildings across the state, many of them aged and historic, and include town offices, libraries, garages, fire departments, and recreation centers where people work and gather.

Currently, municipalities are dependent on volunteer town energy committees to navigate the complicated and costly process of undertaking building energy improvements from start to finish. Those volunteers then have to convince a selectboard or council that the return on investment of the project is worth the town borrowing funds and taking on debt.

The bill would expand the current State Energy Management Program with new support positions to help navigate municipal energy projects within the Department of Buildings and General Services, and provide $48 million in grant funding.