It’s All About the Money

In a normal year, committee rooms throughout the Statehouse would have been humming with activity this week with the Crossover deadline looming. That’s the date by which most bills must pass out of committee to be considered that year. But the deadline came and went on Friday with most committees strangely quiet, with two big exceptions:  House Appropriations and House Ways and Means. The state’s fiscal year 2016 budget gap of $112 million seems to have eclipsed virtually all other legislative activity.
 
Lawmakers in the two House money committees spent the week scrambling for roughly equal amounts of money ($29 million in cuts and $33 million in revenue) and both were finding the challenge extraordinarily difficult. The state’s budget challenges may be the worst the state has experienced in more than two decades.
 
Until yesterday, the Ways and Means Committee was focused primarily on a payroll tax proposed by Gov. Peter Shumlin and a sugar-sweetened beverage tax offered by health advocates, but the committee made a dramatic shift on Thursday to a proposal to cap itemized deductions at 2.5 times the standard deduction. That plan would, conveniently, raise about $32 million.
 
The proposal is politically compelling for lawmakers since nearly eighty percent of the new tax would be paid by Vermonters earning more than $100,000 per year. Eighteen percent would be paid by the 300 or so residents who earn more than $1 million per year. A tax increase on upper-income Vermonters is politically appealing to Democrats who are concerned about reports of growing post-recession income disparities. The cap on deductions has the additional appeal of being an indirect tax hike with a widely dispersed impact, making it less likely to generate focused constituent opposition.
 
Tax Commissioner Mary Peterson was nonetheless cool to the idea, telling the committee just how few Vermonters exist in the upper-income echelons, and how fluid that population is. Only 582 Vermonters reported incomes above $300,000 in each of the years 2003-12, and only 156 reported incomes over $500,000 every one of those years. Half of the filers with those incomes were at those levels for only one year. Peterson also emphasized the fact that Vermont’s tax code is already one of the most progressive in the country.
 
Vermont’s charitable organizations began lining up in opposition to the proposal, arguing that it will result in fewer private contributions. The state relies heavily on donations, since it has the most non-profit organizations in the country on a per capita basis. At the same time, Vermont ranks 48th in per capita charitable contributions, suggesting that the state has a lot to lose if large donations dry up.
 
While the Ways and Means Committee focused on tax increases to fill the state’s budget hole, other committees were looking at revenue for other purposes.  The House Health Care Committee approved both a 0.3 percent payroll tax and a two-cents per ounce tax on sugar-sweetened beverages, which together would raise about $71 million annually. Those taxes would be used to help offset the Medicaid cost shift, increase health care subsidies for low-income Vermonters, increase funding for the Blueprint for Health and subsidize primary care provider loan repayments.
 
The Senate, meanwhile, was engaged in its own search for money, looking for funds to pay for the clean-up of Lake Champlain. The Agriculture Committee is likely to propose a statewide $25 per parcel fee, plus $1 for every acre above 25, which would generate about $11 million annually.

Lawmakers started the session with an apparent voter mandate to cut spending, reduce school property taxes, and avoid other tax increases. Midway through the session the response has been mixed. Many programs are facing dramatic spending cuts, the fate of a proposed cap on school spending increases is unclear and substantial new tax hikes are likely. The response legislators receive from constituents will indicate whether a shift in voter sentiment has occurred.

Panel Approves Payroll and Sugar-Sweetened Beverage Taxes to Fund Health Care Initiatives

On a vote of 7-2-2, the House Health Care Committee on Thursday passed H.481, a bill to fund various health care initiatives. The revenue sources to fund the initiatives in the bill include a 0.3 percent payroll tax beginning Jan. 1, and a two-cent per ounce tax on sugar-sweetened beverages beginning Nov. 1, 2016. The bill repeals the employer assessment on businesses that do not offer insurance to their employees. It also makes permanent the health care claims assessment.
 
The proposal fully funds the governor’s proposed Medicaid cost-shift investment and the committee’s other health care priorities. It increases cost-sharing subsidies to lower income Vermonters, increases payments for Blueprint for Health community health teams, increases payments to primary care medical homes, and fills a budget gap for the health care advocate’s office. It also provides increases for other health care providers and home health agencies and adds funding to the Green Mountain Care Board for additional regulatory responsibilities. It also restores funding to the Area Health Education Centers. 
 
The bill creates a task force on universal coverage to develop a proposal for achieving universal health care in Vermont, requires a universal primary care study to estimate the costs of providing primary care to all residents, and creates a mental health and addiction services registry. 
 
The bill will be referred to the House Ways and Means Committee where both taxes have little support.

Vermont Health Connect Costs Continue to Rise

The House Appropriations Committee heard from Agency of Administration Chief of Health Care Reform Lawrence Miller this week on the finances of Vermont Health Connect, the state’s health insurance exchange. Miller reported that as of Dec. 31 the Agency of Human Services had spent $127 million on the development and implementation of the Exchange. Those expenses are entirely funded with federal dollars.
 
Miller said the remaining development and implementation costs for 2015 are projected at $72 million, which will also be federally funded. Miller reported that the state will pay about half of the ongoing annual operating costs of $52 million. Some of that expense is associated with the updating of the state’s Medicaid enrollment system.
 
Committee members expressed concern about the cost of the project, the inoperability of the system, and its financial sustainability. Miller acknowledged the difficulty of seeing so much money spent on a system that doesn’t work correctly. Miller said he hopes that the system will be able to handle change of circumstances by the end of May. He could not say when the website would allow enrollment by small businesses, how much the business function would cost, or whether it would be covered by the remaining federal funding.

Education Reform Bill Remains under House Scrutiny

A bill to reform the state’s education governance structure received close scrutiny from the House Ways and Means committee this week following its adoption by the Education Committee two weeks ago. After hearing concerns about a cap on per pupil spending growth, the committee sent the bill, H.361, back to the Education Committee for revisions.
 
The Education Committee considered an amendment on Friday that would lower the allowed growth rate in spending, but create an appeal process that would allow districts to exceed that cap under certain circumstances. Under the amendment, the cap would be set at the higher of either a 1.5 percent increase from a district’s prior year’s budget; or a 1.5 percent increase from the prior year’s per pupil spending amount. The secretary of education could grant a waiver from the cap based on “a number of factors,” including “sudden and unpredictable fluctuations in student needs and emergency school repair projects.”

Small Scale Renewable Energy Siting Issues to be Aired in House

The House Natural Resources and Energy Committee began a “long and intricate look” on Friday into issues related to the siting of renewable energy projects with a review of existing permit requirements and some suggested improvements from the Department of Public Service. Among the ideas put in play by DPS Deputy Secretary Darren Springer was one to allow the colocation of net metered projects totaling up to five megawatts on a single tract of land that has been identified by a town as a desirable location. Since project owners would realize economies of scale, Springer said, utilities would pay lower rates for the power from such projects.
 
A second proposal would create a pilot project of up to 2.5 megawatts to be located on a preferred site, such as a rooftop or brownfield, that would have limited aesthetic or environmental impact. Under this strategy, project owners would receive a premium for locating a project at a desired location.
 
The presentation describes the process used for siting net metering projects, which are user-based installations of up to 500 kilowatts, and Standard Offer projects, which supply small-scale renewable energy to utilities and are capped at 2.2 megawatts. Springer said that by requiring Standard Offer projects to be awarded to the lowest bidder, a change incorporated in the last round of amendments, the cost of the projects has come down by 60 percent. Successful projects are now being bid at prices below 12 cents per kilowatt hour, he said.
 
Committee chair Rep. Tony Klein, D-E. Montpelier, said the committee will gather all of the project siting ideas that are contained in new House and Senate bills and assess what problems need to be addressed. The House and Senate will hold a joint public hearing on the proposals,  and the committee expects to send a bill to the House floor this session.

Mullin-led Panel Passes Economic Development Proposal

The Senate Economic Development, Housing and General Affairs Committee has approved a bill that is aimed at stimulating economic development, but the committee’s chair, Sen. Kevin Mullin, R-Rutland, admits that it is still a work in progress. By prior agreement with the House Commerce Committee, both will continue to work on the bill now that it has made the crossover deadline.
 
Central to the bill are a series of changes proposed by the Shumlin Administration which would make tax credits more widely available under the state’s economic growth incentive program, encourage employee training programs and provide broader incentives for Vermont students to train for careers in high demand manufacturing professions. The bill would also create two new tax incentives, ease permitting requirements in industrial parks and authorize the 12 regional development corporations to be designated Enterprise Zones in cooperation with local towns.
 
One provision in the bill attempts to address concerns with a change in Act 250 last year that was intended to limit strip development.  The provision would require the Natural Resources Board to revise and reissue a guidance document it had published regarding the so-called 9(L) provision and to provide additional training to development officials who have a hand in implementing the law.

Congressman Welch Optimistic About Federal Transportation Funding

Vermont U.S. Rep. Peter Welch told the House and Senate Transportation Committees on Thursday that he is optimistic that Congress will agree on a long-range funding source for the federal transportation program despite partisan posturing in Washington. Welch, a Democrat, had an amiable conversation with Vermont lawmakers, recalling his 13 years in the Senate and his own service on the Senate Transportation Committee.
 
Welch said two funding sources were under debate in Washington and he would vote for either one. One proposal would “recapture” the tax on profits shielded by American companies in foreign tax havens and the other would raise the federal gasoline tax by 12 cents per gallon.
 
Welch said it has become common for the party in power to hold onto a bill until it has enough votes within its own party to pass a measure on the floor.  But he said good transportation is an issue for the whole country, the bipartisan leadership in the House Transportation Committee is strong, and he is hopeful that a bipartisan coalition will be allowed to pass the bill.

Senate Agriculture Hears About Motor Fuel Practices

No bill has been introduced in the Senate, but the Senate Agriculture Committee held two hearings this week on a version of H.30, a bill introduced in the House that would require gasoline distributors to report gallons sold to gasoline stations and owners to notify the Attorney General’s Office 60 days before selling a station.  In the end the committee did not act on the bill.
 
Gasoline pricing has been an issue in Chittenden and Franklin counties where some have alleged that prices are consistently higher than in other parts of the state.  Two committees of the House held a joint hearing on the matter in January but also took no action.
 
The draft bill under review in the Senate contains a provision that would provide financial incentives and legal protections for employees who provide information to the Attorney General’s office of unfair trade practices.  The whistleblower provision would apply to all industries.

VPA and Others Oppose Gas Tax Hike for Clean Water Fund

Revenues from state taxes on gasoline should be used to fund improvements to the state transportation system and not diverted to other purposes, a succession of witnesses told the House Transportation Committee this week. That notion also drew support from the Shumlin Administration during testimony provided by Commissioner of Environmental Conservation David Mears.
 
Vermont Truck and Bus Association lobbyist Edward Miller and Vermont Petroleum Association lobbyist Joseph Choquette reviewed the history of the issue in the legislature, recalling concerted efforts by a coalition of highway users and legislators to purge the Transportation Fund of unrelated expenses which it had accrued over time. The effort caused the legislature to create a Joint Transportation Oversight Committee, which had the mission of hunting down and cleansing the fund of unrelated General Fund expenditures.
 
The House Fish, Wildlife and Water Resources Committee had proposed a two cent per gallon increase in the state gasoline tax to pay for water quality improvement projects included in H.35.  The measure was stripped out by the House Agriculture Committee, but will ultimately be decided by the House Ways and Means Committee.

Panel Passes Emergency Involuntary Procedures Bill

On a vote of 10-1, the House Human Services Committee on Thursday passed H.241, a bill related to emergency involuntary procedures.

The bill limits the rule on establishing standards for emergency involuntary procedures to adults in psychiatric units in care and custody of the commissioner of mental health. It allows psychiatrists, advanced practice registered nurses, and physician assistants to prescribe emergency involuntary medication and allows psychiatrists and APRNs to call in phone orders for emergency involuntary medication. PA’s will need to personally observe these patients. It also requires PA’s who prescribe emergency involuntary medications to do so under the supervision of a psychiatrist. The bill applies to hospital inpatient psychiatric units and not to emergency or other hospital departments.

Reportable Disease Registries Bill Approved

On a vote of 9-1-1, the House Human Services Committee on Friday passed H.98, a bill that would allow the commissioner of health to provide confidential information from the state’s cancer registry to the National Breast and Cervical Cancer Early Detection Program. The bill expands access to student immunization records to school administrators and enables interstate sharing of records within the State’s Immunization Registry. It requires data on HIV/AIDS to be stored on networked computers in the same manner as data on other reportable diseases. The committee rejected an amendment offered by Rep. Paul Dame, R-Chittenden, which would have allowed individuals to opt out of having their immunization information shared through the registry.

Senate Committee Adopts Rent-to-Own Regulations

Following a public call by the governor, legislators and non-profit advocates to impose greater regulations on the rent-to-own industry, the Senate Economic Development, Housing and General Affairs Committee approved S.73 this week. Before approving the bill, however, the committee eliminated any reference to interest rate caps or interest rate disclosures. The bill as adopted includes price caps that are similar to those that exist in Maine. 
 
The rent-to-own industry argued that interest rates don’t apply to their transactions since customers are under no obligation to complete a transaction. Goods can be returned at any time at no charge. Moreover, they argued, rent-to-own transactions include free delivery, free pick-ups, and warranties for the duration of the contract period. Those costs don’t exist under installment agreements.
 
The bill will be considered by the full Senate next week.

Senate Health Committee Passes Substance Abuse System of Care Bill

By a unanimous vote on Friday, the Senate Health and Welfare Committee passed S.42, a bill that would require the Commissioner of Health to coordinate a continuum of substance abuse services through prevention and deterrence, early intervention in health care and human services settings, and treatment through various recovery support services. The bill also would establish an alcohol and drug abuse treatment council to integrate substance abuse services across the new system of care. 

S.42 directs the Department of Mental Health to create a plan and report back to the legislature by July 1, 2016 on how to implement a balanced delivery of episodic and chronic treatment services between the Department of Health, the Department of Mental Health, and the Agency of Human Services.

The bill also directs the Blueprint for Health to study the benefits and challenges of the various evidence-based behavior change models in use at federally qualified health centers and designated mental health agencies, and to design a framework to create collaboration models to ensure the most effective care at the local level.

The bill will be reviewed next by the Senate Appropriations Committee.

House Committee Oks Licensed Alcohol and Drug Abuse Counselors to Participate in Medicaid

H.20, a bill that will allow licensed alcohol and drug abuse counselors who are in private practice to participate in Medicaid, unanimously passed the House Human Services Committee on Thursday. 
 
New Commissioner of the Department of Vermont Health Access Steven Constantino said that allowing licensed alcohol and drug abuse counselors to participate in Medicaid will ensure that individuals within the alcohol and drug abuse system have the proper continuum of care. He said the estimated $159,000 cost for the expansion can be absorbed within the department's budget this year, although he has concern about future funding.

Privacy Protection in Vermont to be Studied

The Senate Judiciary Committee on Friday trimmed down and passed S.18, a bill that creates a Special Committee on Privacy to evaluate privacy issues in the areas of commerce, law enforcement, and health care.
 
As introduced by Senators Tim Ashe, D-Chittenden, and Joe Benning, R-Caledonia, the bill would have required a court to issue a search warrant before a company could release certain customer records, such as location information attributed to a cell phone. It would have established a private right of action for a person whose health care information is improperly disclosed and restricted the use of automated license plate recognition systems and the length of time data captured by the systems could have been retained to 48 hours.

Senate Health Passes Reform Bill

The Senate Health and Welfare Committee’s annual omnibus health care bill passed on a 4-1 vote on Friday.  The bill limits the maximum allowable cost for prescription drug reimbursement, requires hospitals to provide oral and written notice to individuals when they have been placed in observation status and reauthorizes the Health Care Oversight and Mental Health Oversight committees in order to maintain ongoing surveillance of health care and human services programs when the General Assembly is not in session.
 
The bill includes $1.25 million in Global Commitment funds for the Department of Vermont Health Access to increase Medicaid reimbursement rates for home health agencies, so it will be reviewed by the Senate Appropriations Committee.

Toxic Chemical Regulation Changes Creep into Senate Health Care Bill

The Senate Health and Welfare Committee lost a vote for its omnibus health care bill on Friday after a last-minute amendment was added pertaining to a newly-enacted toxic chemical restriction program. Freshman Sen. Brian Collamore, R-Rutland, voted against the bill due to a lack of testimony regarding the provision.
 
The toxics provision would allow the Commissioner of Health to adopt new rules regulating the sale or distribution of children’s products containing a chemical of high concern without the consent of a new Chemicals of High Concern Working Group, which was a key provision of the 2014 statute. The amendment also expands the requirements under which manufacturers have to report a chemical of high concern.
 
Department of Health Policy and Legal Advisor David Englander told the committee the department does not support the changes because the law to convene the working group has not fully taken effect. The committee agreed to take testimony from interested parties next week.