Vermont Legislative Update 01-17-2020 - An analysis from DRM's Government & Public Affairs Team

Downs Rachlin Martin PLLC[co-author: Danielle Bradtmiller]

Vermont Legislative Update Quick Links

Paid Family Leave bill heading to a showdown

Fate of Act 250 District Commissions hangs in the balance

State Auditor at odds over water quality spending

Agency reports on PFAS regulation

Committee considers regulation of non-compete agreements

Brattleboro Retreat provides bed expansion update

Competency to stand trial debated

Consensus forecast raises revenue estimates

Cloud tax back on the docket

Lead testing will wrap up by the end of the school year

Committees prepare to overhaul pre-K

Rural Health Task Force presents report to health committee

Autonomous vehicles and highway safety plan updates

Public records debate continues

OneCare Vermont details operations and programming

Paid Family Leave bill heading to a showdown

The Senate approved the conference committee report on the paid family and medical leave bill on Friday, with a vote of 20-9-1. H.107 will now head to the House for a vote. This new benefit would be funded with an employee-paid 0.2 percent payroll tax. The committee agreed to keep an option by which employers can cover that cost in whole or part. Upon approval by the Commissioner of Financial Regulation, an employee can be exempt from the tax if their employer complies with the requirements in the bill through their own benefit plan.

The tax will support the following benefits:

  • A qualified employee shall be permitted to receive a total of not more than 12 weeks of Family and Medical Leave Insurance benefits in a calendar year which may include:
    • Up to 12 weeks of benefits for parental bonding leave taken by the employee;
    • Up to eight weeks of benefits to care for a family member; and
    • Family members include:
      • child or foster child;
      • a stepchild or ward who lives with employee;
      • spouse, domestic partner or civil union partner;
      • parent or parent of the spouse, domestic partner or civil union partner;
      • sibling;
      • grandparent; grandchild.

If an employee opts into temporary medical leave coverage for themselves, they are also eligible for up to six weeks of medical leave for themselves. The additional cost to them is a 0.38 percent payroll tax. Employees can use this benefit once each calendar year.

Determination of reimbursement:
The portion of the employees average weekly wage that is less than or equal to 55 percent of Vermont’s average weekly wage shall be replaced at a rate of 90 percent.
The portion of the employees average weekly wage that is greater than 55 percent of Vermont’s average weekly wage will be replaced at a 55 percent rate.

This is a mandatory payroll tax that must be paid by all workers. Progressives and a group of liberal Democrats believe that without mandatory temporary disability benefits, too many will be left out of the program, and therefore this group won’t support the bill. On the other side, the Republicans are joined by a group of moderate Democrats who also don’t support the bill. The Governor has promised to veto anything that includes a payroll tax, so passage of H.107 is looking highly unlikely.

Fate of Act 250 District Commissions hangs in the balance

Last week, in a joint presentation, the Vermont Natural Resources Council and the Scott administration proposed a package of changes to modernize Act 250. Included in the proposals are changes to how permits are administered and the elimination of District Commissions to be replaced by a new professional three-member Natural Resources Board that would rule on all major applications. The new board would also include two regional members from each project-originating district.

The House Committee on Natural Resources, Fish, and Wildlife dug deeper into the proposal this week with a review of draft language incorporating the changes. A side-by-side comparison between the joint proposals and the committee bill introduced last year showed many areas of agreement, such as protections for river corridors, forest blocks and connecting habitats. The joint proposal also proposes the elimination of Act 250 jurisdiction in Designated Downtowns and Neighborhood Development Areas.

The proposal to eliminate District Commissions has dominated the committee’s discussions. Expressing concern over a loss of regional control, committee members conveyed a desire to examine the current district commission process and address problems rather than toss them out altogether. “In our committee bill we contemplated strengthening the board without making changes at the regional level,” said Committee Chair Amy Sheldon, (D-Middlebury). “We need a better explanation of the problem we’re trying to solve.” Representatives from the Agency of Natural Resources and VNRC defended the recommendations as preserving regional differences, pointing out that the vast majority of Act 250 applications are “minor” permits that will still be decided at the district level, as will the finding of facts for all permits.

While acknowledging the lack of time for more rounds of witnesses, the committee plans to invite current and former district commission members to testify on their experiences in the Act 250 process in the coming weeks.

State Auditor at odds over water quality spending

In July 2019, the Vermont State Auditor's office released a report entitled, “Where's the Money Flowing- Cost-Effectiveness of Lake Champlain Clean Water Efforts.” State Auditor Doug Hoffer spoke with the Senate Committee on Agriculture this week about the report, taking issue with the allocation of funds intended for the reduction of phosphorus in the Lake Champlain basin.

The State has allocated more than $66 million to Lake Champlain Basin projects from FY 16 to FY 18. Wastewater and stormwater projects received 53 percent of these funds, including 41 percent of all state grants, even though most phosphorus does not come from these sources; the majority of phosphorus comes from the agriculture and natural resource sectors.

The report notes that wastewater and stormwater projects were among the least cost-effective solutions to reduce phosphorus, and asks why projects with low cost-effectiveness were prioritized in the early years of the Clean Water Initiative. An answer may be that as stormwater and wastewater projects provide many benefits to municipalities, from public sanitation to economic development, it is in the interest of municipalities to leverage state funds whenever possible.

Julie Moore, Secretary of the Agency of Natural Resources, countered that the Auditor’s report did not take into consideration federal restrictions on how the funds can be spent, and that since 2018 monies have been more targeted at phosphorus reduction. When asked if he had any recommendations, Hoffer replied “none at this time.”

Agency reports on PFAS regulation

The House Natural Resources Committee held a hearing on Thursday on the state’s response to legislation passed last year, Act 21, which requires that all public water systems monitor the presence of PFAS substances. Per- and polyfluoroalkyl substances are a group of man-made chemicals that includes PFOA, PFOS, GenX, and many other chemicals. They have been manufactured and used in a variety of industries around the globe since the 1940s. Act 21 requires the Agency of Natural Resources to adopt a maximum contaminant level for five listed PFAS contaminants and requires ANR to issue a plan to regulate PFAS substances in surface waters.

Last year, the state filed suit against 3M and Dupont for manufacturing PFAS. The state is also part of a multi-district firefighting foam suit.

Matt Chapman, Counsel for ANR, provided an overview of the agency's compliance with the statute. He said that Act 21 establishes new PFAS drinking water standards and requires that 592 water systems be tested by December 2019. Only 11 have failed the test.

Asked about the source of PFAS contamination, Chapman said it is too early to tell, and there is no obvious source. Committee chair Amy Sheldon, D-Middlebury, expressed her surprise and concern to learn that PFAS is present in waxed dental floss.

The state has collected PFAS data from almost all state landfills. The state is now testing biosolids from several wastewater treatment facilities. The state has also required alternatives analysis for treatment of PFAS leachate at landfills. This is a novel challenge, since no landfills are treating PFAS in leachate.

Committee considers regulation of non-compete agreements

The House Commerce and Economic Development Committee heard from numerous witnesses this week on both sides of legislation to restrict the use of non-compete agreements. The bill, H.1 went through many iterations last session, and the committee is considering further changes to its latest version.

Like many Statehouse bills, H.1 is largely driven by personal stories of hardship. A bike tour manager argued that she was being forced from her profession after signing a non-compete agreement that she did not understand and that was not part of her original employment documents. Her testimony follows other personal stories that the committee heard last year.

Attorney Stephen Ellis said the issue is adequately handled through the courts, and he argued that he is not aware of any Vermont Supreme Court decisions that need to be overruled. He said courts apply standards of reasonableness and fairness.

Austin Davis of the Lake Champlain Regional Chamber of Commerce offered a proposed amendment to the bill that would allow non-compete agreements with exempt employees and non-exempt employees who are paid more than 1.5 times the minimum wage and are key employees.

The Vermont Chamber of Commerce presented its proposal which would eliminate the requirement that non-compete agreements include “garden leave” provision. That provision is a payment to an employee during the term of an agreement of at least 50 percent of the employee’s base salary.

The committee is likely to further scale back the bill when it takes it up again next week.

Brattleboro Retreat provides bed expansion update

The House Corrections and Institutions Committee heard from the Agency of Human Services, Buildings and General Services, and the Brattleboro Retreat on Wednesday on the status of the Brattleboro Retreat’s 12-bed expansion for the most acute mental health patients. The beds are scheduled to open in late June. AHS Secretary Mike Smith told the committee there continues to be a desperate need for this level of inpatient beds. The state currently has 45 beds for this level of care and has been at capacity for several years.

Smith provided an update on the events that have transpired over the last week. He said the tone of discussions has changed and there is a path forward for AHS and the Retreat to work together.

Brattleboro Retreat Chief Executive Officer Louis Josephson said that there will be a shortfall of $1.7 million for the expansion. There are enough funds for the construction project, but not enough for fit up costs that will be needed before opening. He said after years of balancing its budget by using surplus funds, there is not enough money left to cover the cost overruns for the project. Josephson acknowledged that the Retreat underestimated the cost of the project after AHS asked the hospital to consider the expansion and that in better times the hospital probably could have found the money to finish the work.

BGS Commissioner Chris Cole said there is an additional request of $250,000 in the FY21 capital bill to help the Retreat.

Competency to stand trial debated

The Senate Judiciary Committee took testimony on Tuesday on S.183, a bill that would extend the time a person remains in state custody if the person is adjudicated not guilty by reason of insanity for a homicide or attempted homicide. Under current law, those that are found not guilty due to insanity at the time of the crime can be released as soon as 90 days later. The bill as drafted would extend that time to three years.

The bill:

  • Establishes a three-year initial commitment period for a person adjudicated not guilty by reason of insanity for a homicide or attempted homicide;
  • Requires the Criminal Division of the Superior Court to hold a public safety hearing before the Department of Mental Health can discharge or discontinue treatment for a person who is in the department’s custody after being adjudicated not guilty by reason of insanity for a homicide or attempted homicide;
  • Requires the Department of Mental Health to notify state’s attorneys and crime victims before a person is released and allows them to speak at the court hearing that determines whether the person can be released to the public;
  • Requires reporting on availability of psychiatric support services during the criminal process, mental health services available in a correctional setting, and forensic models used in other states; and
  • Implements a public education campaign regarding the operation of the forensic care system.

Assistant Attorney General David Scherr said Vermont hospitals could be at risk of losing their federal funding if the state establishes a three-year commitment period because hospitalizations need to be based on treatment. He said the only way to address this issue is to have a secure forensic unit for individuals who are mentally ill and a danger to themselves or the community but who are not eligible for psychiatric hospital level of care. He also said any legislation needs to take into account due process and constitutional rights.

The committee will take up the bill next week.

Consensus forecast raises revenue estimates

Each year in mid-January, the Emergency Board adopts a Consensus Revenue Forecast. The Emergency Board consists of the four committee chairs from the “money committees” and the governor. The legislature’s economist Tom Kavet and the administration’s economist Jeff Carr produce a common number representing the state’s available funds. Representatives of the legislative and executive bodies, as members of the E Board, then vote to adopt these numbers which become the official constraints for appropriations and taxes. The rest of the legislative session is then spent writing and debating a state budget for the following fiscal year that lives within those means.

Legislative economist Tom Kavet described the newly adopted forecast to the House Ways and Means committee as a very modest adjustment to the previous forecast. Fears earlier this year of an escalating trade war were quelled when the revised NAFTA passed Congress and recession concerns receded. The forecast estimates revenues across the General, Transportation and Education Funds at about one percent higher (about $23 million) than previously thought for FY 20 and 21. In spite of stagnant population and job growth, Vermont’s unemployment rate, at 2.3 percent, was again the best in the nation.

While discussing how long economic growth in the U.S. could continue without a recession, Kavet pointed to Australia, a nation in the midst of the longest sustained economic expansion ever, that is now threatened by vast wildfires destroying agriculture, towns, and wildlife habitats, and impacting public health and economic output.

In response, committee members noted that Vermont would benefit by modeling how climate change is going to effect the state’s economy in the next five to ten years in order to begin planning accordingly. Kavet cited increased flooding and loss of winters as major negative factors. One member said that the state’s current lack of grappling with and planning for the realities of climate change felt like fiddling while Rome burns.

Other items of note:

  • The Transportation Fund looks flat into the future due to the fee-based nature of many of its revenue sources. Additionally, gas tax revenue is effected by overall vehicle efficiency gains, possibly telecommuting and growth in urban areas vs. rural.
  • Telephone Personal Property tax continues to decline. This is caused by changes from traditional phone service to newer technologies such as voice over internet protocol. The committee flagged this issue as one to be reconsidered and perhaps structured differently to reflect changes in phone use and technology.
  • Cigarette and Tobacco tax revenue was upgraded by $2 million due to stronger than expected revenues from the new vaping tax. The state grossly underestimated how many people are vaping.
  • Meals and Rooms revenues are benefitting from the rapid growth of on-line short-term rental income. But new revenue from on-line travel agencies has been much weaker.

Cloud tax back on the docket

he tax-writing House Ways and Means Committee received a refresher and overview this week regarding a proposed Sales Tax on Cloud Services. A “cloud tax” refers to the imposition of the six percent sales tax on prewritten computer software that is accessed remotely via the internet, also called Software as a Service, or SaaS. Last year, the House passed the cloud tax as part of its revenue package but the Senate did not favor it.

Legislative Counsel Abby Sheperd and Fiscal Analyst Graham Campbell reminded the committee that this issue has been debated intermittently in the legislature for the past ten years. Beginning in 2010, a tax has either been imposed on prewritten software accessed remotely, or there has been a moratorium on such a tax, and in 2012 the legislature actually allowed the retroactive return of such taxes back to 2007. Most recently, in 2019 the legislature required the Tax Department to do outreach and education for the technology sector on industry responsibilities regarding the current law and a possible repeal of the exemption. Eighteen states currently tax SaaS.

Campbell estimates that the cloud tax would raise $6 to $7 million for FY 21 based upon data from the Bureau of Economic Analysis. This estimate is up a full $1 million from his estimate from May due to the robust growth of software purchases in the U.S. The committee will take more testimony in the coming weeks and expressed that it is likely to include cloud tax in its revenue plan.

Lead testing will wrap up by the end of the school year

David Englander, Senior Policy and Legal Advisor for the Vermont Department of Health, updated the House Committee on Education on the status of lead testing in Vermont schools and childcare facilities. Englander announced the launch of a new state website, allowing the public to access test results. Providing the latest summary of the results, Englander said that school testing should be finished this school year. Of the 450 schools and childcare facilities, 111 have been tested, and all but eight are scheduled to be tested. Of the schools already tested, 79 percent of them have at least one tap testing at or above the action level. Only one school and one child care facility have required more than tap replacements. Two other samples had levels over 300 parts per billion and were thought to be from sinks that were not being used or due to an error in testing. Englander told the committee that Act 66 is more stringent than the rule the Environmental Protection Agency is proposing, and that the Department proposes Vermont stick with the standard set by Act 66.

Rep. Caleb Elder, D-Starksboro, raised concerns that rules the department is proposing in relation to Act 66 may be beyond legislative intent. Specifically referencing the language, “if the Department of Health decides to lower the level, it can do so at a later date,” Elder stated, “that sounds legislative.” Taken aback by learning that Elder had access to the draft rule, while also admitting anyone could read it, Englander still made the request that the draft not be further shared until it is final. Elder replied that he hopes to find clarity when the rules are posted. Englander was hopeful the rules would be filed and posted within the next week.

Committees prepare to overhaul pre-K

Two key House committees reviewed reports and recommendations this week concerning Vermont’s pre-K system. The House Committees on Education and on Human Services held a briefing to begin framing its work.

Act 166 of 2014 created a mixed delivery system of public and private providers, ensuring ten hours per week of prekindergarten for three- and four year-olds at no cost to families. The percentage of three- and four-year-olds participating in the state’s publicly funded pre-K options is one of the highest in the country. The program is administered by both the Agency of Human Services and the Agency of Education. A consistent complaint about the current system is the administrative redundancies and inefficiencies of complying with two sets of regulations. But there was not a clear recommendation to move program jurisdiction solely to one agency or the other. Testimony and deliberation will begin in the education committee.

Rural Health Task Force presents report to health committee

The Rural Health Services Task Force presented its report to the House Health Care Committee on Tuesday. Green Mountain Care Board member and Task Force Chair Robin Lunge said the task force focused its analysis on rural health delivery in three main areas: workforce, revenue stability, and care management.

Vermont Health Care Association representative Laura Pelosi stated that Vermont’s health care workforce is aging, there is a decline in licensed professionals, and there are workforce vacancies in every sector. She said Vermont’s health care workforce crisis is driven by several immediate factors including student debt, education and credentialing challenges, licensing challenges, and provider burnout. Pelosi reviewed the financial impact of vacancies, the actions taken to date, and recommendations to address these issues. The Workforce White Paper can be found here.

Lunge reviewed the issues with revenue stability. She said that operating expenses are growing faster than revenues, reimbursement rates do not cover inflation, and personnel costs continue to increase. Lunge also presented the impact of hospital closures on Vermont.

VNAs of Vermont Executive Director Jill Olson said a lot of work is currently being done to improve care coordination and the task force fully supports the delivery system reform dollars currently being discussed in the 2020 Budget Adjustment Act. She said these funds are critical to maintain and build investment in existing care coordination functions in home and community-based services, and promote the coordination of data sharing.

Autonomous vehicles and highway safety plan updates

The Vermont Agency of Transportation updated the House Transportation Committee on the status of the Automated Vehicle Testing Act. The act creates a permitting framework to allow the testing of automated vehicles on state and local highways in Vermont, and requires that VTrans publish an Automated Vehicle Testing Guidance and permit application no later than Jan. 1, 2021. Joe Segale, VTrans Policy, Planning and Research Bureau Director, said the guide was almost ready for release. Committee members were very interested in automated vehicle technology and generally agreed that it could make our roads safer.

The committee also heard from VTrans on the progress of the VT Highway Safety Alliance’s Strategic Highway Safety Plan 2017 - 2021. In the third year of the plan’s implementation the state is on target for a two percent per year decrease in major crashes over a five-year average. Evelyn McFarlane, VTrans Safety Plan Coordinator, told the committee that partnering with business stakeholders like 3M for reflective gear on initiatives such as the “Watch for me Campaign” and the “Be Safe Be Seen” promotion have been successful.

Public records debate continues

On Thursday, the Senate Government Operations Committee heard from representatives from the Vermont Press Association, the Vermont Association of Broadcasters, the state archivist, the Vermont Natural Resources Board, and the American Civil Liberties Union expressing support for a recent Supreme Court ruling that the costs for public inspection of records can only be charged if a petitioner requests a hard copy.

Vermont Association of Broadcasters Executive Director Wendy Mays said that like elected officials, her eight commercial and public television stations and 98 radio stations have a duty, responsibility and obligation to serve the communities in which they are licensed and to provide the real news Vermonters trust and rely on to stay informed. “Like you, we are part of the checks and balances system that defines our country’s great democracy. Without journalists who ask the hard questions and dig deep to find the truth, who would hold people in positions of power accountable?.... The legislature exists to create laws, police exist to enforce laws, courts exist to interpret laws, and the media exists to uncover and expose law breakers. And since bad apples are not usually forthcoming with the truth, sometimes records are the only way for us to find it,” said Mays.

Mike Donoghue, Executive Director of the Vermont Press Association, told committee members that Attorney General T.J. Donovan’s policy institution of “Pay to Play” or “Pay to Read” is a barrier to needed government participation by Vermonters by charging taxpayers to have access to public documents,. Donoghue also pushed back on the point that records requested of the AG’s office were used by law firms to sue the state, emphasizing the Secretary of State’s assertion that why somebody might want to see a public record is never relevant. Early production of records may save the state money if a law firm considering a case against the state realizes that the case is not worth pursuing due to financial reasons or because it is without merit. The state would be required to produce records during the discovery process anyway, free of charge.

The committee will take more testimony next week.

OneCare Vermont details operations and programming

The House Health Care and Senate Health and Welfare Committees held hearings over two days on OneCare Vermont, Vermont’s accountable care organization. OneCare CEO Vicki Loner and Senior Director of Finance and Payment Reform Tom Borys detailed the structure and budget of their organization. In 2021, $43 million will be paid to Vermont providers to invest in care coordination, primary care enhancement, data, and value-based payments. In response to questions raised recently regarding transparency, Loner told legislators that they are committed to transparency and all board meetings are open to the public. They are also developing dashboards that will be posted on OneCare’s website showing quality and financial program data.

RiseVT Executive Director Marissa Parisi highlighted the RiseVT and Developmental Understanding and Legal Collaboration for Everyone initiatives that are part of the accountable care organization. RiseVT looks to amplify wellness efforts in communities. There are 16 program managers employed by Vermont hospitals. The 2020 goal is to have RiseVT in all 14 counties. DULCE is an intervention that takes place within a pediatric care office to address social determinants of health in infants, zero to six months, and provides support for their parents. As of December 2019, OneCare was able to exceed its goal of having three new DULCE locations and funded four models at pediatric practices statewide.

Several legislative committees have indicated that they will continue to review OneCare Vermont in hearings this session.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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