Unemployment insurance bill will increase tax burden for Vermont businesses
House bill would create new Community Broadband Authority
Contractor registry moves out of committee
Congressional delegation staff detail American Rescue Plan
Committees debrief about school spending and federal COVID funding for education
Senate Appropriations Committee still contemplating expedited budget bill
“Weatherization Collaborative” seeks inclusion in workforce development group
Without legislative intervention, Vermont businesses will experience an enormous increase in the unemployment insurance tax rate as a result of COVID-19-related claims. A Senate committee has passed a bill to delay that increase, but at the same time also voted to add significant new benefits that will further increase costs to employers.
The Unemployment Trust Fund is paid through a UI tax on business owners. Pre-COVID, the fund had a robust $500 million balance. The tax is calculated in five schedule rates, with Schedule 1 the lowest. Higher rates kick in if the trust fund balance decreases, which it has—by more than 50%—due to pandemic-related business shutdowns and resulting increases in unemployment. Without legislative intervention, the resulting UI tax rate jump to Schedule 5 would cost a majority of businesses $186.00 per employee, more than tripling the current contribution of $58.00 per employee.
The administration and the business community advocated for a freeze at Schedule 1 for the first year and a more gradual increase in subsequent years. Business owners would still be responsible for refilling the fund, but over a longer timeline. These changes would not impact UI recipients or state finances.
The Senate Economic Development Committee has approved a bill (S.10), adopting these changes, but it also added a one-year, 20% increase in UI recipient benefits, at a cost of $31-$37 million, and an additional permanent $50.00 weekly per UI recipient with dependents, costing $14 million annually, as proposed by Sen. Kesha Ram, D-Chittenden.
Committee chair Michael Sirotkin, D-Chittenden, said the administration’s proposal was "rate relief" and tallied the postponed payments as a $127 million benefit to business owners. Sen. Randy Brock, R-Franklin, countered that the bill is a deferral, not a break, and people will still be responsible for the $127 million in additional payments.
Introduced less than twenty-four hours before the committee passed the bill, the Ram amendment is a permanent change and will be more expensive in the long run. The committee refused to take testimony on this provision and instead asked for a letter. A business leader sent a letter asking the committee to take into account additional incoming federal aid for UI recipients and families, but that request fell on deaf ears.
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H.360, an act relating to accelerated community broadband deployment, landed in the House Appropriations Committee on Thursday before the Legislature’s “crossover” week ended. The House Committee on Energy and Technology drafted the bill in response to ongoing broadband connectivity problems that have disproportionately impacted Vermont’s rural communities during COVID-19.
The bill proposes to create the Vermont Community Broadband Authority, which would support the efforts of communications union districts to expand broadband. The bill includes a property tax exemption for eligible broadband infrastructure owned by an electric distribution utility or Internet service provider working in conjunction with a CUD. The purpose of the tax exemption is to lower broadband deployment costs in unserved and underserved areas.
The bill would also establish a $6.3 million Community Broadband Preconstruction Grant Program that the Authority will administer in addition to the existing Connectivity Initiative and Broadband Expansion Loan Program. The Authority will also manage the Vermont Community Broadband Authority Fund and establish a $24 million subordinated loan program for CUDs. The Department of Public Service will transfer state-owned fiber assets and unexpended Coronavirus Relief Funds to the new Authority.
To support workforce development efforts, H.360 would delegate authority to the Commissioner of Labor to establish a Broadband Occupational Needs Survey and a federally registered Broadband Installer Apprenticeship Program. Vermont Technical College, in consultation with the Department of Labor, would establish an incumbent training program using $40,000 from the Department’s FY 2022 Training Fund.
In Vermont the architect who designs your home, the electrician who wires it, and the specialist who installs the plumbing and heating are all required to be licensed and have certified training. There is no such requirement for the contractor who builds or renovates your home. The House Committee on General, Housing, and Military Affairs took the first step aimed at changing that by passing H.157, a contractor registry bill.
Two years ago, the Vermont Office of Professional Regulation published the results of their sunrise review of professional home-improvement and construction services. Citing consumer protection, the report recommended the light touch of registration - not licensure - of the industry. OPR also stressed that a comprehensive list of contractors would greatly improve the state’s ability to contact builders with important information, such as changes to code and educational opportunities. As the construction industry began to reopen last spring after being shut down due to COVID-19, a registry could have helped the state reach contractors.
H.157 requires biennial registration by any contractor that will be performing a building or renovating project that will exceed $2,500.00 in materials and labor. The Bill also requires the use of a written contract for each project that will cost $2,500.00 or more. The committee spent considerable time trying to settle on a dollar amount that would not trigger registration for small handy-man type jobs.
Prior to issuance of registration a contractor will need to demonstrate and maintain minimum liability insurance coverage in the amount of $300 thousand per claim and $1 million in the aggregate. OPR would maintain a database for consumers to reference, and registered contractors could choose to voluntarily list certifications on their registration page.
Witnesses representing the Vermont Builders and Remodelers Association strongly supported the language. Chris West of Eco Houses of Vermont and past-president of VBRA told the committee that Vermont is considered the “wild west” of construction by our New England neighbors. “This is a modest step toward professionalizing our industry, and responsible builders should not fear it,” said West.
H.157 is the third bill in as many legislative bienniums attempting to tackle the issue. The Senate passed a bill with near identical language in 2019, but it languished after being sent to the House. The bill will likely be referred to the House Ways and Means Committee where more testimony awaits.
Staff from Vermont’s Congressional delegation gave a presentation on the American Rescue Plan last week to the Lake Champlain Chamber of Commerce and a group of stakeholders. The bill is expected to bring $2.7 billion to Vermont through a combination of funds for state and local governments, education, broadband, business programs, vaccines, healthcare affordability, and direct aid to families. That total does not include increased unemployment benefits. The act was signed into law last Thursday by President Biden.
Chris Saunders of Senator Leahy’s Office reflected upon the need to strike a balance when talking about the bill and its staggering amount of money. While Saunders appreciated that stakeholders want to know “what’s in it for me,” he did not want to gloss over what he called “the importance of this historic bill.” The American Rescue Plan contains antipoverty measures that address income inequality and will reduce childhood poverty.
Businesses will have access to funding on several fronts: through additional funding for the Paycheck Protection Program, a new Shuttered Venues Operators Grant, Targeted Economic Injury Disaster Loan Advance (EIDL) payments, a new Restaurant Revitalization Fund, and a new Community Navigator pilot program with grants for eligible organizations to help improve access to COVID-related programs and resources. The Coronavirus Relief Fund will provide $197 million to Vermont municipalities and $113 million for infrastructure, including broadband.
More information on specific benefits for Vermont businesses and families can be found here.
The House Ways and Means and Education committees received a report last week on COVID-related federal funding for K-12 schools and current school spending as reflected in school budgets. The Vermont School Boards Association told legislators that early action on the Yield Bill provided reassurance to voters, and 92 out of 95 budgets were approved at town meeting. School budgets were only up 1.9 percent in FY 2022 over FY 2021, a much lower increase than many had anticipated.
The Agency of Education said the small increase was likely attributable to surpluses created by two factors: CRF funds released in 2020, and reduced school activities from March through June 2020. Schools likely rolled these surpluses in to current budgets. Districts were also likely exercising restraint when uncertainty about revenues feeding the Education Fund were more dire than proved true.
Only a third of schools have applied for the first round of federal Emergency Elementary and Secondary School Relief Act to date. An additional $114 million will soon be available from ESSER 2. And the American Rescue Plan will provide an estimated $290 million in ESSER 3. The federal government may choose to release these funds in installments over a couple of years. The Vermont Agency of Education will retain 10 percent to address statewide issues.
Legislators acknowledged that there is a lot of federal funding available for schools for COVID recovery, assuming they have the capacity to deal with it. Some opined that schools might need professional help to manage these significant grant amounts.
The Senate Appropriations Committee continued work this week on H.315, the expedited budget bill, but kicked several decisions down the road, partially to allow the Joint Fiscal Office time to determine what state money could be swapped out for some of the hefty funding that Vermont will receive from the just-passed federal America Rescue Plan.
Vermont will receive $1.3 billion under the new federal stimulus bill, with looser spending parameters than previous Coronavirus Relief Fund money. The state will be able to spend the money on a wide range of programs and infrastructure, including broadband expansion. The committee is considering a request from the Finance Committee to add to the one million dollars in broadband line extension and CUD planning funds that are already included in the bill. The Appropriations Committee is also considering swapping out a $15 million reallocation for the School Indoor Quality Grant Program with the new federal dollars.
The committee deferred a decision on the governor’s proposed $10 million Gap Recovery Grant program that is included in the House-passed version of the bill. The program would provide a lifeline to businesses that didn't qualify for earlier state or federal pandemic aid. Committee chair Jane Kitchel, D-Caledonia, is waiting for language from the Senate Economic Development Committee that would make businesses eligible only if they don’t qualify for direct aid from the new federal stimulus bill.
Committee members have also shown support for the governor’s proposal for $25 million to expedite Brownfield revitalization projects but they have not yet approved language to be added to the bill.
In his FY22 budget address two months ago, Governor Scott proposed investing $16 million in one-time funds to accelerate weatherization of homes for low- and moderate-income families through the Vermont Housing Finance Agency. Efficiency Vermont also has designs on the funds with plans to continue an established and successful publicly-funded weatherization program.
Working together, VHFA and EVT have drawn up a proposal with the twin goals of weatherizing more homes and increasing the number of qualified workers while ensuring work is performed with a critical focus on health, safety, and the principles of building science.
VHFA and EVT have made their pitch to the Senate Committee on Natural Resources and Energy, which has passed weatherization bill S.109. With the goal of weatherizing 120,000 Vermont homes by 2030, the bill establishes a weatherization workforce group to develop plans for the coordinated delivery of a standardized, statewide building sciences curriculum that includes weatherization.
Enter the “Weatherization Collaborative,” a group of businesses and teaching organizations comprised of building science and weatherization experts: Vermont Builders and Remodelers Association; Building Performance Professionals of Vermont; the Sustainable Energy Outreach Network; Energy Futures Group, and Vermont Passive House.
While supporting the joint letter from VHFA and EVT the Collaborative has asked to be specifically included in the weatherization workforce group. “We’re the ones crawling into the attics and basements of Vermont’s homes,” said Jim Bradley, past-president of VBRA. “The members of this Collaborative have decades of experience in delivering training programs and are crucial to the success of any curriculum design.”
S.109 will move to Senate Appropriations next.