Liquor Law Modernization Clears House

Liquor Law Modernization Clears House

H.730, a bill containing provisions to modernize Vermont’s liquor laws, has been passed by the House and will advance to the Senate. If enacted, both fortified wines and ready-to-drink (RTD) spirit beverages would shift from the exclusive purview of the Department of Liquor and Lottery and would be permitted to be sold in the same retail streams as malt and vinous beverages.  After review of a fiscal note, the House Committee on Ways and Means amended the bill to shift RTDs and fortified wines to the $0.55/gallon rate to align taxation with the new product definitions. These changes will provide greater access to products for both licensees and consumers.

Additional provisions of interest for license holders include the ability for third-class licensees to purchase tickets for the rare and unusual product raffle which was previously only available for consumers; and allowing the Department to stagger new and renewal dates for permits versus an annual renewal, which will likely expedite processing times and provide a better permitting process for new businesses.

Bill Updates

Bill Updates
  • H.703 Workforce Development: An updated fiscal note details the $41.9 million spending in the bill, which will be on the House floor for approval of amendment before advancing to the Senate. The bill contains investments in the CTE system, funding to retain healthcare workers, and incentives to attract new workers to move to Vermont.
  • H.492 Act 250 Governance: The House passed the proposal to move Act 250 appeals from the Environmental Court to the Natural Resources Board, replacing a well-defined legal process with a new board of review consisting of political appointees with limited legal training. Objections to the proposal raised on the House floor focused on the tight timeline to spend APRA dollars. With many housing and development projects that will likely need to go through the Act 250 process, some worry the disruption that a reconfiguration of Act 250 governance could cause would slow down the process of getting ARPA dollars spent. The bill now goes to the Senate.
  • S.113 Chemical Regulation: Following the Vermont Chamber’s testimony and recommendation on S.113, the House Judiciary Committee heard from the Department of Financial Regulation (DFR) to address the Vermont Chamber’s concern as to whether or not insurance can be written or made available to manufacturers regarding medical monitoring claims for persons exposed to a proven toxic substance. DFR is neutral on the bill and did not provide the clarity needed, which will create uncertainty and put manufacturers at risk for additional costs and deter business recruitment.
  • S.269 Energy Savings Account: The House Energy and Technology Committee began taking testimony on S.269, a bill that would extend the Energy Savings Account Pilot Program for participating businesses. The original program had been impacted by a slow role out of programmatic guidelines and COVID-19 related delays. The pilot program is intended to see if greater energy savings can be found through large employers implementing their own efficiency projects with the funds their company would have otherwise paid into the Energy Efficiency charge.

Child Tax Credit Proposal Puts Senate Finance $9 Million Over Spending Limit

Child Tax Credit Proposal Puts Senate Finance $9 Million Over Spending Limit

The Senate Finance Committee took testimony on H.510, the House-passed Child Tax Credit, which creates a new refundable tax credit of $1,200 per child, per year for families with children under the age of 6 making a gross income of under $200,000. This tax credit has a price tag of $48 million per year. The Senate Appropriation Committee has given Senate Finance a cap of $40 million to spend this year and with roughly $900,000 in tax cuts already passed out of that committee, the Child Tax Credit proposal would put them over by $9 million. The Committee has requested a presentation from the Joint Fiscal Office with a menu of potential revenue sources that could be raised to cover the hefty price tag of this proposal. They will also be presented with possible variations on the Child Tax Credit that would bring its price tag down. The Vermont Chamber is advocating for the Legislature to focus on helping Vermonters recover from the impacts of the COVID-19 pandemic within the confines of the ARPA windfall and General Fund surplus. Any new revenue options considered should not add to the business community’s tax burden as they continue to recover from the pandemic.

The House Budget Sets the Stage for a Challenge of Priorities

The House Budget Sets the Stage for a Challenge of Priorities

The House Appropriation Committee finalized their version of the budget bill, which will be considered by the full House in the coming days. This budget makes significant changes to the Governor’s recommended priorities, setting the stage for an uphill battle. The Committee accounted for all ARPA and General Fund dollars but a core disagreement between the House and the Administration is how to use one-time dollars, with the Governor recommending these funds be used for transformative infrastructure spending while the House has mixed these funds with ongoing spending.

Another major point of contention is tax relief. The Governor presented his budget with no new taxes and a $50 reduction in taxes through cuts and rebates. The House countered that with a $50 million Child Tax Credit. The House also chose not to fund the business grants, which the Senate has approved, or the Missing Middle Home Ownership Program and relocation marketing proposal to encourage more people to move and work in Vermont, both priorities of the Governor.

Reconciling all these priorities will be a struggle, but it will be even more difficult once the Senate crafts its version of the budget. The stage is now set for a clash of priorities as each of the three sides fight for their priorities over the remaining weeks of the 2022 legislative session.

Fix for Business Grants Advances

Fix for Business Grants Advances

The Senate Economic Development, Housing and General Affairs Committee approved a new business support program that establishes a forgivable loan program allowing the Vermont Economic Development Authority (VEDA) to issue loans up to the lesser of $200,000, six months of eligible fixed costs, or the amount of cumulative decline in adjusted net operating income during the COVID-19 public health emergency in 2020 and 2021. They appropriated $20 million for this program which is $6 million less than was promised last year.

The Vermont Chamber advocated for a higher cap of up to $500,000 per eligible business, based on six months of operating expenses, and to remove the requirement that businesses be in operation before January 2020 to serve those who opened right before or during the pandemic. Part of the Chamber’s advocacy included bringing the stories of businesses in impacted industries to the attention of the Committee members ahead of a vote on the bill.

The testimony clearly made an impact, as Committee members discussed a direct communication from Beth Kennett of Liberty Hill Farm in a hearing on Tuesday. The Committee was also engaged and receptive to Chris Kesler from Black Flannel Brewing, who testified that this program was intended to help businesses not only survive the pandemic, but also get back to a place where they can thrive. With these representatives from the lodging, brewing, and restaurant industries showing up to make their voices heard, the Committee got the full picture of the issues businesses with ongoing need are facing as they struggle to remain afloat without the necessary aid.

The Committee voted this bill out favorably, and it will now need to make stops at several committees including Senate Finance and Senate Appropriations before advancing to the Senate floor and then the House. There is still work to be done on this bill before final passage. The cap for the VEDA forgivable loan is far too low to provide adequate relief, particularly since payroll would likely not be an eligible cost. In addition, the bill as amended still contains several provisions of concern, including a minimum wage increase to $15/hour by 2024 and a supplemental unemployment insurance benefit of an additional $25/week per person. The minimum wage increase would come at a time of record-high wages when most employers are already paying above $15/hour for labor, and this would add additional costs to the smallest employers who can least afford the increase. The bill allocates $8 million of ARPA funding to pay for the UI supplemental benefit, which will sunset in 2024, but because the UI system’s projected costs are wildly unpredictable, it is unclear whether this will be sufficient funding. There remain questions about how the benefit increase will be paid for if and when this funding is depleted. The Vermont Chamber will continue to raise these issues as the bill progresses.

Legislature Adds to Business Costs Amid Struggle to Recover

Legislature Adds to Business Costs Amid Struggle to Recover

With more than a billion dollars of ARPA funding to be appropriated this year, the Legislature continues to find new ways to tax businesses as they struggle with ongoing pandemic impacts. Even as they work to provide a new grant program to support for businesses, they are appropriating $6 million less than promised last year. Current efforts underway to add to employers’ cost burden include:

  • $8 million unemployment insurance tax increase
  • $11 million increase on software as a service (also known as cloud tax)
  • $4 million for a corporate minimum tax increase
  • $17.7 million increase in health care premiums for businesses purchasing on the Health Care Exchange
  • $2.8 million increase on the commercial and residential property tax transfer tax
  • Unknown fiscal impact of a new $15 minimum wage and
  • Unknown cost of the Clean Heat Standard to be determined by the Public Utility Commission

All this comes at a difficult time for businesses who continue to struggle with a constrained labor force, higher wages, reduced hours, 7% inflation and endless supply chain problems. Please reach out to your legislators and help them understand the real-world situations in your businesses.