Amy Spear

The Priority Housing Project was established to fast-track approved projects and exempt them from Act 250 permitting regulations. Getting that designation itself can be timely but reviews of the program have generally been favorable. Multiple bills were discussed this week to build on the success of that program and expand how it can be used. Proposals include increasing caps on the number of units that could be built in a project, creating a tax incentive to exempt construction materials for these projects from sales and use tax, expanding the types of projects that qualify in Neighborhood Development Areas, lowering the bar to entry so more municipalities can create Neighborhood Development Areas, and increasing the definition of affordable rental housing from 80% area median income (AMI) to 120% AMI. With the time crunch to get ARPA dollars out the door, there were questions about if these changes will be enough to get projects moved through the pipeline in time.

The Senate Finance committee will be bundling ideas from many of the housing bills being proposed this session into one large omnibus housing bill. The Vermont Chamber supports efforts to address the “missing middle” in housing reforms and will advocate that new and existing programs address the housing crisis for middle income workers.

The Governor’s FY23 Budget includes a $3.1 million expenditure to remove the tax on military pensions for retirees and survivor benefits for military families, an effort the Vermont Chamber has supported. Vermont is one of only three states (CA, VT, VA) and Washington, D.C., that offers no pension tax relief to military retirees. The retirement age of military personal tends to be between 38-42. Removing that tax on military pensions could be another tool used to recruit and retain a diverse workforce population to address the severe worker shortages for all industries. To learn more, please contact Chris Carrigan.

The Senate Finance Committee reviewed the Governor’s tax proposals, including three significant efforts to support working families with child care costs, and child care centers with staffing retention. These include:

• An expansion of the Earned Income Tax Credit for low- and moderate-income workers.
• An increase to the Vermont Child Care and Dependent Tax Credit to 65% of the federal tax credit and a change to make it fully refundable.
• $1,000 fully refundable tax credit for Vermonters working in child care. It is expected that on average this will wipe out any tax liability for child care workers.

The House also discussed a proposal for a Child Tax Credit, similar to the credit that expired from the Federal government in 2021. Data from the US Census Bureau shows that 1 in 4 families nationally with young children used the advanced child Tax Credit to cover child care costs. On the State level, with the price tag of $50 million per year, questions remain about a long-term funding source for this program which would be in addition to significant investments promised last year in a system-wide overhaul set as a goal in statute.

With broad recognition that no legislative solution can fix the current workforce crisis, the House Commerce Committee reviewed the efficacy of existing government training programs. The Vermont Chamber voiced support for continued funding for the relocation and new worker grants, skills building efforts like the Vermont Training Program and support for second-chance hiring programs.

The testimony also cautioned the Committee that the real problem is the lack of people to fill education and training slots, proposing that Vermont needs a robust and sustained marketing effort to recruit more workers. Creating a message that promotes Vermont as a welcoming place can be demonstrated by the adoption of the Declaration of Inclusion, a statement that 25 towns in Vermont have adopted, the continued support for refugee resettlement initiatives and the passage of removing the tax on military retirement pay.

Vermont does many things well and while housing and childcare issues still need attention, recruiting more people cannot wait.

Governor Scott echoed many of the Vermont Chamber’s priorities in addressing the workforce shortage while presenting his FY23 budget proposal to the Legislature. His approach to increase affordability, attract diverse workers, and address the housing and childcare crises aligns with the Vermont Chamber’s advocacy work. Growing the workforce will require strategic investments in housing, particularly in increasing the available stock for middle-income homeowners, as well as investments in childcare for working parents. His budget funds and expands existing worker relocation programs to include more in-demand occupations and includes the exemption of military pensions from income tax to attract this diverse population to work and live here. The budget proposal also included a $50 million tax cut to improve affordability. You can read the Vermont Chamber’s statement in response to the budget address here.

The House Ways and Means Committee reviewed the findings and recommendations of the recently-released report from the Unemployment Insurance (UI) Study Committee. There is interest in increasing weekly benefits by raising the minimum and maximum amount a recipient can collect, which the Vermont Chamber is concerned could draw down funds from the UI Trust Fund at an unsustainable rate. There is also an effort to pay for extra benefits for recipients, administrative costs, or system modernization. The Vermont Chamber is concerned about increasing taxes and new fees for employers, especially now as many are still struggling with the ongoing impact of the pandemic. Also, of concern for businesses is increasing weekly UI taxable wage base as the labor shortage continues to negatively impact business recovery. The Department of Labor is also constrained by the 1970s-era mainframe computer system and its legacy programming language, which the slightest adjustment could crash entirely. After routinely crashing under the strain of unprecedented UI claims during the pandemic, it’s clear that IT modernization must be a priority before implementing any policy changes.

The Senate Finance Committee discussed S.53 which proposes changes to corporate income tax . Included is an increase to the minimum corporate income tax rates, making it significantly more progressive for all but the smallest C Corporations. Other provisions in the bill, including a move to a single sales factor, could lower tax liabilities for C Corporations. Without the inclusion of the alternative minimum tax proposal these changes are expected to be close to revenue neutral, largely benefiting C Corporations with a physical presence in Vermont that sell out of state.

This bill also includes an amendment to create a far-reaching cloud tax, a perennial issue that the House supports but has traditionally run into opposition in the Senate. Preliminary analysis suggests the Senate will not be favorable to this new tax again this year, especially since State revenues up and there are significant federal funds to fund programs. The Vermont Chamber has successfully opposed this tax each of the last five years.

The Senate Judiciary Committee reviewed S.180, which would address organized retail theft by making a string of larcenies or misdemeanor retail thefts within a 6-month period a new category of felony if committed in coordination with another person. With businesses short-staffed and struggling to hire loss prevention and security personnel, some retailers are asking the Legislature for relief. Several downtown Burlington business owners and loss prevention professionals described the same individuals and groups stealing from them repeatedly, sometimes multiple times per week, and a pattern of escalating aggression and violence toward employees over the past several months. Hesitation among some legislators hinged on whether elevating this crime to a felony would sufficiently deter theft for those with no expectation of being caught and charged with a crime. The Vermont Chamber supports retail businesses as this legislation is considered to address organized theft in Vermont’s downtowns. If you are a retail business experiencing rising theft, contact the Vermont Chamber lobbying team.

The Senate hosted a roundtable with industry leaders to discuss housing issues, specifically the importance of removing barriers that prevent production of housing units quickly. The Vermont Chamber’s suggestion to incentivize the conversion of unused commercial space into housing was emphasized in the conversation as a potential new solution. In the House, funding for housing for the missing middle-income development pilot program stalled with committees looking for more details on how this program would work. The Vermont Chamber has advocated for funding of this pilot program, the first to focus on the need for middle income housing and will support efforts for the Senate to put this program back into this bill.