Business Grants Included in COVID-19 Relief and Recovery Package

H.315 passed in the House and is comprised of $49 million in one-time funds of general funds, $13 million in new Coronavirus Relief Funds (CRF), and $17.2 million in reallocated and reauthorized CRF. Included in the advanced relief package is $10 million for economic recovery grants for businesses that suffered an economic loss because of the pandemic and were left out of or did not apply for earlier relief programs.

The grant funding component is the result of a proposal by the Scott Administration that was considered and modified by the House Committee on Commerce and Economic Development before being recommended to the House Committee on Appropriations. As advanced, the grant program defines eligibility criteria and caps the amount a business can receive at $150,000. The grant funding would prioritize businesses that have not received any COVID-19 related assistance from State or federal sources, with eligibility expanding to other businesses after an initial 30-day period.

The Vermont Chamber previously testified in support of the business relief grant funding and worked with impacted businesses to communicate to the Legislature why a business may have not been eligible for past relief programs. In addition to grants for businesses, the overall relief package includes funding for numerous state programs. You can see a full breakdown of the relief package here.

Tech Industry Representatives Rally to Oppose Cloud Tax

The possibility of imposing a cloud tax was revisited in the House Committee on Ways and Means. As proposed, H.261 would repeal the tax exemption on vendor-hosted, prewritten software with the intent to direct added revenue to the General Fund. If advanced, consumers and nearly all of Vermont’s businesses that use software as a service would be impacted by the associated costs. This additional financial burden becomes particularly daunting for many businesses as they struggle amongst the economic fallout caused by COVID-19. Witnesses testifying on the proposal explained that the proposed tax would cost Vermont’s technology industry $6.1 million and damage the state’s current tech-friendly reputation, while also disincentivizing the recruitment of remote workers.

In testimony before the Committee, Department of Taxes Commissioner Craig Bolio additionally pointed out that the proposal could create confusion and disagreement on the definition of software as a service for businesses and consumers, increasing the likelihood of audits, litigation, and liabilities. Given the potential cost and financial burden to the business community, and the current economic uncertainty caused by the pandemic, the Vermont Chamber submitted testimony opposing the tax and joined other business organizations in a coalition letter expressing unified opposition. Please contact Vermont Chamber Government Affairs Director Charles Martin if you have questions or would like help providing your input to the Legislature.

Vermont Chamber Testifies on Unemployment Insurance Proposal

Vermont Chamber Government Affairs Director Charles Martin and Vermont Independent Restaurants (VTIR) Leadership Council Member Leo O’Reilly jointly testified in the Senate Committee on Economic Development, Housing and General Affairs on potential changes to unemployment insurance (UI) criteria. The testimony was supportive of the Department of Labor’s proposal to freeze the UI Tax Schedule at Tax Schedule 1 for an additional year and freeze the UI taxable wage base at its current level of $14,100. If implemented the changes would save employers from having to pay higher UI taxes in the short-term, during some of the most economically challenging months of the pandemic. Under the proposal, the UI Trust Fund would be replenished with increased employer contributions in future years. The pair also testified largely in support of legislation that relieves employers of charges against their UI experience rating for benefits paid to an individual between March 15, 2020, and December 31, 2020, if the associated furlough was a result of circumstances caused by COVID-19. The legislation additionally provides a mechanism for employers to receive charge relief in 2021.

Vermont Chamber Briefs Caucus on Military Retirement Pay Tax Exemption Proposal

During a presentation in the Vermont Legislature’s Social Equity Caucus led by Representative Matt Birong (D-Vergennes) and Representative Daniel Noyes (D-Wolcott), Vermont Chamber Government Affairs Director Charles Martin highlighted some of the benefits exempting military retirement pay from taxation would have for Vermont businesses and communities. Vermont is currently one of only seven states that fully tax military retirement pay, which disincentivizes military retirees from moving to Vermont upon conclusion of their service. The proposal is supported by a bipartisan group of legislators in both the House and Senate, though there are several different bills that seek to provide the exemption. Governor Scott also highlighted the exemption proposal in his budget address, offering a $1.4 million budget proposal to offset short-term associated revenue impacts. One of the legislative proposals that would offer a version of the exemption was also reviewed in the House Committee on Ways and Means in testimony delivered by Representative Birong and Representative Peter Fagan (R-Rutland City) who are both sponsors of the bill.

Military retirees often conclude service in their 40s, are public service oriented, and typically possess a high degree of professional skills that uniquely position them to continue contributing to the workforce until they reach traditional retirement age. The U.S. Military as a whole, including military retirees, is also a significantly more racially diverse population than the general population of Vermont. The Vermont Chamber believes incentivizing military retirees to move to Vermont would increase the diversity of our communities while also strengthening our workforce. The Vermont Chamber has supported this exemption in past legislative sessions and worked to support the issue before the 2021 session. We will continue to advocate for the passage of the exemption as the legislative session unfolds. If you would like to provide input supporting this exemption, please contact Vermont Chamber Government Affairs Director Charles Martin.

Vermont Chamber Testifies in Support of Economic Development Package

Vermont Chamber Government Affairs Director Charles Martin testified in support of an economic development package in the House Committee on Commerce and Economic Development. The wide ranging package includes funding to create a Tourism Marketing Promotion Fund within the Department of Tourism and Marketing, a Buy Local Consumer Stimulus Program to re-establish and increase local consumer spending in Vermont to support small businesses and communities recovering from the pandemic, provisions that would consolidate and allocate additional resources for workforce recruitment programs, additional funds and changes to the Better Places Program within the Department of Housing and Community Development, funds to support expansion of Vermont’s tech sector, and expansion of eligibility under the Downtown Tax Credit Program. Additionally, the omnibus legislation would support funding for a Canadian foreign trade representative firm to generate foreign direct investment leads and prospects for Vermont in the areas of aerospace, biotechnology, and renewable energy, and provide Vermont with statewide representation in Québec. The economic package was originally brought forward by the Scott Administration and is expected to advance in form of an amendment to H.159.

Vermont Chamber Supports Creation of Statewide Short-Term Rental Registry

The Senate Committee on Economic Development, Housing & General Affairs continued deliberations around S.79 which includes the creation of a statewide short-term rental (STR) registry. The Vermont Chamber submitted testimony in support of the creation of the registry. The Legislature has taken progressive actions, most recently in 2018, to regulate the STR market in Vermont. A rental registry would be the next logical step.

With their existing anonymity and little oversight, STRs are afforded an unfair and significant competitive advantage over licensed properties. Removing the anonymity STRs currently operate under is an important step to ensure a safe rental environment. The pandemic has highlighted the difficulties during a public health crisis when unlicensed properties providing overnight accommodations remain anonymous and state officials do not have the means to contact them.

House Continues Consideration of Dedicated Tourism Marketing Funds

Amy Spear, Vermont Chamber Vice President of Tourism, testified in the House Committee on Commerce and Economic Development in support of Governor Scott’s proposed Tourism Marketing Promotion Fund. Amy pointed out that as we imagine emerging from the pandemic, marketing Vermont as a destination and welcoming guests will be critically important. Vermont will need to tell visitors that we are “open for business,” and we will need resources to do that in a crowded marketplace.

Years of level funding have put Vermont’s destination marketing at a disadvantage. In competition within a global marketplace and with neighboring states, Vermont is consistently outspent. Vermont has the smallest tourism marketing budget in the Northeast and the second smallest tourism marketing in the budget in the country. The creation of a Tourism Marketing Promotion Fund to augment VDTM’s general fund budget allocation would serve as an important mechanism for supporting communities and our tourism infrastructure as we recover and look to the future.

House Begins Review of Alcohol-Related Legislation

A series of alcohol-related bills were introduced in the House Committee on General, Housing & Military Affairs this week. Adjustment and modernization of alcohol regulatory and financial policies is a priority for both the Vermont Chamber and our partner organization Vermont Independent Restaurants.

Representative Birong (D-Vergennes) introduced bills H.314 and H.313. H.314 would reduce the renewal fees for first- and third – class licensee fees for 2021. H.313 contains several provisions that would provide meaningful regulatory and financial support for Vermont’s restaurant industry, including:

• Authorizing Licensee Pricing of Spirits Sold by the Department of Liquor and Lottery
  The establishment of licensee pricing would bring Vermont in line with other control states. Generally, bars are the most profitable line of business for a restaurant; this is not the case in Vermont. In Vermont, licensees and consumers pay the same price for spirits, and due to consumer-driven market pricing, Vermont businesses are losing valuable profit that could be essential to stabilizing and rebuilding our Vermont restaurant industry.
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• Authorizing First- and Third-Class Licensees to Purchase Wholesale Spirits Using a Credit Card
  Allowing licensees to purchase spirits from Department of Liquor and Lottery retail locations with a credit card would remove a logistical burden. This would modernize the purchasing process for licensees and would create a level playing field between consumer and licensee transaction methods.
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• Temporarily Authorizing the Sale of Alcoholic Beverages for Delivery and Curbside Pickup
  A formal extension of the current pandemic-allowed alcoholic beverages to-go provisions would allow for a wind-down period of this service that licensees have provided and customers have come to expect. With a long road to recovery anticipated, the proposed sunset of July 1, 2023, would allow for this.
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• Third-Party Platform Regulation
  While delivery represents one of the most important segments of growth for the restaurant industry, third-party platforms are relatively unregulated. These provisions would protect Vermont’s independent restaurant industry as this segment continues to grow in Vermont.

Rep. Tommy Walz (D-Barre City) introduced H.178 which would allow low-alcohol spirit beverages (canned cocktails) to be sold by the same retailers that sell beer, wine, and hard cider up to percent ABV. Currently, this type of beverage is only available at state liquor stores. New Hampshire, Maine, and New York have all enacted similar legislation. Also introduced was legislation that would legalize happy hours. Vermont restaurants and bars currently cannot offer discounted alcoholic beverages over a few hours a day.

Resource Roundup

• Vermont Chamber Virtual Policy Series
  You're invited to get up to speed on important local and federal issues in our second Virtual Policy Series, from March 8 – March 29. Presented by the Vermont Chamber of Commerce, this series brings together government and business leaders to get your questions answered on important issues and provide personal access to key Vermont leaders. See our full agenda and save your seat today.
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• COVID-19 Vaccines in Vermont
  The Vermont Health Department is working closely with the Centers for Disease Control and Prevention (CDC) and other partners to distribute vaccines as they become available. Their goal is to administer every available dose each week. Learn about eligibility, the health department’s weekly email updates, and other information about COVID-19 vaccines in Vermont. Find vaccine information in multiple languages here.

In Case You Missed It

• Vermont House Approves $79 Million COVID Relief Bill
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• State Lifts Travel Quarantine for Vaccinated People; Hospitality Sector, Travelers, Applaud
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• VT Lawmakers Prepare New Stimulus Package
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• Lt. Governor Molly Gray Hosts ‘Seat at the Table’ on Equity in Public Health Access
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House Committee Advances Economic Relief Grants

The House Committee on Commerce and Economic Development approved the Scott Administration’s proposal to provide $10 million for economic recovery grants for businesses that suffered an economic loss because of the pandemic and were left out of or did not apply for earlier relief programs. The Committee modified the original proposal from the Administration, including by more explicitly defining eligibility criteria and capping the amount a business can receive at $150,000. The legislation would prioritize businesses that have not received any COVID-19 related assistance from State or federal sources, with eligibility expanding after an initial 30-day period. The grant proposal passed the Committee by an 11-0 vote and was added to a COVID-19 relief package the House Committee on Appropriations is expected to complete Friday afternoon. Leadership of the House Committee on Commerce and Economic Development will also be presenting the bill to the Senate Committee on Economic Development on Tuesday morning. The Vermont Chamber previously testified in support of this funding and worked with impacted businesses to communicate to the Legislature why a business may have not been eligible for past relief programs.

The Committee also heard testimony from the Agency of Commerce and Community Development (ACCD) on a broad economic development bill. Included in the bill are:

• A Tourism Marketing Promotion Fund, within the Department of Tourism and Marketing, funded in future years with excess rooms and meals revenues
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• A Buy Local Consumer Stimulus Program to re-establish and increase local consumer spending in Vermont to support small business and communities recovering from pandemic
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• A New Vermont Employee Incentive Program to award incentive grants to qualifying new employees who relocate to Vermont
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• Additional funds and changes to the Better Places Program within the Department of Housing and Community Development
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• Funds to enhance technical service provided to assist Vermont-based technology companies in applying for federal small business innovation research and small business technology transfer grants
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• Eligibility expansion and additional funds for the Downtown Tax Credit Program
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• Support for a Canadian foreign trade representative firm to generate foreign direct investment (FDI) leads and prospects for the State in the areas of aerospace, biotechnology, and renewable energy, and provide Vermont with statewide representation in Québec.

The Committee is expected to continue review of the economic bill over the next few weeks.

Senate Considers House-Approved Brownfield Funds

The Senate Committee on Economic Development, Housing and General Affairs heard testimony from officials at the Agency of Commerce and Community Development (ACCD) highlighting some of the Scott Administration’s economic development budget proposals. Among issues discussed was $25 million proposed for brownfield remediation. “Brownfield” is a term that refers to properties where expansion, redevelopment, or reuse may be complicated by the release or threatened release of hazardous material. The liability associated with reuse of brownfield properties makes the redevelopment of these sites particularly costly. Brownfields are found throughout Vermont and are often historically significant to communities, considering their common past uses as manufacturing centers and places of employment. Redevelopment of brownfields often also helps localize development in municipal centers, reduces sprawl, and lessens liability for the State – which can end up taking control of the properties when remediation costs become unsustainable to the private sector or municipalities. The proposed funds would be directed toward a program that allocates money to sites that have the greatest environmental and economic impact for all 251 communities in Vermont. ACCD and the Department of Environmental Conservation (DEC) would jointly administer the funds.

The House Committee on Commerce and Economic Development recently advanced the brownfield proposal, with $14 million directed at DEC for assistance with environmental cleanup and related costs and $11 million directed to ACCD for additional financial supports. The measure was included in the Committee’s budget request to the House Committee on Appropriations. The Vermont Chamber fully supports the Administration’s proposal for brownfield remediation, as it would represent one of the largest investments of its kind in state history and would greatly benefit Vermont’s environment and the long-term economic health of our communities.

Scott Administration Proposal Would Prevent Unemployment Insurance Cost Hike

The Senate Committee on Economic Development, Housing and General Affairs reviewed a proposal by the Department of Labor that, if implemented, would enact a one-year freeze to both the taxable wage base and the tax rate schedule that determines employer contributions to the Unemployment Insurance Trust Fund (UITF). The Department’s proposal would also limit increases to the UI tax rate schedule in subsequent years to a maximum of a two-schedule jump. The UI tax rate schedule is currently set at the lowest contribution level, schedule one. The Department’s proposal would provide considerable cost savings for employers in the short term, while also ensuring the UI Trust fund remains solvent in future years. Mathew Barewicz, Director of Economic & Labor Market Information, briefed the Committee on the impact the proposal would have on the UI Trust Fund, while also comparing the impact to a separate proposal created by the Committee that would raise the weekly UI benefit by 20 percent. The Vermont Chamber previously testified in support of limiting cost increases related to employer contributions to the UITF, and we fully support the Department’s current proposal to limit costs for employers. If you have questions about unemployment insurance, please contact Vermont Chamber Government Affairs Director Charles Martin.

Tourism Marketing Funds Advance

Heather Pelham, Commissioner of the Vermont Department of Tourism and Marketing (VDTM), briefed the Senate Committee on Economic Development, Housing and General Affairs on the Scott Administration’s proposal to boost tourism marketing for the state. As offered by the Administration, the proposal would provide $1 million in seed funding for a tourism and marketing fund that is tied to rooms and meals tax performance. The House Committee on Commerce and Economic Development recently advanced the funds included in the proposal, without language supporting changes to future years rooms and meals tax revenue use.

Sectors dependent on tourism were most impacted by the pandemic, causing rooms and meals tax receipts to drop by $48 million and overall visitor spending to decline by $700 million. In June approximately 15,000 tourism jobs, or about half of all tourism sector workers, were furloughed because of the pandemic. Despite tourism being one of Vermont’s largest economic contributors, the State’s tourism budget is the smallest in the Northeast. In addition to improving existing marketing efforts, the proposal would also contribute to economic recovery when the state begins to fully reopen. Please contact Vermont Chamber Vice President of Tourism Amy Spear with questions.

Bill Would Provide Liability Protections for Agritourism Industry

The House Committee on Agriculture and Forestry advanced H.89. If passed into law, the legislation would limit liability for agritourism operators by making providers of agritourism activities immune from civil liability if a participant is injured as a result of risks inherent in the activity. The legislation would additionally help contribute to the economic diversification of Vermont farms. The Vermont Chamber fully supports this legislation because agritourism represents a significant economic opportunity for Vermont’s rural communities. For questions about the bill, please contact Amy Spear.

House Bill Would Ease Development Hurdles in Downtowns

H.278 would allow municipalities to apply for Act 250 master plan permits for downtown development districts, village centers, and neighborhood development areas. Under the bill, eligible municipalities could apply to Act 250 District Commissions for a master plan permit for a designated area or any portion of that designated area pursuant to the rules of the Natural Resources Board. In approving a master plan permit, a District Commission would be able to set specific conditions that an applicant for an individual project permit in designated areas would be required to meet. If adopted, the legislation could set conditions in which applicants are provided with greater predictability and a degree of assurance that future development projects may be approved on a proposed development tract. This would result in greater efficiency in the environmental review process and help to avoid unnecessary and unreasonable costs for applicants.

The Vermont Chamber has long advocated for greater predictability and reduced costs in the Act 250 permitting process and previously supported legislative proposals that would limit Act 250 jurisdiction in designated centers.

Resource Roundup

• VT Economic Conference Recording: The COVID Opportunity – Keeping Your Business Relevant
  About 100 attendees joined the Vermont Chamber on Wednesday for our final 2021 Vermont Economic Conference seminar, to hear from Dr. Benjamin Ola. Akande, economist and President of Champlain College. The discussion included current employment statistics in Vermont, career opportunities, and the pandemic’s impact on women in the labor force. Watch the recorded event. Watch all the recorded Vermont Economic Conference seminars here.
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• SBA Webinar for Veterans
  The Small Business Administration is hosting a two-day webinar from 8:30 a.m. to 4 p.m. Feb. 24 to 25 for veterans wanting to learn about the fundamentals of starting a small business. Boots to Business is a free SBA training program for transitioning service members, veterans, and family members to assist understanding the steps, stages and activities related to launching and growing a business as a post-military career. For more information or to register, contact Miguel Moralez at 603-225-1601 or email miguel.moralez@sba.gov.

In Case You Missed It

• Vermont Lt. Governor Launches Discussion Series to Address Key Pandemic Topics
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• Wedding, Event Planners Disappointed by State Government’s Caution
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• First-Time Lawmakers Struggle to Connect in ‘Frustrating’ Virtual Statehouse
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• Vermont State Colleges Board Poised to Consider Consolidation Plan
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• Vermont’s Broadband Puzzle: 60,000 Households Aren’t in the Picture
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• Tax Revenues Still Ahead of Projections After Revision, but Less So

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Business Organizations Call for Additional Economic Recovery Grants

In a letter sent to legislative leaders, the Vermont Chamber, Vermont Businesses for Social Responsibility, the Lake Champlain Chamber, and Vermont Main Street Alliance called for additional economic recovery grants to support Vermont businesses. The last round of recovery grants covered $330 million out of the $718 million in need that accrued between March and September, as demonstrated by the Agency of Commerce and Community Development (ACCD) and Department of Taxes. The Vermont Chamber recently testified in support of establishing an additional recovery grant program for businesses that were ineligible for past relief programs, businesses with existing unmet need, and businesses that are bracing for economic hardship that is likely to extend into the summer. In testimony delivered to the Senate Committee on Economic Development, Housing and General Affairs, Ted Brady, Deputy Secretary of ACCD, reiterated the Scott Administration’s focus on advancing additional economic recovery grants. Deputy Secretary Brady stressed the importance of providing funds to mitigate economic decline and to reduce future additional business closures.

The Vermont Chamber will continue to prioritize advocacy for relief grant programs that offer a level of predictability and stability for businesses as they face an uncertain future. Please contact Vermont Chamber Director of Government Affairs Charles Martin with questions.

Expanding Manufacturing Tax Exemption Vital to Economic Development

The Vermont Chamber provided testimony in the House Committee on Ways and Means in support of expanding the Manufacturing Tax Exemption as proposed by the Vermont Department of Taxes. The expansion includes machinery and equipment used as an essential part of an integrated production operation. This proposal moves away from taxation at consumption theory and direct use standard to an integrated plan that would make tax exempt the ancillary processes that occur throughout the manufacturing process, from raw materials in the beginning to the final product and packaging.

The proposed expansion would benefit manufacturers by enabling them to achieve greater compliance, ensure quality assurance for their products and customers, reinvest in workforce recruitment, new machinery and equipment, and updated technology for cybersecurity compliance. The expansion would also help companies recover from the pandemic, rebuild their supply chains, and compete in a global economy. Expansion would serve as an important economic development tool to attract, recruit, and retain our larger, anchor manufacturing employers. The change would help grow our $3 billion manufacturing industry and increase tax revenues and economic activity. To learn more or to share how this proposal would impact your business, please contact Vermont Chamber Vice President of Business Development Chris Carrigan.

Marketing Proposal Would Boost Economic Recovery

Heather Pelham, Commissioner of the Vermont Department of Tourism and Marketing (VDTM), briefed the House Committee on Commerce and Economic Development on the Scott Administration’s proposal to boost tourism marketing for the state, and also on the overall economic impact of Vermont’s tourism industry. Sectors dependent on tourism were most impacted by the pandemic, causing rooms and meals tax receipts to drop by $48 million and overall visitor spending to decline by $700 million. In June approximately 15,000 tourism jobs, or about half of all tourism sector workers, were furloughed as a result of the pandemic.

The proposal by VDTM includes $1 million in seed funding for a tourism and marketing fund that is tied to rooms and meals tax performance. Despite tourism being one of Vermont’s largest economic contributors, the State’s tourism budget is the smallest in the Northeast. In addition to improving existing marketing efforts, the proposal would also contribute to economic recovery when the state begins to fully reopen. Please contact Vermont Chamber Vice President of Tourism Amy Spear with questions.

House Considers Exempting Military Retirement Pay from Personal Income Tax

The House Committee on Ways and Means reviewed the Scott Administration’s proposal to exempt military retirement pay from personal income tax. Graham Campbell, Senior Fiscal Analyst with the Joint Fiscal Office, explained to the Committee that the state would only need to recruit an additional 640 new military retirees to offset the immediate loss of revenue that could result from the change.  Vermont is currently one of only seven states that fully taxes military retirement pay, which disincentivizes military retirees from moving to Vermont upon conclusion of their service. The Administration’s plan would phase in an exemption over two years, with all taxable military retirement pay being exempted from Vermont’s personal income tax by 2022. The proposal is supported by a bipartisan group of legislators in both the House and Senate. Governor Scott highlighted the exemption proposal in his budget address, offering a $1.4 million budget proposal to offset short-term associated revenue impacts.

Military retirees often conclude service in their 40s and typically possess a high degree of professional skills that uniquely position them to continue contributing to the workforce until they reach traditional retirement age. Military retirees are also a significantly more racially diverse population than the general population of Vermont. The Vermont Chamber believes incentivizing military retirees to move to Vermont would increase the diversity of our communities while also strengthening the workforce. The Vermont Chamber has supported this exemption in past legislative sessions and worked to support the issue in advance of the 2021 session. We will continue to advocate for the passage of the exemption as the legislative session unfolds.

Child Care Proposal Could Cost Up to $500 Million

Sean Brown, Commissioner of the Department for Children and Families testified in the House Committee on Human services on legislation that could cost the State between $300 and $500 million, according to the Department. The bill seeks to make significant changes to the State’s existing child care apparatus, including by expanding eligibility for the Child Care Financial Assistance Program, appropriating funds for the implementation of the Bright Futures Information System modernization plan, establishing scholarships and student loan repayment assistance programs for existing and prospective members of the child care workforce, requiring the completion of studies on child care financing and governance, and establishing an Early Care and Education Governance and Administration Advisory Committee. Commissioner Brown expressed that the Department agrees with the general intent of the bill but has concerns about the many unknown financial implications that could result from the legislation.

The Vermont Chamber believes that building a stronger, more equitable, and sustainable child care system is vital to restarting our economy in the wake of the pandemic. Improvements in child care will also help maximize our state’s workforce potential and attract new families. However, a significant injection of federal resources is essential to ensuring that improvements in Vermont’s child care system do not result in unsustainable cost increases. Striking a balance between additional child care investments and the tax capacity of Vermonters is essential to the sustainability of any new investment. This is particularly true as sectors of the economy continue to suffer from unprecedented financial hardship because of the pandemic.

Bottle Bill Includes Program Expansion, Doubling of Deposit

The House Committee on Natural Resources is considering H.175, a bill that expands bottle redemption regulations by requiring deposits for bottled water, hard cider, wine, and other beverage containers. The bill would also double the deposit for most containers, moving from five to ten cents per container. Deposits are charged by distributors to retailers and grocers for each individual container, with the retailer recouping that deposit from consumers at point of sale. Restaurants are charged the same deposit when purchasing from a distributor, but typically do not recoup the deposit when they sell a canned or bottled beverage to a customer. Doubling the deposit and expanding the program could present an additional cost for restaurants. If you have questions about this legislation, please contact Charles Martin.

State Leaders Propose Montreal Office for Recruitment, Trade, and Tourism

As part of Governor Scott’s $210 million economic development and reinvestment plan, the Vermont Agency of Commerce and Community Development (ACCD) discussed the proposal to establish a Business Attraction Investment Program in the House Committee on Commerce and Economic Development. The proposed budget appropriation of $300,000 would be used to hire a Canadian foreign trade representative firm over a period of two years to generate foreign direct investment (FDI) leads and prospects for the State in the areas of aerospace, biotechnology, and renewable energy, and provide Vermont with statewide representation in Québec. The goal of this initiative is to increase FDI investment with Canada, Vermont’s largest trading partner, and promote cross-border trade and tourism when the border reopens.

In keeping with our record of working with Québec on cross-border trade and legislative issues and building the Vermont – Québec Aerospace Trade Corridor, the Vermont Chamber supports this initiative as it will help strengthen our ties with Québec, promote tourism as we come out of the pandemic, and will also help to attract and recruit Canadian companies interested in establishing a footprint in Vermont to access the North American market for contracting opportunities. Successful business recruitment, in turn, will create jobs for Vermonters and grow the state’s economy.

Vice President of Business Development Chris Carrigan testified on the Vermont Chamber’s work on aerospace and the Vermont – Québec Aerospace Trade Corridor in the House Committee on Commerce and Economic Development. To learn more, please contact Chris Carrigan.

ACCD Briefs House Committee on Brownfields Proposal

The Scott Administration’s Fiscal Year 2022 budget proposal includes $25 million for brownfield remediation. “Brownfield” is a term that refers to properties where expansion, redevelopment, or reuse may be complicated by the release or threatened release of hazardous material. The liability associated with reuse of brownfield properties makes the redevelopment of these sites particularly costly. Brownfields are found throughout Vermont and are often historically significant to communities, considering their common past uses as manufacturing centers and places of employment.

The House Committee on Commerce and Economic Development heard testimony from the Department of Environmental Conservation (DEC), Agency of Commerce and Community Development (ACCD) and regional development corporations that highlighted the economic and environmental benefits the budget proposal would provide, if advanced by the Legislature. The proposed funds would be directed toward a program that allocates money to sites that have the greatest environmental and economic impact for all 251 communities in Vermont. ACCD and DEC would jointly administer the program.

Resource Roundup

• VT Economic Conference Recording: A Changed Vermont Workforce
  About 200 attendees joined the Vermont Chamber on Wednesday for our Vermont Economic Conference seminar, to hear from Mathew Barewicz, Director of Economic and Labor Market Information. The discussion included current employment statistics in Vermont, career opportunities, and the pandemic’s impact on women in the labor force. Watch the recorded event. Register for next week’s final 2021 Vermont Economic Conference event, featuring Dr. Benjamin Ola. Akande, economist and President of Champlain College.
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• About COVID-19 Vaccines in Vermont
  The Vermont Health Department is working closely with the Centers for Disease Control and Prevention (CDC) and other partners to distribute vaccines as they become available. Their goal is to administer every available dose each week. Learn about eligibility, the health department’s weekly email updates, and other information about COVID-19 vaccines in Vermont.

In Case You Missed It

• Rental Housing Regulations Would Cover Short-Term Vacation Rentals, Too
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• Lawmakers Consider Funding Boost for Racial Equity Office
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• Checking in With Vermont Legislative Leaders Jill Krowinski and Becca Balint
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• Women With a Plan? New Statehouse Leaders Could Become Political Rivals 
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• Vermont Has Highest Percent of 'Equity Rich' Homes in the Nation
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• Switch to Home Offices Leads to Bump in Utility Bills

Want great exposure for your business? Sponsoring the weekly newsletter is an affordable and effective way to reach your target customers. Email Megan Bullard for pricing and more information.

Vermont Chamber Advocates for Additional Business Grants

Charles Martin, Vermont Chamber of Commerce Government Affairs Director, testified in the House Committee on Commerce and Economic Development in support of the Scott Administration’s request for economic recovery grants to provide aide to pandemic-impacted businesses left out of federal and state programs. The testimony highlighted the reality that small employers, new businesses, seasonal businesses, existing businesses that changed ownership, growth businesses, and others that may have not had the time or resources necessary to navigate application processes, are some of those who were left out of one or more previously established relief programs. Business owners also testified in support of the proposal to increase the Committee’s understanding of factors impacting eligibility.

Many businesses are bracing for continued operating restrictions and reduced economic activity, even as vaccinations roll out. The Vermont Chamber will continue to prioritize advocacy for relief programs that provide a level of predictability and stability for businesses as they face an uncertain future.

House Committee Briefed on State of Manufacturing

The House Committee on Commerce and Economic Development heard updates from the Vermont Manufacturing Extension Center (VMEC) and AIV on the state of Vermont manufacturing. Manufacturing is a $3 billion industry in Vermont, representing 9% of the state’s Gross Domestic Product (GDP) and 1,200 companies with a combined total of 30,000 Vermont employees. In 2020, the pandemic’s impact to manufacturing included a 15% workforce reduction, which has rebounded by 60% since June. A pivot by manufacturers to online commerce, defense contracting, cybersecurity compliance, increased automation, and digitization of the supply chain has also aided recovery. The pandemic has also accelerated the adoption of Industry 4.0 and trends that favor artificial intelligence, 3-D printing, and augmented reality. Throughout this paradigm shift, the Vermont Chamber of Commerce, VMEC, and AIV have worked together on the COVID-19 sub-taskforce supporting Governor Scott’s Restart Vermont Guidance Advisory Council for Manufacturing, helping develop phased reopening policies and long-term economic recovery planning. While the overall industry remains stable, companies are cautious and continue to face challenges with finding skilled labor. The opportunity to hire and train Vermonters from more heavily impacted industries, such as hospitality and tourism, was discussed as an emerging trend to address labor shortages in the manufacturing sector. To learn more, please contact Vermont Chamber Vice President of Business Development Chris Carrigan.

Temporary Workers’ Compensation Changes Extended

Governor Scott signed a bill that continues certain workers’ compensation amendments related to COVID-19. The move extends a sunset on the temporary expansion of workers’ compensation eligibility enacted last year. The extension provides a continued rebuttable presumption that certain workers who contract COVID-19 are presumed to have contracted the disease at work, qualifying them for compensation. The extension allows this provision to remain in place until 30 days after the conclusion of the Governor’s state of emergency declaration. State officials have pointed out that outbreaks of COVID-19 are largely occurring through community transmission, rather than at workplaces operating in compliance with state and federal health and safety requirements.

Citing the potential for cost increases in workers’ compensation insurance rates, the Vermont Chamber worked to limit the scope of the bill last session. Changes passed this week extend the time in which the legislation is valid, without expanding its scope.

Expansion of Manufacturing Tax Exemption Essential for Economic Development

The Department of Taxes proposed an expansion of the Manufacturing Tax Exemption in the House Committee on Ways and Means. The expansion includes machinery and equipment used as an integral or essential part of an integrated production operation. This proposal is a move away from taxation at consumption theory and direct use standard to an integrated plan that proposes to make tax exempt the ancillary processes that occur throughout the manufacturing process, from raw materials in the beginning to the final product and packaging. To qualify for exemption these processes must protect the quality of the product and be part of the integrated production operation. Examples include air quality, cooling, heating, waste removal, and cleaning. Additional processes that occur after packaging, such as testing, inspection, quality control, and secondary packaging would also be exempt from the use tax under this proposal. According to the Department of Taxes, the use tax is a difficult audit area with taxpayer appeals and approximately 18 audits annually. It can also be vexing for taxpayers and small companies that do not have use and sales tax expertise.

The Vermont Chamber supports this proposal, as it would make Vermont competitive with the 33 states that have such an exemption, while also contributing to the growth of Vermont’s $3 billion manufacturing industry. Expansion of the tax exemption would also serve as an economic development tool to attract, recruit, and retain manufacturers, provide Vermonters with high-paying jobs, and grow our economy. To learn more, please contact Chris Carrigan.

Connectivity Bill Would Establish Broadband Oversight Authority

The House Committee on Energy and Technology continued review of a bill that would significantly limit eligibility for accessing State-administered financial resources for broadband projects. The bill also seeks to establish an 11-member board to administer a new Vermont Community Broadband Authority that would be responsible for a proposed Vermont Community Broadband Fund and Community Broadband Innovation Grant Program. Under the bill, the Authority would also take over administration of the previously established Connectivity Initiative. The legislation reduces the ability of the State to support connectivity investments in projects proposing less than 100 Mbps symmetrical speeds and amends the Broadband Expansion Loan Program to narrow eligibility for loans to communication union district borrowers alone. Current potential borrowers under the Broadband Expansion Loan Program include other units of government, cooperatives, for profit businesses, and nonprofit organizations. Further, the legislation would transfer Department of Public Service owned fiber-optic assets to the communications union district where those assets are located.

The expansion of broadband around Vermont requires equitable access to financing opportunities for both public and private entities. While the Vermont Chamber fully supports expanding broadband access to all Vermonters, we have serious concerns about limiting the feasibility of public and private partnerships in this area.

Higher Education: The Vermont State College, UVM, and VSAC

The pandemic has taken a toll on higher education in Vermont, impacting operations and enrollment. The Vermont State College (VSC) system is working to reimagine their future for students, the state, and their long-term sustainability. This week, Chancellor Sophie Zdatny requested $81 million in state funding for FY22, up from the annual appropriation of $30 million. While some of the increase will be funded through federal relief funds and a current year budget adjustment, a total of nearly $37 million more is needed. The Governor proposed $20 million more toward VSC in his budget announced last week. While this is a significant budget request, most legislators and policy leaders understand the importance of higher education to the state and particularly to the communities in which they are located. Chancellor Zdatny said that VSC is currently too big for the number of students they serve, and as they look at the reducing campus sizes, they are prohibited from abandoning leases without legislative approval. They are investigating innovative uses of buildings to house businesses where students could work and possibly housing for non-students.

University of Vermont President Suresh Garimella also addressed the committee, presenting UVM’s metrics on students and economic impact, noting half of Vermonters don’t pay tuition and 91% get financial aid scholarships. The 2020 Impact Report featured the opening of the Office of Engagement which is supported by a $1 million appropriation in the Governor’s budget to develop a talent and workforce pipeline, help UVM students find employment, and aid employers in understanding how to work with students. The Office of Engagement also plans to bring in grants and work with businesses, creating a significant increase in research and development in Vermont.

The Vermont Student Assistant Corporation’s (VSAC) mission is to create education opportunities for all students. Last year, the VSAC scholarship program provided awards worth $6.1 million. Their smallest and newest program provides microgrants of up to $400 for food, housing, and technology to help meet unexpected expenses. Meanwhile, their traditional full-time grant program funds 7,500 students pursuing degrees. The advancement grant allows students to take a non-degree training program or to apply to Vermont Community College. In the last 10 years, this program has grown by almost 40%, and additional opportunities for training exist. In Vermont, 55% of students go to 2–4-year colleges vs. 40% of students nationally. Nationally, 26% of students consider a 2-year degree, while in Vermont only 7% of students do.

Ways and Means Considers Changes to Corporate Income Tax

The House Committee on Ways and Means considered two changes to the tax treatment of corporate income that could be helpful to businesses. Currently, Vermont uses a three-factor calculation using a combination of sales, property, and payroll to apportion corporate income with a double weight on sales. Most states are moving toward a single-sales factor. Vermont is the only state in New England that continues to use a three-factor calculation. This increased utilization of single sales factor in other states creates a potential disincentive for jobs and property to locate in Vermont, because in a three-factor formula (property, payroll, and sales), the company’s taxes increase when additional payroll and property is placed in Vermont. The Committee is also reviewing the difference for the apportionment factor calculation between the “Joyce” method and the “Finnigan” method, with the former being calculated by each taxable entity separately and the latter calculating apportionment as a single taxable entity.

Another area for review that could be helpful to business is the throwback rule requiring a company to add income earned in another state to its Vermont state tax base if the other state chooses not to tax that income or is prohibited from doing so federally. This makes a Vermont company’s tax liability dependent on how it is measured in another state. The elimination of the throwback rule could also align with Vermont’s move to market-based sourcing for sales of services and intangibles.

Senate Committee Moves to Codify Remote Worker and Relocation Programs

The Senate Committee on Economic Development reviewed legislation to codify the remote worker and relocation programs that were both successful prior to pandemic. The Scott Administration proposed adding $500,000 to this program to award incentive grants to qualifying new employees who may receive up to $7,500 if they become a resident of certain rural areas in Vermont. Individuals who settle in other areas will receive a maximum of $5,000. To qualify, a new worker must be a full-time resident and full-time employee of a Vermont business. Remote workers also need to perform the majority of their employment duties remotely from a home office or a co-working space located in Vermont. Qualifying expenses include relocation costs, connectivity, specialized tools, and more.

Commissioner of Economic Development Joan Goldstein highlighted the success of the program that resulted in 586 new Vermonters, a figure that includes both grantees and their families. Any new funds should include a set-aside for BIPOC workers, targeted marketing for veterans, nurses, tradesmen, and educators, where some of the greatest workforce needs exist. In additional testimony related to workforce, the Committee also heard from Sarah Buxton, State Director of Workforce Development, who highlighted programs in the Department of Labor aimed at connecting businesses with job seekers through labor exchange platforms and direct recruitment. The Department also connects job seekers with employment opportunities through the provision of information and basic career services.  Career services include training programs, funds for supplies and equipment, on the job training funding, and more. The Vermont Chamber recognizes the value of attracting new families to live and work in Vermont and fully supports programs to improve and expand workforce.

House Committee Works to Understand Restaurant Industry Developments

The House Committee on Ways and Means continued discussions regarding the tax treatment of third-party meal delivery platforms. Language proposed in the Miscellaneous Tax bill would clarify that online delivery platforms are required to collect the Meals and Rooms Tax on transactions completed on their platform, including service and delivery charges. This largely mirrors tax treatment applied through other third-party platforms. The Joint Fiscal Office presented an analysis of how Vermont’s approach compares to other states.

The Committee formed a working group to gain a better understanding of third-party delivery platforms and impacts on Vermont’s restaurant industry. In partnership with Vermont Independent Restaurants (VTIR), the Vermont Chamber will continue to engage with the Committee on this issue. If you have questions or concerns about this issue, please contact Vermont Chamber Vice President of Tourism Amy Spear.

Resource Roundup

• VT Economic Conference Recording: Funding Vermont Through the Crisis
  About 150 attendees joined the Vermont Chamber on Wednesday for our Vermont Economic Conference seminar, where they heard from Administration Secretary Susanne Young, Finance and Management Commissioner Adam Greshin, and Tax Commissioner Craig Bolio. The discussion included the overall picture of our state’s budget, Governor Scott’s one-time initiatives in the FY22 Budget, and plans for future business relief grants. Watch the recorded event.Register for the rest of our Vermont Economic Conference through February 17.
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• Middlebury College Professor of Economics Jessica Holmes gave a presentation this week to the House Health Care Committee on Understanding the Market for Health Care and Performance of the U.S. Health Care System. You can watch it here.
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• NAMI Vermont is a non-profit organization that supports, educates, and advocates so that all communities, families, and individuals affected by mental illness or mental health challenges can build better lives. NAMI offers multiple support groups that meet each week to provide an ongoing opportunity to discuss the challenges of living with a mental health condition and techniques for maintaining wellness. Learn more about the groups and joining the meetings at namivt.org and https://namivt.org/support/peer-support-groups/.

In Case You Missed It

• Senate Rejects Governor’s Executive Order to Restructure Act 250 Review
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• Lawmakers Call for Investigation of Department of Labor Data Breach
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• Scott Predicts No Increase in Property Taxes
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• Vermont Businesses to See Decrease in Workers' Comp Rates for 5th Year in a Row
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• How the State Decided Who Should Get the Vaccine First
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• In a Remote Democracy, Lobbyists Adapt to Remain Relevant

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