Vermont Chamber Successfully Advances COVID-19 Crisis Priorities

The Vermont Chamber continues to dedicate 100% of our staff and resources to assisting businesses during this COVID-19 crisis. Some of our recent successes include: Department of Taxes (DoT) action that indefinitely relieves businesses from Meals and Rooms Tax filing and penalty deadlines for March and April payments, a 90-day extension on the income tax filing deadline, and the advancement of legislation that protects employers forced to layoff workers due to COVID-19 from having their unemployment insurance experience ratings negatively impacted.

The Vermont Chamber recognizes that the needs of Vermont’s businesses impacted by the COVID-19 crisis are far from met. We will continue to advocate for meaningful financial and regulatory relief in the coming weeks and months.

"Phase III” Federal Relief Package Advances

Congress passed H.R.748, the CARES Act which includes $377 billion included for small business relief. The bill provides $350 billion in loan forgiveness grants to small businesses and non-profits to maintain existing workforce and help pay for other expenses like rent, mortgage, and utilities; $10 billion for Small Business Administration (SBA ) emergency grants of up to $10,000 to provide immediate relief for small business operating costs, and $17 billion for the SBA to cover 6 months of payments for small businesses with existing SBA loans.

Unemployment insurance (UI) resources include $260 billion to facilitate paycheck replacement amounting to a $600 per week increase for every American, which equates to 100 percent of wages for the average American without a paycheck struggling through the crisis, and allows for the extension of benefits to provide an additional 13 weeks of federally-funded unemployment insurance benefits to be available immediately. Additionally, the bill expands access to unemployment by allowing part-time, self-employed, and gig economy workers to access UI benefits.

To accommodate additional crisis response, the legislation provides $1 billion for the Defense Production Act to bolster domestic supply chains, enabling industry to increase production of personal protective equipment, ventilators, and other urgently needed medical supplies and $3.5 billion in additional funding for the Child Care Development Block Grant (CDBG) to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to the COVID-19 crisis. It also allocates more than $6.5 billion in Federal funding for CDBG, the Economic Development Administration, and the Manufacturing Extension Partnership to help mitigate the local economic crisis and rebuild impacted industries, such as tourism or manufacturing supply chains, and $562 million to help small businesses by ensuring SBA has the resources to provide Economic Injury Disaster Loans (EIDL) to businesses that need financial support.

In perhaps its most widely impactful provision, the legislation also provides all U.S. residents with adjusted gross income up to $75,000 ($150,000 for married couples) a $1,200 ($2,400 for couples) “rebate” payment with additional eligibility of $500 per child. The payments would start phasing out for earners above those income thresholds and would not go to single filers earning more than $99,000, head-of-household filers with one child earning more than $146,500, and joint filers with no children earning more than $198,000.

The Vermont Chamber is in daily contact with Vermont’s Congressional delegation and our Washington, D.C. counterparts to advocate for relief that appropriately responds to the needs of Vermont businesses impacted by COVID-19.

Meals and Rooms Tax Filing Deadline Extended

After a coordinated push by the Vermont Chamber and our industry partners, Governor Scott directed the Commissioner of Taxes to exercise his authority to provide relief to Vermont businesses that owe Meals and Rooms Tax or Sales and Use Tax. As a result of COVID-19 related closures and associated economic downturn, many local businesses are unable to meet the March 25 and April 25 filing deadlines. The Administration’s actions mean that business owners that are unable to meet the original deadlines will not be charged any penalty or interest on these taxes for late submissions. Further guidance on recent tax changes can be found on the Vermont Department of Taxes COVID-19 tax factsheet.

The Vermont Chamber will continue to advocate for full abatement of the Meals and Rooms Tax through future legislative action. While legislators spent much of this week addressing other immediate crisis response matters, key legislators assured the Vermont Chamber that conversations around abatement will continue next week.

Essential Business Determination Guidance Issued

Governor Scott recently issued Addendum 6 to Executive order 01-20, requiring non-essential businesses to cease in-person operations. The Addendum permits certain business operations essential to COVID-19 response, public safety, medical care, or support of critical infrastructure. If you feel your business is essential to public wellbeing, but not permitted to operate by Addendum 6, the Agency of Commerce and Community Development (ACCD) is encouraging businesses with questions or requests regarding the acceptable continuation of business operations to complete this online form. ACCD has received thousands of these requests in the last few days and has dedicated additional resources to address the backlog. ACCD has also issued sector specific guidance to help business owners in determining how their business is impacted.

In the days following Governor Scott’s initial Executive Order declaring a state of emergency, the Administration has issued various Addendums and Directives to supplement and amend the original declaration.

Unemployment Insurance Changes Advance

The Vermont House and Senate met this week to vote on rule changes that establish the framework necessary to allow remote voting and to pass legislation that provides additional resources for the COVID-19 response. One piece of legislation sent to the Governor’s desk, H.742, would temporarily expand unemployment insurance (UI) eligibility benefits to those who leave work voluntarily for COVID-19 related issues, including taking care of a family member, school age children with no daycare or open school, and to avoid unreasonable risk (defined as a workplace out of compliance with public health guidance) at the workplace.

Additionally, H.742 also protects employers from UI rate increases as a result of laying off employees because of circumstances related to the crisis – a provision for which the Vermont Chamber advocated heavily in the days leading up the March 13 emergency adjournment.

Significant State Revenue Shortfalls Anticipated

With thousands of Vermonters out of work and entire sectors of the economy shuttered, state leaders are bracing for tax revenue shortfalls. The State has taken a number of actions to provide immediate liquidity to businesses and individuals with some expectation of federal relief to sustain depleted state funds.  The recently US Senate-passed CARES Act is anticipated to provide individual states with a minimum of $1.25 billion in funds to be used to replace expenditures incurred due to the COVID-19 public health emergency between March 1 and December 30, 2020 in situations where the expenditure was not previously accounted for in Vermont’s most recently approved budget. The full extent to which these federal funds can be used to replace depleted state accounts remains unclear.

The Vermont Chamber will continue to work with state and federal leaders to ensure additional relief and stimulus packages provide businesses with the resources necessary to continue or restart operations in the coming weeks and months.

Vermont Jobless Claims Spike Due to COVID-19 Layoffs

The Vermont Department of Labor (VDoL) received 14,784 claims for unemployment last week, and all-time record which is three times the number of claims VDoL received during the Great Recession of 2008.

The spike in unemployment claims in Vermont mirrors what is occurring nationally because of COVID-19 related layoffs.

In Case You Missed It

• How Vermont Businesses Are Helping Our Communities
• Senate Reconvenes to Pass Emergency COVID-19 Measures
• Is Your Business Essential?

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Message from Vermont Chamber President

Dear Vermont Businesses,

Over the last two weeks Vermont and the nation have experienced an unprecedented public health emergency, coupled now with an abrupt economic downturn unseen in modern times. We at the Vermont Chamber of Commerce are cognizant of the hardships currently faced by our thousands of businesses and their employees and families across all industries. We also fully acknowledge that certain sectors continue to grapple with a disproportionate level of human and financial impact. We are deeply appreciative of the work done by our state’s emergency management apparatus and we continue to advise our membership with questions related to health and safety to contact the Vermont Department of Health or the Vermont Department of Emergency Management.

While communication is essential in a time of crisis like this, overabundant or duplicative communication, can add confusion and clutter to an already hectic scenario. That is why we have focused our efforts on compiling reliable information for our members that can be used to ensure the continuity of business operations for locations that remain open, and also for the long-term survivability of businesses ordered closed. We recognize that in many industries a single week, or even day of closure, can be catastrophic.

Currently, the entirety of my staff is 100% focused on obtaining state and federal resources that can be used by Vermont’s business community to mitigate the economic damage inflicted by this crisis. We are in daily contact with officials from Governor Scott’s Administration, the congressional delegation, and the Legislature. The purpose of our engagement with state and federal officials is to identify existing resources our businesses may benefit from, and also to advocate for immediate financial and regulatory relief aimed at ensuring that Vermont’s business community is able to weather these times and thrive in the future.

Specifically, the Vermont Chamber advocated last week for the passage in the Vermont House of a bill that expands unemployment insurance and ensures that businesses forced to lay off employees as a result of the crisis are not charged for benefits paid to an individual due to the individual’s COVID-19 related unemployment. This legislation is not yet law and we are therefore urging the Legislature to take action on the bill as soon as is safely possible. At the state level, we are also pursuing immediate abatement of the February and March rooms and meals tax payment to provide employers with a degree of immediate liquidity.

At the federal level, we continue to work with our D.C. counterparts and Vermont’s Congressional delegation to ensure the timely passage of a relief package that will provide immediate substantial resources to Vermont’s businesses. These are just a few of the legislative items we are working on daily. We are actively integrating additional priorities into our immediate agenda as actionable problems are identified.

For a guide to existing state and federal agency relief resources and to track the latest in legislative developments related to this crisis, you can visit our COVID-19 landing page. On this page, you will find a compilation of links to resources for businesses and individuals, as well as a constantly updated section highlighting recently passed or pending COVID-19 legislation and policy.

To the greatest extent possible, the Vermont Chamber of Commerce is determined to continue ensuring the wellbeing of Vermont’s business community during these unique and trying times.

Stay Healthy,

Betsy Bishop

House Remains Adjourned

The House remains in adjournment with in-person meetings postponed until Tuesday, March 24, though it is anticipated that adjournment will extend beyond next week. Before adjourning last week, the House passed measures to respond to the coronavirus crisis. H.742 would provide grants for emergency medical personnel training and increase resources for the Agency of the Human Services (AHS) to better enable healthcare access. The second piece of coronavirus-related legislation, H.681, amends unemployment insurance law and ensures that experience-rating records for an employer are not charged for benefits paid to an individual due to the individual’s COVID-19 related unemployment.

The Vermont Chamber advocated heavily for the passage of H.681 in the days and hours leading up to last week’s unplanned adjournment. Due to the closure of the State House, neither of these bills are currently law. The Vermont Chamber is urging legislators to take action on UI provisions as soon as is safely possible.

Senate Reviews Coronavirus Response

Senate Committees met remotely to continue work on the annual budget and to consider COVID-19 response measures. Committees discussed House-passed H.742, and also met with state agency leaders involved in COVID-19 response. This week’s Senate business was largely informational, with no committee or floor votes taking place. Like the House, the Senate has postponed in-person meetings until (at least) Tuesday March 24.

Federal Coronavirus Legislation Passes

At the federal level, H.R.6074 was passed and signed into law. It enables the Small Business Administration to provide $7 billion in low-interest loans to small businesses impacted by COVID-19. Lawmakers also passed and signed into law H.R.6201, which provides $104 billion in relief and expands sick leave and FMLA for COVID-19 related leave. The bill would require employers to provide up to 80 hours of paid sick leave to employees for COVID-19 issues. It also provides employees on leave for COVID-19 related issues who don’t have childcare or the ability to work remotely with 2/3’s pay for up to 12 weeks. Under the bill, employers pay for the sick time/FMLA and are supplemented by federal tax credits.

Governor Scott Executive Order

Late last week Governor Scott issued executive Executive Order (EO) No. 01-20 directing the Agency of Commerce and Community Development (ACCD) to work with the U.S. Small Business Administration (SBA) and the Vermont Small Business Development Center (VSBDC) to survey businesses to determine the economic impact of financial losses related to COVID-19 for purposes of pursuing SBA Economic Injury Disaster Loans. The EO also expands unemployment insurance to quarantined Vermonters and removes the work search requirement for workers affected by temporary COVID-19 related business closure. In subsequent action, the Governor ordered bars and restaurants closed on Tuesday after banning gathering of more than 50 people.

Of particular significance to restaurateurs, on Thursday Governor Scott issued Gubernatorial Directive 4 to provide supplementary revenue opportunity for restaurants capable of take-out by permitting the take-out and delivery of alcoholic beverages that accompany food orders for off-premise consumption.  The Administration is regularly updating its COVID-19 business page with information on additional directives.

Childcare Solutions for Essential Workers

The Administration is also encouraging workers identified on the Essential Persons List to complete a webform. The form is intended to collect information that can be used to connect families of essential workers with childcare in schools and licensed childcare programs. Families can also call 2-1-1, ext 6.

UI Application Process Updated

In response to an unprecedented influx of unemployment insurance applications, the Vermont Department of Labor (VDOL) launched a mobile friendly web application for individual claimants to deal with some of the backlog. The UI process differs for first-time users and VDOL is providing step-by-step guidance for new claimants. VDOL staff are also encouraging employers to fill out a mass layoff spreadsheet if the employer plans to lay off 10 or more employees.

In Case You Missed It

State Agency Resource List:

• Vermont Agency of Commerce and Community Development COVID-19 Guidance
• Vermont Department of Labor COVID-19 Guidance
• Agency of Human Services (Department of Mental Health)
• Department of Financial Regulation Business Interruption Insurance Guidance

Federal Agency Resource List:

• U.S. Small Business Guidance and Loan Resources Related to COVID-19
• U.S. Department of Labor COVID-19 FMLA Guidance
• IRS COVID-19 Tax Relief Guidance
• Office of Senator Patrick Leahy
• Office of Senator Bernie Sanders
• Office of Congressman Peter Welch

In the News:

• Vermont Lawmakers Look to Expand Eligibility for Unemployment Benefits
• State Tax Coffers Could Take $200M Hit from COVID-19 in Next Three Months

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Coronavirus Prompts State House Closure

Due to the Covid-19 pandemic, legislative leadership announced today that the General Assembly will recess for at least one week. As of now, the planned return date is set for Tuesday, March 24. We will keep you informed as the situation develops.

Economic Development Initiatives Advance

The Senate Economic Development Committee voted unanimously to advance S.256 a bill that would expand economic development initiatives. The bill includes an incentive program for workers who relocate to Vermont by providing qualified new employees up to $7,500 for relocation expenses. The relocation program specifically incentivizes the relocation of workers in high-need sectors as identified by the State.

S.256 would also enable project-based Tax Increment Financing (TIF) for smaller construction projects. TIFs are typically used as a financing tools for larger municipal projects and taxpayers benefit from the resulting added value to grand lists once the associated debt is retired. However, the existing criteria enabling the use of a TIF limits the program for use by larger municipalities with larger revitalization projects. S.256 would make TIFs simpler to implement for smaller infrastructure projects in more rural communities. Additionally, the bill would provide additional funds to the Vermont Department of Tourism and Marketing and enable a Capital Investment Convertible Loan Program that would allow businesses with 30 or fewer employees to apply for an incentive for smaller businesses in the form of a convertible loan in order to upgrade facilities, machinery, and equipment and to increase.

The Vermont Chamber has advocated for these programs during the 2020 Legislative Session.  We are supportive of programs that encourage economic growth, particularly in our rural communities.

Senate Committee Approves Tax Bills

The Senate Committee on Finance advanced several bills this week, including S.190, which passed unanimously, 7-0. The bill tightens criteria for the Standard Offer Program wherein the Public Utility Commission can determine rates paid to a power plant to fulfill the baseload renewable power portfolio requirement included in the bill. When setting the price, the Commission considers written factors (including terms of a potential contract), the availability of energy, and whether fuel supply is acquired ecologically and sustainably.

By a vote of 6-0-1, the Committee also passed S. 337,  a bill that makes change to energy-efficiency entities to reduce greenhouse gases in the thermal energy and transportation sectors. The bill requires energy-efficient entities to consult only with relevant agencies to ensure there are no overlaps in competition to complete initiatives, and requires that funds used for programs and services be proportionate to the energy- efficiency charge collected in the provider’s territory.

The Committee additionally passed S. 191 an act relating to tax increment financing districts that would base the municipal increment on the assessed value of the property. Under the bill, if assessed value decreases in comparison to the initial value, the municipality is responsible for paying the difference to the education fund. The bill would also allow interest-only debt financing, and a district would be able to create a capital reserve or a debt service reserve fund after consultation from the bond bank, their bankers, their taxpayers, and the Vermont Economic Progress Council (VEPC). Additionally, current TIF districts would be able to expand or alter their district boundary by July 1, 2021 but after that effective date.

The Vermont Chamber is supportive of programs that optimize state investments to recruit additional workforce, and build or renovate housing and commercial/retail space, all of which is vital to sustaining economic growth.

Bill Would Limit Ability to Prevent Storefront Solicitation

The House General, Housing, and Military Affairs Committee voted to advance H.492, a bill that would erode the ability of business owners to prevent loitering and solicitation at storefronts. The Vermont Chamber testified in favor of recent changes to the bill that struck particularly worrisome content that would have added shopping mall interiors to the list of spaces forced to allow solicitation. However, this latest version maintains provisions that limit the ability of store owners to seek the removal of individuals soliciting on sidewalks in front of privately-owned businesses.

The Vermont Chamber recognizes the ongoing need to care for Vermont’s homeless population, and we support the general intent of H.492. However, we have serious concerns about sections of the bill that would create circumstances which limit the ability of business owners to facilitate safe and successful business operations. We will continue to oppose legislation that degrades this fundamental ability.

Corporate Income Tax Debate Develops

The House Ways and Means Committee continued its review of the Governor’s proposed corporate tax bill. Under the proposed bill, the State would move to triple weighted sales in fiscal year 2020, quadruple weighted sales in FY21, and then to single sales in FY22. The throwback rule would be repealed in FY22. The Corporate Tax Revenues Forecast predicts $95.1 million in FY21, $89.9 million in FY22 $95.3 million in FY23 and $100.96 million by FY24 with a change in apportionment factor of -$1.30, -$3.3 -$8.35, and -$11.1 million, respectively.

The bill also replaces the Joyce methodology of receipts factor calculation with Finnigan apportionment method. This supersedes the 80/20 rule which requires income and apportionment factors of all taxable corporations incorporated in the U.S. that are part of a unitary combined filing group to be included in that group’s return. The estimated recuperation of these losses through Finnigan is expected to be known by FY22. Legislators expect that these changes will reduce risk and keep Vermont’s corporate tax structure regionally competitive.

The Vermont Chamber believes in a consistent and predictable fiscal policy that does not increase the tax burden on businesses or their customers. Given that Vermont has one of the most progressive tax systems in the country, we continue our work to ensure that annual budget decisions are made consistent with available revenue.

Vermont Chamber Testifies on Workforce Development Initiative

The Vermont Chamber testified in the House Committee on Commerce and Economic Development in support of removing Vermont’s tax on military retirement incomes. Vermont is one of only six states that offers no tax relief on this form of income. Military retirement generally occurs when a soldier or officer is in their mid-40s. Often military retirees bring with them larger-than-average families and continue working for decades in new civilian careers. Military retirees are proven to augment workforces, given their high rates of education and training. They are also covered by federal health care programs, which helps ease financial strain on the state’s health care resources.

The Committee chose to support adding military pension tax relief as one of the economic priorities included in their economic development bill. The change will likely require approval from the House Committee on Ways and Means prior to receiving a vote on the House floor. There have been several bills introduced in 2019 and 2020 that would exempt military retirement income from taxation, and Governor Scott has repeatedly highlighted removal of this tax as one of his priorities.

The Vermont Chamber is supportive of removing this tax to better incentivize military retirees to move to Vermont and contribute to our workforce.  We will continue to pursue this exemption this session.

Bill that Puts Manufacturers at Risk for Higher Electric Rates Advances

By a 6-1-0 vote, the Senate Finance Committee passed S.267, a bill that would increase the cost of electricity, and negatively impact large energy users like manufacturers and ski areas. The Vermont Chamber shared its concerns in testimony with an amendment to the Renewal Energy Standard that would require electric utilities, effective January 1^st, 2023, to increase their distributed renewable generation portfolio from 10% to 20% by 2032. Although the new version includes an annual petition process, any increase could ultimately result in a 4-10% increase in electricity rates and potentially cost manufacturers hundreds of millions of dollars in additional operating expenses over the next decade.

The Vermont Chamber and business groups supported the recommendation by the Department of Public Services to conduct a study as the first step to fully understand the costs and benefits before implementing a mandate in statute. The Vermont Chamber also joined a coalition of industry groups that that shared recommendations with the Senate Committee on Natural Resources and Energy, which were sidelined. S.267 then moved to the Senate Committee on Natural Resources and Energy where utilities again weighed in again with concerns. The Committee is now drafting a new version with an amendment to include a planning analysis of the amendment to increase the distributed renewable generation portfolio from 10% to 20%.

While the Vermont Chamber supports the use of renewable energy in Vermont’s energy portfolio, we are concerned about the increased costs this initiative places on business. If S.267 impacts your business, please contact Chris Carrigan with your concerns.

In Case You Missed It

State of Vermont Coronavirus Guidelines

Vermont Companies React to Virus

Legislature Grapples with Coronavirus Response

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Vermont Chamber Comments on Career and Technical Education Plan

The Vermont Chamber commented on the Perkins V Draft State Plan. Perkins is a federal formula grant program aimed at improving the state’s career and technical education (CTE) systems. Vermont receives $5 million each year for supporting regional CTE centers-- the Community College of Vermont and Vermont Technical College. The Vermont Chamber is largely supportive of the Perkins V plan because it provides significant resources for workforce development in key sectors. Encouragingly, the most recent plan better aligns the career pathways offered by CTEs with the workforce needs of employers.

PBS/VPR Poll Shows Economy Is the Top Issue

In the PBS/VPR Poll released this week, the number one issue by a wide margin was (again) the economy, jobs, and the increasing cost of living. Thirty percent of the 600+ respondents selected this option as the #1 issue over property taxes, climate change, and opiate addiction, each of which tied for second with 10% of the responses. Wages and Leave polled at 4%, Guns at 2%, and National Politics at 2%. Yet these issues receive prominent coverage by the State House press corps. Most legislators say they support boosting the economy, job growth, and reducing the cost of living while they are on the campaign trail. However, when it comes to addressing these initiatives in the Legislature, it seems a different story. For example, this week the Vermont Chamber is working to curb an increase in mandated wages and an increase in electric rates. Meanwhile, the one incentive program for businesses, the Vermont Employment Growth Incentive (VEGI), is under attack with several legislators questioning the program’s efficacy and existence. Our initiatives to increase tourism funding, support training programs, and fund recruitment efforts are progressing, but not without immense effort. We are hopeful that as the legislative session continues, legislators will focus on the issues Vermonters find most important as quantified in the PBS/VPR poll.

Moving Forward When Everything Is a Crisis

Vermont headlines are filled with claims of a crisis and the solutions offered lean toward more State funding. No doubt, each of the known crises in Vermont is worthy of additional attention. Still, how a state with a $6.3 billion budget and only 625,000 people affords it all remains unanswered.

The State’s budget funds the needs of our citizenry. However, each year the plea for more funding grows with little in the budget that can be cut without significant programmatic shortfalls-- not education, clean water, childcare, Medicaid, or infrastructure investment. Yet, as Vermont’s population decreases and our Gross State Product flatlines, the struggle to work on meaningful projects with limited resources continues. The list seems endless:

• $565 million in deferred maintenance for schools
• $300 million to get broadband to every last mile
• $56 million for clean water initiatives
• $30+ million for housing
• $12 million for childcare
• $4.5 billion for pension obligations

These ongoing requested expenses plus regular annual increases for current agencies and programs consume any new revenue generated by existing tax rates, leaving little money for new and innovative initiatives to encourage economic growth.

It’s time for an honest discussion about how much Vermonters can realistically afford, and how resources could be realigned to most appropriately expend our limited resources.

Program Provides $7,500 in Worker Relocation Funds

As of January 1, 2020, a program that provides grants of up to $7,500 for relocation expenses is available for workers in select fields. This opportunity is provided on a first-come, first-served basis. Interested employers are encouraged to take advantage of the program by advertising the incentive to potential employees while funds remain available. Qualifying expenses include closing costs for a primary residence, lease deposits, first month’s rent, hiring a moving company, renting moving equipment, shipping, moving supplies, connectivity, specialized tools and equipment, and co-working space membership fees.

If you have additional questions about the program, please send an email to workerrelocation@vermont.gov.

Census Worker Shortage Raises Concerns

As legislative leadership struggles to advance a bill to increase the minimum wage to $12.55 by 2022, state and federal officials are scrambling to fill thousands of Vermont census worker positions that pay between $20 and $22 an hour. This problem is not unique to census worker needs. During summer visits to business members around the state, the Vermont Chamber consistently heard from employers searching for workers to fill positions that pay $15 an hour or more.

After the Vermont Futures Project initially quantified the workforce crisis, State leaders almost unanimously accept that Vermont is facing a severe worker shortage. Businesses around the state are struggling to find entry-level employees for positions that pay far above proposed minimum wage increase. Businesses currently paying near the minimum wage are generally smaller, rural establishments such as family-run general stores and independent, Main Street businesses.

The Vermont Chamber has consistently steered the economic development conversations on the issue of worker shortages, rather than on wage increase mandates that will result in negative impacts that disproportionately harm rural and small businesses. The Joint Fiscal Office, a non-partisan and publicly-funded research entity that provides economic data to the Legislature, concluded this year that the proposed $121 million minimum wage increase will limit economic growth and suppress job creation while also resulting in the loss of $39.1 million in federal benefits for low-income Vermonters.

Employment Growth Program Faces Scrutiny in House

The Vermont Employment Growth Incentive (VEGI) is a program that directs incentives to businesses to encourage economic activity that would not occur, would not occur in Vermont, or would occur in a significantly less desirable manner, without the incentive. Numerous Vermont employers have successfully accessed the program, resulting in significant economic benefits for both local business communities and the state’s overall economy.

Unfortunately, members of the House Committee on Ways and Means continue to direct significant criticism toward the program. Recently, the Committee has focused on advancing a bill that mandates additional information disclosures related to the incentive. State officials that run VEGI, as well as businesses that have used the program, explained to the Committee that VEGI is one of the most transparent employment growth incentive programs in the nation, when compared to equivalent programs in other states. Supporters of VEGI also explained that the disclosures mandated by H.640 would place businesses that are forced to comply at a competitive disadvantage, as the proposed information requirements could be used against participating businesses by competitors.

The Vermont Chamber is supportive of VEGI because it provides businesses of all sizes with the opportunity to access performance-based cash incentives to be used for growth that benefits not only the business itself, but also Vermont’s composite economy.

Let’s Grow Kids Briefs House Committee with Childcare Solutions

Let’s Grow Kids testified in the House Commerce and Economic Development Committee this week, explaining to the Committee that Vermont has an aging and shrinking population, lacks an adequate pipeline of workers to meet the needs of Vermont businesses, and is dealing with the impacts of a downgraded credit rating. Let’s Grow Kids believes early care and education is the linchpin in how we solve Vermont’s economic challenges.

Vermont business leaders joined Let’s Grow Kids in the House Commerce and Economic Development Committee to support the message that the early education workforce is critical to supporting Vermont’s greater workforce goals. The Vermont Business Roundtable joined Aly Richards, CEO of Let’s Grow Kids, to tell the Committee that employers, planners, and developers around Vermont believe the lack of accessible, affordable – and high-quality – child care for employees is a fundamental barrier to growth, and one that affects employee recruitment, retention, and productivity.

In a recent study of Vermont families with young children, four out of five families with all available parents in the labor force said that the availability of child care impacts how much they work. However, three out of five Vermont infants likely to need child care don’t have access to regulated child care programs. Vermont needs more child care to meet the requirements of families, and the supply of child care relies entirely on one sector of our state’s workforce – Vermont’s early childhood educators. But child care workers make, on average, half of what their counterparts make in the public school setting. Turnover is high. The long-term solution to this crisis is complicated, with robust public and private investments needed to fund Vermont’s child care system. These investments are critical and timely.

The Vermont Chamber is supportive of initiatives that maximize the workforce potential of Vermont’s existing population and also efforts that would help attract new families to live and work in Vermont. Bolstering the State’s child care resources is essential to this effort.

Bill Could Result in Higher Electric Rates

The Senate Committee on Finance reviewed S.267, a bill that will increase the cost of electricity, which will negatively impact large energy users like manufacturers and ski areas. The bill features two amendments to the Renewal Energy Standard that would require electric utilities to have 100% renewable power by 2030, and increase their distributed renewable generation portfolio from 10% to 20% by 2032. The latter amendment requires utilities to purchase new local sources of renewable energy, such as solar, which could ultimately result in a 4% increase in electricity rates. This could potentially cost manufacturers hundreds of millions of dollars in additional operating expenses over the next decade.

While the Vermont Chamber supports the use of renewable energy in Vermont’s energy portfolio, we are concerned about the increased costs this initiative places on business. If S.267 impacts your business, please contact Chris Carrigan with your concerns.

In Case You Missed It

Climate Policy: Walters: Phil Scott’s climate offensive: strong action or hot air?

Climate Policy: Briglin: Vermont has highest GHG emissions in New England

Climate Policy: Vermont House Approves Climate Bill

Over Regulation: Allen: In an outsider’s critique of Vermont, ‘the element of truth’

Child Care: Child Care Center Saved from Closure

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Increasing Workforce Participation Is the #1 Issue

The House Commerce Committee reviewed H.703, a proposal to create a workforce development provider portal to enable providers, educators, training program administrators, and others to exchange information about services. As the Committee works on this bill, the Vermont Chamber will explain our track record on workforce initiatives. For the past four years, the Vermont Chamber has led the effort to increase workforce participation since members have identified the lack of people to fill open jobs as their number one issue. This is true regardless of size of employer, geographic location, or industry. Vermont needs more people in the workforce.

Our research and education foundation, the Vermont Futures Project, identified that Vermont needs 11,000 new workers each year. With that as our goal, we have worked to get Vermonters off the sidelines and into the workforce by supporting criminal justice reform, helping employers hire people in recovery, encouraging mature workers to remain in the workforce, and supporting the workforce training programs currently funded by the State. Additionally, we are working to attract more people to consider Vermont as a place to live and work. We have secured $250,000 for marketing, and have supported the remote worker and Stay to Stay programs. Chamber member, Pomerleau Real Estate, produced an infographic that summarizes this work.

Committee Advances Act 250 Bill

After a long and tedious reform effort, changes to Act 250 advanced this week. The House Natural Resources Committee passed their Act 250 bill by a 6-3-2 vote. The process to update Act 250 began in 2018, with the Commission on Act 250 traveling Vermont to hear public comment on the state’s largest land use law. The Committee was tasked with using recommendations generated by the Commission as a reference to aid in the development of an updated version of the law. In 2019, the Vermont Chamber weighed in on the future of Act 250, offering a series of recommendations in delivered testimony.

In January, the Scott Administration and the Vermont Natural Resources Council (VNRC) presented the Committee with a mutually supported plan to update the State’s principal land use law. Included in the testimony was a proposal to replace District Commissions with three-member professional boards. Doing so would greatly increase consistency in the permitting process. Over the last several years, businesses have expressed frustration with the often inconsistent and unpredictable paths of the existing permit process. The recommendations also included Act 250 permit exemptions for projects within municipalities holding downtown designations. These exemptions would better allow for economic growth, while also limiting the negative environmental impacts of sprawl. In the version passed by the Committee, legislators chose to include several of the joint recommendations, including provisions that add greater consistency to the permitting process, as well as sections that better enable development in zones that hold municipal designations.

Unfortunately, the Committee also chose to lower the elevation threshold that trigger Act 250 (from 2,500 feet to 2000 feet), an aspect of the current bill that the Vermont Chamber opposes.  Lowering the elevation threshold would bring hundreds of thousands of acres of additional Vermont land into Act 250 jurisdiction, which will generally result in a devaluation of privately held portions of that land. The legislation now moves the Senate, where the Vermont Chamber will continue to engage legislators to ensure that recommendations from the business community are reflected in final Act 250 legislation. Specifically, the Vermont Chamber will oppose any legislation related to Act 250 that unreasonably burdens or restricts economic growth in rural or urban communities.

Tourism Marketing Effort Advances

The House Committee on Commerce and Economic Development reviewed and marked up H.705 in an effort to be inclusive of Governor Scott’s $1 million investment announced for tourism, economic development, and outdoor recreation marketing. The additional $500,000 for Vermont destination marketing is a part of this $1 million package.

This increased investment will allow the Department to further engage towns, businesses, and destinations to ensure the most compelling stories of Vermont are being told to potential visitors. Conversations are expected to continue next week.

Individuals and businesses can join the Vermont Chamber in urging the Legislature to invest in Vermont tourism by signing the petition to show support of the increased investment.

House Committee Hears Tax Recommendations

Christopher Sullivan, attorney with Rath, Young, and Pignatelli, P.C, briefed the House Ways and Means Committee on some aspects of Vermont’s current tax structures as the Committee considers potential changes. Sullivan also highlighted reforms that could help increase the state’s competitiveness. The Committee was receptive to Sullivan’s testimony, which provided an informative overview of the unique corporate tax structure that exists in Vermont.   Testimony also focused on the proposed legislation that would change Vermont’s double-weighted corporate income tax to a triple-weighted structure. Sullivan recommended moving to a single-weighted corporate income tax. He pointed out that Vermont already has one of the most aggressive corporate tax bases and that single sales factor would help in-state businesses with significant property and payroll. It would also increase Vermont’s competitiveness in attracting new jobs and property by bringing the state sales factor in line with most other New England states.

The Vermont Chamber believes in a consistent and predictable fiscal policy that does not increase the tax burden on businesses or their customers. Given that Vermont has one of the most progressive tax systems in the country, we continue our work to ensure that annual budget decisions are made consistent with available revenue.

Minimum Wage Bill Vetoed

Governor Scott vetoed S.23, the minimum wage increase bill that would have cost businesses $121 million in additional payroll allocation. Analysis conducted by the Joint Fiscal Office indicates the bill would cost the state and private sector $53 million in 2021, and $121 million in additional payroll allocation in 2022. The proposed increases would also slightly suppress (by 0.08%) the State’s total GDP growth over the same period. Legislators on the conference committee tasked with finalizing the bill also verbally indicated that the proposed two-year phase-in to a wage target of $12.55 by 2022 would serve as a jump start for future increases. In his veto message, Governor Scott expressed his concern about the potential detrimental economic impacts of additional minimum wage increases on businesses in rural communities.

The Senate overrode the Governor’s veto by a 24-6 vote. House leadership will face a far greater challenge corralling the same two-thirds vote count, which is necessary to override a veto. When initially passed in the House, S.23 did not meet the two-thirds threshold necessary for an override. A tri-partisan group of House legislators continue to express concerns about the detrimental impact the proposed increases will have on businesses in their districts, including rural businesses that will be most harmed by additional wage mandates.

The Vermont Chamber has repeatedly testified on the negative impacts of minimum wage increases beyond those already in statute, including by highlighting that small businesses in rural areas will face out sized difficulties in adjusting to any new wage mandates.

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Investing in Vermont Tourism

Tourism Commissioner Heather Pelham delivered additional testimony before the House Commerce and Economic Development Committee in support of the proposed $500,000 increase to the Vermont Department of Tourism and Marketing’s budget. The testimony examined VDTM’s role in unify the Vermont brand’s messaging from various state agencies and across the tourism sector into one cohesive message, and then sharing that with potential domestic and international visitors.

Individuals and businesses can join the Vermont Chamber in urging the Legislature to invest in Vermont tourism by signing the petition to show support of the increased investment.

Non-Compete Bill Advances

The Vermont Chamber has testified multiple times on a bill that seeks to limit the use of non-compete agreements. The bill advanced this week, moving out of the House Commerce and Economic Development Committee after a 9-1-1 vote.

Non-compete agreements aid in the protection of proprietary and confidential information, intellectual property, and customer relationships. During the 2019 legislative session, the Committee asked the Vermont Chamber to work with legislators to develop a bill that would mitigate harm to businesses. The most recent version removes inclusions that would have forced employers to pay wages to former employees for the lifespan of mutually agreed upon non-compete contracts, commonly known as “garden leave.” This feature was included in earlier versions of the bill and the Vermont Chamber successfully removed it from the most recent draft. However, as written, the current draft would require any employer seeking to implement a non-compete to pay for a potential employee’s attorney fees related to employment contract consultation. It would also bar non-competes from taking effect for individuals making less than $75,000 a year. In recent testimony, the Vermont Chamber recommended to the Committee that portions of the bill requiring employers to provide legal fees be struck from the bill.

The Vermont Chamber recognizes the vital importance of ensuring that businesses possess the tools to protect sensitive information. We will continue to oppose any bill that seeks to impose a prohibition on the use of non-compete agreements, or forces employers into unsustainable financial or legal obligations.

Changes to Corporate Income Tax Proposed

The House Ways and Means Committee is making progress on a bill to change the corporate income tax structure. Vermont already has one of the most aggressive tax structures on foreign source income compared to other states and this latest proposal will make it even stronger by amending the apportionment of a taxable corporation’s Vermont net income. That is currently derived by combining the sales, property and income of the non-Vermont based company into a unitary entity and calculating the amount due to Vermont. Current Vermont law dictates a doubling of the sales amount and this bill would increase that to tripling this factor of the calculation.

The bill also proposes to eliminate the bank franchise tax and instead charge the corporate income tax on financial institutions. While the proposal simplifies the tax law, it includes a potential reduction of revenue to the State of $6 million. This alone may cause further changes as the bill makes its way through the legislative process over the next few months.

Threat of Cloud Tax Continues

Tech industry representatives again descended on the State House to express opposition to establishing a tax on software as a surface (SAAS), commonly known as a cloud tax. Witnesses explained to the House Ways and Means Committee that such a tax would disincentivize the startup and growth of SAAS businesses. Prewritten software purchased on storage media or downloaded to a computer in is currently taxable, while prewritten software accessed remotely via the internet is not. Late in the 2019 session, the Vermont Chamber worked to prevent the imposition of a tax on software as a service, often referred to as a “cloud tax,” which would have cost Vermont’s tech industry $ 6.1 million.

With eighteen states implementing similar taxes in the aftermath of the South Dakota v. Wayfair Supreme Court decision, the possibility of enacting a cloud tax has increased considerably, especially with members of the Committee again expressing support for such a tax. Imposition of an additional tax on software as a service would threaten growth in Vermont’s tech sector, an industry that elected leaders continually use as an example of a preferred growth sector given its high wages and low environmental footprint.

If you have questions or concerns about a cloud tax, please contact Charles Martin.

Vermont Chamber Testifies on Workforce Development Initiative

The Vermont Chamber testified in support of removing Vermont’s tax on military retirement incomes. Vermont is one of only six states that offers no tax relief on this form of income. Military retirement generally occurs when a soldier or officer is in their mid-40s. Typically, military retirees continue work for decades in new civilian careers. Military retirees are proven to augment workforces, given their high rates of education and training. They are also covered by federal health care programs, which helps ease financial strain on the state’s health care resources.

There have been several bills introduced in 2019 and 2020 that would exempt military retirement income from taxation, and Governor Scott has repeatedly highlighted removal of this tax as one of his priorities. The Vermont Chamber is supportive of removing this tax to better incentivize military retirees to move to Vermont and contribute to our workforce. We will continue to pursue this exemption as the session unfolds.

House Committee Reviews Remote Worker Bill

The Chair of the Senate Economic Development Committee briefed the House Commerce Committee on proposed changes to the remote worker grant program. The changes would additionally allow remote workers to qualify for grants under the worker relocation program. Members of the House Commerce Committee expressed support for the changes.

Supported by data from the Vermont Futures Project, the Vermont Chamber has repeatedly identified population stagnation and decline as a top economic challenge. The Vermont Chamber has long been supportive of workforce development initiatives that incentivize people to move to Vermont to live and work. We remain supportive of the worker relocation program and will continue to advocate in favor of the recently proposed changes.

Paid Leave Override Attempt Fails

Despite full-court pressure by House leadership, a Democratic super majority, and pleas by elected business owners and other allies, the attempt to override Governor Scott’s veto of H.107, the paid family leave bill, failed to reach the 100 votes required for a two-thirds majority, the necessary margin to override a gubernatorial veto. If passed, H.107 would have mandated a $29.7 million payroll tax.

In December 2019 Governor Scott’s administration announced the advancement of an optional leave program created through executive action. The Governor’s plan offers six weeks of leave at 60% wage replacement, using the state employee workforce as the predominate risk pool. The Vermont Chamber is supportive of this optional paid leave program, as it offers employers and employees alike the freedom to choose whether they wish to participate in the benefit.

Much of the opposition to this version of paid family leave was best summed up by Rep. Linda Joy Sullivan’s (D-Dorset) vote explanation:

“I am truly disappointed today. Let me be clear at the outset: I unequivocally and without reservation support Vermont’s adoption of a paid family leave plan. Unfortunately, we are today being asked effectively to adopt the second of what will be two competing and irreconcilable plans. I have serious issues with both plans. Issues that honestly needed to be worked out between the Governor and this body before we launched these ventures. Instead, at a time we are facing an astronomical and growing unfunded pension liability gap, when we are in desperate need to make substantial investment in our corrections and mental health systems, we are committing to spend another $3 to $6 million in General Fund dollars to set up this plan. A plan that’s broken from the outset. I find that to be the height of irresponsibility. I will not support this bill. Come back when we get it right.”

Protecting Vermont Agritourism

The House Agriculture and Forestry Committee heard testimony on H.794 to address agritourism liability. If passed, this bill would make providers of agritourism activities immune from civil liability if a participant is injured as a result of risks inherent in the activity. This would apply to any activities conducted on a farm that members of the public are invited to observe or participate. Agritourism is a significant economic opportunity for rural communities, and this bill would aid in economic diversification on Vermont’s farms.

Personal Care Products in Lodging Properties

The Senate Natural Resources Committee discussed S.227, a bill introduced by Sen. Chris Bray (D-Addison). The bill proposes to prohibit lodging establishments from using personal care products in single-use, small plastic bottles. If passed, lodging properties with more than 50 rooms would need to comply beginning January 1, 2021 and lodging properties with 50 rooms or fewer would be required to comply beginning January 1, 2022.

Contact Amy Spear with any questions or concerns about the bill.

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House Reviews Tourism Budget Bill

The House Committee on Commerce and Economic Development took testimony on increased investment in destination marketing Tuesday, Wednesday, and Thursday. The Committee is expected to continue tourism investment discussions next week.

The Vermont Department of Tourism and Marketing unifies the voice of the Vermont brand to tell the story of Vermont’s iconic experiences, and the tourism industry is critical to the health of the State’s economy. While not every witness was supportive of Vermont’s destination marketing efforts, the Vermont Chamber is continuing to advocate for the tourism industry and supporting Governor Scott’s proposed $500,000 investment in Vermont’s destination marketing.

Individuals and businesses can join the Vermont Chamber in urging the Legislature to invest in Vermont tourism by signing the petition to show support of the increased investment

Consensus Lacking on Act 250 Bill

The House Natural Resources Committee continued deliberations on legislation that would overhaul Act 250, Vermont’s principal land use law. The committee heard testimony from several stakeholders, each delivering a unique point of view on the impacts of proposed changes to Act 250. Among possible Act 250 changes that concern the Vermont Chamber are proposals that would lower the elevation threshold that triggers Act 250. This threshold is generally set at 2,500 feet, but some advocates are pushing to lower that elevation to between 1,500 and 2,000 feet, a move that would bring hundreds of thousands of additional acres into Act 250 jurisdiction, which subsequently lowers the values of impacted properties.

Early in January, the Scott Administration and the Vermont Natural Resources Council (VNRC) presented the House Natural Resources Committee with a mutually supported plan to replace District Commissions (bodies that generally review larger Act 250 projects) with three-member professional boards. Doing so would greatly increase consistency in the permitting process.  Over the last several years, businesses have expressed frustration with the often inconsistent and unpredictable paths of the existing permit process. The recommendations also included Act 250 permit exemptions for projects within municipalities holding downtown designations. These exemptions would better allow for economic growth, while also limiting the negative environmental impacts of sprawl. In an unexpected move, the Natural Resources Committee recently all but rejected proposals to reform district commissions.

In 2019, little progress was made on Act 250 reform, despite it being a priority of legislative leadership. The Vermont Chamber testified on Act 250 conveying the business community’s main concerns. The Vermont Chamber remains supportive of recommendations jointly offered by the Scott Administration and the Vermont Natural Resources Council, and we will continue working to ensure communities, both urban and rural, are not negatively impacted by any final changes to Act 250.

Senate Passes $121 Million Minimum Wage Bill

The Senate passed a minimum wage bill that would cost businesses $121 million in additional payroll allocation if signed into law. Analysis conducted by the Joint Fiscal Office indicates the bill would cost the state and private sector $53 million in 2021, and $121 million in additional payroll allocation in 2022. The proposed increases would also slightly suppress (by 0.08%) the State’s total GDP growth over the same period. Legislators on the conference committee tasked with finalizing the bill also verbally indicated that the proposed two-year phase-in to a wage target of $12.55 by 2022 would serve as a jump start for future increases. Having passed in both the House and Senate, the bill now moves to the Governor’s desk for his consideration. In recent public remarks, Governor Scott expressed his concern about the potential detrimental economic impacts of additional minimum wage increases on businesses in rural communities.

The Vermont Chamber has repeatedly testified on the negative impacts of additional minimum wage increases beyond those already in statute, including by highlighting that small businesses in rural areas will face outsized difficulties in adjusting to any new wage mandates.

Vermont Chamber Testifies on Non-Compete Agreements

The Vermont Chamber has testified multiple times on a bill that seeks to limit the use of non-compete agreements, and again delivered verbal testimony this week. Non-compete agreements aid in the protection of proprietary and confidential information, intellectual property, and customer relationships. During the 2019 legislative session, the House Committee on Commerce and Economic Development asked the Vermont Chamber to work with legislators to develop a bill that would not cause sustainable harm to businesses. The most recent version removes inclusions that would have forced employers to pay wages to former employees for the lifespan of mutually agreed upon non-compete contracts. This feature was included in earlier versions of the bill and the Vermont Chamber was successful in working to remove it from the most recent draft.  However, the current draft would require any employer seeking to implement a non-compete to pay for a potential employee’s attorney fees related to employment contract consultation. It would also bar non-competes from taking effect for individuals making less than $75,000 a year. In this week’s testimony, the Vermont Chamber recommended to the House Commerce Committee that portions of the bill requiring employers to provide legal fees be struck.

The Vermont Chamber recognizes the vital importance of ensuring that businesses possess the tools to protect sensitive information. We will continue to oppose any bill that seeks to impose a blanket prohibition on the use of non-compete agreements or forces employers into unsustainable financial or legal obligations. Please contact Charles Martin if you have any questions or comments on this issue.

Medical Monitoring Bill Puts Vermont’s Agricultural Supply Chain at Risk

U.S. District Court Judge Geoffrey Crawford recently ruled that medical monitoring for industry chemicals is allowed as a legal remedy without a physical injury. Following this decision, and the Senate Judiciary Committee’s 3-2 vote and recommendation to override the Governor’s veto on S.37, the Senate Agriculture Committee reviewed S.37 with an eye on protecting Vermont’s farming and agricultural economy.

While there is an exemption for the use of pesticides, S.37 would put the farming supply chain at risk. Any large facility with 10 or more full-time employees, or 500 employees employed at all facilities, are vulnerable to lawsuits. Large facilities-- such as cheese, dairy and food manufacturers and slaughterhouses-- would face uncertainty, liability, risks, and costs.

The continued debate on S.37 suggests growing concern and lack of votes to pursue Governor veto override strategy. The Vermont Chamber has struck a balance between protecting Vermonters and the environment, while not disrupting insurance markets which would put manufacturers and the respective supply chains at significant risks and costs.

Conference Committee Advanced Employee Misclassification Bill

A conference committee of House and Senate legislators agreed to a bill that would allow the Attorney General to investigate businesses that have misclassified multiple workers within a set time period. Employee misclassification is generally understood as instances in which an individual working under an employer is classified as an independent contractor when their employment circumstances more appropriately fit the criteria of an employee.

The Department of Labor currently adjudicates instances of employee misclassification, and the need for additional investigatory resources remains unclear. The Department of Labor has previously indicated that existing department resources can sufficiently handle misclassification cases. In 2019 testimony, the Attorney General’s office expressed lukewarm interest in taking on this additional responsibility. No representatives from the Attorney General’s office were present for the conference committee’s deliberations this week.

The Vermont Chamber understands the importance of businesses complying with all state and federal employment regulations. However, legislation that would add duplicative regulatory frameworks to existing and otherwise functional enforcement systems is unnecessary.

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Governor’s Budget Address Prioritizes Tourism and Workforce Investment

In his budget address, Governor Scott again identified reversing Vermont’s declining workforce as his number one priority. The Vermont Futures Project was one of the first organizations to raise statewide awareness about Vermont’s demographic crisis, and the Vermont Chamber has made addressing the problem an ongoing legislative priority. The Governor also summarized several other economic initiatives supported by the Vermont Chamber. Among the shared priorities highlighted by the Governor during his remarks was increased investment in tourism marketing funds, continued investment in training, economic development marketing funds, additional incentives for small businesses to start and operate in Vermont, additional workforce development initiatives, technological investment in key sectors, further enhancement of designated downtowns, and greater investment in childcare programs. The Vermont Chamber will continue to work with the Administration and the Legislature to advance these and other priorities that help grow Vermont’s economy.

Consensus on More Housing But Not on Source of Funds

The Senate Economic Development Committee led an effort last year to secure a bond for additional housing following the successful $37 million effort that passed several years ago. While last year’s effort didn’t pass, the Committee resumed discussion with a new report from the State Treasurer which suggests fully funding the Vermont Housing and Conservation Board (VHCB), rather than more bonding. The Governor has agreed with the Treasurer that there isn’t enough capacity in the State’s debt affordability forecast to issue another bond, especially since Vermont’s bond rating has been downgraded as rating agencies cite our aging demographics and modest economic activity. Currently, VHCB funding comes from the property transfer tax but it is being redirected to other programs. If fully funded, it would inject $3.4 million annual into housing. The Committee wasn’t enamored with that suggestion since that amount of new funding is hard to find in the State budget.

State House Abuzz with Tourism Advocacy

Governor Scott announced an additional $500,000 for Vermont destination marketing during his budget address, demonstrating the Administration’s support for the tourism industry which is an important economic driver for Vermont’s rural communities. This investment represents half of the of the additional $1 million investment announced for tourism, economic development, and outdoor recreation marketing. Continuing its tourism advocacy efforts, the Vermont Chamber testified in front of the House Committee on Commerce and Economic Development on the importance of Vermont destination marketing. Join the Vermont Chamber in urging the Legislature to invest Vermont tourism by signing the petition to show your support of the increased investment.

Senate Receives Update on Broadband Progress

The Senate Finance Committee heard from the Public Service Department on progress related to Act 79 legislation passed in 2019 that assists with building out broadband infrastructure in underserved Vermont communities. In addition to providing staff capacity to help direct broadband projects in underserved regions, Act 79 also established the Broadband Innovation Grant Program, which helps communities conduct feasibility studies and create business plans related to the deployment of broadband. Forty-five towns are currently working with the Department of Public Service to access these resources.

The Vermont Chamber recognizes the importance of bringing broadband infrastructure to the 50,000 Vermonters who currently lack high-speed internet. Doing so is essential to making Vermont a desirable place to live, work, or start and grow a business.

Minimum Wage Proposal Will Cost Businesses and State $121 Million

Legislative Council briefed a conference committee of House and Senate legislators on the differences between House and Senate versions of recently proposed bills to increase the minimum wage. Preliminary analysis conducted by the Joint Fiscal Office indicates current proposals would cost the state and private sector $53 million in 2021 and $121 million in additional payroll allocation in 2022. The proposed increases would also slightly suppress (by 0.08%) the State’s total GDP growth over the same period. Legislators on the conference committee indicated that the proposed two-year phase-in to a wage target of $12.55 by 2022 would serve as a jump start for future increases. The conference committee ultimately chose to proceed with the latest proposal and the bill passed in the House 93-52. Having passed in both the House and Senate, the bill now moves to the Governor’s desk for his consideration.

The Vermont Chamber has repeatedly testified on the negative impacts of additional minimum wage increases beyond those already in statute, including by highlighting that small businesses in rural areas will face outsized difficulties in adjusting to any new wage mandates.

House Passes $31 Million Paid Leave Program

By a vote of 89-58, the House passed H.107, a bill that establishes a paid family leave insurance fund. H.107 mandates a $29.7 million payroll contribution by employees, and an additional $1.2 million allocation of state funds to properly administer the program. The bill will require 45,000 Vermonters, primarily part-time workers, to pay into the program without being eligible to receive the program’s benefits.

The latest bill does not include a mandatory employer contribution to fund the proposed leave program, a feature the Vermont Chamber worked to secure. Having passed in both the House and Senate, the bill now moves to the Governor’s desk for his consideration. There has been broad speculation that he will veto this bill since he instituted a voluntary program for state employees that private businesses may join.

House Committee Considers Implementing Cloud Tax

The House Ways and Means Committee heard renewed testimony on the impact of establishing a statewide tax on software as a service, commonly known as a “cloud tax.” The Tax Department briefed the Committee on the current status of taxation on prewritten software. The Committee also heard from tech industry advocates who expressed unified opposition to the proposed tax. Industry representatives explained to House members that such a tax would hinder growth in Vermont’s budding software industry. Twenty-seven states currently offer tax exemptions for software as a service.

Late in the 2019 session, the Vermont Chamber worked to prevent the imposition of a tax on software as a service, which would have cost Vermont’s tech industry $ 6.1 million. Imposition of an additional tax on software as a service would threaten growth in Vermont’s tech sector, an industry that elected leaders continually use as an example of a preferred growth sector given its high wages and low environmental footprint. If your business relies on software as a service or you have questions or concerns about a cloud tax, please contact Charles Martin.

Vermont Chamber Testifies on Latest Non-Compete Bill

The Vermont Chamber met with legislators to discuss the most recent version of a bill that proposes to further regulate the use of non-compete agreements. Previous versions would have entirely prohibited the use of non-compete agreements in employment contracts. These agreements aid in the protection of proprietary and confidential information, intellectual property, and customer relationships. In addition to allowing for the use of non-compete agreements, the current draft would also require any employer seeking to implement a non-compete, to pay for any potential employee’s attorney fees related to employment contract consultation. It would also bar non-competes from taking effect for individuals making less than $75,000 a year.

The Vermont Chamber recognizes the vital importance of ensuring that businesses possess the tools to protect sensitive information. We will continue to oppose any bill that seeks to impose a blanket prohibition on the use of non-compete agreements, or forces employers into unsustainable financial or legal obligations. Please contact Charles Martin if you have any questions or comments on this issue.

Vermont Chamber Addresses Advisory Council on Workforce Recruitment

The Vermont Chamber addressed the Governor’s Veterans Advisory Council on efforts to remove the tax on military retirement pensions. Vermont is one of only eight states that offers virtually no tax relief for former servicemembers, a population that often retires from service around the age of 40.  A removal of the state’s tax on veteran pensions would incentivize former servicemembers to move to Vermont or remain here after the conclusion of their military service. With Vermont having recently passed a degree of licensing reciprocity for transferable military skills, this population could serve as a significant workforce boost. In his budget address, the Governor’s expressed support for removing this tax.

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