Governor’s Budget Address Prioritizes Tourism and Workforce Investment
Consensus on More Housing But Not on Source of Funds
State House Abuzz with Tourism Advocacy
Senate Receives Update on Broadband Progress
Minimum Wage Proposal May Cost Businesses and State $121 Million
House Passes $31 Million Paid Leave Program
House Committee Considers Implementing Cloud Tax
Vermont Chamber Testifies on Latest Non-Compete Bill
Vermont Chamber Addresses Advisory Council on Workforce Recruitment Initiative
In Case You Missed It
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.
In Case You Missed It
Childcare: Dems Give Cool Reception to Scott’s Lottery Expansion
Housing: Treasurer Gives Housing Bond Proposal Thumbs Down
Workforce Recruitment: Southern Vermont Attractive to Young Professionals
Business: Threatened Tariff on European Wines Worries Vermont Food and Beverage Industry
Legislature: Legislators Fast-Track Vermont Prison Release Reforms
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