Friends, the legislature is in the process of digesting the Governors budget recommendations. The House has already ignored some of them, passing a budget adjustment act that spurned investments in housing and technical education. Other initiatives such as Act 250 reform and economic development grants seem to have support but need to start moving out of Committee in order to make the crossover deadline.

 

Quote of the Week: “Everyone is in favor of more housing but it is unclear what regulations make this more difficult.” -Senator Bray
		Message of the Week: “Technical Education is finally getting the attention it deserves. After decades of neglect we seem to be at a point where we can move forward.” - CFV President Pat McDonald
Vote for Vermont: This week, Meredith Angwin re-joins Pat and Ben to talk about her newest book and the possible fragility of the New England power grid. Watch the latest episode

 

Fiscal Responsibility

The House Ways & Means Committee reviewed the Governor's proposed child tax credit. This program was pitched as a mechanism to return some of the State's tax surplus from FY2022 back to taxpayers. Crag Bolio (Tax Commissioner) shared that the Governor is concerned with the current House bill because of how narrow a group of people it would cover (parents with children under six). The Governor would like to see this broadened to include more families. The House bill would only help 36k taxpayers while the Governor's proposal would help 25% (roughly 94k) of taxpayers with the intent of helping to retain young workers in the state.

The Committee questioned whether the Governor's proposal would dilute the impact too much so it wouldn't meaningfully help families. The total program would provide about $59M in benefits to Vermont families. Under the House bill this would equate to about $1200 per child. There was also concern about the impact on other income-based programs like 3SquaresVT (previously known as the food stamp program) or LIHEAP (winter heating assistance) because some families might loose eligibility. Ideally the credit would be paid out monthly, however that would be difficult for the state to administer compared to a single annual payment and it would eat into overhead costs. 

 

Workforce Development

The House Commerce Committee began looking at both H.468 and H.483 on Tuesday, which proposes a remote learning pilot program for Vermont's Career and Technical Education Center system. The program would work through a partnership with the Vermont Virtual Learning Cooperative (VTVLC).

One of the challenges with adoption of Career and Technical Education Centers (CTEs) is that sending high schools have to pay tuition out of their budget, which creates a dis-incentive for them to offer that option to their students. One proposed solution to this is to eliminate the per pupil fee and each CTE would develop their own budget for voter approval. In this manner funding would not come out of the high school budget.

There are 17 CTEs across Vermont with 14 covered by host schools (essentially designated sending high schools) and three others are independent. There were pilot projects being contemplated before the pandemic but they have lost steam given the stress on our education system. Both the Hannaford and Middlebury CTEs had started down the process though. Large employers are struggling to find workers with the right technical skills so the Committee is hopeful they can re-start this pilot program. There was agreement that they needed to reach kids earlier - before they reach high school - to understand the benefits of technical education. There was even discussion of creating pre-tech programs to become feeders for CTEs.

 

Later in the afternoon, the Committee met jointly with the House Education Committee. Former State Rep., Michele Kupersmith, was concerned about two things happening:

1. People who aren't able to access the system because of the options they are provided with or because the support network isn't robust enough.
2. K-12 school messaging is all about college, but if college "isn’t right for you" then we send you to a CTE.

The question should be focused on our kids and what they could and would excel at and what career options they are interested in or match their skillsets.

Concerning things heard all the time:

• Schools will have to lay off teachers if we send student's to CTEs.
• CTE is training is for narrow set of skills which will be obsolete.
• Tax dollars should not be paying for what businesses should be doing.
• Students wont learn good citizenship/democracy.
• CTE students don’t become life long learners.
• Students won't go on to college.
• College graduates out-earn than those with CTE credentials.
• One Superintendent even said "so now you want to take our smart kids!"

This thinking is not just an obstacle, it's an impediment.

By the way, try telling the Barista at your local coffee shop who can't afford to buy a house because of the $80k in student loans they have that College is the only path to the middle class. In America we graduate more college educated workers than we have jobs requiring college education. The real issue is graduating students with the right skills.

The Governor is very supportive of CTE and is concerned about workforce shortages in health care, advanced manufacturing, and trades. In his FY2023 budget proposal, he recommended splitting the $90M surplus in the Education Fund between taxpayer relief and CTE/Workforce training. His FY2022 budget adjustment also included another $500k for CTEs. Other skillsets being discussed are solar installation, weatherization, electric vehicle repair and maintenance, construction, and others.

There are two bills currently in play:

H.483 – Would continue work started by the legislature to allow CTEs to launch pilot projects for new governance, funding models, and program offerings.

H.468 – Would allow students to attend classes at their CTE in-person and complete general coursework from their local high school virtually.

The Committee discussed how to overcome the stigma associated with CTEs that Kupersmith spoke of and how to provide incentives for high schools and guidance counselors to offer that as an option to students. The Agency of Education is conducting a review of students who participate in CTEs and how they learned about that opportunity and why the decided to take advantage of it. There was also talk about providing access to CTE education within the corrections system.

 

The House did not include the Governor's recommended $1.5M for CTEs in the FY2022 budget adjustment; the Senate Education Committee discovered as they began reviewing the bill on Thursday. $150k in emergency assistance for the three independent CTEs was added but this was largely to covering operational shortfalls not investments in programming, facilities, and recruitment.

Additionally, the Agency of Education wants $350,000 for adult learning and literacy providers, $1M in ESSER funds to support remote learning operations, and another $1.4M or so for other various stop-gap measures for air quality, vaccine incentives, post-secondary education, etc.

The Twin Valley Tech Center, Southwest Technical Education Center, and the Hannaford Center asked for an additional $250k to make their budgets whole. All three centers saw a drop in enrollment and an increase in costs. Part of the reason for the enrollment drop is that they couldn't allow prospective students in for walk arounds last year which resulted in lower attendance.

 

The House Corrections and Institutions Committee heard from the Vermont State Colleges (VSC) on Friday. Officials shared they are engaged in a true overhaul – transfer of their schools, enhanced services and reduction of financial deficit. They will be streamlining administrative functions and reducing expenses by $5M utilizing a "hybrid university" throughout the state. Enrollment is strong this year with over 10k students (not pre-Covid levels but more than budgeted). More than one-third of their students are non-traditional (financial independent, have children, commute to school, etc.)

The Board of Trustees is progressing on the development of a strategic plan to meet the Legislatures requirement of $25M in savings or revenue growth over five years (they met that target this year). Their goals include ensuring student affordability, accessibility, and preparedness. Additionally, they are striving to maintain their present campus locations while revamping their program offerings to meet the workforce needs of the state.

The Governor proposed an additional $1M in VSC funding for the purpose of a "modern learning" pilot program with a hybrid in-person/remote classroom. The VSC Board of Trustees is planning to present the 10-year strategic plan to the legislature when it is ready.

 

Doug Hoffer (State Auditor) shared a Workforce Innovation and Opportunity Act (WIOA) report with the House Commerce Committee this week. The program is federally funded and offers education & training resources to increase workers' employment earnings or help businesses retain workers. The direction of the inquiry was to evaluate the effectiveness of the various programs covered by WIOA.

Programs included:

• Title I, Adult - Adults with priority for recipients of public assistance, low-income individuals, and individuals who are basic skills deficient.
• Title I, Youth - Youth ages 14 to 24 with barriers to employment, such as low-income youth and youth who have dropped out of school.
• Title I, Dislocated Worker - Individuals who have been terminated or laid off or have been notified of a termination or layoff.
• Title III, Wagner-Peyser - Individuals with authorization to work in the United States.

One key finding was that very few persons eligible for these programs actually applied to participate. For example, only 11% of known dislocated workers applied. Hoffer also took an opportunity to question Governor Scott's claims about the shrinking labor force, pointing out that while it declined 24k workers over two years, it bounced back 5k the second half of 2021. He suggested that the reasons for people leaving the workforce matter more than the numbers.

The Committee discussed pursuing a waiver from the federal government to get more creating in how they apply these funds to the current challenges. However, it seems like the Department of Labor (DOL) likely doesn't have the bandwidth to pursue this will current staffing levels. DOL also has no experience pursuing such waivers.

Hoffer left the committee with this though: "If you pay people more they will come. So if we prioritize ways the private sector can afford to pay higher wages then let them do that."

 

The Department of Labor presented their workforce analysis to the House Commerce Committee on Friday. Vermont's population is actually rising faster than projections by about 20k people for 2020 and fewer counties lost population than expected. However, even the fastest growing counties (Chittenden and Lamoille) were still below the national average of 7.8%

Labor force participation rates (LFPR) have dropped significantly over the past two years. There were already concerning trends before the pandemic, including the participation rate for teens dropping dropping from 60% to 40% in the decade preceding the pandemic. Other groups with outsized impacts in LFPR include young women, older workers, and minorities. It is likely that workplace, education, and childcare disruptions have impacted these groups.

Older workers likely chose to retire than to cope with pandemic conditions in the workplace. We have known for years that our aging workforce as going to cause issues and we are beginning to see that now. The kicker is that we don't have people in our existing population to replace them and we don't have housing to import additional workers.

Other observations included a comparison to the 2008 financial collapse, which was eclipsed by the scale and speed of the 2020 downturn. It is not clear when (or if) the economy will recover, but it is clear that labor supply (not labor demand) is slowing the recovery.

The Committee is looking for creative solutions to "recycle" mature workers into the labor force without them taking an economic hit from social security, pensions, or health care coverage.

 

Economic Development

The House Commerce Committee took testimony on the Governor's proposal to re-allocate unspent bridge grant funds into a new loan program run by VEDA. Joan Goldstein (Commissioner, Department of Economic Development) noted that these grants are significantly underutilized - only $4M out $30M that is available has been used. There is an existing fund for capital investment and she would prefer to roll the money into that program than develop a new one.

The original economic recovery grants were too stringent to be deployed quickly and in the 2021 legislative session the Department was unable to design a formula that would satisfy the legislature. They decided to roll funds into the VEDA program to sidestep the formula problem. VEDA underwriters do the type of due diligence that the legislature is looking for, so it would be better to have VEDA develop the criteria for them. VEDA is able process forgivable loans rather than grants, which would be simpler than the current program.

The Committee seems be interested in reallocating this money, it's just a matter of figuring out where it should go.

 

The Senate Economic Development Committee also took testimony on proposed changes to the bridge grant program. VEDA issued over a thousand Paycheck Protection Program (PPP) loans, however many business' revenues were still out of balance. The hospitality industry has been particularly hard hit and  inventory problems have significantly impacted revenue.

Officials gave the same pitch they provided earlier in the day to the House. The Committee was interested in what would be included in their loan criteria and controls would be in place to verify the information provided by businesses. The state Auditor also voiced concern about the state making capital investments in private businesses without guaranteed equity stake to ensure a return on investment.

The Committee is also working on an Omnibus Economic Development bill which we expect to see a draft of next week.

 

The House Ways & Means Committee reviewed the state's tax-increment financing (TIF) system on Wednesday. The Joint Fiscal Office (JFO) presented a report on the performance of this program.

General findings of the report included:

• The current structure of TIF administration is appropriate.
• The State Auditor's periodic audits are a benefit to the system.
• The cost to the Education Fund is between $5.5M and $7.5M annually.
• The cost to municipalities is between $3M and $5M annually.
• Some of the assumptions upon which the tax increment calculations are based are flawed is some current districts (particularly in Chittenden County).
• It is possible that long-term the program may be driving development into denser downtown areas.
• The legislature may need to intervene to provide some support to specific districts in the future.
• The program is not driving growth in economically distressed areas, but instead areas with a base of economic activity.

Given their findings and the availability of federal funds, JFO recommended looking at other programs to drive economic growth in the short term.

 

Matt Dunne briefed the Senate Economic Development Committee this week about an issue around getting matching funds from the state for the Center on Rural Innovations (CORI). CORI has been working under a grant from the Vermont Community Foundation to stand up accelerator and technology entrepreneur programs in five locations around the state. A few of those programs (Rutland, Bennington, and Randolph) are preparing to apply for federal Build to Scale grants that require matching funds from the state or local organizations. The FY2023 budget includes a $1M appropriation for this purpose, the problem is that the grant applications can't proceed until those funds are available. The grants need to be submitted by the end of April and the FY2023 fiscal year doesn't begin until July. This will cause the grants to fall through for the communities involved.

Dunne is hoping that funding could be included in the FY2022 budget adjustment for this purpose so these communities could count on those funds in their applications. The Committee was reluctant to fund a project as a one-off bill, but the prospect of projects in the que and matching funds being available was appealing.

 

Housing

The Senate Natural Resources Committee came back to Act 250 reform this week, taking testimony on S.234. Developers shared that they respect the process when it functions, but it can be repetitive sometimes and major delays and costs can be incurred by citizen complaints. This complaint process is often abused and not initiated in good faith, more protections in this regard could avoid unnecessary delays and costs. There is an opportunity to expand downtown designations to capture more legacy vacant spaces. This is particularly true for housing which can actually reduce impervious surface compared to an underutilized existing structure.

One anecdote used was "the question is not how do we push 40 units through a process that can take two years but how do we push through 400 units in 8 months?" There was consensus among developers and planners that Act 250 is essential in towns without zoning but may be redundant in municipalities with strong permitting processes. Some also wanted Act 250 exempted from "new town centers",  neighborhood development areas, and growth centers.

Outside of the permitting process, affordable rental units will not be constructed without subsidies - the costs are too high. The Committee is interested in pursuing solutions to this and asked a number of questions related to cost drivers. One major one is water infrastructure capacity. One developer even identified this as a top priority for building more affordable housing (some permits take 9-12 months for review).

Some Developers shared that projects in non-designated areas cost as much as $20k per unit more than in designated downtown areas. That cost is much more difficult to absorb on the low-income side of the market. There was also concern that the designations in the bill may not be the correct vehicles because the current downtown development districts are used for tax credit purposes and don't take into account things like flood areas and river corridors that are relevant to Act 250.

Environmental advocates disagree that Act 250 permitting is a key obstacle to smart growth. They also do not believe that the housing stock limitations necessitate sidestepping zoning and Act 250 processes. Growth should be allowed in tightly regulated smart growth areas and municipalities should be required to have excess capacity for water and wastewater treatment (we actually agree on this point.) The current criteria for downtown development areas is not sufficient to meet these goals. They also do not want to see citizen appeal opportunities removed from the process.

 

The committee came back to this the next day. Chairman Bray is concerned that the proposed umbrella permits and exemptions will be too complicated for municipalities to participate in. The overlapping designations are too numerous and complicated. Also of concern was the cost of connecting to and supporting water and sewer infrastructure. It is cheaper to build outside of town without those permitting and wastewater constraints but that is at odds with the intent of Act 250. This highlights the inherent conflict between construction of housing and our existing permitting system. There is also interest in the Committee to pursue forest fragmentation protections.

 

The Senate Economic Development also took a turn working on Act 250 this week. Senator Bray (visiting from Natural Resources) noted the everyone is in favor of more housing but it is unclear what regulations make this more difficult. American Rescue Plan Act (ARPA) money restrictions have put pressure on the state to reduce regulations to allow for the construction more affordable housing. Both S.234 and S.200 propose to do this using a combination of strategies.

One of these strategies, that municipalities can take advantage of, is a master permit plan which would allow an Act 250 permit for a designated area. Any new project in this area would only amend the existing Act 250 permit and not require a new one. This has been an option since 2007 but it has never been used. S.234 would let municipalities exempt more projects from Act 250, the thinking being that communities are better equipped to make decisions on development. They are somewhat comfortable doing this because the professionalism of local planning and zoning officials has come a long way. Also, downtowns are already "heavily modified" environments so potential the potential for new environmental impacts is low.

Bray did note that the S.234 idea has not been well received because the new designations may too burdensome to be practical. Even with extra support, municipalities are reluctant to take on more work. Unfortunately it does not seem like S.200 will move forward in his committee, but Senate Economic Development may still take it up.

Senator Brock presented third option - S.270. It would provide a sales and use tax exemption for priority housing project materials. It would also expedite Act 250 appeals and simplify permit amendments for priority housing projects. Similar to S.234, it would exempt Act 250 permits for for designated downtown centers. It would also exempt some permits in counties with high demand for housing and require remaining permitting to be expedited (there was some concern that this process would still be quite cumbersome).

Committee members seemed receptive to all three bills and would like to see the number of appeals in the Act 250 process reduced.

 

Good Government

The Senate Government Operations Committee came back to the State Code of Ethics Bill this week. Campaign for Vermont had an opportunity to testify in support of this baseline for the conduct we expect from our public officials, you can watch that testimony here.

The Committee is still grappling with whether or not the legislature and members of boards and commissions should be included. We believe strongly that they should be. However, the Committee did make positive progress this week on the definition of gifts to public officials, what family members should be included, and on the definition of person used throughout the bill (there's that pesky Citizens United decision that complicates the legal definition). Also still to be ironed out is the definition and scope of what constitutes a conflict of interest for a public official. The Committee is hoping to wrap up discussion on this bill next week and have a draft to approve mid-February.

 

Education

The Senate Finance Committee began reviewing a list of "winners and losers" with the proposed student weighting formula changes. A handy flow chart was presented with the various options before the legislature. The Committee weighed the pros and cons of each proposal on the table: moving to a weighted categorical aid system (being called a cost equity payment) or simply implementing new weighting factors proposed by UVM study and leave the current system in place. Per the Agency of Education, the cost equity payment system would see bigger winners and losers than the weighting system would.

Neither system guarantees that the money going back to districts is spent directly on students (or even for the intended purposes) but there was some sense from the Student Weighting Task Force that the cost equity payment would be more difficult to spend on something completely unrelated to what it is intended for.

While the Committee would need (and want) to review any sort of weighting bill, Chairwoman Cummings preferred to let the Education Committee draft the bill.

 

The Senate Education Committee heard testimony from Mark Schauber (Executive Director, Coalition for Vermont Student Equity). A truly "educational formula" is the focus of this group and they are very concerned about the pupil weighting study. They believe the current system is fair and equitable. They prefer to see a correction to the formula instead reinventing the wheel. They take particular issue to breaking the English Language Learner (ELL) weights out into a categorical grant. The cost of these students in not the same everywhere and the multiplicative effect of the current formula would account for that. That is an equality system, not an equity one.

As an example, Rutland has seen a decrease in population of 5,000 people but 100 families with ELL needs have moved in. This results in increasing costs while their weighted student population is decreasing.

Professor Tammy Kolbe (author of the original UVM report) testified that these grants would scale for each district (in comparison with their overall student population) based on the weighting formula. The grants are meant to offset the additional cost of education that student, not cover the entire cost. For example, it may cost $15 to educate a typical student in a given district, the grant would provide an additional $10k in funding which would prevent the district from incurring additional costs until they reach $25k for educating that student. Under this proposed mechanism the grants would still scale based on other factors, such as rurality and income, but in an additive manner instead of the current method where weights are multiplied together.

Members of the Committee also voiced concern that the grants (known as cost-equity payments) could cause unintended consequences, such as services that may be needed that the grant doesn't cover.

 

Health Care

The Senate Health and Welfare Committee reviewed a presentation on Thursday about evolving Vermont's health care regulatory system. Consultants presented a report that focused on building data collection and analysis capacity. Several data gaps were highlighted and key recommendations included conducting a per capita cost analysis, mitigation of low-value care, and drug cost reduction.

The report found that all stakeholders seem to be invested in the Accountable Care Organization (ACO) model. In lieu of this, the regulatory framework should adapt to this new payment model.

 

Things to watch for next week:

Act 250 Changes (S.234) - Senate Natural Resources on Tuesday and Friday

Creating a Vermont Child Tax Credit (H.510) - House Ways and Means on Tuesday

Career and Technical Education - House Commerce on Wednesday

Omnibus Economic Development Bill - Senate Economic Development on Thursday

State Code of Ethics (S.171) - Senate Government Operations on Friday

 

 

We reviewed 30 hours of legislative testimony to bring you this report, please consider supporting our work.