Fuel dealers and heat pump installers launched an impassioned plea this week for the Senate to abandon the Clean Heat Standard as it is currently conceived. They stressed that installing heat pump systems, as the bill envisions, is much more costly than existing fossil fuel systems and they are more expensive to operate in cold temperatures. They claim that Vermonters do not want this and there are other ways to reduce net carbon emissions that are less costly and easier to implement. Will the Senate listen?

Other topics this week:

• Independent schools emphasize commitment to diversity, equity, and inclusion.
• The Senate questions the need for the State Board of Education.
• Local broadband providers seek more funding for affordability programs.
• The Senate looks at a ranked choice voting system for presidential primary elections.
• A House Committee contemplates eliminating "fusion candidates."
• Oregon officials highlight the importance of planning head with their Clean Fuels Program.

 

Quote of the Week: "[The Clean Heat Standard] feels like the 1970’s energy crisis when everyone switched to electric heat – prices spiked – and in the 80s [everyone] pulled all those systems out and replaced them with fossil fuel systems."		Manny Fletcher Operations & Compliance Manager, Fyles Brothers
CFV President, Pat McDonald		Message of the Week: Every single issue with technical education has been talked about and asked for for years and years and years. It is beyond frustrating that these issues not been resolved. Our children need choices and there is room for both high schools and tech centers to be successful. Its about funding, access, calendar space, teachers, and college credits. Worst of all is the nonrecognition of industry certificates and college credits. How can you support tech centers, or just the trades in general, and not recognize certificates as comparable to college credits and degrees? We already do this at our state colleges through prior learning exams.
News Highlight: The former president of Jay Peak Resort said in a court filing this week that he was an “unknowing pawn” as the state “covered up” a $200 million fraud in the EB-5 scandal that sent him and two others to federal prison. Read on VT Digger

 

Sustainability

Thermal Sector Carbon Reduction

Key Points:

• Fuel dealers and heat pump installers plead with Senators not to pass the CHS
• Public Utility Commission asks for significant changes to the structure of the program
• Oregon shares it's experience with their Clean Fuels Program

Kelly Lucci (Director of Partner and Customer Engagement, Efficiency Vermont) joined the Senate Natural Resources Committee on Tuesday to give a run-through the Energy Burden Report released in 2019. The report is being updated and will be re-released in the next couple of months. The share of energy burden is 45% for transportation, 35% thermal, 20% for electric. Energy burdened communities are not burdened because they use more energy – they actually tend to use less.

Energy burden is defined as energy spending divided by household income (energy $/income = total energy burden), and looks at electric, thermal, and transportation usage.

Lucci presented a color-coded map of energy burden per town, noting some of these calculations are an inexact science based on census data. She prefers this metric because it overlaps with other equity issues. If you are already an energy burdened household, you probably would have trouble affording the upfront costs of installing a heat pump, etc.

We need to move beyond a one-size-fits all approach to helping people access solutions. The current system is inequitable. It is easier to participate in “solutions” if you have the money to pay the upfront costs. Easier if you own your own home as opposed to renting (more likely for lower income/younger/minorities). If we don’t fix this we will only make existing disparities worse.

Senator McCormack asked what are the patterns in the map they should be looking for. She pointed to Chittenden County has the lowest energy burden while it is higher in the NEK. It’s primarily an income-based burden, but transportation factors in as well.

Efficiency Vermont has a broad set of performance goals that are intended to push us in a direction of increased equity. Let’s not just focus on the cheapest energy solutions available, which would focus on people and businesses that have the $ to invest.

Daniel Reilly (Director of Public Affairs, Efficiency Vermont) gave an overview of the Inflation Reduction Act (IRA) and how it might impact Vermont programs, especially those that would move forward under S.5. The IRA totals $733B with $369B allocated toward climate investments. These will come in a mix of grants, loans and tax incentives.

The funds have a ten-year timeframe and Vermont can expect to receive $59M. Most funds have to be spent by 9/30/2031, and the tax breaks will be in place through 9/30/2032. The timing of when block grants will be distributed is still TBD.

It’s still not exactly clear how these funds will be allocated. “We feel strongly that the goal should be [use these funds] to build systems that will endure beyond these one-term funds,” he said. Think about the day after!

States must submit their plans for how they would use the money by August 15, 2024, or they will lose access to funds.

Tax credits will be available for electric panels ($600), energy audits ($150), weatherization ($1200), heat pump/water ($200). However, as is the nature of any sort of tax credit, you must have tax liability to participate. Construction Efficiency Tax Credits ($2000 per unit) yield bigger savings for zero emission ready projects.

The aspects of the IRA most relevant to S.5 are the Electric Home and Rebates Act, which covers up to 50% for households with income between 80% and 150% of AMI. 100% of costs for incomes under 80%.

A key consideration for legislators crafting S.5 how to integrate with existing programs. There are also complexities with of Income verification (how do you prevent fraud, etc.), workforce, and supply chain issues – all states are going to be competing for workers/supplies.

Weatherization and fuel switching create the greatest benefits when they are combined and done at the same time.

Reilly also touched on the role in S.5 of the Default Delivery Agent for clean heat credits and, assuming Efficiency Vermont is that DDA, how it would function in that role within the existing system. The DDA, he noted, is not something you can turn on and off. How can the DDA track which fuel dealers are in and out? How do you track customers that switch fuel dealers? No answers were offered to these questions.

 

The Committee came back to the bill on Wednesday to hear feedback from the Public Utility Commission (PUC) regarding their role in implementing the CHS as reflected in the bill.

Thomas Knauer (Policy Director, Public Utility Commission) and Kyle Landis-Marinello (General Counsel, Public Utility Commission) presented, emphasizing that the PUC has not taken a position on the bill. Their comments are solely based on improving the language to improve their prospects of success in the event that the bill passes.

As S.5 has the Clean Heat Standard (CHS) taking effect in 2026, the bill would need to make it clear that we are not looking at the 2025 GWSA goals. We’re looking only at 2030 and 2050.

The PUC would like clarification in the bill regarding they would be able to enforce by rule and what can be done by order. The PUC wants the most flexibility possible in implementing the law. They also want authority to making changes to the rules after they have been adopted – avoiding the normal process for rule making.

NOTE: This is a red flag for government accountability reasons. It is generally not good public policy to allow agencies to take shortcuts in rulemaking changes.

The PUC argues they would be on a very tight timeline to get these rules drafted and to the Legislature. They may need to make course corrections after the program goes online, and they don’t want to have to go through a formal rule making process to make those corrections. They say they don’t anticipate using that provision but want to have it just in case.

Concerns they raised about the overall concept in the bill include:

1. The PUC doesn’t currently have any relationships with the obligated parties (fuel dealers) in this bill, and the relationships they need to establish will be different from the relationships they have with the utilities the PUC currently regulates.
   1. They are asking to move up the deadline for registration of obligated parties with the PUC so they can start identifying and connecting with those parties.
      
      
2. The PUC has no way of compiling a list of obligated parties, so the PUC would like the to levy more severe penalties for dealers who don’t self-register, and a for a provision stating that not knowing one has to register is not a legal defense for not registering.
   1. They also requested having the Tax Dept provide the PUC with a list of dealers who pay the fuel tax.
      
      
3. PUC has a “Large suggested change” for the committee’s consideration around the Default Delivery Agent (DDA). Instead of saying the obligated party “may” meet its obligation by contracting with the DDA, to “must” meet, unless it gets permission from the PUC after proving they can do the measures on their own.
   
   
4. They would have more comfort with working primarily one entity, the DDA (hinting that Efficiency Vermont would be that DDA).
   1. This highlights how the complexity of the system described in bill makes enforcement/compliance extremely difficult.
   2. Chairman Bray wants to see language on how this would work.
      
      
5. The PUC wants a change from “may” to “shall” regarding the penalties that an obligated party incurs for failure to comply, and they want language that clarifies that these enforcement powers they are being given in 5 are ON TOP of enforcement powers they already have.
   
   
6. They would also like to remove credits for “renewable electricity systems paired with heat pumps or electric appliances…” as these activities are already eligible for credits under the electric sector, not the thermal sector.
   1. Senator White wants to keep it in to help low and moderate income Vermonters get subsidies for electrical appliances and to encourage net metering.
   2. The PUC claims this is an accounting issue that would be messy and lead to double counting.

NOTE: #3 is concerning as it undermines small businesses, which is one of the stated goals of the bill. It also encourages fuel dealers to change their business model.

Around public engagement, the PUC thinks the bill is too prescriptive in how the PUC will deal with the public. The PUC thinks its procedures are better and more inclusive than what’s ordered in the bill. They also don’t want a legal deadline for hiring a contractor to help design the program as this is a new program and it’s impossible to know if anyone will respond to the RFP.

The PUC would also like to ensure that an identified revenue stream for funding its activities is included in the bill now, and not at a later date. This needs to be a sustainable funding source, not one time money. It would likely be an increase fuel tax, a charge on the obligated entities, or an allocation from the General Fund. Bray indicated that the money committees will review the bill.

The bill would allow the PUC to hire three new positions to do the work of creating the rules, plus hired consultants. They thought $800k seemed about right for this work.

Senator Watson asked if they were comfortable creating this program. They answered that they have a lot of concerns about doing something that’s never been done before, saying “it’s a new thing that we would be doing.”

 

The Committee returned to this again on Thursday for some legal perspective. Geoff Hand (Attorney, Dunkiel Saunders) shared with the Committee that controlling a state’s energy policy is recognized by the federal courts as an important role for state governments, and states can regulate energy for the purposes of mitigating climate change. States can and do regulate fuels (i.e. sulfur content in heating oil, licensing fees, taxes, etc.), however, while the state does have authority, the federal authority is dominant.

The Dormant Commerce clause is an implied restraint on states trying to impede the flow of commerce across state lines. In other words, states can’t engage in protectionism.

The real question is whether the policy treats in-state and out of state interests differently. That can be facial or practical. The state cannot regulate commerce outside the state or impose a burden on interstate commerce that is excessive.

Other programs that do similar things to what S.5 proposes that have been upheld by courts:

• California Low Carbon Fuel Standard.
• Oregon Clean Fuels Program.
• Connecticut electric Renewable Portfolio Standard.

Courts can look at discussions of the bill for underlying intent, so the Committee should be sure in their deliberations to be clear that it does not intend to burden interstate commerce.

Federal laws related to S.5 that the Committee needs to be aware of:

• Natural gas Act
• Clean Air Act
• EPA’s renewable fuel standard
• Energy Policy and Conservation Act. (Gives US authority to regulate efficiency of appliances. Probably no conflict with S.5)

Warnings for the Committee include:

• Don’t discriminate based on origin.
• Program should only apply to jurisdictional transaction occurring within the state.
• Obligations should apply as far up the chain of delivery as possible without breaking jurisdictional limitations.
• Obligations for regulated natural gas distribution utility should be based on sales at the distribution level.

Watson wondered what happens if fuel is coming into Vermont from a wholesaler in Quebec or Massachusetts and whether we can apply the credit obligations to them. The answer was yes, if it is intended for use in the state.

Bray clarified that if the retailer goes out of state to purchase fuel and brings it back into the state, it is the retailer who is responsible for the credit, not the out of state wholesaler.

 

Laura Murphy (Assistant Attorney General, Attorney General's Office) testified next, reminding the Committee that there are no guarantees in courts of law, but this is their best assessment.

There are four categories of the dormant commerce clause examined:

• A facial issue. S.5 seems okay in that it applies equally to fuels no matter where they come from.
• Discriminatory purpose or effect. S.5 seems okay as it applies equally to fuels no matter where they come from.
• Extraterritoriality, or an attempt regulate commerce that takes place wholly out of the state. Since the bill regulates the first sale that occurs in the state, it should be ok.
• Pipe Balancing Test. If there is a burden on interstate commerce, is it clearly excessive in terms of the benefits? The bill should be okay on this aspect as well.

She pointed out that some of the consumer protection language in the bill is redundant with existing law and unnecessary. For example, consumer protection law already protects against fraudulent and deceptive statements, so S.5 doesn’t need to address that in the bill. If it is included in the bill, it needs to be more specific about what messages are allowed and disallowed and how the PUC would enforce this.

In regard to PUC request for language enforcing registration, the AG’s office recommends: “Failure to register with the commission shall be a violation of the consumer protection act.”

 

The Committee wrapped up the week by hearing from fuel dealers directly. They were allowed five or six minutes per person. Matt Cota (the lobbyist for the Fuel Dealers Association) went first, responding to earlier testimony. He stated that they understand the need have to have better reporting data. The data collection process regarding fuel sales and uses needs to be updated. However, that’s different from being obligated to pay taxes, etc.

Many dealers don’t import fuel from other states, they go and get it in other states and bring it back. This would make the dealer in this case an obligated party under S.5. This is counter to the Committee’s preference to ensure that the fewest number of entities to be obligated by going up the supply chain as far as possible. Bray noted that they need to go back to the lawyers to nail down what the bill actually does.

Brian Gray (Energy Co-op) shared that his business is in a good position to benefit from S.5 as it will be able to expand their work in heat pump and weatherization if the subsidies created under the bill materialize – that is if they have the labor force to do the work.

NOTE: Gray was the Speaker of the House’ hand-picked fuel dealer representative to the Climate Council for 2020-2022.

The accounting and oversight necessary under S.5 will add to their business expense. Once installed, it is generally cheaper to operate heat pumps than fossil fuel systems (this claim has been contradicted by other installers). However, the homeowners who have adopted these systems so far have had the capital to make the upfront investment necessary. Adoption of clean heat systems has slowed in recent years because early adopters have adopted, economic pressures (inflation, etc.) have left people with less disposable income, people are waiting to see what the rebates will be under the federal IRA.

Upfront costs for installing heat pumps range from $5,000 to $20,000. Weatherization is between $5,500 and $15,000. The payback on these investments is WAY down the road, and disposable income to pay for these items is out of reach for most Vermont households.

Heating oil is up 44% and kerosene is up 48% since last year. The CHS is going to add to the price of a gallon of these fuels (the Administration estimated $0.70 per gallon last week). If people are going to switch, “steep incentives and readily available financing must be available.”

He also reminded that Committee that he never recommends “ripping out” existing fossil fuel systems as the heat pumps don’t work in extremely cold temperatures. Homeowners need a backup heating source.

There will also be supply issues for biofuels if the policy of ratcheting down the carbon intensity continues long-term.

 

Anthony James (James Plumbing & Heating) noted that a lot of the installers of heat pumps are not well trained. The slowdown in heat pump adoptions is because there isn’t the manpower in place to service this industry. Heat pump systems are very difficult to repair, taking up to a week. That is not acceptable in weather like what we have today (-5). When this happens, the most common back up is a wood stove, which is much more polluting than oil.

He also believes it’s not fair to make the fuel dealers shoulder the cost of funding this program with a $0.70 - $1.00 per gallon tax. Those costs will be passed along to the customer.

Bray disputed the cost impact to a gallon of fuel, but did not offer an alternative estimate.

James also wondered how Vermont is going to regulate fuel dealers based in New Hampshire and what would happen to electricity costs when demand increases to power all these systems. There are no answers to these questions.

He closed by saying that “a $5,000 cold climate heat pump system is not going to heat a Vermont home.”

 

Vickie Haskins (Haskins Gas Service) shared that they have 6,000 customers that have become like family. She is now seeing middle income Vermonters having to choose between groceries and heating fuel. It’s “not right to put responsibility on the dealer to tell people to use less fuel,” she said, “we always want to encourage people to use less energy, but we can’t force them.”

She also claimed that Vermonters are buying “hundreds of generators” because they are afraid that with all the new pressure being put on electric generation there won’t be enough electricity.

She doesn’t know if they will be able to say in business with all the new costs and regulations that S.5 would bring. “This feels like discrimination toward the small dealers. I don’t know how we’re going to survive this,” she said.

Senator MacDonald asked the witnesses for suggestions on what they could do differently from what we are doing now. The response was that they need to slow it down. People don’t react well when “you’re cramming things down their throats.” The infrastructure should be in in place before we do this.

 

Rob Stenger (Simple Energy) told the Committee that he had “a litany of suggestions for you, unfortunately none of them are in support of S.5.” He started Simple Energy seventeen years ago, creating 125 jobs. They are a full-service energy provider selling heating oils, bio blends, and renewable propane. They also contract for plumbing, electricity, battery backup systems, heat pumps, and water heaters. The majority of revenue still comes from delivery of liquid fuel, which they buy from distributors in ME, NY, NH and Vermont.

S.5 will benefit Simple Energy because they install heat pumps. However, for the first time, this year had a customer ask to remove a heat pump system and replace it with a fossil fuel system because of the cost to operate the heat pumps.

He believes this only works with big dollar up-front investments. According to Stenger, you can’t heat the average new England home with the best cold climate heat pumps today. Efficiency drops as it gets colder, and they are extremely expensive to operate.

As a business owner in both Vermont and other states, Legislators could help them by making it less expensive to do business here. He does business in multiple states and Vermont is “by far the worst.”

Bray asked if he thought people are worried about grid reliability. Stenger thought so, pointing to news around rolling blackouts in California. He believes that COVID migrants who are now permanent residents are buying generators.

 

Dennis Percy (Fred’s Energy) employs over 100 people in NEK. They sell liquid fossil heating and motor fuels serving 15,000 customers. He has lots of customers on fuel assistance, and is concerned that people don’t have the money to maintain their systems as it is.

They have been installing heat pumps for 13 years. They’re getting a lot better, but still not ready for New England weather, he claimed.

A local library wanted to go “all green” with no alternate heat source. They installed the heat pump for them and two months into the winter the library said they couldn’t afford to run them. Barton electric had just announced they are going to raise rates by 20%. He suggested that the Committee instead look to incentivize more efficient fossil fuel and systems.

The workforce we have in Vermont in this industry is 50 years old and above. The younger people are leaving Vermont. He claimed that the Legislature is going to “shove Vermonters out of Vermont” with this bill.

He also shared that the people we put heat pumps in for are using them for air-conditioning. They’re not using them in winter. They don’t heat the homes with them in winter.

 

Manny Fletcher (Fyles Brothers) flat out told the Committee to “stop the attempt to pass S.5. This will do nothing to help Vermonters. This will do nothing to impact climate change.” Instead, he said that they need to talk about costs and who is going to pay them. It’s going to be expensive to heat your home in Vermont. He followed by saying “this feels like the 1970’s energy crisis when everyone switched to electric heat – prices spiked – and in the 80s their business pulled all those systems out and replaced them with fossil fuel systems.”

Fletcher believes the bill is going to force the smaller dealers out of business. People will have propane backup systems, but the cost to run them will be astronomical because there won’t be dealers to sell them fuels to run those backups.

He closed by saying that the Legislature their industry “like a punching bag in this state. Customers are not for this! They are telling us this, but they don’t feel comfortable calling their legislators.” He encouraged legislators to talk to their constituents.

 

Casey Cota (Cota & Cota) shared that their business is now 3rd generation after 82 years. They have helped people go from 1700 gallons of fuel a year on average to about 700. It was pointed out that it didn’t take a law to do this. He was concerned that moving forward with the bill would “hurt our neighbors. Not knowing what the cap will be on this is very concerning.”

He told an anecdote of a new customer who came to them, after having been sold “a bill of goods” that a heat pump could keep her house warm. She couldn’t get it above 40 degrees in November.

He also pointed out that heat pumps don’t work in mobile homes and can potentially destroy them by leading to catastrophically frozen pipes. No matter how you slice it, the cost will eventually be paid by the consumer. He wants to see low costs of fuels so people can afford to heat their homes all the time.

 

Peter Bourne (Bourne’s Energy) has been in business for over 75 years. They are in their second generation and working on the third. They have sold about 1000 heat pumps, but most customers are using them for air conditioning. Installations are expensive, two headed heat pump systems run from $10-12K, and single head systems from $5-8K.

They have been doing biofuel for over 10 years. Alternatives are there and doable; he encouraged legislators to “leave room” in the legislation for what’s coming in the future. We don’t know what’s coming, but we need to be able to adopt it when it does.

He also believes it is dangerous to give the electric utilities a monopoly. We need to maintain competition in the heating market. Utilities have a guaranteed a rate of return, but fuel dealers have to be competitive all the time.

Oil and propane prices right now are “higher than hell.” Electric prices only go up, never down. He believes that we’re already seeing oil prices for next year going down.

 

Judy Taranovich (Proctor Gas) leads a 57-year-old company in Rutland County. She stressed that electric is NOT cheaper than fossil fuels because a lot of the electricity is generated by burning fossil fuels. “In my opinion this is the Unaffordable Heat Act. And it’s really the Unaffordable Heat Mandate,” she said.

She followed by saying “I won’t help you put me out of business. I have 12 employees. You will put me out of business with S.5. We are already the cleanest state in the nation in terms of carbon intensity of fuels burned.”

 

Paul Beauregard (OnSite Propane) also reiterated that we are “already the cleanest in the country. There is no need for the legislature to get involved. Vermonters do not support what you’re doing.”

 

 

Oregon’s Clean Fuels Program

On Tuesday, Cory-Ann Wind (Program Manager, Oregon Clean Fuels Program) outlined their program’s objective to lower greenhouse gas (GHG) emissions from the transportation sector for the Senate Natural Resources Committee.

Oregon Clean Fuels program came online in 2016. Every year the program increases the percentage of GHG reductions. Currently that percentage is at 6% reductions from a 2015 baseline. Targets set out to 2035 go to a 37% reduction lifecycle GHG reductions, which translates into 48% of tailpipe GHG reductions.

Dealers of gasoline, diesel, ethanol, biodiesel, and renewable biodiesel are required by law to participate in the program, which means registering, reporting, and complying with the standards. The standards are: if you sell a fuel with a carbon score that falls under the set reduction standard, you generate credits, and if you sell a fuel with a carbon score over the standard, you generate deficits. The dealers generating deficits need to buy credits to cover the difference. Currently gasoline and diesel are the only fuels that require the purchase of credits.

A credit under the program is defined as one metric ton of GHG reductions.

Chairman Bray asked if there are always enough credits available. Wind confirmed that they do, and credits can be banked for future years.

Producers of clean fuels must apply to have their fuels receive a carbon intensity score so they can participate. Providers must also hire a third party to verify their carbon score.

Oregon has reduced 8M tons of GHGs on a lifecycle basis, a displacement of almost 2B gallons of fossil fuels. They have also generated $50M in revenue for state utilities to spend on EV projects.

Average price of a credit was $119 in 2022, with a total cost of credits to dealers totaling $185M. The current impact of these credits is about 6.9¢ on gasoline and 7.9¢ on diesel. Revenue generated from the sale of credits can lower the cost per gallon of cleaner fuels from 1.8¢ (biodiesel) to 98.5¢ (100% tallow renewable diesel).

Citizens are not allowed to participate in generating credits. For example, utilities get credits for EVs in their service areas, not the car owners.

Senator White asked if they had enough data when they started your program. Wind admitted it did take a while. There was a pause after we passed their law in 2009 and they didn’t start implementing until 2016. “We took that time to develop our web reporting system; our IT system… To work with our stakeholders to identify the different ways and the systems it would take for them to actually keep track. So, I thought it was really time well spent to do that homework so that when it was time to implement all that was in place,” Wind stated.

 

Housing

Senate Draft Bill

The Senate Economic Development Committee spent the entire week focused on their Omnibus Housing Bill. On Tuesday, staff from the Joint Fiscal Office (JFO) spoke to how Vermont has allocated over $320M since the start of the pandemic for the development of low- and moderate-income housing from state and federal sources. New proposals contemplate up to $100M in additional General Fund allocations, mainly focused on the following three agencies and programs.

1. Vermont Housing and Conservation Board (VHCB) – Various projects for affordable mixed-income income rental housing and homeownership units; improvements to manufactured homes and communities; shelter and permanent homes for those experiencing homelessness; recovery residences; and if eligible, projects that house farm workers and refugees.
2. The Department of Housing and Community Development (DHCD) – Investments would primarily go to Vermont Housing Investment Program (VHIP).
3. Vermont Housing and Finance Agency (VHFA) – Focused on the Missing Middle-Income Homeownership Development Program.

JFO identified that there has been many smaller funding allocations related to capacity building, technical assistance, community planning, zoning modernization, infrastructure assessment and other housing development adjacent issues that are not the focus of this presentation. It was further noted in their presentation that most of the affordable housing projects developed with the one-time funds provided incorporate other funding streams that include an array of state and federal tax credits such as the Low-Income Housing tax credits, Downtown and Village Center tax credits, Historical Preservation tax credits etc. Other funding streams may also include National Housing Trust Funds, HOME funds, Community Development Block Grant Funds, and other smaller targeted grant funding or funding from private or non-profit sources. JFO further noted that, in addition to the funds just referred to, $15M is appropriated Education Fund in FY2023 to VHCB create and administer the Career and Technical Education (CTE) center construction and rehabilitation for the experiential learning program and its revolving loan fund.

 

The Committee came back to the bill on Tuesday with Catherine Dimitruk (Executive Director, Vermont Association of Planning & Development Agencies) identifying, in writing, that the Northwest Regional Planning Commission had recently completed a housing needs analysis. It concluded that in Franklin and Grand Isle Counties (approximately 7,600 households) had inadequate housing (80 unhoused, 3,350 underhoused, 6,620 cost burdened).

She continued on to offer the Committee her personal suggested revisions and opinions, based upon her own personal experience and not those of the Northwest Regional Planning commission. Her opinions included suggested revisions to the Omnibus Housing Bill such as:

1. Define “served by water and sewer.” She believes that this is an important foundation of the bill and a definition of ‘served by’ should be added. This definition should include an ability to set water and sewer service areas at the local level that exclude flood hazard/river corridors/shorelands or other regulated environmental concerns. Underlying permit conditions such as Act 250 conditions on service areas should stay in control. And, municipalities should be able to differentiate and potentially exclude areas served by water and sewer solely for public health or environmental reasons. She believes that this addition will help ensure that these provisions do not inadvertently promote sprawl.
2. Consolidate Accessory Dwelling Units (ADUs), Duplex and Duplex ADU Proposals:
   1. Retain the owner-occupied requirement for ADUs that is found elsewhere in statute.
   2. More clearly clarify duplex units by adding additional language requiring two-unit dwellings to be treated the same as single unit dwellings in dimensional standards.
   3. Remove some duplicative language around allowing 4-units buildings.

Dimitruk further requested that the Omnibus Housing Bill clarify subdivision approval. She suggested keeping the proposed language but deleting references to “major” and “minor” lots as these are not defined by statute. Administrative Officers already have the ability to approve subdivisions of any size if the bylaws allow.

She went on to suggest that in order to make it easier to amend municipal bylaws by removing the ability to vote by Australian ballot in rural towns, and increase the percentage of voters needed to petition a vote 10%. It would also be a good idea to get a report from DHCD every two years to evaluate impact of these changes.

 

Maura Collins (Executive Director, Vermont Housing Finance Agency) explained the pillars of their Housing Development Program and identified the elements:

Equity: Reaching all Vermonters and all of Vermont with investments and development opportunities.

Capitalize projects that fulfill the promise of Local and State Land Use modernization efforts.

Provide a reasonable level of subsidy, revolve the funds, build a long-term program.

Build capacity in Vermont’s development and construction industries; and engage employers in a meaningful way, both to meet their needs and leverage their interest in investments in housing.

They explained how both employers and communities wanted to be part of the housing solution. They expressed their belief that a revolving loan fund would fill the gap and that middle-income homes were costing more than they will be appraised for.

 

Alex Weinhagen (Legislative Liaison, Vermont Planners Association) testified next, saying that VPA is a non profit advocacy organization. He discussed H.68, saying that the housing crisis is real and stems from a number of factors – e.g., a slowdown in residential construction after the 2008 economic collapse, lending restrictions enacted after the great recession, increased cost of building materials, supply chain shortages since the onset of the COVID pandemic in 2020, a shortage of skilled labor, rising cost of land, inadequate State and Federal funding for infrastructure, antiquated municipal and State permitting, and an unwieldy and slow appeals processes.

NOTE: The Chairwoman asked many of the those who testified on the Omnibus Housing Bill to agree that there was a housing crisis.

Weinhagen went on to say that State and local government can and should take action in the areas over which we have control. VPA strongly supports modernizing municipal land use regulations, State permitting reform (e.g., wastewater, stormwater, building codes, Act 250), as well as changes to expedite development review appeals processes. Both H.68 and the larger omnibus housing bill in the Senate include important reforms and funding. They recommend the revisions below to improve these bills, and to set the stage for even more impactful permit reform in the 2024 legislative session.

He stated that generally, the organization supports most sections of the bill; however, they recommend language be added to the bill to convene a commission or stakeholder group (housing advocates, municipal planners, developers, regional planning commissions, etc.) to evaluate and provide additional recommendations for action in the 2024 legislative session. Legislative studies on Act 250 and state planning designation reforms due out this year will help inform this effort. They offered that similar stakeholder engagement efforts in other states helped yield results at the state and local level. Approaches like New Hampshire’s Housing Appeals Board, Maine’s study of land use regulations and short-term rentals, and targeted “fair share” provisions in Massachusetts and Rhode Island should be considered. They recommended that in order to achieve the most impactful reforms of municipal land use regulation, that the municipal planning practitioners that work with zoning regulations and local-level development review every day be included. They identified that VPA would be very willing to participate through member outreach and designation of a representative to formally serve on a stakeholder group.

It was also suggested that provisions to rework in 2024 included the number of parking spaces per dwelling unit. Right-sizing residential parking requirements to actual need makes sense, especially for one-bedroom units, multi-unit buildings, and senior housing. They agreed that excessive parking requirements in municipal zoning regulations can impact the viability of new housing projects, particularly in-fill and redevelopment. They said that context, housing type, and availability of transit are all important factors to consider. They recommended that the bill should be revised to recognize these factors, so as not to constrain all municipalities to a one space per dwelling unit formula for every housing project.

Their suggestions on Section 2 (both bills) regarding residential density, building height, and density bonuses. They stated that VPA has long advocated for higher density development in areas planned for infrastructure-supported growth. However, these pre-emptions of municipal land use regulations could be problematic and may result in unintended consequences for some communities. They should be discussed and refined by a stakeholder group for consideration in the 2024 session, perhaps working towards a statewide plan for housing growth that complements, rather than overrides, existing regional and municipal land use planning. Some of the issues include:

• A one-size fits all approach for all areas served by municipal water and sewer doesn’t recognize the complexity, history, and planning of these service areas. For example: shoreline areas where water/sewer service exists to address water quality issues; legacy service areas that are adjacent but outside areas planned for growth; service areas that were expanded outside of growth areas to address public health issues (mobile home parks, PFAS contamination, etc.); and floodplains, and river corridor, and other unbuildable areas within a service area.
• Not all municipal water and wastewater systems have large amounts of uncommitted reserve capacity. Some communities with limited capacity have adopted local land use policies to direct this limited capacity toward redevelopment of their village and downtown cores, including housing that meets the needs of low- and moderate-income Vermonters.
• Some municipal systems are subject to Act 250 permit conditions that have required adoption of land use regulations and/or limit connections in order to limit sprawl. It is unclear whether the State preemption will also overturn these Act 250 permit conditions. Unless clearly defined in statute, it is possible that this will introduce litigation and unpredictability that could discourage housing investment in these communities.
• Meaningful tools are also needed to address defined housing production targets in affluent exurban communities that exercise exclusionary policies simply by avoiding investment in municipal water and sewer infrastructure. This could include a combination of incentives for communities that make progress on meeting more clearly defined housing goals, as well as consequences for those that do nothing or actively avoid it.
• While VPA strongly supports measures that increase affordable housing and mixed-use development, the proposed height waivers for such development likely will not work as intended. The limits to building heights in rural areas are also pragmatic – namely, the community’s ability to provide adequate water service and fire protection to taller buildings. Until these underlying issues are resolved, removing height restrictions in zoning will simply stall such projects in the permitting process. Density “bonuses” can also be addressed in other ways (reduced lot sizes and setbacks, increased lot coverage, etc.).

Weinhagen echoed many of the same themes as Dimitruk around the definitions of duplexes, ADUs, and lot sizes. They also suggested revising reporting so that municipalities are required to submit a report and bylaws/regulations to DHCD, to ensure consistent coding and uploading to statewide databases. More importantly, currently there is no review process to ensure that municipal bylaws are not exclusionary prior to adoption, this is only enforceable after-the-fact through state statute. Further consideration is merited on whether to empower or require Regional Planning Commissions (RPCs) to review proposed bylaws for conformance with fair housing practices as they currently do for municipal comprehensive plans.

Finally, they suggested expanding appeal protections to include designated village centers, and to include any other approval that addresses character of the area (e.g., subdivision, site plan, etc.).

 

Jacob Hemmerick (Community Planning and Policy Manger, Department of Housing and Community Development) addressed Act 250 and the impact of it’s regulatory incentives to enable housing in designated centers. He identified that there were five designated center programs and that the Statewide policy framework reviewed municipal conditions and work, including plans, budgets, bylaws, and resources. He pointed out that Act 250 consistently maps locations of statewide consensus for re-development, supports prioritized development, and public interests and that they have annual reports available.

 

Chip Sawyer (Director of Planning and Development, St. Albans City) testified next on the Omnibus Housing Bill. While he supported comments delivered the Vermont Planners Association, especially their recommendations to take time for more stakeholder solutions on many sections of the bill, he clearly stated that the drafting of the language of this bill with the current lack of stakeholder input from the local planning community is a regrettable oversight and a mistake. He further recommended that there should be greater local, regional and municipal involvement in the drafting of such language before it gets to the legislative committee level.

Sawyer explained challenges and concerns such as, the challenges that their historic urban center has had to overcome for housing development would not be solved with broad preemptions of the building blocks of local land use regulation. In fact, he has substantial concerns with many of the local zoning changes proposed in the current draft of the bill. Time and time again, he stated, that he has found that the biggest impediments to housing development in his community are market failures and regulatory redundancy. The City has had to step into a development partner role to secure financing, remediate environmental issues, engage in site preparation and take on other risks.

Based on his experience, the witness had the following comments and suggestions:

1. Do not limit municipalities ability to require off-street parking to only one space per dwelling unit. Furthermore, the proposed parking language here could be construed to preclude any local regulation that requires parking spaces per bedroom, rather than per dwelling unit.
   
   Franklin County is a car-centric housing market, driven by economic realities and inadequate regional public transit. Households typically have more than one car. Even many one-bedroom apartments house two-earner households, both of whom must commute to work. Their local bylaws must be allowed to reflect these current conditions. They often see the lack of parking capacity hindering low-to-moderate income households who have little choice in housing options and end up having to settle for properties that can’t accommodate the cars they own.
   
   
2. The duplex and ADU language that was an issue for others is also an issue for Sawyer, but he could get behind it with the parking changes cited above.
   
   
3. He requested the removal of the term “dimensional standards” from this proposed language. It is a catch-all term that could be misconstrued to include a wide variety of zoning rules that are important to communities and neighborhoods, and the change as currently drafted could have unintended consequences.

Sawyer reiterated that the Omnibus Housing Bill as written would have the unintended consequence by allowing any two-unit dwelling to include two ADUs and thus in practice become a four-unit dwelling by right. This would be excessive abuse of the current enabling statute for ADUs. Overall, the use of the word “duplex” should be removed from the bill and replaced with the term “two-unit dwelling.” Having more that one word for the same term is problematic in the construction of regulations and he made other suggested working change.

 

On Thursday, Kirby Dunn (Executive Director, HomeShare Vermont) shared that HomeShare Vermont helps the state meet two important goals by assisting aging neighbors to stay at home, where they want to be, while at the same time helping others find an affordable place to live. While there are no age or income restrictions for homesharing, most people sharing their homes (homeshare hosts) are elders or persons with a disability while most people looking for housing (homeshare guests) can’t afford market rents. Homeshare Vermont provides a comprehensive screening and matching service with ongoing support to those persons. Like other Homeshare advocates, Dunn put forward that home sharing is part of the housing needs and solutions.

 

Representative Laura Sibilia (House Committee on Energy and Technology) spoke on behalf of the Rural Caucus and how they were bringing out a Rural Caucus Omnibus bill. She shared that Representative Bongartz’s bill, H.68, was not considered. However, they are considering Representative Sims’ bill, H.111, and that a copy of the Rural Caucus’ bill would be sent to the Committee once released. Sibilia stated that rural capacity was a priority in their bill, focusing on permits, infrastructure development, project management, old housing stock and high energy burdens. Rural communities needed to be given the tools for people who did not need to travel to work and that rural communities have different housing needs than urban areas.

 

Representative Katherine Sims spoke next, saying that housing needs were over 5,000 units per year and that there was not enough public dollars to cover the tools needed by rural communities. To that end, she believes we would need an ability to leverage more money to build the size and capacity needed. Each community has different needs based on its own diverse community and that monies should not be distributed on a first come first served basis. There are up-front risks and costs that larger developers may be able to carry but smaller developers may not. This could create inequity unless it is addressed through statute. For that reason, Sims supports the Housing Revolving Loan Program.

 

Brian Shupe (Executive Director, Vermont Natural Resources Council) said the bill needed clarity on definitions. They support parts of it, but strongly oppose sections where the bill interferes with the Act 250 appeal process in any way that they do not believe that municipalities are capable of dealing with certain issues. They feel these responsibilities should be kept under the jurisdiction of Act 250. He also found the designation programs in the past were flawed and that Governor Shumlin and Governor Scott were the Governors that worked better in this area than past Governors.

Shupe was fine with the municipalities designating one parking space as he believed then the burden could be on the developers to promote or designate additional parking. He said he had met with Representative Bongartz to express his concerns. He also he had issues with areas of the bill that interfered with Act 250 and water and sewage, he will be putting in writing some of his proposals for changing the bill and submitting those to the Committee.

 

Returning on Friday, the Committee heard from Elizabeth Bridgewater (Executive Director, Windham and Windsor Housing Trust) who shared that they were a 35-year-old nonprofit in Brattleboro that also served Windham county areas. They own 859 rental units and mobile homes as well and that they have six projects in various stages.

 

Kristine Lott (Mayor, Winooski) was up next, saying that she reviewed the brief of the Omnibus Housing Bill and had general support for the bill and thought that measures were getting on the right track. The Mayor further stated that Winooski had already done most of the measures and found reduced costs and more available housing as a result. She cautioned the Committee to realize that moving from a four unit dwelling to a five until dwelling would cost more money as the developers would need to go from wood to steel construction and developers were not so quick to move in that higher cost direction.

 

Ryan Fecteau (Former Speaker, Maine House of Representatives) spoked to the Committee. He now works for the Governor as the Senior Advisor of Community Development and is still focused on housing issues. He believes that it is important to understand how to get to the point of consensus on housing issues. Maine has the oldest housing stock in the nation. He spoke to the hardship for transportation and housing as many have to drive long ways to work. They have developed 250 units per year since 2015 but they need 1,000 units of affordable housing. Domestic migration took them by surprise and was a unique circumstance as people began to move to Maine in 2021, with 17,000 new people and under the age of 45. This put a strain on their housing stock.

What Maine did for the ADU parking issue that has been discussed is to control through the primary structure, so that the addition of an ADU would not change the parking requirement. Whatever the unit was with the primary structure before the ADU determined the situation. Maine also offered grants to citizens to assist to build ADU’s. Fecteau also stated that the spirit of local control is universal in New England.

Senator Clarkson asked about data and whether or not there was a housing registry in Maine to gather data. Fecteau stated that Maine did not have a registry but there was a bill in legislature this session proposing it, and it addressed not only housing stock but also outstanding permits. He did not indicate if there was enthusiasm for the bill but did state that Maine relied on local information for its data and expected even more information from local governments as projects began to develop.

 

Sue Fillion (Planning Director, Town of Brattleboro) wrapped up testimony by focusing on a housing and zoning report from 2019 that they were involved in. There was a housing crisis in Brattleboro even at that point and in 2021 there was a plan for over 500 units that were needed.

While there was general support for the parking portion of the Omnibus Housing Bill, it was not consistent with Brattleboro’s position where there was a minimum of one and maximum of two spots with the necessary provisions in place to reduce parking as appropriate. She stated that neighbors had concerns over parking issues in the bill and that stated that, in Brattleboro, 3-5 unit buildings were a permitted use and did not need review board approval. Brattleboro's interim by-laws got rid of density caps (number of units per acre) on sewage and water and that it resulted in 22 new housing units.

 

 

Education

Key Points:

• Independent schools emphasize commitment to diversity, equity, an inclusion.
• House inches closer to independent school bill.

Independent School Approval Process

On Tuesday, the House Education Committee began putting together the elements they want to include in a bill around this topic. Off the bat, they want to codify the discrimination protections from the 2200 rule series into statute. There may also be some provisions around accreditation vs Agency of Education (AOE) review. There was a suggestion to do both because even though accreditation seems to be more rigorous, the accrediting agencies may not be looking at all the same things as AOE. The Agency has not yet weighed in on this topic.

Discrepancies between private pay students and public tuition should not be allowed. The intent of the bill would to require anti-discrimination, harassment, and bullying policies and then possibly have AOE review these polices on an annual basis to make sure schools are still in compliance.

There was also discussion of some sort of reporting requirement back to the home district. Representative Austin asked if these students are required to take the SBAC standardized tests (they are). Per current statute, it appears that reporting goes to AOE instead of supervisory unions.

Chairman Conlon would like to see a checklist for compliance as a tool for Superintendents to use. Problem is that “it will happen differently in different places.”

 

Claire Leheny from the Association of Independent Schools in New England (AISNE) joined the Committee to discuss their accreditation process. They have 265 schools across New England (17 in VT) that are members of their organization. However, currently only 79 of their schools are accredited through AISNE (none in VT yet). Members who are not accredited by them must be through NEASC as a condition of membership.

She emphasized that they are committed to equity and inclusion, and it runs through everything they do.

AISNE has eight criteria for accreditation, a school must:

1. Have a clear statement of mission and philosophy.
2. Consist of three or more consecutive grades in kindergarten through grade twelve or equivalent.
3. Be incorporated as a not-for-profit organization as attested by federal and state records.
4. Have a non-discrimination statement as required by law.
5. Be governed by an appropriately constituted and substantially independent governing board, in accordance with the by-laws of the corporation.
6. Have policies and procedures to ensure that any perceived or actual conflicts of interest for board members are disclosed and managed appropriately.
7. Have an annual audit of the school's financial statements, performed by an independent certified public accountant.
8. Have a process for the ongoing monitoring of its compliance with all federal, state, and local legal and regulatory requirements.

A visit team does an on-site review of the standards at the school. These teams are experienced teachers and educators from the region, a sort of peer review. AISNE continues to support schools throughout the process even in-between their accreditation cycle (which is every 10 years). Schools must also complete an annual report to affirm that they are continuing to comply with the standards of accreditation.

In addition to accreditation, AISNE also provides training for teachers and boards as well as job postings.

 

Drew Gradinger (President, Vermont Independent Schools Association) and CJ Spirito (Head of Rock Point School). The Association has 30 therapeutic schools, 40 approved general education schools. There are also 17 approved religious schools in Vermont, but they are not currently part of Vermont Independent Schools Association (VISA).

Spirito spoke to discrimination protections, stating clearly that Carson v. Makin blurred the lines between church and state and that VISA firmly believes that all schools need to remain anti-discriminatory in practice.

The VISA endorses Maine’s action as an effective response Vermont can make.

The Maine law identified as “a civil right” the opportunity for full participation in any educational institution’s offerings without discrimination “because of sex, sexual orientation or gender identity, a physical or mental disability, ancestry, national origin, race, color or religion.”

VISA is committed to working with the Vermont General Assembly to support passage of a law requiring all schools receiving public funds to comply with nondiscrimination laws.

There are 88 Vermont towns that don’t have high schools VISA schools help to fill this gap in the Vermont education framework. They also pointed out that even today, “Three-fourths of all students attending Vermont general education independent schools were in a school that provides special education services.” This will become a requirement for any school receiving public dollars as of July 1^st.

Gradinger also mentioned that “students whose special needs are so severe that they cannot be accommodated in their home schools often are placed by their home school district in any of the 30 therapeutic independent schools throughout Vermont.”

Spirito described the process of taking on a new student as his school as looking at every student individually. He described one student came to them not reading and wouldn’t interact with his peers. Within the first year they had him reading and were able to build relationships with him. He is now getting ready to graduate and is even considering continuing his education at Vermont Technical College.

They are seeing a lot of students going on to another independent school with small class sizes as a transition back into a public school setting. Many of the students that therapeutic schools work with struggle in larger schools.

Chairman Conlon is a little concerned about a Local Education Agency (LEA) determining an independent school is the best fit but then the school being unable to provide the services needed (like public schools often do). Ultimately the responsibility falls back on the LEA as their problem to solve. Right now it is accomplished through shared resources or tele-med services. Schools often have work together with the LEA to figure it out.

Representative Austin asked about school governance. All the non-profit schools have boards, typically they are parents or family members of former students who serve in this capacity.

Spirito spoke in favor of the NEASC accreditation process, having served on several review committees. He described it as a “vigorous self-study.” However, Conlon expressed concern about NEASC’s evaluation on the basis of the schools “mission and values.”

 

After testimony wrapped up, Conlon encouraged Committee discussion on a potential bill. He wanted to address reporting requirements back to Superintendents (currently it appears these reports go to AOE) about student performance.

Representative Buss questioned how we measure performance if we don’t have consistent evaluation measures across different schools.

Conversation came up again around requiring independent schools to adhere to the Education Quality Standards (EQS) but the conversation quickly moved on after it was pointed out that this would increase the tuition they independent schools are eligible to charge.

Conlon and Representative Brady contemplated additional reporting requirements around truancy issues or students who leave or change a school for any reason. It would make sense to extend this to public schools as well.

Conlon also brought up the concept of a compliance checklist for approved independent schools that would be developed by the Agency of Education (AOE) to send to superintendents. Any instances of non-compliance would be reported to AOE. Austin wondered if it is redundant to require this.

 

Career & Technical Education

The Senate Education Committee began taking testimony on Tuesday, around and how there may not be access to Career and Technical Education (CTE) beyond 11^th and 12^th grade. Funding is currently responsibility of local school board and sending districts. The current statute for CTE was added in 1987 and most people agree it is time for an update. However it's not clear why only those two grade levels are specific and not additional ones. It seems like there is interest among the Committee to expand this. The Miscellaneous Education bill will likely end up being the vehicle for these changes.

One of the committee members went to a CTE conference where they were talking about middle school students – but it was more focused on doing outreach rather than taking classes. Although they did discuss doing exploratory classes and giving students information about CTE. Committee also spoke about using facilities outside of the CTE Center and how schools could cooperate to use facilities and teachers efficiently and to the benefit of all students who want to take CTE classes. There is a report due in March that will shed more light on this topic.

 

The House Education Committee also took up this topic later in the week to learn more about CTE centers and how the funding works. Brad James from the Agency of Education was the primary presenter. He shared that there are 12 CTE centers attached to high schools and 4 that are stand alone and governed by their own boards. The primary source of funding is from the federal government through Perkins Grant and some other programs, state funds cover the rest. Of state funds the largest piece comes from tuition paid by the sending school districts.

For the 12 host CTE centers at high schools, the budgets are voted on separately when the high school budget is up for a vote. However, for the The 4 stand alone centers, they send their budgets directly to the voters. Once passed the budget becomes a legal obligation of the member districts no matter what happens to the high school budgets. The member districts must pay the CTE budgets.

When calculating tuition for CTE, the total cost with all grants backed out and then the net amount divided by pupil count to get the tuition rate. However, if you are Vermont student, the CTE center gets a supplemental assistance grant which is also then backed out. Out of state students pay the full rate. There is also transportation funding where centers get a certain amount per mile set by federal standards. In some cases, primarily in very rural areas, it is paid to personal mileage for the parents when transportation by the school is not available. The resident school district supplies transportation by statute, but often not in practice.

There are state grants available with salary assistance for directors, guidance councilors, coop managers, etc. Supplemental assistance grants are also available to reduce tuition rates.

Student enrollment fluctuates at CTE centers, so they look at a rolling six semester average at full time equivalency. The law also requires the Secretary to take out a certain amount from the Education Fund for direct funding of tech centers. This amount is subtracted from tuition and the net number used to calculate tuition. The purpose of this "smoke and mirrors" calculation is the feeling that the tech centers costs may be considered too high, so they split the tuition bill. This is not a transparent approach and it seems better for the state to cover the full cost upfront for transparency

 

Jody Emerson (Director, Central Vermont Career Center) and Scott Farr (River Valley Technical Center) testified next. There is a disincentive for the sending school to send students to tech center as they have to pay tuition. They believe we need to ensure students have full access, which is not the same throughout the state. Some schools never send anyone. CTE centers have created proficiencies for every program statewide, which is wonderful to see. Sending schools have very different expectations which make it very confusing when it comes to graduation.

Competition is a big issue, tech centers want access to college credits, which is a requirement for Perkins funding. When they try to create these pathways they hit barriers from state college system. These roadblocks do not exist in New Hampshire.

Space and capacity are also barriers. Student numbers have been growing, but tech centers have not caught up and can’t take kids that want to come. HVAC currently has a waiting list and teachers are hard to find. If they are coming from the industry, it ends up being a "big cut in pay."

There is also an issue of a statewide calendar. Tech centers can’t do professional planning and development that doesn’t take teachers away from their students. Teachers and industry professionals are needed and recruitment and retention is a problem. Teachers from the industry go to school first three years to get their accreditation because their industry certification isn’t recognized as subject mater expertise for teaching purposes. They believe that master level technicians, like a master plumber, should be on the same level on a teachers salary scale. This would help bring pay into parity.

 

 

Economic Development

Key Points:

• Broadband rollout well underway but affordability is an issue.
• Joint Fiscal Office provides overview of inflationary side effects.

Broadband

Representatives from the Vermont Communications Union District Association (VCUDA) testified on Tuesday. F.X. Flinn (Chair, ECFiber) gave a presentation to the Senate Finance Committee. He spoke about the history, demographic and geographic obstacles, transitions from dialup, and the financing difficulties for cable buildout.

EC Fiber began with town members to build out slowly with proper financing, using cash flow and small local investors – literally financing with $2500 loans at the start. When the Communication Union District (CUD) laws came along a few years ago and bonding became the base finance system it moved the system much further along.

In 2019 they asked for changes to the poll attachment rules, which the legislature gave them along with an expansion of the CUDs. Many CUDs are newly formed, but able to accomplish in 2-5 years what it took the EC Fiber 15 years to do, thanks to the new frameworks.

Next up was Ellie de Villiers (Chair, VCUDA) and Rob Vietzke (Director, VCUDA). De Villiers reviewed a PowerPoint on how CUDs function under current law and financing model. Last mile broadband is always the hardest mile, she reiterated. But, the public-private partnership model is working.

Chairwoman Cummings recalled, enthusiastically, how far they have come. CUDs are supposed address broadband access under a viable and sustainable business model; denser areas are prioritized so funding and financing can then support the buildout at the less dense sections to the last mile.

Next up was Christa Shute (Executive Director, NEK Broadband) who explained her role as an example of how a CUD operates. NEK Broadband consists of 55 towns in the NEK, plus Wolcott, and they are the most rural CUD in the state. This will translate to a unique challenge the CUD model that they will have to address.

High level design has been completed and shows a need for some 2,800 miles of road coverage. Estimates are $196M for last mile fiber coverage in their region. They will receive up to $65M from existing FY2022 allocations and the infrastructure bills.

They now have five full-time employees, including an Operations Manager, a Logistics Specialist, an Accounting Manager, and a Grants Manager. She stressed they are gearing up for the financing and efficiency of the project remains top priority.

She explained the “make-ready” process which establishes fiber corridors on existing poles which are modified to accept the fiber installation; these are owned by electric utilities, private and public municipals or cooperatives. Sometimes these need upgrades which the CUD needs to coordinate with the pole owner on. Many municipalities have larger offroad poles which are less accessible and more expensive to make-ready.

With 2,800 miles of fiber required, if they do 400 miles per year (more than ECFiber has ever done) it will take 7 years. She is pushing an aggressive schedule to achieve a 5-year buildout.

She added that “continued funding here is critical.” It was also pointed out that workforce support is crucial, along with the ability to retain these people in a very competitive market across the nation.

She also stated the demographics and average incomes in the NEK requires “targeted programs” because they will not be able to achieve across the board income accessible rates in a free market without them.

NOTE: We assume she is talking about targeted subsidies for rates based on household incomes.

Shute added the cooperation from others in the industry has been excellent and we could not have made it this far without them.

There was some general discussion about earlier financing models and why they are very fortunate to have had access to the ARPA and now Infrastructure Investment and Jobs Act (IIJA) funding streams. They now rely heavily on Vermont Economic Development Association (VEDA) for startup and design funding. They get three years without payments but even these are at market rates so there is a cost consideration.

Cummings is concerned about the affordability issues and asked Shute to come back in to discuss “what they can come up with” for people to be able to afford broadband service.

Senator Brock asked if they were not likely to be bothered with a host of other competitors. Shute laughed and said both yes and no. She explained the Town of Westmore is utilizing ARPA funds to add spurs to the fiber lines. They called ahead to see where the NEK Broadband lines would come to, so some planned competition may seem welcome here. On the other hand, these will also be in a density that is efficient in scale and will detract from the economics for a CUD.

Brock then reads from a list of policy goals in the state plan and questioned the ability for CUDs to maintain a competitive market.

Flinn pointed out there is often competition between CUDs and telecom companies. ECFiber is building where Comcast exists for instance, so a CUD can actually bring competitive choices.

Shute added that without CUD’s we would be subsidizing private companies and creating monopolies that have no accountability and stakeholder access, input, and governance.

The Committee wrapped up discussion, agreeing to revisit the affordability issue.

 

Workforce Development

The Senate Economic Development Committee discussed workforce development on Tuesday with Sarah Buxton and Michael Harrington from the Department of Labor (VDOL).

It sounds like the House is going to start with a substantial rewrite of the apprenticeship statute relatively soon. Before pandemic the department hired woman in Northeast Kingdom to provide business services and she is doing an outstanding job in response to changes in Workforce Innovation and Opportunity Act (WIOWA). In 2016 WIOWA changed the way the agencies approached their work. Before, all work started with job seeker, but WIOWA asked VDOL to get equal effort to serve employers. So, the staff started working with employers, asking questions what jobs they have, what qualifications they were looking for and if they really needed them.

Employers have had difficult time looking for workers. During pandemic, VDOL collected data and if they found a cluster of skills needed they used funding to work with those clusters and sought industry professions with skill sets to match with those jobs. They used next generation funds to give them flexibility.

Currently Vermont Works for Women contracts with the Department of Corrections to work with newly released incarcerated women – providing them services, training and jobs. VDOL would like to work with this organization to track beneficiaries and to document how the program is working and if it is a good format to follow for the future. It's a small population with a big dollar investment, but they would like to know how this model works.

Buxton noted that in the Legislature they talk about secondary education and training from the tech centers but never talk about adult education. She made a distinction that for tech centers and school aged students it's about ‘learning’. But, for adult education it's actually about technical training and workforce development, a totally different focus. There isn’t a clear owner of adult education and the system is disjointed. She thinks it should be changed.

 

Inflation

On Tuesday, the House Ways & Means Committee heard from Joyce Manchester (Senior Economist, Joint Fiscal Office) about measuring and adjusting state policy for inflation.

She reviewed and explained the components of Vermont’s Earned Income Tax Credit (EITC). There was a pretty sever drop off in 2021. She attributes much of this to an extraordinary rise in the single person household receiving EITC and so the “value” of the EITC was skewed relative to average returns (more returns of smaller value).

The Consumer Price Index (CPI), a monthly measure of the average change over time in the prices paid by consumers for a market basket of consumer goods and services, has risen at historic rates over the past 18 months. It is important to note that this particular index excludes food an energy prices, which have both seen potentially larger increases than typical consumer goods.

Another measure (which is used by the Federal Reserve) is Personal Consumption Expenditure (PCE). This is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. According to Manchester, this is used for capturing inflation (or deflation) across a wider range of consumer expenses and reflecting changes in consumer behavior.

One approach she offered is to look at some measures as a share of something else. When she was at Congressional Budget Office (CBO) looking at trillions of dollars in the national debt is obscure and unreal; looking at it in terms of debt relative to the GDP gives it some relative term. It makes it real and understandable.

She asserts these terms give an interesting and useful snapshot and rates of change over time. For instance, if debt is increasing, but the economy in GDP is growing faster that may seem more useful for policymakers.

Representative Demrow asked about using PCE, and if it included food and fuel. The answer yes, and these are more volatile and a large portion of household spending. The northeast indexes are even more dependent on fuel costs.

She then gave examples of where VT law uses indexes, like with minimum wage. Education finance uses it to adjust the statewide grand list values, yield models, and block grants for special education are other examples of state use of indexes. State pensions also utilize CPIs of different types depending on bargaining agreements.

There are other examples as well, which Manchester encouraged the Committee to keep in mind as they look at tax and spending policies.

 

 

Government Accountability

Key Points:

• Senate entertains ranked choice voting in presidential primaries.
• House considers banning hybrid/fusion candidates.
• Town clerks renew call to scrap current write in voting system.
  
  

Ranked Choice Voting

The Senate Government Operations Committee reviewed S.32 on Wednesday. Paul Burns (Executive Director, Vermont Public Interest Research Group) testified first, giving a great overview of how ranked choice voting works and the benefits of it. Vermont Public Interest Research Group (VPIRG) has two new election and campaigns arms that have allowed them to be directly involved in the campaign seasons via an independent expenditure committee and a coordinated political committee. He did not offer further details but specified that he is speaking for VPIRG specifically.

He supports the proposed bill and appreciates that it starts with the presidential primary elections.

He stressed the effects of “spoiler votes” and “winner take all” mentalities on the current system. Ranked Choice Voting (RCV) would have allowed even a 2nd or 3rd place finish like Elizabeth Warren to collect some delegates votes for later on in the primary.

He played a video of a WCAX news story that was really an educational effort they had instigated about the new RCV system in Burlington.

Senator Clarkson stated the RCV led to less partisan elections so why do we still have so much Republican opposition to it. Burns declined to answer specifically and reminded them his position on RCV is non-partisan. He suggested that “voting reform” is painted as a progressive idea.

Senator White noted that her town clerk has concerns about added the staff needs and volunteers needed to administer RCV elections. Burns admitted he has heard these complaints and suggested that it is not a new system and other states, like Maine, have figured it out.

Senator Watson asks about other types of instant runoff elections and why we should or not use one of these other types. Burns pointed out that this is the only one used quite widely across U.S. and internationally. Others give numeric scores and are used, for instance, with the MVP selection in baseball, so not really applicable.

Justin Marsh (Political Outreach Director, Vermont Conservation Voters) introduced themself to the Committee next. They emphasized that RCV “helps to discourage highly negative campaigning since candidates need to appeal to voters as their possible second choice. With politics getting more and more polarized, we think this would be a step in the right direction.”

Betty Keller (Member, Vermont League of Women Voters) was the final witness.

In 1999 they participated in a study and have continued to support RCV for statewide offices ever since. They also reviewed alternatives and support methods for auditing elections and increasing voter participation. Read more…

Chairwoman Hardy asked what they could help with on voter education if S.32 passed. Vermont Conservation Voters (VCV) has done some video and social media education recently and would be happy to also be involved here.

Keller also addresses criticism from town clerks that the timeline is too fast. They encouraged adding a task force to engage clerks to develop the implementation and education plans for the new system.

There were some questions from the Committee about the level of support among Vermonters for RCV, but no organization has done any polling on this topic.

 

Changes to Elections

The House Government Operation Committee jumped into a draft committee bill on Thursday around miscellaneous changes to election laws. The first section of the bill was termed the so-called “sore loser law.” Legislative counsel explained it would restrict any candidate in a primary to appear on the ballot of another party in a general election. It would also not allow a winner in a primary to also be nominated in a third party ballot.

Chairman McCarthy questioned if party has a loss of candidate due to drop out, could they not nominate anyone who was also a loser in another primary race. It appears that this would be restricted under the current draft of the bill.

McCarthy took credit for this inclusion and acknowledged. Representative Hooper pointed out that political party’s are separate entities and we are telling a citizen they cannot run. He wondered if that would pass Constitutional muster. Legislative counsel pointed to similar laws in other states that have made the cut, but there are no litigated outcomes from Vermont.

He couched it as “if any candidate wants to appear on the ballot, [they have to] choose at that time, am I running as major party candidate or am I filing as an Independent. And then if you choose to run as a major party candidate and you lose, you can’t then afterwards file as an Independent or be nominated by another major party.”

Another section of the bill would re-ordering filing deadlines and requirements, including names and addresses of citizens that have organized the candidate’s committee.

Further, the bill would prevent “cross-nominations,” removing multi-party labels on general election ballots.

NOTE: This effectively kills fusion candidates who might run as a Democrat/Progressive or a Republican/Democrat, etc.

Representative Hango questioned why this was included and McCarthy admitted he had it included on his own initiative.

A further section of the bill requires candidate demographic information to be collected. In notifications to the Secretary of State as a primary candidate it would ask for name, gender, age, race or ethnicity, mailing address, and e-mail address of all candidates.

Representative Higley pointed out that the data will be skewed for research as it isn’t mandatory. McCarthy agrees and admits the appearance of the questions will make most folks just provide it without objection.

Will Senning (Director of Elections and Campaign Finance, Secretary of State's Office) supported the entire bill, but they didn’t submit any of the language nor were they consulted to do so. In particular, they support (along with town clerks) the write-in restrictions and language around counting and recording those types of votes.

The nominations section they were agnostic on, dual nominations and party nominations are more of a policy matter and they can implement whatever is passed.

The eligibility criteria for independent candidates came up again. Hango asked why candidates would file as both a primary contender and an independent, knowing that if they lose the major party primary they cannot run as either?

McCarthy immediately stated “its Senator Sanders.” The candidate would file as both and then decline the major party nomination (in Sanders’ case he still caucuses with the Democrats). The provision is meant to keep a candidate from “hedging” or seeing “which way the wind is blowing” and then file late as an independent candidate. McCarthy concluded, saying that “to me reduces the integrity of what it means to be a major party candidate.”

Hango voiced concern that the bill is a carve out for a single person (Sanders) and pigeonholes everyone else into one of the major parties. She does not like that approach. McCarthy agreed but does not see it as a bad thing. He thinks that “sore loser” or “spoiler” candidates happen fairly frequently and wants to address that.

Senning saw the candidate demographic information as helpful and informative. There are, however, questions around how that data should be released and whether it should be on an individual level or aggregated.

 

Representative Brennan introduced his bill H.97, which is based on a experience in August where is local town clerk had to count 324 separate names that were submitted in the primary. It took longer to count these than all the rest of the major party ballots combined.

The bill would essentially give town clerks up to five days following an election to count write-in ballots. This window was a drafting choice and not directly related to anything town clerks had asked for. There is a similar section in the Committee bill as well.

Carol Dawes (Legislative Committee Chair, Vermont Municipal Clerks and Treasurers Association) outlined various datapoints on recent write-in counts and the staff demands they incur. She offered that voters feel constrained because they cannot cross over between two party ballots in primary elections and often use write-in’s to resolve this dilemma.

Hango commented that voters feel stalled within a party ballot system and they are allowed the choice via write-ins. McCarthy agreed the sentiment is valid, but believes they are only adding confusion in their attempts to do this.

Representative Hooper agreed with Hango for the most part, but also suggested these choices may result in some wasted votes as well.

Representative Mrowicki added “to muddy the waters even more” Washington and California consider their primaries open, in a sort of “two-tier primary,” which incited laughter.

Representative Waters Evans asked about any historical context for the write-in method of voting. Dawes noted that they have a ballot from the late 1800s on the wall in her office that has a write-in line on it. Time is the major concern in the current system since they can’t issue results until all the write-ins are counted. She questioned the value of “cataloguing all these different names and votes. Particularly when it is clear that most of them are a one-off.”

Senning added that the primary and local elections have a minimum threshold for write-ins to be counted. He sees the middle ground as allowing for empty races and local offices to be filled with write-in’s by recruiting alternates and latecomers to the race.

 

Open Meetings

The Senate Government Operations Committee met on Friday to discuss open meeting laws and a new bill that has been introduce, S.55. The bill repeals the emergency authorization statute passed during the 2021 session to allow fully remote meetings while the Governors emergency declaration was in place. Essentially this would allow public bodies to continue meeting remotely a permanent feature.

The new statute no longer requires public meetings be recorded if these are the School Board or the City Council & Selectboard (Legislative Body of the Municipality). Any quorum of a meeting not held in a public space can be electronic participation only and has no recording requirements. Presumably, however, the requirements to maintain minutes and other records under the open meeting law would still apply.

Chairwoman Hardy noted that the bill was drafted mainly “as a vehicle for a broader conversation on what changes we may or may not want following the pandemic.” She reiterated that continuing electronic meetings after the pandemic is a topic for broader public discussion.

Senator Clarkson spoke to the increase in participation and access for the public. She added that to have this as an option, would save energy heating buildings and folks driving to offices.

There was some disagreement about how much this might change the character of town meeting. Some towns have chosen to host remotely and have appreciated the flexibility to do so. Others believe strongly in having an in-person meeting.

 

Divestment of State Pension Funds

On Tuesday the Senate Government Operations Committee reviewed S.42, which would divest the state pension funds from investments in the fossil fuel industry. These divestments would have to happen for all three state retirement systems by December 31, 2030. As defined in the bill, fossil fuel to include petroleum, coal, natural gas, heating oils, light and heavy diesel or motor gasoline, propane, butane, residential fuel oils, kerosene and aviation fuel. Notably, it does not include biodiesel.

The Vermont Pension Investment Committee will be required to develop a plan to accomplish this and the bill allocates $100k for this purpose. Senator Clarkson stated intent is to not in any way negatively impact the pension funds, however she is worried about exposure to liability law suits when fossil fuel companies get sued for "ruining planet." Committee discussed list of those who should be asked to testify.

 

Things to watch for next week:

Carbon Reduction in the Heating Sector (S.5) - Senate Natural Resources (all week)

School Choice & Independent Schools - House Education (Tue/Wed)

Omnibus Housing Bill - Senate Economic Development (all week)

Amending the Vermont Employment Growth Incentive Program (H.10) - House Commerce (Tue/Wed)

Paid Family Leave (H.66) - House General & Housing (all week)

Universal School Meals - House Agriculture (Tue-Thurs)

Career and Technical Education - Senate Education (Tue/Wed)

Ranked-choice Voting for Presidential Primary Elections (S.32) - Senate Government Operations (Tue/Fri)

 

 

 

We reviewed over 31 hours of legislative testimony to bring you this report, please consider supporting our work.