This week the legislature overrode Governor Scott's veto of the pension bill unanimously. While only addressing less than half of the deficit, the legislature resoundingly chose incremental progress over sweeping reform. Other bills are following this trend, such as the Act 250 bill, shying away from bold reforms and towards minor tweaks to existing laws.

Other bills moving forward include housing and workforce development, economic development, student weighting (headed for the Governor's desk). Universal school meals were also approved by the Senate this week, setting up a likely slash to the $36M in property tax savings that were offered by the House.

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Fiscal Responsibility

S.286 - Public Pension and Other Postemployment Benefits

Governors veto of S.286 was presented to the Senate on Thursday morning. Senator White shared that the only recommendation that the Governor offered was that new hires should be on a DC plan. She expressed frustration that, during the entire eight months of the Task Force, the Governor did not present this recommendation to them. This bill is quite intertwined with the budget and that not overriding the veto would force them to go back to the drawing board.

Senator Brock warned that within eight years the legislature will be back dealing with the same issues again because this bill does not go far enough. He voted yes on the override because it moves the needle, but he wanted to communicate that the legislature's work is not done.

The Senate overrode the Governor's veto 30-0-0.

 

The House took up the veto override on Friday. There was little discussion outside of the Governor's failure to bring his proposal forward earlier. The House voted 148-0 to override the Governor's veto of S.286. The bill will now become law.

 

H.572 - Retirement Allowance for Interim Educators

Senate Finance reviewed H.572 this week. The bill would create a one-year program (with the possibility of extension) to allow retired teaches to come back into service. During their year of extended service, they are entitled to keep their retirement benefits while still collective a salary from the school district.

There are a couple safeguards in the bill, for example the superintendent must exhaust all other avenues prior to making these offers and the retirees will not be paid benefits from the school district (they will continue on their retiree benefits). School districts will also have to pay a $2500 fee to the State Treasurer's office for each of these hires. If passed, the bill will go into effect on July 1st.

Treasurer Pearce still has concerns about the impact on the unfunded liability. This might also impact actuarial calculations and if teachers view this is a financially valuable tool it could drive pension retirement earlier. It seems like she would prefer to fund this out of school budgets instead of the pension plan.

You don’t want this to be viewed as an early retirement incentive, which would lead to higher liability risks. Other committees that looked at this bill tried to narrow when and who this bill would apply to in order to address a "shortage" of teachers without creating a perverse incentive.

 

The bill is scheduled to appear on the Senate Floor on Monday.

 

H.737 - Homestead Property Tax Yields and Tax Rates

The Joint Fiscal Office reviewed a new potential category for the current use program with the Senate Finance Committee on Wednesday. The new category would be used to incent preservation of certain types of desirable forest lands that would still require a land use management plan but would be more hands off than the existing current use program. One targeted category of land is old growth forests. The Committee may add this language to H.737.

 

The Committee came back to this Thursday as the Senate was preparing to pass S.100 (more on this below). The Education Committee was prepared to concur with the House but wanted to be sure that they would also receive funding for PCB remediation through H.737. After discussion the Committee chose to put $29M towards school meals, $45M towards PCB remediation, $10M towards career and technical education, and roughly $8M towards pensions - leaving only $2.5M for property tax reduction. The Governor had proposed $45M in property tax relief, and the house had $36M.

They voted out the bill 6-0-1 and it will appear on the Senate Floor Monday. The bill will go to conference committee and there is likely to be further negotiations given the disparity in funding preferences.

 

 

Housing

S.226 - Expanding Access to Affordable Housing

On Tuesday, Legislative Counsel explained the First-Time Homebuyer Down Payment Assistance program to the House Ways and Means Committee. The program, part of S.226, provides grants for first generation homebuyers. The qualification requirements replicate the Federal program and will have up to $1M in available funds for FY2023.

A new amendment from Representative Cina would also create a Land Access Opportunity Board to oversee BIPOC access to property ownership. This language has already found issues in the Senate (and the House General Committee) because it seems duplicative with other work the legislature is doing.

The bill would also expand the Downtown & Village Center Tax credit program by allowing developments or redevelopments within Neighborhood Development Areas to qualify. Flood mitigation projects would also qualify under the new bill.

There was some hesitation to blend it with NDAs (which are seen as a pilot project) with Downtown and Village Center designations as the existing program seems to be working well in their eyes. There is a sunset provision (two years out) in the bill which seems to make most of the members on the Committee happy.

An updated fiscal note was provided by the Joint Fiscal Office (JFO) that focused on the addition of contractor registration requirements. They believe up to 1500 individuals and 2500 businesses will register. The program will cost around $200K to administer, which will be covered by the registration fees. Contractors accepting jobs smaller than $10k would not be forced to register, but JFO predicts that most of them would anyway because otherwise they are pigeonholed into smaller projects and being a registered contractor would likely be seen as a "status symbol."

Committee Voted to pass the bill 7-4-0 with opposition from Representative Mattos, Brennan, Canfield and Beck because of the contractor registration program.

 

House General took up S.226 on Thursday to review amendments from Ways & Means and Appropriations. Because the regional navigator program was nixed a few weeks ago, the $5M that had already been appropriated for that bill was re-distributed into two manufactured homes programs. $3M would go into capital grants (up to $20K per home), $1M into repairs and rehabs, and $1M into foundation construction and utility connections.

After reviewing the amendments, the Committee approved 10-1-0.

 

The Committee came back to entertain two floor amendments to S.226 on Friday morning. The first amendment was offered by Representative Donahue to add members from psychiatric and disability advocates to the Vermont Land Access and Opportunity Board (VLAOB) being proposed in the bill. The Committee found the amendment favorable.

The second amendment was offered by Representative Bluemle and also addressed the VLAOB. Her amendment would add to their responsibilities advising the Vermont Housing and Conservation Board, the Vermont Housing Finance Agency, the Vermont Economic Development Authority, the Vermont Agricultural Credit Corporation, and other affordable housing and land access stakeholders. The Committee found this amendment favorable as well.

 

The Senate Economic Development Committee received S.226 back from the House on Friday on a 103-42 vote. The House removed several sections on Neighborhood Development Areas because they are also included in S.234. There was also some debate about the necessity of the new housing board to oversee diversity that the House added.

The Accessory Dwelling Unit language that was in the bill is now in S.234 and the section on wastewater connection permits was removed entirely, the Committee is trying to insert those provisions into S.11 in the Conference Committee.

The important part, the missing middle home affordability grants, are still included in the bill and were unchanged from the Senate version. However, the bill also came back with a controversial provision to register all construction contractors who bid on projects greater than $10k.

 

S.234 - Changes to Act 250

S.234 passed the House on Wednesday after two amendments were offered on the floor:

1. Reallocation of municipal modernization grants totaling $650K, which was agreed to.
2. Removing the forest block provisions included in the bill and reverting changes to the Natural Resources Board. This amendment failed 44-97.

The underlying bill passed the House 99-43 and will likely appear on the Senate floor Monday.

 

S.210 - Rental Housing Health and Safety and Affordable Housing

The Senate Economic Development Committee met on Monday to discuss S.210. They mostly focused on language around Accessory Dwelling Units (ADUs) that would provide grants to bring those units online for housing purposes. These sorts of units are things like guest houses or in-law apartments that are on the same property as the primary residence of the owner. The Committee would like to see these leveraged for long-term rentals to start addressing the housing shortage.

There was some concern that the new language would allow lots with multiple structures (such as condo complexes) to qualify. They originally intended these funds to be used for rehab, upgrade, and code compliance projects for degraded properties in areas where housing was in demand. The new language would allow the program to be much more expansive than that.

The Committee is also trying to prevent funds from going to ADUs that are being used as short-term rentals (STRs). They are not interested in subsidizing seasonal or camps or summer rentals here. There was also wariness of getting overburdened with details, “like Burlington has been doing,” that will encumber future owners. Pretty clear language already exists to find and exclude STRs: rented to transient or vacationing persons less than 30 consecutive days and for more than 14 days per calendar year.

Senator Brock pointed out that the rental registry in the bill is a “Poison Pill” and his question is whether they should move the bill with it included. Registration fees would be waived for units rented less than 120 days per year, but the provision is veto bait for the Governor.

 

The Committee came back to this on Wednesday to review a “compromise” proposal for ADUs that would provide a forgivable loan up to $50K (with matching funds from the owner) to cover construction costs of making ADUs available as rental units. Chairman Sirotkin wants "the offer to be attractive” and at the same time balance the availability of market rate versus lower income availability. They are also now debating if they should require ADUs to rent through homelessness programs first and also accept vouchers during the term of the loan (10 years). This was not the original intent of the program to be low-income and at risk focused.

They ended up setting on language stating "A landlord shall coordinate with nonprofit housing partners and local coordinated entry organizations to identify potential tenants." The Committee approved the bill and it was brought to the Senate later that day.

The House reviewed the bill on Friday and refused to concur with the changes. A conference committee was ordered.

 

Workforce

H.703 - Promoting Workforce Development

The Senate Economic Development Committee met on Monday and Wednesday to review some technical changes to H.703, which is now a massive 91 page bill.

The new language adds paramedics to the list of high demand sectors being targeted by funding. Funding for EMS and paramedics was also increased from $3M to $3.5M. There was some concern around this because these groups are special as many are quasi-volunteers with no promises at the end for careers unlike other training programs they are supporting. After debate the Committee agreed that these funds should be directed by the Department of Health to ensure they go to the correct places and have the maximum impact.

Career and Technical Education (CTE) construction funds were slashed from $15M to $10M. The Committee also wanted to be certain that CTEs are partnering with other organizations to allow the funds to be utilized in partnerships for students to participate in.

Nurses also saw their funding cut from $5.4M to $2.4M. The program to reimburse education costs was also moved from the Vermont Student Assistance Corporation to the State Colleges (VSC). At issue seemed to be costs and portability since VSAC loans (which would be forgivable in this case) can be used out of state or at private colleges. To keep costs down and funnel students to VSC institutions, the Committee decided to make this change.

The Vermont Trades Loan Reimbursement Program was struck out with $5M in funding. It's not clear if this was a budget constraint or a broader policy decision.

 

S.11 - Omnibus Economic Development

In a last minute move, the House rolled large sections of both H.703 and H.159 into a bill that had been sitting on the wall - S.11. Weird things happen at the end of the legislative session...

The bill as passed by the House on Tuesday and the Senate called for a Conference Committee, which began meeting during the second half of the week.

A useful side-by-side analysis was put together by legislative counsel, but here are the highlights:

• The House version of the bill did not include CTE funding and governance (currently in H.703)
• A study looking at governance structures for CTE was removed by the House (Currently in H.703 and S.287)
• The Senate version of the bill has an Educator Workforce Development report included (not anywhere else currently)
• The House included a Secondary Student Industry-Recognized Credential Pilot Program (not anywhere else currently)
• The Vermont Trades Loan Reimbursement Program was introduced in the House version of the bill
• An EMS outreach program, coordinated through several state agencies, was introduced in the Senate version of the bill
• The House included a section on early childhood education
• The Senate included a section requiring the Agency of Human Services to catalog all education program made available to its employees
• A forgivable loan program for mental health professionals was introduced in the Senate version of the bill with $1.5M in funding
• A program for training in the Agency of Human services and Designated Agencies was introduced in the Senate version with $2.5M in funding
• The House version requires a report from the Office of Professional Regulation about barriers to mental health licensure.
• New relocated worker incentives was introduced in the Senate version of the bill that would allow up to $7500 in moving expenses to be reimbursed
• The Senate version of the bill includes a project-based tax increment financing proposal that narrowly missed getting approval last year.

There also changes in the Senate bill for EMS, CTE, and nurses that were cut in the Senate version of the bill (noted above).

The Senate version modified the Capital Investment Grant Program significantly, with guidelines and oversight that differs from the House version. Policy goals are not dissimilar but they removed the data modeling from the Joint Fiscal Office and put implementation in the hands of agencies.

The most substantive addition is that municipalities with stagnant or declining grand list values and can access these funds to help reverse that trend with infrastructure development. The Vermont Economic Progress Council (VEPC) would be involved and the qualifications would mirror TIF and VEGI programs that are already in place. Policy-makers believe towns will be competing at a high level for these monies.

VT Film & Media Task Force was not included in House bill. This will be a point of discussion for the Conference Committee.

There were some technical changes with the Paid Leave Grant Programs between the two versions. The program would partially reimburse employers who provide paid leave to employees who are out of work because of Covid. More significantly, the Senate version included a minimum wage increase to $15 by January 1, 2024. It's debatable whether or not this would actually be an increase because if they had left wages tagged to the consumer price index it might actually hit sooner than that. This "increase" may actually have the opposite effect of slowing down the growth in minimum wage.

 

Education

S.100 - Universal School Breakfast and Task Force on Universal School Lunch

Chair of Education Committee voiced support for S.100 on the Senate floor Wednesday. Originally when they looked at the bill, his committee thought that they would not be able to support it because they felt they would be subsidizing middle-income and wealthy Vermonters who can afford to buy their children lunch. But, when they started hearing the stories about kids who are just above the poverty level – such as single moms not making enough to cover all the costs - it changed their minds. He noted that is heartbreaking to not have money for your children's lunch. The committee hopes that this program will not just be a one year program, but continue going forward if funding can be found.

The Committee's amendment requires a report to collect data so that the program can be analyzed to identify potential revenue resources. There is an ongoing tension in the Senate over whether to commit more funds for universal school meals, to expand them beyond just the breakfasts included in this bill, or to address PCB remediation in school buildings. Of course, both of these stand in contrast with the Governor's request to spend half of the $95M Education Fund surplus on tax relief.

The property tax yield bill will likely end up funding all three priorities at some level. Senator Sears voiced concern for how we pay for this program in the future. We (the legislature) haven’t thought this through and he is worried about the pressure on the Education Fund and taxes. It is hard to vote against feeding kids, but if we make this commitment without a funding source with a recession coming, this is a problem.

Despite these concerns, the bill passed the Senate unanimously. 

 

The Senate Education Committee continued to take testimony on S.100 the next day, wanting to set aside $40M for PCB remediation. Senator Chittenden noted that PCB money would go to few schools. There were serious concerns with funding school meals given the amount of money that will be spent to remediate PCBs over the next decade (Burlington's new $200M school building being a good indication of this). The House is looking for $29M for meals in FY2023.

Chittenden was not supportive of the bill without PCB funds, but the Committee is looking at adding in language to set aside money for PCBs. One option would be to use funds to relocate students if PCBs are too high in a particular school building. However, this assumes that another suitable facility exists to relocate to. There was also a conversation about how federal money could be used to help deal with PCBs.

The Department of Environmental Conservation and the Agency of Education will look at how to distribute funds to deal with PCBs over the summer.

 

S. 287 - Adjusting the School Funding Formula (student weighting)

The changes made by the House to S.287 were reviewed on the Senate Floor Thursday. Weights are the same, which was the primary concern. The structure and reporting of the weighting mechanism also remained the same. However, the House did make an adjustment to how the weights get applied to school district budgets. It should be net-zero change but the Joint Fiscal Office is reviewing.

The House also increased the cap on tax rate increases to 10% instead of 5%.

The Economic Development Committee is in discussions regarding career and technical education (CTE), which is in this bill. They supported concurring with the House version at this point because there are other vehicles for CTE changes still in play.

The bill passed in concurrence with the House on a voice vote. The bill will now be sent to the Governor.

 

H. 456 - Strategic Goals and Reporting Requirements for the Vermont State Colleges

House Education reviewed the changes to H.456 from the Senate on Thursday. The Senate added a new provision (last minute) that would create a faculty member position on the Vermont State College (VSC) Board of Trustees. This is similar to a provision in S.248 the failed to gain support in the Senate. Maine just vetoed a similar bill.

The Committee questioned why this issue was just coming to them so late in the session. Chairwoman Webb voice concern about conflict of interest and that this member of the board must understand they have fiduciary responsibility to the institution. There was also concern expressed that faculty member would probably be a union member which might present a conflict of interest if the board was dealing with a strike or other union related issues. She noted that this was a significant step and that the Committee needed to look at the big picture.

Tom Borchert, faculty witness to the UVM Board of Trustees, was open to the idea of a non-voting member, but it means that the member is not included in executive meetings nor provided much opportunity to talk.
He believes boards benefit from broader voices and that the issue of conflict is misleading. Faculty would have to recuse themselves if they were on the board.

Representative Dickinson, the legislative member of the VSC Board of Trustees, also testified. She noted that they have accomplished several milestones:

1. They have gotten all four faculty assemblies to work together with a consultant
2. Appointment of new president, Parwinder Grewal, who recently served in leadership roles at the University of Texas
3. Recently received waiver to continue working on accreditation of the newly consolidated Vermont State University

Dickinson, on behalf of the trustees, is opposed to the amendment as it presents unreconcilable conflicts of interest. The attorney for the the University also spoke. She does not want an employee serving on the board in two roles – as employee and trustee. Everything they do is open to the public and there is plenty of opportunity to weigh in with concerns and suggestions. In the recent consolidation process (which is what this whole issue stems from) the Board has also held listening sessions to prompt community involvement.

The UVM board chair, Ron Lumbra, also joined the conversation. His occupation is working with boards to improve their efficiencies and structure. He is concerned that when boards get too big a smaller group such as the executive board winds up running things. He was also also worried about the board's top donors who want board members to be totally independent (aka not controlled by unions).

The Committee decided to not accept this part of the bill and requested a Conference Committee. All in concurrence at 11-0-0.

 

PCB Remediation vs Universal School Meals

The Senate Education Committee took testimony from Secretary French on Wednesday. The Committee is interested in setting aside money for PCBs, and they wanted French's take on that. This is particularly relevant because there is an ongoing debate in the Senate about whether to spend the $95M Education Fund surplus on PCB remediation or on universal meals. He is concerned with how to pay for both initiatives and is recommending that this should be done in budget reconciliation. There was concern that universal meals is an ongoing cost and a long term source of funding would need to be identified.

The Committee wanted to know if the Governor is open to setting aside funds to deal with PCBs. French noted that there are many competing priorities; budget reconciliation would seem to be the best way to deal with them. He punted here, likely because the Governor wanted to see that money spent on Career and Technical Education.

Switching over to school meals, Senator Chittenden asked if the administration considered just doing universal breakfast. French favored this due to the fact that it was a lower dollar amount while allowing progress to be made until a more permanent solution is found. French noted that the Administration is interested in setting aside funds for this but their are many competition priorities, such as workforce development (front and center in the governors mind.)

Chittenden asked if the Administration was still looking for tax breaks. The Governor is open to having a conversation, but he would like to see some tax relief. The Committee also wanted to know if there is any money set aside for school construction. French acknowledge the need, but we have to look at all of the issues. The state would likely need money from the federal government to address this issue.

 

 

Things to watch for next week:

Signature/Veto Pending - Student Weighting in the Education Funding Formula (S.287) - Sent to Governor

Universal School Breakfast and Study of Universal Lunches (S.100) - House Floor on Monday

Expansion of Affordable Housing (S.226) - Senate Economic Development on Monday

Homestead Property Tax Yields and Rates (H.737) - Senate Floor Monday

 Retirement Allowance for Interim Educators (H.572) - Senate Floor Monday

Housing-Related Changes to Act 250 (S.234) - Senate Floor on Monday

Vermont Child Tax Credit and SSI Exclusion (H.510) - Conference Committee on Monday

Rewriting the Rules on Act 46 Mergers and Divorces (H.727) - Conference Committee All Week

 Goals and Reporting Requirements for the Vermont State Colleges (H.456) - Conference Committee All Week

 

 

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