Legislative Compensation (S.39) - May 8, 2023

Two different House committees reviewed S.39 on Monday, passing the bill quickly to get it back to the floor in time for Friday adjournment. The bill encompasses significant increases in salaries for legislators, an entirely new benefits package, and more generous expense reimbursements. Proponents claim it will make legislative service more accessible to members of the public by moving compensation more in line with median wages across the state.

House Government Operations Committee

On Monday the Committee returned to S.39, which introduces a pay increase and new benefits for legislators. Chairman McCarthy introduced the topic of the healthcare coverage provided in the bill. There were some open concerns that certain members could lose access to subsidies on the health care exchange because of the benefits offered through part-time legislative service. Mike Fisher joined them to review these options. It was noted that VSEA plans seem to be platinum tier and many employee plans are less comprehensive.

Representative Hooper noted that this was a significant expenditure and wondered if there was a way to do a graduated fee scale based on wages that legislators make. Fisher noted that this is done in the private sector, and there is no reason it could not be done here.

McCarthy suggested that they are now finding the entire system very complex, and that realization is spreading around the building. There may be winners and losers under this framework; perhaps some may not even have the answer at this point.

Legislative Counsel walked through Draft 2.1, which would seek to incorporate VSEA plans at different income levels. Detailed analysis on this was not yet available. The effective dates of the health care provision were pushed out to January 1, 2025, which would allow proper analysis of the impact of these benefits.

Representative Hango questioned why they were back to discussing this benefit, her understanding was that it had been taken “off their agenda.” She noted that it looked like they were worried that some “well off members will be harmed of they join the VSEA plan.”

McCarthy somewhat confirmed this; by delaying the benefit availability they had more of a chance to understand the impacts of this potential “benefits cliff.” Hango countered that this dynamic may not be different in two years.  She suggested that they simply hold-harmless anyone who already had a plan.

Legislative Counsel explained that legislators who already have employer plans are safe here. It is the people who are in the exchange who don’t have access to employer plans and receive subsidies who will be harmed. The offer of the VSEA plan will be considered “an offer of employer sponsored insurance” by the federal subsidy programs so the scenario would remove them from eligibility on the exchange. Because the exchange is a federal system, unless the state wants to make up the difference, these folks would be denied exchange plan access.

Representative Mrowicki motioned to find Draft 2.1 favorable.

Representative Higley stated again that this bill was “violating the Common Benefits Clause” of the Vermont Constitution, and the “optics are terrible to the people.” 

Representative Morgan agreed, saying he was under the misunderstanding that the bill was stalled and had told this to folks at home. He had a feeling that if the legislature “had public hearings on it there would be a lot of backlash.”

Representative Birong responded that most folks are surprised when told how little they do make. He says they need to understand that the wage increases are incremental. He and McCarthy had agreed the increments are reasonable.

Representative Boyden added the groupings in the NCSL presentation were deficient. Hango agreed that the presentation was not useful.

Hooper offered that “diversity is a serious issue,” and believed that they had not moved far enough to address it. “To ignore that and say to fellow Vermonters, move on, you can be replaced, is dereliction of our duty…” he added.

The Committee voted 9-3-0 in favor of the bill as amended. Hango, Morgan, and Higley voted against it.


House Appropriations Committee

On Monday evening, the Committee looked at S.39, which (in addition to a pay increase) would make legislators eligible for the State Employees Health Benefit Plan, any flexible spending account program offered to State Employees, and the Employee Assistance Program.

The amendment of the Government Operations Committee would push the start date for health benefits out to 2024, as these might have “unintended consequences” for people who are eligible for subsidies on the state’s health care exchange.

Under the bill legislators would be entitled to:

Legislative Counsel noted that the bill was introducing a new concept for expenses, which is similar to what they did last year for mileage. The main difference is that expense reimbursement is eligible for non-taxable treatment under federal and state law, whereas if legislators opt for the allowance instead, this would be treated as taxable income.

Compensation allowances would be equal to one-fifth of the weekly legislative pay. A member could decide to claim it for one week and not claim it for another, if they felt their expenses justified it. This would be the default reimbursement mechanism unless the legislator notified the Office of Legislative Operations that they would like to submit for actual expenses.

It was noted that the Study Committee in the bill would also look at expanding the staff available to the legislature. This was a point of discussion for the Committee. They will be coming back to this topic once they have possession of the bill, but despite this it seemed like they were ready to move the current iteration of the bill.


See what happened with S.39 on Wednesday

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