Leonine: Vermont deals with the 'Trump Effect'

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Leonine: Vermont deals with the 'Trump Effect'

Mon, 02/05/2018 - 6:49pm -- tim

Leonine Public Affairs This week saw a public dispute erupt between the Phil Scott administration and Senate leadership over workforce statistics; an influx of citizens coming to the statehouse to advocate for various causes; and the beginning of the nitty gritty review of the Governor’s proposed budget for FY2019. Since the early days of the Scott administration the governor and his team have been outspoken with their “6-3-1” message, a phrase that highlights what they believe are the key problems facing the state. According to the administration the “6” refers to the number of people leaving the state’s workforce every day, the “3” is the daily reduction in the number of public school students in Vermont and the “1” represents the number of babies born every day to mothers who are addicted to opioids.

This week Senate President Pro Tem Tim Ashe, D-Chittenden, publicly challenged the “6.”  He pointed to statistics showing an increase in the state’s workforce since 2016. The administration shot back, saying that Senator Ashe “cherry picked” the statistics from a short period of time, and displayed a large graph on a placard outside the Governor’s ceremonial office in the Statehouse showing workforce statistics from April 2009 to December 2017.

Large groups of citizens converged on the statehouse this week to advocate for a number of causes. Late Tuesday afternoon the Senate Judiciary Committee held a public hearing on Vermont’s firearm laws in the largest meeting space in the building--the House chamber--and hundreds if not thousands of people came to speak and watch. Wednesday was Mental Health Advocacy Day, and hundreds of citizens who support improvements to the state’s mental health system showed up to lobby their elected officials.

The House Appropriations Committee was also crowded this week, as they began delving into the details of the Governor’s proposed FY2019 General Fund Budget. Among other topics the committee took testimony on the Governor’s proposals concerning human services and higher education.

Congressman Peter Welch addressed a joint hearing of the Vermont House and Senate Transportation Committees this week to provide an update on the federal transportation outlook.

The congressman said he believes US House members from both parties would support increasing transportation revenues (ie. an increase in the gas tax) if it were ever brought to a floor vote. He said most representatives understand the need for increased transportation revenues and recognize the tax has not increased in 25 years. He went on to say such a vote will not happen because US House Republican leadership will not allow a gas tax increase to come to the floor.

He said there are two options that will be considered in the US House this year. The first is President Trump's infrastructure proposal to use the Public Private Partnership model to boost infrastructure improvement. Welch said the proposal has the potential to infuse a lot of funding into transportation projects in urban areas, but will not be very beneficial for rural areas. He said this is because the private partners will be looking to maximize their return, which makes urban areas attractive, and rural areas less likely to receive investment. He said he expects this proposal to pass the US House. It is less clear whether it will pass the US Senate.

The second option is a Democratic proposal to issue revenue bonds to stabilize the federal highway trust fund. He said this proposal would appropriate funds to the states through the regular formula and result in an additional $62 million per year for Vermont. He said the gas tax would be indexed to pay down the bonds. He said he believes this proposal would pass with support from some Republicans if it ever came to the floor, but stated again that Republican leadership will not allow this to happen. 

On Friday the Senate passed S.289, a bill that would prevent state agencies from contracting for broadband Internet services with providers unless the provider certifies compliance with net neutrality and other consumer protection obligations. The bill passed by a vote of 23-5 despite concerns raised by the Administration about the impact the bill could have on state facilities in areas of Vermont where there is only one provider and that provider can not comply with the requirements laid out in the bill. The administration also raised concerns about potential litigation as a result of federal preemption language in the recent Restoring Internet Freedom Order issued by the Federal Communications Commission. The bill now heads to the House.

Late on Wednesday the House Energy & Technology Committee approved H.582 on a 6-2 party line vote. The bill raises the Universal Service Fund fee on telecommunications services from 2.0 to 2.5 percent for a period of four years. The bill provides that the approximately $1.6 million in revenue the fee increase would generate on an annual basis be directed to the Connectivity Fund. That fund is a source of grants for funding the deployment of broadband infrastructure. The bill has gone to the House Ways & Means Committee.

The House Institutions Committee continued to review the Scott administration’s “facilities report” this week. The report, includes a recommendation to explore siting a 925-bed correctional and mental health facility in Franklin County over the next decade. The report has generated a large amount of chatter and speculation in the statehouse over everything from feasibility to whether or not it would be run by a private enterprise. In response, administration officials and members of the House Institutions Committee have repeatedly stated that the facilities report is nothing more than a recommendation and that they have a long way to go before any decisions are made.

Despite the high interest in the more eye-popping elements of the facilities report, both the administration and the House Institutions committee are looking to address two of the report’s recommendations in FY2019. The first is the creation of a temporary forensics unit, which would house individuals charged with a crime who have been ordered to undergo a psychiatric evaluation, and the second is a secure residential facility, which would house psychiatric patients in the custody of the state. The House Institutions Committee is expected to include proposals for both units in the annual capital expenditure bill. 

There are a number of alcohol bills that lawmakers are considering:
  • A bill proposing to merge the department of liquor and lottery (H.571). The bill is the product of a summer study task force. Governor Scott, who issued an Executive Order to merge these departments last year, strongly supports the bill. The bill is pending in the House Appropriations Committee and is expected to reach the House floor soon.
  • The Vermont breweries and wineries have introduced bills that propose to exempt themselves from Vermont’s beer and wine franchise law. These bills propose a significant change to Vermont’s alcohol regulation and distribution system. The House General, Housing and Military Affairs Committee will review these issues next week.
  • Department of Liquor Control Commissioner Patrick Delaney gave his “wish list” to lawmakers in the House this week. Issues DLC would like addressed include alcohol permit renewal dates, alcohol signage on the highways and licensing liquor brokers, among others.

Legislative committees in both the House and Senate continued work this week on bills that would regulate the use of materials in manufacturing and require manufacturers to pay for the disposal of certain products. S.197, a bill that would increase liability for the discharge of certain chemicals is being considered in the Senate Judiciary Committee. The committee will continue to hear from a number of interests next week, including representatives of industry, the environmental community and the administration. S.103, a bill that weakens the scientific criteria required to regulate the manufacture of children's products, passed the Senate Health and Welfare committee. The bill will be debated on the Senate floor next week. In the House the Natural Resources, Fish and Wildlife Committee is considering a bill, H.560, that would require manufacturers to pay for the disposal of hazardous household cleaning products. H.560 imposes a fee, which runs contrary to Governor Scott’s commitment not to raise taxes or fees. This sets up what could be an interesting political showdown if the committee decides to advance the bill.

Vermont Department of Taxes Commissioner Kaj Samson presented a tax reform plan to both the House Ways and Means Committee as well as the Senate Finance Committee. The tax reform plan is necessary due to unintended consequences from the federal tax legislation.

In a nutshell, the new federal tax law will result in the state of Vermont collecting $42 million in additional taxes, but there will be $12 million in reductions for some taxpayers resulting in a total of $30 million in additional revenue for the state.

The Tax Department is proposing several changes in order to solve the issue. They include:

  • Switching to Adjusted Gross Income
  • Reintroduce personal exemptions at $4,000 each
  • Create a Vermont-defined Income Deduction
  • Lower marginal rates
  • Introduce a 5 percent tax credit for charitable contributions

You can review the entire Vermont Department of Taxes memo here.

And review the Impact Analysis here


Source: Leonine Public Affairs, Montpelier, Week 5. 2.2.2018. leoninepublicaffairs.com. Through a special arrangement with Leonine, Vermont Business Magazine republishes Leonine's weekly legislative report on vermontbiz.com.  leoninepublicaffairs.com