By noontime on Tuesday, the FY24 Budget bill, known as the “Big Bill”, was agreed to by the Committee of Conference which set out a path for a smooth adjournment on Friday. What was unclear, with less than 3 days left in the session, is how the negotiators of the top priority would make it over the finish line. Universal childcare has been a priority for three years and anyone would have guessed that this would be the most contentious bill of the year. The Senate disposed of the House proposal on Paid Family Leave so the House went full force with childcare by proposing increases in both the personal income tax and corporate income tax. For a moment, the House thought Governor Scott liked tax and fee increases. Not so much, tax/fee increases, motor vehicle fees, and some fees on professionals, are things Governor Scott had warned against. At the end of the week, the personal & corporate tax rate increases were removed much to the disappointment of the newly “minted” Committee Chair; Emily Kornheiser (D-Brattleboro).

The Governor’s budget utilized federal funding and surplus revenues in his version of the budget. Speaker of the House, Jill Krowinski (D-Burlington) said earlier in the session, the Governor’s budget is not a starting place for negotiations. The House constructed a budget around their own personal priorities, and now the General Assembly will return for a veto session to attempt an override of the expected and almost certain veto of the Budget by Governor Scott. The only other option is to work with the Scott Administration on a new budget to be approved on June 20^th.

The various bills that were passed that utilized one-time funding or roll out new programs over the next several years will mean that Vermonters may not feel the effects of the 2023 Legislative session until 2027 or 2028.

 H.494 FY 2024 Appropriations Bill - Passed, delivered to Governor
(Passed 90-53, not enough to override a Governor’s veto)
The $8.5 billion budget, a 13% increase, the largest increase in history for Vermont. Let's not be confused, Governor Scott will veto this budget. Here are a few examples of why:

• $120 million in new spending into Vermont’s child care system.
• $30 million a year increase in property taxes to fund free school meals for all students in the state, regardless of income status.

• 68 new positions in state government; a quick google search shows Vermont has more than 90 openings that they can't fill.
• Increase in Motor vehicle fees by 20%

We won’t go into too much detail because we will be back at the Statehouse on June 20^th for the veto session. An override challenge is less likely, so we expect a new budget to be crafted. The budget must be approved before the beginning of the new fiscal year, July 1. Click here for a summary of the highlights and here to view the one-time funding.

H.217 Childcare & Workers Compensation (passed 118-27) - Passed, to be delivered to Governor
The Senate & House came together to pass a provision that would set the Workers’ Compensation annual rates, a “must-pass”. Included in the bill is a renewed childcare plan to aid workers in childcare and pay providers more. We cannot assume Governor Scott doesn’t care about kids or families, like some members of the House have said in passing. Governor Scott included a $56 million increase in childcare spending in his budget proposal, but the Democratic wing of the Legislature said, “not enough”.
Childcare: The new childcare system adds $120 million/year to the childcare system; $76.1 million is appropriated in fiscal year 2024 for the following:

• $107,500 to AOE to retain a contractor to assist the Prekindergarten Education Implementation Committee and pay per diem compensation and reimbursement of expenses for eligible members.
• $47.8 million to DCF to expand CCFAP eligibility and increase provider rates.
• $4 million to DCF to administer the adjustments to CCFAP.
• $20 million to DCF for one-time readiness payments to providers.
• $4.2 million to the Department of Taxes to be used for the implementation of a new payroll tax, including the establishment of 15 new permanent classified positions.

Funding:
The legislation will increase the payroll tax by 0.44%; generate $80 million. The employers will be required to pay at least 3/4 of the tax. The bill required an initial investment from the General Fund, $50 million.

• Utilizing the Vermont child tax credit, the $1,000 benefit enacted into law last year for income-eligible families with children 5 and under.
• Combination of one-time and base funding appropriated in H.494 (the “Big Bill”) to cover the estimated costs associated with this bill in fiscal year 2024.
• Annualized and other anticipated costs are estimated to be $124.8 million in the fiscal year 2025.

The controversial 12-week Paid Family Leave provision was not included in H.217.  S.56, the original Child Care bill and H.66 Mandated Paid Leave did not pass. We expect the Legislature to return with a plan to pass in 2024.
Vermont now ranks #1 nationally for spending the most per child. This statistic didn’t seem to bother the 118 House members that voted for the bill.

Workers Compensation:
For fiscal year 2024, the General Assembly determines that the rate of contribution for the direct calendar year premium for workers’ compensation insurance will be 1.5%. The contribution rate for self-insured workers’ compensation losses and workers’ compensation losses of corporations will remain at 1%.

S.56 An act relating to childcare and early childhood education (passed in H.217)

H.479 An act relating to the Transportation Program and miscellaneous changes to laws related to transportation - Passed, delivered to Governor
Click here to view the Committee of Conference Report (final bill) and here for CoC Budget by Fund.
One of the final points of contention was including $850,000 for Green Mountain Transit (municipal transit) to continue operating its bus services fare-free through the end of the year rather than fully funding highway maintenance. The Conferees included language that if any monies are not used from FY23 then FY24 should add to Highway Maintenance Fund as a top priority.
The bill invests $877.476M in all programs:

• $402.8M Program Development; paving, highway, bridge, safety, park & ride and other
• $108M Maintenance
• $10M Municipal Mitigation
• $5.35M One-time; Lamoille Rail Trail, St. Albans District Maintenance, public transit

Increases in the Department of Motor Vehicle fees were removed and inserted into H.494, the FY24 Appropriations Bill (“BIG BILL”) so H.479 will likely not have to face a veto.

H.493 An act relating to Capital Construction and State bonding - Passed, to be delivered to Governor
The Capital Construction budget for FY24 & FY25 was agreed upon, a two-year budget that will be reconciled in 2024 as a budget adjustment. The budget bill will expend $56,520,325 million in FY24 and $66,247,051 million in FY25 for a total of $122,767,376 million.
Click here to view the spreadsheet of spending. The bill is generally non-controversial and the major differences between the House and Senate will be deciding how to expend the allowable spending in the first or second year of the budget.

S.100 An act relating to housing opportunities made for everyone - Passed, to be delivered to Governor
The final version of S.100 focuses on local zoning, short term relief from some Act 250 requirements in efforts to build more housing in Vermont. S.100 increases the threshold to 25 units within five years in designated areas, including a village with zoning and subdivision regulations, only until June 30, 2026. To secure the exemption, by June 30, 2026, a person must request and receive an Act 250 jurisdictional opinion that construction will be substantially complete by June 30, 2029. The 10/5/5 rule remains in effect outside designated areas. The bill also allows duplexes to be built in single-family home zoned areas and duplexes can be turned into 3-4 building units until 2026.
Click here for a summary.
Reports to S.100:

• Act 250 Municipal Delegation Report; December 31, 2023
• Designated Area Report; due December 31, 2023
• Adds a study for Building Energy Codes; report due December 31, 2023
• Building Safety Study

The Legislative Joint Fiscal Office estimates the bill would have a fiscal impact of $90.4M in FY24 because of General Fund appropriations for several housing programs made in the bill.

S.5 Affordable Clean Heat Standard (General Assembly Overrode the Governor’s Veto)
On Tuesday, the Senate took a first crack at overriding Governor Scott's veto. A veto requires 2/3 of the members present to vote yes, otherwise the bill is dead. The House took up the bill on Thursday and voted 107-42 to override the Governor. S.5 will become law.

S.99 An act relating to miscellaneous changes to laws related to vehicles
Passed, to be Delivered to Governor
The 2023 miscellaneous motor vehicle bill contains numerous amendments and technical corrections to Vermont’s vehicle statutes. Annually, the Legislature considers changes within the VT Department of Motor Vehicles.
Fiscal impact:

• Up to $17,000 of foregone Transportation Fund revenues (beginning FY 2024) from proposed changes to overweight and milk hauling permits.

• $15,000 of approximate annual savings to the Department of Motor Vehicles (DMV) from the elimination of registration validation stickers.

The DMV core modernization project is, over time, expected to enable more electronic transactions to be performed by the customer. As a higher volume of electronic transactions are performed, DMV is likely to see lower administrative costs, but also foregone revenue from fees for duplicate documents. The net impact of these factors is not currently known but is expected to be relatively minor in the near term.
A controversial provision around practices of towing companies slowed the passage of S.99. In trying to decide how to regulate towing companies the Senate moved the bill and amended to add a study and report back to the General Assembly.
The study will consider:

• Motor vehicle towing practices, including practices related to abandonment or suspected abandonment of motor vehicles, such as the use of liens and bonds to ensure the recoupment of costs borne by towing companies.
• Storage practices
• Pricing
• Consider regional laws and compare liens, personal property in the vehicle, recovery, pricing, and storage.

The report needs to strike a balance between consumer protection and the needs of towing companies.

H.81 An act relating to fair repair of agricultural equipment (missed the crossover deadline for the Senate to consider)
The purpose of this bill is to ensure equitable access to the parts, tools, and documentation that are necessary for independent repair providers and owners to perform timely repair of agricultural and forestry equipment in a safe, secure, reliable, and sustainable manner.
This bill requires original equipment manufacturers (OEMs) to provide available parts, tools, and documentation to be made available for sale to independent repair providers or owners, which is currently only available from an authorized repair provider. This includes any sort of electronic security lock or other security-related function that must be unlocked to service the equipment.
The bill requires that the parts, tools, and documentation be made available at a reasonable and fair cost. However, it is unsure how reasonable will be defined and the bill as passed by the House does not define this clearly. The bill did not meet the crossover deadline therefore and it currently sits in the Senate Rules committee, the Senate Committees may take their swing at it next session.

S.135 An act relating to the establishment of VT Saves - Passed, to be Delivered to Governor Scott
This bill would require the Office of the State Treasurer to establish and administer VT Saves, a program that provides access to retirement savings for Vermont employees.
The bill will:

• Require an employer that does not offer a retirement plan to participate in a state-run IRA and funded by a payroll deduction.
• Require 5% of the employee’s paycheck into a Roth IRA account.
• Employers without company plans would be required to help their employees sign up; employers with fewer than five employees would be exempt, at least initially.
• Employees would have the ability to adjust their contributions or decline to participate but would need to opt-out.

It is expected that the VT State Treasurer would contract with a third-party administrator to run the program. A one-time appropriation of about $750,000 and fees on participants would pay for the program, including any new state employees hired to administer it.