None of the $125 Million in Taxes Passed by the House Would Alleviate Education Fund Burden

None of the $125 Million in Taxes Passed by the House Would Alleviate Education Fund Burden

Tax increases topping $125 million hit the House floor this week amid ongoing tension on increased state spending in the absence of pandemic-era federal funding. Despite the significant new proposed revenue for the state, none of it would alleviate the $230 million education fund deficit that is slated to increase property taxes by 18%. While the bills housing these taxes all passed, there was notable vocal dissent from legislators on the floor about how the money would be allocated and the long-term impact on the Vermont economy.

As noted by Rep. Scott Beck (R-St. Johnsbury): “In the last 10 years, personal income tax receipts in the state of Vermont have grown 54%, sales tax receipts have grown 65% and property taxes have increased by 53%. Corporate income tax has nearly tripled in the last 10 years.”

Tax increases passed by the House include:

  • $15.3 million – Increase in the Global Intangible Low Tax Income (GILTI) and Foreign Derived Intangible Income (FDII) taxes to increase the amount of revenue from foreign corporations doing business in Vermont. Giving Vermont the highest GILTI and FDII tax rates in the country.
  • $17.7 million – Increase in the top marginal tax rate of corporate income tax from 8.5% to 10% giving Vermont the highest corporate tax rate in the country.
  • $74.9 million – New personal income tax bracket of 11.75% starting at $500,000 of income per tax flier, including.
  • $17.5 million – Property transfer tax increase from 1.25% to 3.25% for transfer values greater than $750,000. This tripling of costs will likely harm the ability to attract new and scaling employers in purchasing industrial space for expansion.

We know the House isn’t done there. As the focus now shifts to the education fund, we are expecting to see taxes proposed regarding cloud internet services and software as a service. Legislators need to hear from you about your concerns. Please contact your Representatives and Senators.

Treasurer Mike Pieciak Connects with Business Leaders at the Wellspring Forum

Treasurer Mike Pieciak Connects with Business Leaders at the Wellspring Forum

Treasurer Mike Pieciak connected with Vermont business leaders at the Patrick Leahy Burlington International Airport for the latest installment of the Wellspring Forum series on March 22, 2024. Each event in the series has convened top business and policy leaders at a unique business and is moderated by Vermont Chamber President, Betsy Bishop.

“Connecting business and policy leaders for robust conversations is essential to our mission of advancing the Vermont economy,” stated Bishop. “Treasurer Pieciak was featured at our very first Wellspring Forum in 2022 when he was on the campaign trail, and it’s only fitting that we had him back in his official capacity to delve into the economic issues that are on the top of mind for Vermont businesses.”

Treasurer Pieciak took audience questions and addressed employer concerns, including struggles with the scale of financing important services in Vermont such as education, health care, and technology, along with ongoing affordability and workforce woes. The Treasurer also spoke about his work on VT Saves, Baby Bonds, and promoting housing growth in Vermont through recent substantial investments.

“Vermont continues to be a desirable location for people seeking a high quality of life,” said Treasurer Pieciak. “People want to live here, and our businesses want to expand, but we don’t have the workforce because we don’t have the housing. That’s why our Office has prioritized supporting new housing by investing over $60 million in low-interest loans in the last year alone. These funds are expected to support the development of over 1,100 new units of housing to help address our changing demographics, grow our economy, and support a more prosperous future for all Vermonters.”

Business leaders from across Vermont toured the Patrick Leahy Burlington International Airport following the forum, receiving a first-hand account of the new development project, “Project NexT” which will create a new terminal building to advance efficiency, safety, traveler amenities, and partner accommodations.

“It was a privilege to welcome Vermont Treasurer Mike Pieciak at the Vermont Chamber of Commerce’s Wellspring Forum last week,” said Nic Longo, Director of Aviation at the Patrick Leahy Burlington International Airport. “As we prepare for Project NexT, the latest and largest sustainable infrastructure project at Patrick Leahy Burlington International Airport, we are committed to opening our airport to not just passengers but to the general public at future events.”

The event is inspired by Governor James H. Douglas’ quote; “I am often reminded that the wellspring of Vermont liberty flows from Main Street, not State Street,” and was made possible by the sponsorship of AT&T, The National Life Group, NBT Bank, and Blue Cross Blue Shield of Vermont.

House Offers Important Improvements to Bring Act 250 Bill in Line with NRB Compromise

House Offers Important Improvements to Bring Act 250 Bill in Line with NRB Compromise

In response to stakeholder concerns on the version of the House Act 250 modernization bill that was voted out of the committee last week, the House Energy and Environment Committee has taken up an amendment to that bill. It will include important provisions related to the timeline of how Act 250 changes are implemented and is based on the significant package of compromises made by stakeholders before the session in the Necessary Updates to Act 250 report. Changes in the timeline ensure that the growth and protection provisions move in concert with each other, as agreed upon by stakeholders. The Vermont Chamber remains concerned about language that would transfer the responsibility of hearing Act 250 appeals from the environmental court to the new Environmental Review Board.

Meanwhile, the Senate Natural Resources Committee took up the “Be Home” bill, S.311, this week which was passed out of the Senate Economic Development, Housing, and General Affairs Committee with changes to Act 250, local zoning, and housing programs. Builders and developers testified regarding regulatory hurdles and housing market dynamics. They emphasized the importance of regulatory clarity and streamlined processes to expedite housing construction while ensuring compliance with environmental standards. Bill sponsor Senator Kesha Ram Hinsdale also testified, reiterating the need for evaluation of Act 250’s efficacy. In particular, she emphasized the need to incentivize development projects that cater to various income brackets, creating more diverse housing options, from affordable rentals to multigenerational housing.

When the House Act 250 bill makes it to the Senate, pulling them together will be a focus of the Senate Natural Resources Committee for much of the remainder of this legislative session. The Vermont Chamber will be engaged and at the table to ensure businesses are represented in this process.

House Ways & Means Committee Passes $125 Million in Tax Increases

House Ways & Means Committee Passes $125 Million in Tax Increases

Just over three months before the $100 million payroll tax is set to start, the House Ways and Means Committee has passed an additional $125 million in new tax increases. None of these tax increases are slated to go into Vermont’s education fund deficit, which means that the additional $230 million that is projected to be needed for the education fund will be accounted for in double-digit increases to property taxes, a possible new cloud tax, and additional options.

Tax increases passed by the House Ways and Means Committee include:

  • $15.3 million – Increase in the Global Intangible Low Tax Income (GILTI) and Foreign Derived Intangible Income (FDII) taxes to increase the amount of revenue from foreign corporations doing business in Vermont
  • $17.7 million – Increase in the top marginal tax rate of corporate income tax from 8.5% to 10%
  • $74.9 million – New personal income tax bracket of 11.75% starting at $500,000 of income
  • $17.5 million – Property transfer tax increase from 1.25% to 3.25% for transfer values greater than $600,000

Notably, these changes were voted out swiftly without the robust testimony and due diligence normally afforded for major policy changes, leading to speculation that this was strategic to gain approval amid the Friday deadline to pass these bills. The Vermont Chamber raised concerns about these new taxes and the lack of thoroughness in their review with both the committee and the Speaker of the House.

The vote count for the bills containing this breathtaking spending in the committee was split on party lines. If this is any indication of what is to come when these proposals hit the House floor, it will be up to the Senate to once again make choices that align with the fiscal reality of Vermont, and an already highly taxed population.

Legislators need to hear from you about your concerns. Please contact your Representatives before these proposals are considered by the full House next week and help them understand the collective impacts they will have on Vermont’s economy. 

Vermont Chamber Raises Concerns that Data Privacy Bill Could Have Significant Implications for Businesses

Vermont Chamber Raises Concerns that Data Privacy Bill Could Have Significant Implications for Businesses

A bill that started as closely mirroring the existing data privacy laws of neighboring states has undergone several changes in recent weeks. These changes have sparked concerns regarding its jurisdiction and the potential of making Vermont an outlier rather than keeping it regionally aligned. The bill, which is expected to pass the House Commerce and Economic Development Committee this afternoon, includes a private right of action. The Vermont Chamber testified on the increased risk of litigation and the challenges Vermont businesses may face in understanding and implementing these new changes. The Vermont Chamber will continue our efforts to address these concerns for businesses throughout the session.

Before the Town Meeting Day break, a coalition of fourteen Vermont businesses and non-profit organizations sent a letter to the committee expressing their concerns about the bill’s private right of action. They suggested that alternative measures should be prioritized, focusing on prevention, remediation, and robust enforcement through mechanisms such as empowering the Attorney General’s Office. The Vermont Chamber will continue advocating for measures that prioritize prevention, and remediation, and ensure that businesses are informed and have access to technical assistance to comply with these significant regulations.

Progress on Act 250, Housing, Now Depends on Senate

Progress on Act 250, Housing, Now Depends on Senate

The House Energy and Environment Committee has spent much of the first half of this session working on an Act 250 modernization bill. As passed out of committee this week on an 8-3-0 vote, it incorporates some of the provisions within the Necessary Updates to Act 250 report. Unfortunately, it does not yet include other important provisions from the significant package of compromises made by stakeholders before the session. These compromises were based on exemptions in smart growth areas, which are implemented alongside protections. When it is presented on the floor, Rural Caucus members have indicated that they plan to propose amendments. After passing through the House, the bill will be considered by the Senate Natural Resources and Energy Committee, along with the Senate’s version of a housing and Act 250 bill. The five Senators on this committee have the responsibility to implement changes that more effectively balance the efforts invested in this historic compromise.

While there is no single solution to Vermont’s housing crisis, modernizing land use regulations is a crucial step to encourage housing development and meet workforce needs across all income levels. The version of H.687 that the House Environment and Energy Committee approved introduces a vital framework for a tiered, location-based approach to Act 250. However, the current criteria for a smart growth area to qualify for Tier One status are too stringent, likely limiting the number of communities that can receive the exemption benefits.

Additionally, the proposed “road rule” as a new jurisdictional trigger would come into effect years before any area exemptions are approved. This timing means the road rule’s broad application could pose immediate challenges to large-scale housing development in our downtowns, villages, and neighborhood development areas. Implementing this trigger before the Tier One exemptions undermines the compromise agreed upon by stakeholders, and would add additional trigger in places where there has been broad consensus that expedited growth is necessary.

Furthermore, the bill proposes the establishment of an environmental board to decide on appeals to Act 250 decisions, shifting this responsibility from the environmental court. While having a professional board is crucial to ensuring Act 250 becomes a regulatory program that is fair, predictable, and timely throughout the state, assigning it the additional role of hearing appeals may lead to complications, as it would review decisions made by its own staff. This concern echoes the backlash from mayors, town managers, developers, housing advocates, and community leaders when a similar proposal was put forward in 2022, highlighting fears that it could complicate essential housing developments.

Business Advocates Voice Concerns on Potential Legal Impact of Consumer Privacy Bill

Business Advocates Voice Concerns on Potential Legal Impact of Consumer Privacy Bill

A coalition of Vermont businesses and non-profit organizations sent a letter to the House Commerce and Economic Development Committee to raise concerns over the private right of action included in a consumer privacy bill that the committee is focusing on this session. The Vermont Chamber continues to raise business concerns related to anticipated consequences that could come from the significant unfunded mandates on Vermont businesses and non-profits (notably, the state government is now exempted from these mandates). Specifically, concerns that privacy violation allegations may lead to increased litigation that strain businesses, especially smaller enterprises that are crucial to Vermont’s economy. 

The letter, sent on Monday, February 26, stated: 

Dear Chair Marcotte and House Commerce & Economic Development Committee Members, 

As we navigate the complexities of enhancing data privacy laws in Vermont, our organizations that represent Vermont businesses, non-profits, and trade associations, find ourselves at a pivotal juncture. The proposed data privacy bill, specifically its private right of action provisions, presents a significant concern that could inadvertently exacerbate the challenges facing our state’s economy and business and non-profit communities. 

The introduction of a specific private right of action for data privacy violations risks ushering in a new era of litigiousness that our state is ill-prepared to absorb. While well-intentioned in its aim to protect consumer rights, experience from other jurisdictions tells a cautionary tale: such provisions invariably lead to a surge in litigation, placing undue strain on businesses and non-profits of all sizes, but most acutely on the small enterprises that form the backbone of Vermont’s economy. 

These legal threats do not necessarily advance consumer protection. Instead, they divert critical resources away from innovation and growth, creating an environment of uncertainty that disproportionately challenges local businesses and non-profits. This is not merely a hypothetical scenario, it is a tangible risk that could undermine our collective efforts to foster a vibrant, innovative, economic landscape in Vermont that respects consumer rights. 

While we recognize the importance of providing businesses with an opportunity to rectify potential violations, and the committee’s attempts to do this through the proposed right-to-cure period, we believe that alternative mechanisms, such as enhanced enforcement measures through the Attorney General’s Office, may offer a more effective and efficient means of achieving the dual objectives of protecting consumer interests and supporting economic growth. 

In light of these considerations, we urge a recalibration of this proposed section of bill H.121 to focus on measures that prioritize prevention, remediation, and robust enforcement through our state’s legal frameworks and strengthening the Attorney General’s Office: Empowering the Attorney General’s Office to fulfill its mission as the State’s top law enforcement agency with enhanced resources to enforce data privacy laws effectively offers a more direct and efficient path to protecting consumer interests without the collateral damage of rampant litigation. 

The committee has done extensive and important work to create a data privacy bill that will make real progress on this issue. The undersigned organizations are ready to engage in meaningful dialogue and collaborate on provisions that genuinely serve the interests of Vermonters without imposing undue risk on the businesses and organizations that drive our state’s economy. 

We appreciate your commitment to this issue and look forward to working together towards solutions that safeguard data privacy while promoting economic health and innovation in Vermont. 

Thank you for your attention and consideration. 

Sincerely, 

Vermont Chamber of Commerce 

Vermont Technology Alliance 

Common Good Vermont 

Lake Champlain Chamber 

Vermont Lodging Association 

Vermont Independent Restaurants 

Vermont Retail and Grocers Association 

Heating and Cooling Contractors of Vermont 

Vermont Fuel Dealers Association 

Vermont Ski Areas Association 

Vermont Vehicle and Automotive Distributors Association 

Vermont Specialty Food Association 

Vermont Insurance Agents Association 

Associated General Contractors of Vermont 

 

Building Together: A Call for Collaborative Housing Legislation

Building Together: A Call for Collaborative Housing Legislation

This commentary is by the Vermont Chamber of Commerce, the Vermont Natural Resources Council, and the Vermont Association of Planning and Development Agencies

Climate change poses a significant threat to Vermont’s natural resources, economy, and way of life. From extreme weather events to loss of biodiversity, the impacts are already evident. Simultaneously, Vermont faces an urgent housing crisis that demands swift and strategic action. Adequate and affordable housing is essential for attracting and retaining a skilled workforce, promoting economic vitality, accommodating climate refugees, and ensuring the well-being of our communities.

Elected leaders at all levels have made building more housing and protecting our environment a priority – and yet progress to comprehensively reform Act 250, our state’s landmark land use and development law, has remained elusive for a number of years, even though there have been multiple attempts. This year, after building unprecedented consensus among a number of stakeholders, we believe a compromise is available, actionable, and attainable.

Legislators can make real progress this year by passing the recommendations in the Vermont Natural Resources Board’s report on the Necessary Updates to Act 250, which was released in December 2023. This report reflects areas of common ground and outlines a framework for how Act 250 can be modernized to better protect our environment while also encouraging more housing to be built in viable locations.

Act 250, originally enacted in 1970, has played a fundamental role in shaping Vermont’s development, and these proposed updates signal a willingness to adapt to the evolving needs of our state. Following six months of work, stakeholders with different priorities, have shown a commitment to demonstrating that progress is not a zero-sum game. The solutions proposed in this report highlight the intersectionality of the challenges Vermont faces today, and offer a path forward to incentivize new housing development in and around our community centers, while better protecting Vermont’s natural resources.

With the current legislative session well underway, this report is now in the hands of Vermont’s lawmakers. Committees in both chambers have spent weeks hearing testimony on how Act 250 can be improved to more effectively support housing, environmental protection, social equity, and economic vitality. There is much more work to be done to develop legislation that meets the moment by adequately protecting our environment and advancing needed housing around the state.

By modernizing Act 250 to a location-based approach with a 3-tiered system, we can better incentivize the development of dense and resilient communities where we want growth to happen while also recognizing that certain natural areas deserve a heightened level of review. In Tier One, Act 250 would acknowledge where municipalities and state agencies are already providing appropriate oversight of development by encouraging compact housing in areas that will lead to better smart growth outcomes. The addition of a “road rule” trigger and forest fragmentation criteria in Tier Two would incentivize more compact growth that better maintains our forested and agricultural lands and wildlife habitat. Tier Three would acknowledge that there are critical natural resources that need additional review and protection when development is proposed.

We acknowledge and expect that disagreements will continue to arise throughout the legislative session. However, we firmly believe that by remaining at the table and engaging in open dialogue, we can find common ground and work together to find solutions that serve the best interests of Vermont. We can strike a balance between development and natural resource protection that allows us to find shared solutions to the housing crisis and mitigate the impacts of climate change and biodiversity loss.

The Vermont Chamber of Commerce, the Vermont Natural Resources Council, and the Vermont Association of Planning and Development Agencies recognize the urgency of addressing these issues and are committed to fostering collaboration among stakeholders. Each of our organizations brings a unique perspective to the issue and we are all committed to working toward policies that pave the way for a resilient and prosperous future for all Vermonters.

As leaders in our respective fields, we urge legislators, communities, businesses, advocates, and government agencies to remain engaged in this collective effort. The challenges we face are immense, but so too is our capacity to overcome them. Let us embrace collaboration, and work together to create a resilient, thriving future for Vermont.

About the Vermont Chamber of Commerce

The Vermont Chamber of Commerce is dedicated to advancing the Vermont economy. Trusted by the businesses that make living, working, and thriving in Vermont possible, we prioritize collaboration and uphold the core values that define our state. As the preeminent not-for-profit business organization, we advocate, build community, and provide resources for businesses statewide.

About Vermont Natural Resources Council (VNRC)

Through research, education, collaboration and advocacy, VNRC protects and enhances Vermont’s natural environments, vibrant communities, productive working landscapes, rural character and unique sense of place, and prepares the state for future challenges and opportunities.

About the Vermont Association of Planning and Development Agencies

The Vermont Association of Planning and Development Agencies (VAPDA) is the statewide association for the State of Vermont’s 11 regional planning commissions. Regional Planning Commissions (RPCs) are Political Subdivisions of the State of Vermont created by their member municipalities.  RPCs provide technical assistance to municipalities, and since Vermont does not have county governments, Vermont’s Regional Planning Commissions act as a link between municipal affairs and state government. RPCs work in fields that directly and indirectly affect the public at large: land use, transportation, housing, economic development, environmental quality, and more.

Manufacturing Leaders Testify on State of the Industry

Manufacturing Leaders Testify on State of the Industry

Several business leaders from across Vermont convened for an afternoon of testimony before the House Commerce and Economic Development Committee. The hearing underscored the critical role of manufacturing businesses in the Vermont economy, while also highlighting the opportunities and challenges unique to manufacturing in Vermont. The committee’s Chair recognized Chris Carrigan, Vice President of Business Development, for his 16 years of service to the industry.  

In his opening testimony, Chris Carrigan elevated the Vermont Chamber’s work on supportive tax policies and transforming the state into a supply chain hub by bringing buyers, suppliers, and partners together. “We are committed to strengthening our cross-border commercial ties with Québec and Canada and supporting workforce development initiatives to bridge the skills gap and help address the labor shortage,” stated Carrigan. “Supportive tax policy and economic development are vital to Vermont’s manufacturing industry.” 

Alberto Aguilar of Carris Reels (Rutland), Jay Bellows of KORE Power (Waterbury), Janette Bombardier of Chroma Technology (Bellows Falls), Julia Birnn Fields of Birnn Chocolates of Vermont (South Burlington), Rich Hornby of Mack Molding (Cavendish), and Julie Laforce of Built By Newport (Newport) each spoke to the unique products they manufacture, the value of their workforce, and the challenges and opportunities within the Vermont manufacturing community. 

Labor shortage concerns, rising supply chain costs, and disruptions, as well as a lack of workforce housing, were sentiments shared by each of the manufacturers. They also expressed appreciation for the work of legislators in recent years to make Vermont a state where manufacturing can continue to grow, including the expansion of the manufacturing tax exemption, forgivable student loans for workforce retention, the partial military retiree pension tax exemption, and more.  

“The importance of the tax exemption expansion has been crucial in our strategic planning,” stated Julia Birnn Fields. “We are currently reinvesting in our company and buying new, bigger machinery along with increasing our warehouse and manufacturing space. Continuing to expand upon these manufacturing tax exemptions and credits help keep our growth here in Vermont.”

Jay Bellows stated, “Today, we are doing what many thought was impossible. We have brought manufacturing back to Vermont, and manufacturing jobs here are increasing. The once shuttered facility is now being transformed into a hub of clean tech innovation and manufacturing. Our Vermont workers – some of whom hold GEDs, some advanced engineering degrees, many are graduates of our state colleges– are building battery energy storage systems that are among the safest and most efficient in the world. And they are doing it at a time when the demand for domestically built storage systems is at all-time high.” 

Recovery & Resiliency Remains Top of Mind for Businesses

Recovery & Resiliency Remains Top of Mind for Businesses

Looking ahead, it’s not a matter of if, but when, Vermont will face another catastrophic weather event. Resilience must be central to rebuilding and future planning. A bill currently in the Senate Government Operations Committee proposes several steps to address this. The Vermont Chamber is advocating for the bill to include measures such as the inclusion of mitigation efforts, codification of grant program best practices, and the implementation of communication initiatives to keep residents, business owners, and visitors well-informed before, during, and after disasters. Following testimony, the committee has requested that the Vermont Chamber provide language to the committee, hoping to incorporate these suggestions before the bill crosses over to the House where work on the bill is expected to continue.

The Vermont Chamber will continue to work with the committee to elevate the following recovery and resiliency priorities for businesses.

  • Including Business Organizations in Local and State Disaster Recovery Planning: Ensure that municipalities, regions, and the state include businesses in the planning and response to natural disasters by including regional development corporations and other local and regional business organizations in both the local and state-level process.
  • Communication Strategies: Create efficient strategies for communication and marketing during and after disasters.
  • Tourism Impact Mitigation: Following a disaster, and when appropriate, promote areas that remain open for business to help maintain economic stability.
  • Emergency Alert System Engagement: Collaborate with entities to encourage business enrollment in the Emergency Alert System to enhance the reach and effectiveness of emergency communication.
  • Fund Disaster Mitigation Initiatives: Proactively plan and implement mitigation strategies to reduce the downtime of operations and revenue loss following future disasters.
  • Rapid Program Implementation Strategies: Elevate attention to businesses in impacted areas that are also focusing on individuals.