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2014 Vermont Legislative Wrap-Up

Date: May 14, 2014

Minimum Wage

The House and Senate finally reached a compromise on a minimum wage increase on the last day of the legislative session.   The debate was never really about whether or not there should be an increase to the minimum wage; most legislators in the democratically controlled body believed that increasing the minimum wage rate was the correct policy to adopt.  However, there was much disagreement over exactly how much the rate should increase and also how quickly the rate should rise.  In the end, the Legislature chose a phased in approach that resembled the one originally proposed by Governor Shumlin.  Under the bill passed by the legislature, Vermont’s current minimum wage of $8.73 per hour will steadily rise about 44 cents per year until 2018. In 2015, the minimum wage would rise to $9.15, in 2016 to $9.60, in 2017 to $10 and in 2018 to $10.50.  Governor Shumlin, who will almost certainly sign off on the wage increase, stated: "I thank the legislature for doing the right thing for working Vermonters by raising the minimum wage…everyone who puts in a full day's work deserves a paycheck that will give their family a fighting chance."

NFIB/VT opposed amending Vermont’s minimum wage law, because Vermont’s law already provides for annual cost of living increases as a result of a compromise that was made in 2005.

Mandated Paid Leave

NFIB/VT worked vigorously to defeat a proposal that would have mandated paid leave for full and part-time employees; who would have immediately begun accruing paid leave of 1 hour for every 30 hours worked, up to a maximum of 56 hours in a 12 month period.  NFIB/VT successfully made the case that this proposal amounted to a broad-based tax on employers, would have been a “one-size-fits-all” requirement upon all employers no matter the size and that the burdensome nature of the proposal coupled with surveys from other states with paid leave mandates showed that employers would curtail hiring and scale back other benefits to cover their costs.

We fully anticipate this issue to be back next session.

Budget & Tax Increases

Legislators approved a $5.5 billion state budget that will require $5.79 million in new taxes, and relies on approximately $35 million in one-time funds.  The $5.5 billion budget represents nearly a 5 percent increase in state spending.  NFIB/VT has urged lawmakers to consider their spending, like all small businesses have to do each and every day.  Increased state spending year after year in excess of 5 percent is unsustainable especially in a Vermont economy that is growing as less than 1 percent.

 

Significant tax changes include:

  • An increased employer assessment which targets employers who don't provide health insurance to their workers or provide coverage that is too expensive. Also imposes the assessment on employers whose workers are on Medicaid.  The two changes raise $2.8 million.
  • The Department of Taxes will publish the names, addresses and amounts of unpaid taxes for the 100 most delinquent individuals and businesses. This may raise $800,000.
  • Property tax changes include a 4-cent increase in homestead (residential) property tax rate to 98 cents per $100 of assessed property tax value, and a 7.5-cent increase for non-residential (commercial/second homeowners) property tax rates ($1.515). Income-sensitized property tax payers will not see a change in the current rate 1.8 percent of their income.

GMO Labeling Requires Legal Defense Fund

Although NFIB/VT did not take a position on a proposal to require GMO labeling of food we thought our perspective on it might be of interest.  Governor Shumlin signed Vermont’s new Genetically Modified Organisms (GMO) labelling bill into law on May 8.  The festive bill signing took place on the Vermont Statehouse steps with much fanfare. “Vermonters have spoken loud and clear: They want to know what’s in their food,” Gov. Peter Shumlin said. “We are pro-choice. We are pro-information. Vermont gets it right with this bill.”

The new Vermont law is the first of its kind in the nation and requires food manufacturers to label products containing genetically modified ingredients beginning on July 1, 2016.  The legislature included the establishment of a legal defense fund in the legislation because they anticipate needing up to $6 million dollars to defend the State of Vermont in a legal challenge widely anticipated to be brought by food industry manufacturers, and the biotechnology industry, which manufactures genetically engineered food products.


The legislature was unable to reach agreement on several key issues that were debated extensively during the session.  Most important among those issues was an effort to reform Vermont’s education system and a financing plan for Vermont’s proposed single payer health system reforms.

School Consolidation

After the defeat of more than 30 school budgets at Town Meeting day last March, lawmakers received a very clear message that Vermonters are frustrated with the high-cost of property taxes being paid to get just above average educational outcomes for our children.

There have been a number of proposals bantered over the past several session.  But early this session political leaders said the issue was too important to take on during this session and called for stakeholders to be brought to the table to determine how to address this very important situation over the upcoming year. 

But as election year politics would have it, lawmakers decided to take on this enormous issue over a few weeks’ time and attempted to ramrod school consolidation through, essentially gutting what little is left of local control.

Their efforts failed even after the Vermont House of Representatives passed a measure that would have reorganized and shrunk the number of school districts in Vermont from nearly 280 down to about 60 over the next few years.  It is argued that this type of consolidation would provide cost savings.  Senators, however, preferred a much more diluted consolidation plan, that would have been voluntary for school districts rather than mandatory.  In the end, lawmakers were unable to resolve their differences in time to pass a consolidation plan.  As a result of the legislature making no progress, Vermonters face another rise in their property tax bills in 2015.

Health Care Financing

The legislative session came to end without a clear picture of how Governor Shumlin intends to raise $2.2 billion to finance Green Mountain Care, his proposed single payer health care system despite a law in the books that calls for his proposal by January of 2013.  Further Shumlin announced during the opening day of the 2014 session that he would provide the legislature with a ‘menu of options’ at some point during the session. 

However, halfway through this session, Shumlin reversed course and said he would delay unveiling a financing plan until January 2015 (despite a law on the books that calls for this to be released in January 2013).  Many lawmakers from all political parties are becoming displeased with the Governor’s delays because of the high level of anxiety over the uncertainty their constituents are facing. 

The House Health Care Committee Chairman Michael Fisher stated: “If we’re moving forward on Green Mountain Care, the governor will have to put a financing plan on the table…And the Legislature will have to take its time to really understand the implications of that financing plan not only on the business community and on Vermonters but also on how people access the care that they need.”  Despite some of the public grumbling, however, during the final days of the session a proposal was voted down that would have cut off the Shumlin Administration’s planning and implementation budget for Green Mountain Care if it did not provide a financing plan by January 15, 2015.

NFIB/VT has been a vocal advocate for small business and the concern over burdening Vermonters with another $2.2 billion in higher taxes; which would be the largest tax increase in Vermont history.


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