Vermont Legislative Update 02-12-2021
An analysis from DRM's Government & Public Affairs Team
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New stormwater requirements will cost property owners hundreds of millions of dollars
The House Committee on Corrections and Institutions received a primer this week on the history behind the 3-acre general permit, which will impose enormous new compliance costs on property owners. The general permit went into effect on December 1, 2020 and applies to all landowners with three acres or more of impervious surface who were not permitted prior to 2002. Impervious surfaces include paved and unpaved roads, parking areas, roofs, driveways and walkways from which precipitation runs off rather than infiltrates. Runoff from developed lands contributes an estimated 18 percent of Vermont’s portion of Lake Champlain phosphorus pollution. The permit requirement affects nearly every sector of society, including state government, municipalities, developers, businesses, and homeowners.
700 projects affecting 8,000 landowners have been identified by the Department of Environmental Conservation as having three acres or more of impervious surface. The Department sent out letters to landowners on this list detailing requirements and next steps. Landowners have eighteen months to complete an engineering analysis to determine a “best-fit” stormwater system using modern practices to address runoff. It is likely to cost property owners hundreds of millions of dollars.
DEC has identified at least eight state-owned properties needing upgraded stormwater treatment systems at a cost of $6.6 million for design and construction. Unpaved parking lots in state parks that were not permitted prior to 2002 are an additional concern and will trigger the general permit. These projects will be funded through the Capital Bill.
Vermont’s 2015 Clean Water Act (Act 64) created the requirement for a general permit. Michael O’Grady, Legislative Counsel, recalled to the committee that when the act was debated there was vigorous discussion on whether state properties should be exempted. Equity considerations prevailed, he said, and Rep. Alice Emmons, D-Springfield added, “If you’re asking the public to do it, state government should do it.”
Hospitality businesses beg Scott Administration for reopening plan
Small businesses in the hospitality sector are growing increasingly anxious as they wait for the governor to declare a reopening plan for the economy. Without new guidance by March 1, there will be very little spring or early summer hospitality business.
Representatives from the lodging, wedding, and event sectors have asked Financial Regulation Commissioner Michael Pieciak for benchmarks so they can start scheduling bookings. Hospitality businesses also met with members of the House Commerce Committee to tell them that if the state fails to announce reopening plans, they will need more business grants to survive.
Businesses asked the administration to set up targets: when the age 65+ population, as well as those with chronic conditions, have been offered the vaccine, people will be allowed to travel freely and participate in outdoor events and indoor events with up to 75 percent capacity. Masks, social distancing, and handwashing guidance are expected to stay in place for the foreseeable future.
Broadband funding continues to garner legislative attention
Vermont State Treasurer Beth Pearce testified before the House Energy and Technology Committee this week to offer recommendations to the Committee’s draft billon accelerating community broadband deployment. Treasurer Pearce generally supports the committee’s efforts and believes the proposed program will boost the state’s economy in the long-term.
The House Energy and Technology Committee set up the broadband lending program with the Treasurer’s office two years ago, when there were only two Communications Union Districts in the State. The number of CUDs has increased four-fold since then.
As both the State Treasurer and a Vermont Economic Development Authority board member, Pearce questioned specific language regarding the state’s moral obligation and loss absorption. Commenting on the committee’s proposed increase in moral obligations from $181 to $193 million, Pearce recommended that the increased funds be used exclusively for broadband deployment programs. She emphasized that the committee should spend time with bond counsel and a financial advisor to ensure fairness for VEDA and the state.
Committee Chair Tim Briglin said he hoped that other members will consider the governor’s recommendation to use a portion of one-time federal funding to support broadband expansion and leverage VEDA funding. Briglin reiterated that broadband is a high-risk business model with a great potential return on investment. The committee intends to use one-time funding as effectively as possible for broadband deployment.
Panel considers expansion of manufacturing tax exemption
The House Ways and Means Committee is considering a Tax Department proposal to expand the sales and use tax exemption for machines and equipment used in the manufacturing process. Vermont currently uses the direct use sales tax standard, which allows a tax exemption only if the equipment or machine makes a physical change to the physical product. The Tax Department is proposing a switch to the integrated plant standard, which has become more common. This rule is more expansive and provides a use tax exemption for any necessary equipment or machinery integrated into the manufacturing process.
Will Baker, Director of the Legal Unit at the Tax Department, said that the current standard is challenging to apply for both manufacturers and tax auditors as it is hard to determine if a machine is integrated into the manufacturing process in a synchronized fashion, and therefore exempt from the tax.
The Lake Champlain Regional Chamber of Commerce, Associated Industries of Vermont and the Vermont Chamber of Commerce all testified in support of the proposal, emphasizing that the new standard will give manufacturers a clearer path to compliance while enhancing Vermont’s competitiveness in the manufacturing sector.
The Joint Fiscal Office does not yet have an estimate of the cost of the proposed exemption, but the Tax Department estimates that it will cost the general fund approximately $700,000. At the end of Friday’s hearing on the issue, Chair Janet Ancel, D-Calais, said that the committee will continue considering the proposal, noting that “sometimes it costs money to do good tax policy.”
Weatherization tied to workforce and continuing education
The Senate Committee on Natural Resources continued to take testimony this week on Governor Scott’s proposal to make one-time appropriations for the state’s weatherization efforts. The governor’s $25 million request includes:
- $4 million to the Department of Children and Families to increase low-income weatherization by 20 percent;
- $5 million to expand the State Energy Management Program to municipal buildings;
- $16 million to the Vermont Housing Finance Agency for programs that leverage private capital, expanding the reach of Vermont’s low-to-moderate income weatherization efforts.
Jim Bradley, independent contractor and representative of the Vermont Builders and Remodelers Association, told the committee that weatherization should not be as simple as buying insulating spray foam and pink insulation to plug holes. Bradley believes an understanding of building science and how a house “breaths” are critical to the success of any weatherization program.
“That,” he said, “brings in the whole issue of a properly trained workforce and the availability of continuing education courses.” Bradley stressed the need for green-building apprenticeships and support for existing educational programs, such as training from Efficiency Vermont and the Sustainable Energy Outreach Network.
Sen. Chris Bray, D-Addison, a champion of weatherization, said Bradley’s testimony as an expert in the field was “music to my ears.” Bray asked for examples and a breakdown of how much an average home would cost to weatherize, as well as recommendations for the best way to spend the new money.
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