Marijuana Legalization Passes House

The first bill approved by the House when we returned in January was H.511, legalization of recreational marijuana. As I write this, Governor Scott is expected to sign it into law based on a compromise he made last June with backers of legalization. The legislation, which takes effect on July 1, 2018, limits the number of marijuana plants in a dwelling unit to two mature and four immature plants. The bill is essentially a grow your own. It is still illegal to sell marijuana.

I voted against H.511. Vermont’s law enforcement, health care and education community have all raised concerns about the potential impacts of increasing marijuana usage in Vermont. As a legislator I also try to be pragmatic. Given that passage was likely, I offered an amendment to delay the effective date by one year to allow the Governor’s Marijuana Advisory Commission to report its findings and recommendations later this year. By delaying actual implementation I believe the legislature would have time to consider a more regulated approach before legalization takes effect. However, even though my amendment included legalization in 2019, it failed as backers of the bill did not want any further delay.

If we are going down the road of legalization, it is my belief that we should consider doing it in a regulated market perhaps similar what we do for spirits in Vermont, including licensed retail sales and some level of taxation. H.511 does neither.


Is $15 Minimum Wage the Magic Answer?

Senate leader, Tim Ashe of Chittenden County, has indicated a $15 per hour minimum wage for Vermont is a high priority for him this coming session. A timetable for the increase has not been established by the legislative study committee looking at the issue.

Virtually all members of the Legislature support Vermonters earning higher wages. However, a new law from Montpelier does not necessarily provide a magic answer. Vermont already has one of the highest minimum wages in the country ($10.50 effective January 1, 2018) yet has a lower than average hourly wage. Our neighbors to the east, New Hampshire, for example, just follow the federal minimum wage of $7.25, yet has a higher average wage than Vermont. The reason is likely a stronger economy creating more competition among employers seeking staff.

One study in Seattle, which has increased the city’s minimum wage to $13, reports a 9% reduction in hours to workers in jobs paying $13-$19 per hour as a result of employers trying to mitigate some of the impact of a higher minimum.

One may question if this is a politically motivated proposal to move Vermont to the top of the minimum wage competition and somehow try to embarrass Governor Scott in an election year if he opposes the measure. Stay tuned for what could be a politically charged issue in the coming months.


Potential Conflicts on Horizon between Scott and Ashe/Johnson

Last week, Senate leader Tim Ashe and House Speaker Mitzi Johnson spoke with reporters about their priorities for the upcoming session, while acknowledging that the Governor may not share the same ones.

Included on their list are:

  • Paid family leave funded by a new payroll tax
  • Increasing the minimum wage to $15
  • Develop long-term funding for water quality issues
  • Potential changes to education funding system that are more transparent

Absent from the leaders priority list was passage of a new carbon tax on gasoline and heating fuels. (At least four proposals have been put forth, including the so called Essex plan, which purports to use the higher taxes to help reduce electric rates. see related link below)

New carbon tax proposal would lower power rates
vtdigger

Meanwhile, the Governor has indicated he plans to press for another year of no new taxes or fees and coming up with strategies to reduce the cost of K-12 education in Vermont. Other priorities are being formulated and will likely be unveiled during the State of the State address on January 4.


What’s up for next year?

There will likely be a wide variety of issues before the 2018 legislature and Governor. If you have thoughts on proposed legislation or have ideas to move Vermont forward, please email me at jharrison@leg.state.vt.us.
 
Some of the higher profile issues are likely to include:

  • State budget adjustments if federal funding is reduced
  • Paid family leave benefit for employees up to six weeks funded by a new payroll tax on employees
  • Minimum wage increase to $15 per hour
  • Carbon tax (at least four different proposals introduced)
  • Regulating marijuana if the current bill, S.22, becomes law this year
  • Clarification of who independent contractors are for workers compensation coverage
  • Act 250 revisions
  • Clean water funding

Scaled Back Consumer Protection Bill Passes

S.136 has been approved by the legislature and is awaiting action by the Governor. Several important consumer protections were removed at the end of the session to reach agreement on other parts. Removed provisions included consumer credit card debt collection, consumer credit protection for vulnerable populations, consumer auto-renewal contracts, and retainer of payment for construction materials.
 
The bill includes some regulation of fantasy sports with a study for additional regulations or taxes and a few changes to escrow allowances by lenders for home loans.
 
S.136 final legislation


Economic Development Bill Approved

S.135 has been passed by the legislature and will be sent to the Governor for signature. The legislation includes:

  • Removes Act 250 from certain Priority Housing Projects
  • Allows Rural Economic Development Infrastructure Districts
  • Establishes Green Mountain Secure Retirement Plan for employees at businesses not offering retirement plans
  • Workforce Development to assess Vermont’s current workforce education and training activities, workforce development strategies, and resource allocations
  • Establishes Minimum Wage and Benefits Cliff Study
  • Increases Downtown Tax Credits
  • Expands Tax Increment Financing Districts

 
Summary of S.135


Legislature Adjourns...For Now

The 2017 Vermont legislative session came to a close shortly after midnight last Thursday. The end came after a day of meetings between Senate leader, Tim Ashe, House Speaker, Mitzi Johnson and Governor Phil Scott working to find a compromise solution to the Governor’s proposal to save taxpayers up to $26 million annually on school employee healthcare. Unfortunately agreement was not reached and in his closing remarks to the legislature, Governor Scott expressed his disappointment and indicated he would veto the state budget and education funding bills.

 Because of a change in education health care plans in response to Obamacare requirements, all plans will need to change and will be the subject of negotiations in each school district this year. The Governor’s proposal would move the negotiation of the health care benefit to one state level negotiation with the NEA. The other parts of the benefit package would continue to be negotiated at the local school district level. His proposal assumes $75 million in premium savings (new plans are less expensive, but have higher deductibles) and would allocate about $49 million to be put into employee HSA or HRA accounts to keep teachers and employees whole with the higher deductible plans. The resulting $26 million is the potential savings that would benefit property taxpayers.
 
The NEA and the Democratic House and Senate leadership has been steadfast in their opposition to the change and as a result, a stalemate on the issue will likely mean a veto on the budget and education financing bills.
 
The legislature will return to the State House on June 21-22 in the likely event of gubernatorial vetoes. While a state budget must be enacted by July 1 in order to avert a shutdown, Governor Scott has indicated he would not allow that to happen. An article in vtdigger gives a perspective on the politics.
 
Margolis: How to win by losing

If the education financing bill does not pass, and the yield numbers are not set through some other vehicle, then:

  • Non-Residential property rate is set at $1.59
  • Homestead and Income rate are not able to be assigned, this would leave a $425 million hole in the Education Fund.

 

Budget Highlights:

  • 1.5% General Fund spending growth is below the FY 2018 forecasted revenue growth of 3.7% and below the 2% projected Gross State Product growth.
  • Adds one new position for tech training and education as well as to help employers with employee job placement
  • Provides for up to $15M to cover a potential one-time FY 2018 revenue downgrade due to corporate tax refunding
  • Meets the statutory requirement of having 5% in reserves
  • Increases Rainy Day Fund from $6.8M to $7.3M with additional amounts possible at the close of FY 2017 and FY 2018
  • $3.88 million to the Vermont State Colleges System, $880,000 for the merger of Johnson and Lyndon state colleges
  • $9.3 million increase for the state's mental health system
  • $2.5 million to improve access to child care
  • $35 million bond authority to create affordable housing, a proposal that originated with the governor
  • $5 million reduction that the secretary of administration will be directed to find across state government