Mid-Session Update – What’s on Tap for the Rest of Session?

Representative Heidi E. Scheuermann

As Vermont Legislators get ready to return to Montpelier tomorrow after the weeklong Town Meeting Day break, it is appropriate to evaluate what the General Assembly has done so far, what is being considered, and what might be on tap for the rest of the session.

When Governor Phil Scott took office, he made clear that his Administration had three priorities: 1) Strengthening the economy; 2) Making Vermont more affordable; and 3) Protecting the most vulnerable.
So, how have these three priorities been reflected in legislative action thus far?
Fiscal Year 2018 Budget
First off, the House Appropriations Committee has been charged with reviewing the Governor’s proposed Fiscal Year 2018 Budget, and making changes they feel necessary.  And, thus far, the Governor’s demand that the FY 2018 Budget be level-funded and not be based on any additional taxes and or fees has been heeded.  
To be clear, there remains much work to do, but the efforts thus far are commendable in my view.
Governor Scott was clear throughout the 2016 campaign that he would bring fiscal restraint back to Montpelier; that he would oppose any new or increased taxes and fees on Vermonters; and, that under his leadership, the state would start to bring its fiscal house into order.  
And, while the demand by the Governor of a level-funded budget was received with skepticism in some circles, I am glad that it clearly caught the attention of the Democratic legislative leadership.  
My hope, of course, is that the Appropriations Committee continues its good work and finds the additional savings needed to ensure the reality of a responsible budget this year.
As the Appropriations Committee heeds the call for responsible state spending, other pieces of legislation being considered are sure to put a chill on greater investment and growth for many of our state’s small businesses.
The Big Four
Mandated Paid Family Leave
Minimum Wage Increase to $15.00/Hour
$2.00 Occupancy Fee/Room/Night
Rooms/Meals/Alcohol Tax Increase
The House Committee on General, Housing and Military Affairs (the committee on which I serve) is working its way through three of the Big Four above, in addition to others.
Under this program, employees would be eligible for up to 12 weeks of paid leave over the course of 12 months to care for a family member, or for medical or maternity/paternity leave.  
Our committee is also considering two proposals that would increase the minimum wage by 50% – to $15.00 per hour.  The first, H. 64, would do so over the course of the next three years.  The second, H. 93, would increase it over the next five years.
And, both H. 181 and H. 217 would institute a $2.00 occupancy fee on each lodging room per lodging night to fund a Workforce and Supportive Housing Fund.  To be clear, this proposal would mean every bed and breakfast, every small inn, and every lodge/motel would be charged an extra $2.00 per room per night on top of the 9% (in some cases 10%) rooms tax.  
Finally, the House Committee on Natural Resources, Fish, and Wildlife has passed a proposal to add an additional 1% to the rooms and meals tax and to the tax on alcohol, the revenue from which would help pay for the clean water efforts.
Make no mistake, all of the goals of the above proposals are admirable – to ensure the ability of Vermonters to take some time to care for their family or themselves; to ensure wages for Vermonter workers continue to grow; to address our state’s housing shortage; and to do all we can to clean up our waterways.
But, adding more and more mandates and fees onto our state’s small businesses is not the way to solve these challenges.  For far too long we have been doing just that, to no avail.
Instead, we must create an atmosphere in this state in which investors are encouraged to invest, and businesses encouraged to grow.  In turn, wages and benefits will increase organically and our state coffers will fill more easily thereby allowing for greater capacity to do the things we want to do.
You can bet that each one of the proposals outlined above would be exceptionally challenging to our small businesses – especially those in the hospitality industry.  And, cumulatively, they would be a disaster. 
Anybody who is at all familiar with the hospitality industry and tourism knows very well the challenges that industry already faces.  It is a global marketplace now in which we compete, and that competition is fierce.  The profit margins are small, and in some cases due to weather or other complications, non-existent.  We cannot make it more difficult for these small Vermont businesses to achieve success.
At this time, I am unsure of what kind of support all of these proposals have from the Democratic leadership, but it seems as though both the paid family leave proposal and the minimum wage increase may have the legs needed to progress this year.
While the good news is that Governor Scott has made very clear his opposition to both of them, if you share his concerns – and mine – I urge you to contact your local legislators.
There are a number of issues being worked on that would improve the delivery of, and outcomes from, services for our most vulnerable, including improvements to our mental health services and further developments in our opiate epidemic response.  
But, much of the focus on the part of the Governor’s Administration and the Legislature is on the potential impact changes at the federal level will have on the funding of our many programs that are designed to protect the most vulnerable Vermonters.
And, given some of the proposals coming from Washington thus far, this focus will continue as the FY 2018 budget development continues, and we prepare for the out-years.

Independent Contractors
21st Century Workforce
I am pleased to report that the House Committee on Commerce and Economic Development has been spending some time on the issue of independent contractors, an issue on which I have been working diligently for over 7 years.  And, one of the bills they are considering is H. 119, a bill I introduced along with a bipartisan group of House colleagues.
As Vermonters know very well, our state has a long tradition of independence. One manifestation of that independence throughout the years has been in work. 
For greater flexibility and autonomy, and greater control over their destinies, many Vermonters have chosen to work for themselves, and be what we now call independent contractors.  Over the course of years, however, conflict has arisen between this kind of work and our worker’s compensation and unemployment insurance laws. 
In the past, this conflict has mostly been in the construction industry – with general contractors hiring sub-contractors to do specific parts of the job. The Department of Labor or insurance companies themselves then determine, through an audit, that a subcontractor should have been classified as an employee.
This conflict has now reared its head in our new economy as well.  This new 21st century economy is fast growing, but is very different. 
Instead of the traditional economy of an employer with many employees, in many ways it is an independent workforce coming together to collaborate on projects.  Couple this with the sharing economy, and we’ve got a new kind of independent workforce around which we must tailor our laws.
Every state in the country is trying to address this issue, but I have fought for years to try to get Vermont lead the charge.  If we can position ourselves as the place to come to work both independently and collaboratively, and do so successfully, we can attract this new workforce and start to address our significant demographic challenges. 
One critical way to do this is to establish a common definition for independent contractor under both workers compensation and unemployment insurance. This would do three things: 1) alleviate some of the incredible confusion among employers surrounding the various definitions and bring absolute clarity to the definition; 2) encourage and grow the independent workforce; and 3) ensure that those who should be classified as employees are classified as such by their employers. 
Toward that end, my bill, H. 119 would explicitly define an independent contractor by requiring that six criteria be met by the individual: 
  1. He/she has the essential right to control the means and progress of the work except as to the final results. 
  2. He/She is customarily engaged in an independently established trade, occupation, profession, or business. 
  3. He/She has a substantive investment in the facilities, tools, instruments, materials, and knowledge used by him or her to complete the work. 
  4. He/She has the opportunity for profit and loss as a result of the services being performed for the employer. 
  5. He/She hires and pays his or her employees, if any, and supervises the details of the employees’ work. 
  6. He/She makes his or her services available to the general public and is able to accept work for entities other than the employer, whether or not he or she chooses to do so. 
In addition, at least two of the following five criteria would have to be met as well: 
  1. The individual is responsible for satisfactory completion of the work and may be held contractually responsible for failure to complete the work.
  2. The parties have a written contract that defines the relationship and gives the individual contractual rights in the event the contract is terminated by the employer prior to completion of the work. 
  3. Payment to the individual is based on factors directly related to the work performed and not solely on the amount of time expended by him or her. 
  4. The work is outside the usual course of business for which the service is performed. 
  5. The individual has elected to file taxes as an independent contractor with the federal Internal Revenue Service. 
This has been a very tough row to hoe over the years, and I am not sure what kind of progress it will make this session.  But, as always, I will fight for a common sense resolution, and will remain hopeful.

Important Increased Investments
Will They Make the Cut?
If you recall, in addition to demanding no new or increased taxes and fees to pay for the FY 2018 budget, Governor Scott also proposed significant increased investments, which included the following:
  1. $4 million base increase in Vermont State Colleges;
  2. Additional $2 million for UVM and VSAC;
  3. $9.6 million increase in early childhood education and child care;
  4. $35 million housing initiative to ensure greater housing opportunities at costs Vermonters can afford;
  5. $750,000 increased investment in tourism and marketing;
  6. $500,000 for Vermont National Guard members to attend Vermont State Colleges for free; and
  7. Increased investment in prevention programs and treatment of our opiate epidemic.
Given that the Governor’s proposal to level-fund FY 2018 school budgets in order to pay for these increased investments did not occur, where do they stand now?
The short answer is I simply don’t know right now.
What I do know, however, is that this is an absolutely critical discussion to have for our future, and I applaud the Governor for taking it on.
The fact is, we are expected to spend $1.6 billion on K-12 education this coming year.  That is $300 million over 2010 and $600 million over 2005.  That is a $600 million increase in K-12 spending over the same time that we have lost 16,000 students from our system.
Meanwhile, as we all know, just about everything else is being suffocated.
Ask our early childhood care providers; ask our mental health agencies; ask our State Colleges and University; ask our municipalities; ask just about any other entity providing services funded by the State of Vermont; and you will hear the same response: “This cannot continue.”

We have to find a way to get our K-12 education spending under control so that we have the resources to invest in other important things.  But, in order to that, the Legislature and the Governor need to hear from Vermonters that you believe this kind of budget realignment is critical; and that you would support future efforts to do so.

I can assure you, this kind of encouragement and support is the only way to make a change like this happen.
If you have any questions or concerns about any of the items above, or any other issues that arise, please feel free to contact me.

Representative Heidi E. Scheuermann
Stowe, Vermont

2 thoughts on “Mid-Session Update – What’s on Tap for the Rest of Session?

  1. How about casual labor? I don’t consider the kid mowing the lawn to be an employee and I doubt he thinks of himself as one.

    Yes, there is a big problem here for businesses. But note that it exists only because of government laws, regulations and, in a Liberal Utopia, mandates.

  2. It ain’t rocket science. 2 + 2 still = 4. Forget family leave, $15 minimum wage, occupancy fees and increased meal and alcohol taxes! Little ole Vermont can’t afford these boon dogles. Level funding is long overdue.

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