MONTPELIER — Gov. Phil Scott on Tuesday vetoed bills for a $15 minimum wage and mandatory paid family leave, citing campaign promises not to raise costs on residents and businesses.
Both bills were key goal posts for Democrats this legislative session, demanding many hours of floor and committee time. For each bill, Scott issued a written statement explaining his position.
The minimum wage bill, S.40, would have increased the wage incrementally from its current $10.50 minimum to $15 by 2024. According to Scott, the impact on small businesses would have been overbearing.
“Unfortunately, the evidence available to us — much of it from the Legislature’s own economist — indicates that the mandated wage increase proposed in S.40 will result in negative outcomes for job seekers, current employees, job creators and our economy as a whole,” he wrote.
Earlier in the legislative session, Department of Labor economist Mathew Barewicz reported to the Senate Economic Development Committee that a $15 minimum wage would have negative impacts.
In addition, a 2017 study by the National Bureau of Economic Research concluded that a raise to just $13 in Seattle Washington in 2016 ultimately led to fewer work hours and jobs for those who needed it most.
“We conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent,” the report reads. “Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.”
Scott wrote that while he was in the Vermont Senate he voted to tie the minimum wage to the rate of inflation. However, the proposed acceleration to $15 was more than he would support.
“So, while I agree with the spirit of S.40, I believe the bill is more likely to harm those it intends to help, weaken small businesses and the economy as a whole, and deepen the economic inequality that exists between Chittenden County and other counties in the state,” he wrote.
Paid family leave
Another bill Scott vetoed, H.196, would have allowed employees up to 12 weeks of 70 percent of wages for parental leave or six weeks for family leave. The program would have been paid for by a 0.141 percent payroll tax on employees, but Scott expressed worries that the estimates of its cost could be underestimated.
“Essentially, this bill establishes a tax rate which is known to be insufficient and there would be no way to avoid increases,” he wrote. “That involuntary rate increase in future years stands in direct conflict with the goal of making Vermont more affordable for working families.”
Again, Scott said while this was promoted by its supporters with the best of intentions, it ultimately could hurt businesses and employees as well.
“According to analysis and testimony from analysts at both the Department of Labor and Department of Taxes, the Legislature’s estimations of start-up and ongoing costs are severely understated,” he wrote. “Overlooking expert testimony resulted in downplaying the actual startup costs of a complex entitlement program and lower cost projections when presenting the required payroll tax increase.
“In addition to being a disappointing sleight of hand, underestimating the costs of implementing this program would jeopardize the program’s administration and functionality.”
He suggested an alternative strategy might be a state-run voluntary paid leave program that workers can invest in or opt-out as they choose.
For both bills, the sentiment of Scott’s message was that he was sent to the governorship with a mandate, and the cornerstone of that mandate was to impose no new taxes or fees on struggling Vermonters.
“For years, Vermonters have made it clear to me, and to many of their elected officials in the Legislature, they cannot afford new taxes,” he wrote. “We cannot continue to make the state less affordable for them and less appealing for families and businesses.”
There is no veto session scheduled, but lawmakers have said any bill can be taken up again during the special session that began Wednesday. Any bill can be voted on again, and even vetoed again, after which a veto session may be scheduled.
Neither the minimum wage increase or paid family leave received two-thirds support in the House their first time through, which would be required to override the governor’s vetoes.