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Vermont’s senators and representatives worked past midnight Saturday to reach compromises on the tax bill, the budget and other key pieces of legislation from this session.
In this post, we’ve summarized 10 major bills this session that will have the broadest and most immediate impact on Vermonters, from a tax break for Social Security beneficiaries, to paid family leave to clean water and gun restrictions, so you can see where they stand at the close of session.
At least a third of the top bills face a veto threat. In March, Gov. Phil Scott vowed to veto any legislation that has an increase in taxes and fees.
Lawmakers did not reach a deal with the governor on budget and taxes, and Senate leader Tim Ashe and House Speaker Mitzi Johnson have said they will not schedule a veto session. That means the governor will have to call lawmakers back for a special session as lawmakers did not [reach a deal] with the governor on budget and taxes. The special session enables lawmakers to pass new budget and other bills with a simple majority vote. (In a veto session, they can only take up legislation that the governor has vetoed and a two-thirds vote is required for passage.)
Scott and the legislative leadership have been at an impasse for weeks and have not even begun bargaining over a compromise. If they can’t agree to a solution before the end of the fiscal year on June 30, the state faces the threat of a government shutdown.
Minimum wage
The Legislature passed the minimum wage bill, S.40 last week. The bill would gradually raise Vermont’s minimum wage from $10.50 an hour to $15 an hour by 2024. Proponents have said that increased wages will boost Vermont’s economy as workers will spend more money at local businesses and send more tax dollars back to the state’s coffers.
Opponents of the bill, including Gov. Phil Scott, say if the higher wage becomes law, workers will lose jobs as businesses look to shed employees with higher salaries. The governor has said he will veto the bill when it comes to his desk. The bill passed by a narrow margin in the House; a number of Democrats joined Republicans in opposing the minimum wage hike.
Paid family leave
The House gave final approval to the paid family leave bill on Friday, but a veto from the governor is expected. H.196 relies on a new payroll tax to enable Vermont workers to take up to 12 weeks of paid parental and family leave, with a cap on six weeks of family leave per year.
Employees would pay a 0.136 percent payroll tax for a parental and family leave insurance program. Workers who take the benefit would receive 70 percent of their income during the leave period.
Supporters of the bill say that paid family leave will reduce stress for families and attract young people to Vermont who want to start families. The bill has faced opposition from Republicans and some Democrats, who say working Vermonters cannot afford to pay a tax for a program they may not use. Scott, who opposes any new taxes, has vowed to veto the legislation.
Gun control
Gov. Phil Scott signed historic gun restrictions into law on the Statehouse steps in April. His endorsement of the new limits on gun purchases and use was an about-face that irked his Republican base. Supporters of the governor denounced him as a traitor, while moderate members of the GOP and many Democrats lauded him as a courageous leader.
In the wake of news about an alleged planned shooting at Fair Haven Union High School in February, Scott worked with the Democratically controlled Legislature to impose restrictions on guns. Act 94 expands background checks in private sales, raises the purchase age to 21, limits magazine sales and bans bump stocks. Act 92 enables law enforcement officials to remove weapons from people arrested or cited on domestic violence offenses.
Prior to the enactment of these new statutes, Vermont had among the most liberal gun laws in the nation, needed to tighten gun control regulations.
Extreme risk
Scott also signed into law Act 97, which enables law enforcement officials to confiscate weapons from people deemed to pose an “extreme risk” to themselves or others.
The legislation was also pursued in response to news that 18-year-old Jack Sawyer had planned to shoot former classmates in Fair Haven. A judge granted the [first extreme risk order] to the prosecutor in the Sawyer case, shortly before he was released on bail.
Act 97 allows a prosecutor to seek a temporary order in civil court to seize firearms from a person found to be a risk for 15 days. At the end of that period, a prosecutor can seek to extend the seizure to up to six months following a hearing. The Legislature also passed a domestic terrorism bill at the end of the session that criminalizes taking “substantial steps” toward planning to harm, kidnap or kill a group of people. The governor is expected to sign the legislation.
Marijuana
This session, Vermont became the first state to legalize marijuana through legislation rather than by voter referendum. Scott signed a bill legalizing recreational use of small amounts of marijuana in January.
Starting July 1, 2018, Vermonters 21 or older can possess 1 ounce or less of marijuana and four immature and two mature plants. To address concerns raised by the governor and opponents of legalization, the bill creates criminal penalties for using pot in a vehicle with children and increases penalties for providing marijuana to anyone underage.
The law does not establish a retail market for sale and taxation of marijuana.
Social Security benefits tax break
Scott’s budget proposed to phase a tax exemption for Social Security benefits over three years. While that provision has made it into the final tax bill, H.911, the governor has pledged to veto other portions of the legislation that include an increase in the property tax.
Vermont is one of only four states that taxes Social Security beneficiaries.
Lawmakers chose to implement the tax breaks in year one, and they pay for it with a slight increase in taxes for high income earners. For Vermonters who file as single or head of household and have an adjusted gross income $45,000 or less or who file jointly and have an adjusted gross income of $60,000 or less, taxes on social security income will be a thing of the past. Social Security beneficiaries will see an immediate tax break of $6 million.
Education funding
Working well into Saturday evening, the House and Senate finalized versions of the tax and budget bills.
The Legislature used $9.8 million in surplus tax receipts to fill the education fund reserve and raised property tax rates. They rejected Scott’s plan to use $58 million of one-time money to buy down the rates and carry forward deficit spending in the education fund.
Instead, they approved a 2.5 cent hike in residential property tax rates and a 5 cent hike in non-residential rates. This represents a last-minute compromise reached by a conference committee. The House had originally proposed an income tax surcharge and the Senate had proposed higher property tax increases to cover the gap.
The property tax hikes face an all but certain veto from the governor, who opposes increases to property tax rates.
Clean water funding
The lone bill this session that would have provided funding for Vermont’s federally mandated clean water efforts will reach the governor without any funding. Lawmakers rejected any fee or tax increases to pay for phosphorus mitigation efforts.
Scott wants to put off implementation of a long-term clean water funding source until next year. A funding source was supposed to have been identified by the end of 2017, in order for the state to remain in compliance with a federal order requiring Vermont to reduce phosphorus pollution, which is feeding large toxic algae blooms on several lakes.
The bill, S.260, requires the administration to repair lakes, such as Lake Carmi, that are in “crisis.”
Health insurance mandate
The House and the Senate have approved legislation that requires Vermonters to purchase health insurance as of Jan. 1, 2020. The bill, H.696, tasks a working group with determining how to enforce the so-called individual mandate over the next year. Vermont legislators were spurred into action after Congress removed a tax penalty for people who don’t purchase health insurance. Supporters of the bill say the mandate is needed to ensure that as many residents as possible retain medical insurance. It is unclear whether Scott supports the bill.
Pharmaceuticals from Canada
The Legislature created a program for wholesale importation of prescription drugs from Canada to Vermont. The bill, S.175, allocates an estimated $150,000 to $250,000 in fiscal year 2019 for the Agency of Human Services to design the drug importation program and submit a request for federal approval by July 2019. Human Services Secretary Al Gobeille has said the program is a “long shot,” and expressed concerns about getting approval from federal regulators. Scott is “studying” the bill before deciding whether he will sign it.
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