The Meadow Hill View Session Summary
Energy, Transportation, Housing and Economic Development
Updated May 29, 2023
Budget Sent Back Governor Phil Scott has vetoed the budget approved by the Legislature earlier this month, which ensures lawmakers will be back in the Statehouse to vote again in late June. Scott’s veto message makes it clear he objects to several provisions in the $8.5 billion spending plan. Scott wrote that “we cannot and should not ask Vermonters to shoulder the burden of new and higher taxes, fees and penalties.” The administration estimates that the legislature added "an average of nearly $1,200 to a household’s burden each year.” The increase in ongoing base spending passed by the legislature is more than twice the rate of current inflation.
The budget includes a 20% increase in DMV fees. Check out what is going up and how much here. Scott asserts that the increase will make Vermont the most expensive state in the northeast to maintain a driver’s license and register a vehicle. In his veto message, Scott also signaled his opposition to an increase in payroll taxes to pay for child care expansion (H.217) and the cost of other new government programs created this year, such as the Clean Heat Standard.
So what happens now?
Democratic leaders will now decide whether to negotiate with the Governor or override his veto. It is certainly possible that this spending plan passes unchanged since Democrats hold a super majority in the both House and Senate. However, there is dissension in the party over the decision to close the state's emergency motel housing program next month. The federal government has footed the bill for a policy that’s provided motel rooms for nearly 3,000 Vermonters over the past three years. But that federal funding has run out. Both Governor Scott and most Democratic lawmakers say that Vermont doesn’t have the financial capacity to keep the program going with state funds. But progressive Democrats who disagree could, oddly, side with the Republican Governor to sustain the veto in order to force Democratic leaders to extend the motel housing program.
Heat Act The first successful veto override this year happened when the legislature enacted S.5, the so-called “Affordable Heat Act.” If fully implemented in two years, Vermont’s heating fuel sellers will have to sell less heating fuel or else pay someone else to convince Vermonters to use less. The Vermont Public Utility Commission will now be tasked with registering all fuel dealers and collecting data on every gallon that is purchased and sold. They will also create something called a “clean heat credit marketplace.” A credit will be handed out when something is done to reduce greenhouse gas emissions when it comes to heat, hot water and cooking. Nearly every fuel dealer in Vermont will need them, but it isn’t clear how many they'll need and how much they’ll cost. While the work designing this policy begins immediately, no payment is required by fuel dealers unless and until the legislature gives final approval in 2025.
Payroll Tax The other centerpiece of the 2023 legislative session is a $120 million plan to subsidize child care programs. Most of the money comes from a 0.44% payroll tax split between employers and employees. The tax hike is slated to start on July 1, 2024. Once in effect, child care subsidies will be available for a family of four that makes less than $172k per year. Child care providers will also receive larger subsidies.
Pay Day After voting for these and other fee hikes and tax increases, a majority of lawmakers agreed to give themselves a pay bump. Both the House and Senate approved legislation that would more than double their salary. They will also become eligible for state health insurance, a benefit that would cost the state up to $27,300 for each lawmaker.
VEGI Extension One of the most successful programs to incentivize economic development in Vermont barely survived. While some lawmakers were willing to let the Vermont Employment Growth Incentive (VEGI) program sunset at the end of the year, a coalition of advocates urged lawmakers to simplify and expand this important program. After much consideration, lawmakers added another year to the program and agreed to discuss further in 2024.
SALT Stopped Efforts to keep more money in Vermont by sending less to Washington, D.C. was stopped by the Democrats in the House. Vermonters pay nearly 14% of their income in state and local taxes, which is higher than any other state except New York, Connecticut, and Hawaii. The Senate passed legislation that would help Vermont business owners save on their federal taxes through the State and Local Taxes (SALT) deduction. The move, which would save Vermonters $20 million in federal taxes and add nearly $2 million to the general fund was rejected by the House Democratic leaders who do not believe businesses should pay less in taxes, even when it benefits Vermont.
Free Food The legislature set aside $30 million to fund free school meals for all students in the state, regardless of income status. It will be paid by an increase in property taxes.
State-Run Retirement Program Treasurer Mike Pieciak advanced legislation that will auto-enroll Vermonters in a Roth IRA if their employers do not offer a retirement plan. The program would start in 2025. Learn more here.
Bottle Bill An overhaul of Vermont’s beverage container deposit law is headed to the Governor’s desk. The latest bottle bill expands the types of beverage containers included in the program like water bottles and energy drinks.
Talking Tanks Lawmakers passed a safe collection program for Household Hazardous Waste, but not before the legislation was modified. The original version would have created a costly and duplicative recycling program for propane tanks. Propane energy advocates successfully removed re-fillable propane tanks from the regulation.
Updated Tank Regs If you install, fix or fill fuel oil tanks, this is your chance to add your comments and suggestions to a proposed update to Vermont's Aboveground Storage Tank Regulations. The proposal, found here, also includes changes to tank inspection forms. Among the changes under consideration is a requirement that existing tanks meet new tank installation standards by 2030. The proposal would also create a “yellow tag” that would allow a fuel dealer to fill a non-compliant tank under certain conditions until the end of the heating season.
PCF Changes A significant change to the Vermont Petroleum Cleanup Fund is coming under legislation approved this year. The new policy increases the maximum reimbursement for underground storage tanks by $10k, from $990,000 to $1 million. The same $1 million threshold would apply to aboveground bulk storage facilities. The maximum reimbursement for cleaning up spills from aboveground storage tanks that are less than 1100 gallons will double if the bill becomes law, from $25k to $50k. While opposed by the Petroleum Cleanup Fund Advisory Committee, funds dedicated for cleaning up fuel spills could be spent on electric and wood heating appliances. However, according to this memo, none of the money can be spent on electric and wood heating until the fuel oil tank is removed or repaired.
Sales Tax Exemption Extension Lawmakers have agreed to exempt certain wood burning heating equipment from paying the Vermont sales tax for one more year. Only furnaces or boilers that are used as a primary central heating system can qualify.
More Money for Electric Cars and Heat Vermont’s decade long energy policy to increase the amount of electricity used for heating and transportation is getting yet another cash infusion. Lawmakers agreed to extend the sunset on a pilot program that allows Efficiency Vermont to use another $6 million in electric ratepayer money over the next three years on programs that incentivize electric vehicles and cold climate heat pumps.
Cat Fix Lawmakers agreed on legislation that aims to prevent the theft of catalytic converters. It strengthens existing law (9 V.S.A. § 3022) by limiting the number of catalytic converters that can be sold for scrap and requires those selling them to prove ownership. A catalytic converter can fetch about $850 at the scrap yard for the few grams of platinum, palladium and rhodium inside these exhaust systems, making them literally more valuable than gold. Thefts have increased by more than 1,215% since 2019, according to the National Insurance Crime Bureau. Learn more here.
Housing Hustle Legislation to address the state’s affordable housing crisis passed with little enthusiasm after the most effective measures were removed. Housing advocates had high hopes back in January that lawmakers would agree to remove some of the regulatory hurdles that add time, cost and complexity to building in Vermont. After months of debate, all that is left to the legislation known as S.100 are limited and temporary changes to Vermont’s 50 year old land use law, as well as few minor amendments to municipal zoning regulations. Instead of increasing the threshold for Act 250 review from ten housing units to 25, the legislation calls for a “study.” The law authorizes even more studies to improve coordination, reduce redundancies in state permitting and releases funds for municipal planning. But none of these things accomplish what is most needed: the removal of regulatory hurdles that make construction so expensive. Language passed by the Senate to limit the ability of towns to ban affordable fossil fuel used for heat, hot water and cooking was also removed in the final version passed by the House. Instead lawmakers added yet another study to figure out how to enforce a statewide Residential Building Energy Standard. There are a few small changes that will have a positive but limited impact on Vermont’s housing crisis. In municipalities with zoning and subdivision, the construction of four or fewer units in an existing structure located entirely within a designated center would count as one unit toward the total number of units. Additionally, developers can build up to 24 units of housing in designated areas, including a village with zoning and subdivision regulations without going through Act 250. However, this exemption is temporary. It expires on June 30, 2026. And it only pertains to a tiny fraction of Vermont’s developable land — just 31 square miles.
Grid Stability The legislature did agree to temporarily lift regulations on electric utilities and “related facilities” (cable, telephone and internet providers). None will be obligated to obtain an Act 250 permit until 2026 if they are rebuilding of existing distribution lines and improving reliability and service to existing customers through overhead or underground lines in an existing corridor, road, or State or town road right-of-way. There will also be a study to figure out whether this exemption helps make our wired world more resilient.
Sunset Extended Governor Scott has signed H.110, An act relating to extending the sunset under 30 V.S.A. § 248a. The sunset has been extended another three years. Under the 248a process, companies or persons wishing to construct a telecommunications facility may do so by applying to the Public Utility Commission (PUC) for a certificate of public good (CPG). The legislature also ordered a study to figure out how to make the process easier for municipalities and individuals to participate in the regulatory process. This study is due by January 15, 2024.
Brownfield Money The Agency of Commerce and Community Development (ACCD) approved five additional brownfield cleanup awards, totaling $3.97 million, to remediate contaminated sites across Vermont. Since the Brownfields Revitalization Fund opened in October 2021, nearly $11 million in cleanup funding has been awarded to 25 projects in eight counties, which are anticipated to clean up more than 42 contaminated acres and create 554 jobs and 425 units of housing.
Reimbursement Rates The Department of Financial Regulation (DFR) will now investigate how insurance companies compensate the automotive repair industry. Lawmakers are requiring the study by DFR which could result in a minimum reimbursement rate for auto repairs on insurance claims. The report will also include a review of best practices in the insurance industry when it comes to how repairs are directed and disclosed, including the use of aftermarket parts.
DMV Changes Vermont’s “Lemon Law" has been updated to provide consumers one year following the expiration of the express warranty for new motor vehicle arbitration if proceedings are terminated because manufacturer performs corrective work satisfactory to consumer prior to scheduled hearing. The measure also eliminates the annual (or biennial) validation sticker on license plates, allows motor vehicles that are more than 15 years old (as of January 1, 2024) from needing to have a certificate of title, and authorizes the Commissioner of Motor Vehicles to issue a certificate of title for a motor vehicle without regard to the age of the motor vehicle.
Construction Cash There will be a record number of highway transportation projects in Vermont this year. The Transportation bill spends more than $850 million on road and bridge projects, rail system upgrades, bus service and electric vehicle incentives. The legislation, which will pay for nearly 500 miles of new paving, spends several hundred million dollars of federal infrastructure money. The measure also includes a study of a "Mileage Based User Fee.” It also requires “work towards collecting a fee” on electricity dispensed though public electric vehicle chargers. None of the new fees will take effect until 2025 and only after a study is done on how to collect the money. As proposed it could add about $150 to register an electric vehicle. However, doing nothing will result in Vermont losing nearly a million dollars per year in gas tax revenue as the number of electric vehicles purchased increases while sales of gasoline continue to decline. Check out the Vermont Motor Fuel Index here
On the Wall
Legislation of interest that did not pass in 2023, but could in 2024.
H.453 proposes to establish as a matter of law that a retail sales transaction of a motor vehicle is final after three days, and to prohibit a motor vehicle dealer from selling a vehicle that was traded in as part of the sales transaction until after the transaction is final.
H.9 would exempt motor vehicles, except for buses, from the safety inspection for the first 40 months after manufacture in the case of plug-in hybrid electric vehicles; from all inspections for the first 40 months after manufacture in the case of zero-emission vehicles; and from the safety inspection for the first 30 months after manufacture in the case of other motor vehicles.
H.412 proposes to make the annual motor vehicle safety and emissions inspections biennial and form a study committee to investigate the effect that motor vehicle inspections have on Vermonters with low income, Vermonters who live in rural parts of the State, and Vermonters who are elders.
S.113 would require gas stations and convenience stores that accept credit or debit card payments for the retail sale of gasoline to provide notice to the customer if they, or a third party, will place a hold on a credit or debit card payment that is for an amount larger than the actual retail gasoline purchase.
H.419 would add consumer protection measures for broadband service. The legislation attempts to promote a thriving broadband market in Vermont free of anticompetitive, unfair, deceptive, or misleading practices in order to protect the public and to encourage fair and honest competition.
H.436 This bill proposes to give municipalities the authority to use home energy rating systems for compliance with the residential building energy standards. It would also allow the Department of Taxes to share data on the fuel tax with municipalities. It would also direct the Department of Motor Vehicles to share data with municipalities related to the tax on transportation fuels. The bill would also prohibit a renewable energy project from being denied a certificate of public good solely for aesthetic concerns.
H.119 proposes to, with limited exceptions, prohibit the operation of a motor vehicle equipped with an inadequate or modified muffler or exhaust system or with an amplification device.
S.102 would expand employment protections and collective bargaining rights, ending “at will” employment. It would require severance pay for employees at a rate of one hour of pay for every 12 and one-half hours worked during the employee’s first year of employment and an additional one hour for every 50 hours worked in subsequent years. It would also prevent “electronic monitoring” of employees, something routinely done to prevent crime.
S.9 would give the state auditor permission to open the books on any private business that has a contract with the state, including those selling fuel, equipment or vehicles. This includes the examination of records and accounts.
H.101 attempts to create a Regional Transportation Climate Initiative to increase the cost of gasoline and diesel fuel. It would also add a new fees on cars and trucks with combustion engines if they don’t meet the minimum MPG standards. The bill would also take $20 million from the fund that repairs Vermont's roads and bridges (the Transportation Fund) to spend on marketing EV’s to Vermonters. The legislation would also make bus service free.
H.56 gives the Vermont Public Utility Commission (PUC) jurisdiction over the construction and operation of utility model thermal energy networks. It would prohibit the PUC from approving permits to expand natural gas service territory.
S.59 bans oil and gas heat, hot water and and gas cooking appliances from being installed in any buildings owned or controlled by the state.
S.24 requires the Commissioner of Environmental Conservation to adopt rules to implement a Low Carbon Fuel Standard for motor fuels.