April 16, 2021
After an outpouring of widespread opposition from business leaders following the Legislature’s recent unexpected decision to tax forgiven Paycheck Protection Program (PPP) loans in tax year 2021, the Legislature has yet to advance legislation to adjust the harmful change. Without legislative action, the recent changes would apply a tax to forgiven 2021 PPP loans as if they were income. The Vermont Chamber and other business organizations sent a letter to the Legislature requesting they conform to federal treatment of forgiven PPP loans in the tax year 2021, as was the congressional intent of the forgivable loan program. In the wake of an economically devastating pandemic, most employers are ill-equipped to pay this new and unexpected tax bill. Please contact Vermont Chamber Government Affairs Director Charles Martin with questions or for help with contacting your legislators to oppose the tax. 
After advancing in the House Committee on Ways and Means, the full House voted to tax software as a service and to expand a tax bill to include additional taxes on platform and infrastructure as a service. If passed into law, consumers and nearly all of Vermont’s businesses that use cloud-based services would see considerable cost increases. This additional financial burden becomes particularly daunting for many businesses as they struggle from the economic fallout caused by COVID-19. The proposed taxes would cost Vermont’s technology industry at least $14 million annually by Fiscal Year 2025 and damage the state’s current tech-friendly reputation, while also disincentivizing the recruitment of remote workers. Please contact Vermont Chamber Government Affairs Director Charles Martin if you have questions or would like help providing your input to the Legislature. 
The Vermont Chamber and several other organizations representing Vermont businesses recommended the Senate Committee on Appropriations include in the FY 2022 budget the Governor’s proposal for $50 million in American Rescue Plan Act (ARPA) funds for Economic Recovery Grants to be directed at the Economic Recovery Bridge Grants program recently established under H.315. The inclusion of the Governor’s ARPA request in this program would not fully address the $500 million in known unmet need existing because of pandemic related economic turmoil, but it would serve to provide a temporary bridge for businesses most in need of immediate relief. H.315, the COVID-19 relief legislation passed by the Legislature and under consideration by the Governor, includes a $10 million grant program for businesses. The proposed grant program is intended to provide bridge funding to businesses that suffered a loss in 2020 and require immediate State aid.
The House and Senate have both passed legislation that takes advantage of a change in federal health care policy that will result in millions of savings in health care costs for small businesses. The Legislature responded to the Vermont Chamber’s advocacy which urged them to act quickly so this opportunity will be in effect for the next health plan year. The American Rescue Plan Act of 2021 (ARPA) expanded premium subsidies for individuals purchasing their own health insurance on Vermont Health Connect. With that new protection available, the legislation separates this individual market from the small group market, allowing for businesses purchasing in the exchange to be rated on their own, without subsidizing the individual market. Early estimates suggest this could result in as much as $17 million in savings.
The House Committee on General, Housing, and Military Affairs took further testimony this week on S.79 which contains a provision to establish a short-term rental (STR) registry. The Vermont Chamber testified in support of this provision. The Legislature has taken progressive action to regulate the STR market in Vermont, and the registry is seen as the next step in the progression. While STRs contribute positively to Vermont’s economy, they operate in a relatively unregulated environment compared to licensed lodging properties and are frequently unknown entities/units. The foundation set by establishing a STR registry would be a positive step forward to ensure a safe rental environment and move towards greater regulatory equity in the lodging marketplace. If you have any questions or concerns, please contact Vermont Chamber Vice President of Tourism Amy Spear
Senator Michael Sirotkin reported on Senate-passed S.10 to the House Committee on Commerce and Economic Development. In its current form, S.10 would increase Vermont UI benefits by an estimated $5.2 million in ongoing annual costs for employers. Before the bill moved to the House, the Vermont Chamber and others in the business community worked to implement changes in the Senate to improve the legislation by successfully advocating for the removal of provisions that would have increased weekly UI benefits by 20 percent, an additional estimated $35 million cost for businesses. While the bill in its current form is an improvement from the previous draft, the legislation currently does not remove 2020 from the calculation of the UI Trust Fund balance size, which is of paramount importance to Vermont businesses. The Vermont Chamber is scheduled to testify on the bill next week and will continue to advocate for a result that does not impart unsustainable cost increases on employers.
The House Committee on Ways and Means added a military retirement pay tax exemption to their controversial cloud tax bill. The tax exemption would exclude the first $10,000 of federally taxable U.S. military retirement pay from state taxation. Vermont is currently one of only a handful of states that fully taxes military retirement pay, which disincentivizes military retirees from moving to Vermont upon conclusion of their service. The Vermont Chamber has long supported fully exempting military retirement pay from taxation and believes incentivizing military retirees to move to Vermont would increase the diversity of our communities while also strengthening the workforce. If implemented, this exemption proposal would serve as modest step toward the future goal of fully exempting military retirement pay. However, the Vermont Chamber has concerns about using a bill that will implement a costly new tax on cloud services as a vehicle to advance the exemption. This exemption should, ideally, be increased in scope and advanced as standalone legislation. 
The Senate Committee on Economic Development, Housing and General Affairs received testimony on Friday relating to H.313 and S.68. Provisions in both bills are aimed at modernizing Vermont’s liquor laws. Two provisions discussed Friday are also supported by the Administration. First, eliminating the requirements for 48-hours written notice to be given to the Division of Liquor Control for promotional tastings for licensees and for staff participating in the promotional tasting to be off duty for the rest of the day. This change will remove a cumbersome process that may impede the potential for selling products. Second, permitting licensed stores and retailers to sell spirit-based canned cocktails containing up to 16-percent ABV. The bill expands distribution and sale of these products to all of Vermont’s licensed stores or retailers rather than just the Department of Liquor and Lottery agency stores. The House will take up the low-alcohol spirits beverages conversation next week.
The Senate Committee on Finance continued deliberations on H.360, the primary broadband bill moving through the State House. After hearing from internet service providers (ISPs) and communications union districts (CUDs) last week, the Committee took further testimony from CUDs and ISPs. Representatives of the ISPs and others have cautioned against restricting funds to CUDs alone, which could delay broadband buildout. The members of Senate Finance expressed agreement that some amount of funding needs to advance relatively soon. The Committee expressed their intent to target addresses that are currently underserved or unserved and is also largely supportive of a property tax exemption on new broadband infrastructure built after July 2021, provided it is capable of 100 Mbps symmetrical service and the owners of the infrastructure are themselves CUDs, or ISPs working with a CUD. The Vermont Chamber continues to believe that investments in broadband should include public and private partnerships that maximize knowledge and capitalize on existing infrastructure, while planning for future technology landscapes.
The Vermont Chamber of Commerce is collecting resources for employers and businesses throughout Vermont, produced by the Chamber and externally. View this week's roundup to register for our interactive discussion on April 26 with Senator Patrick Leahy, take a survey about your organization’s remote work experiences and plans post-pandemic, and more. To share helpful content for next week's resource roundup, send us an email.
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