State to Main Newsletter

February 26, 2021

In This Issue:

Business Grants Included in COVID-19 Relief and Recovery Package

Tech Industry Representatives Rally to Oppose Cloud Tax

Vermont Chamber Testifies on Unemployment Insurance Proposal

Vermont Chamber Briefs Caucus on Military Retirement Pay Tax Exemption Proposal

Vermont Chamber Testifies in Support of Economic Development Package

Vermont Chamber Supports Creation of Statewide Short-Term Rental Registry

House Continues Consideration of Dedicated Tourism Marketing Funds

House Begins Review of Alcohol-Related Legislation

Resource Roundup

In Case You Missed It

Business Grants Included in COVID-19 Relief and Recovery Package

H.315 passed in the House and is comprised of $49 million in one-time funds of general funds, $13 million in new Coronavirus Relief Funds (CRF), and $17.2 million in reallocated and reauthorized CRF. Included in the advanced relief package is $10 million for economic recovery grants for businesses that suffered an economic loss because of the pandemic and were left out of or did not apply for earlier relief programs.

The grant funding component is the result of a proposal by the Scott Administration that was considered and modified by the House Committee on Commerce and Economic Development before being recommended to the House Committee on Appropriations. As advanced, the grant program defines eligibility criteria and caps the amount a business can receive at $150,000. The grant funding would prioritize businesses that have not received any COVID-19 related assistance from State or federal sources, with eligibility expanding to other businesses after an initial 30-day period.

The Vermont Chamber previously testified in support of the business relief grant funding and worked with impacted businesses to communicate to the Legislature why a business may have not been eligible for past relief programs. In addition to grants for businesses, the overall relief package includes funding for numerous state programs. You can see a full breakdown of the relief package here.

Tech Industry Representatives Rally to Oppose Cloud Tax

The possibility of imposing a cloud tax was revisited in the House Committee on Ways and Means. As proposed, H.261 would repeal the tax exemption on vendor-hosted, prewritten software with the intent to direct added revenue to the General Fund. If advanced, consumers and nearly all of Vermont’s businesses that use software as a service would be impacted by the associated costs. This additional financial burden becomes particularly daunting for many businesses as they struggle amongst the economic fallout caused by COVID-19. Witnesses testifying on the proposal explained that the proposed tax would cost Vermont’s technology industry $6.1 million and damage the state’s current tech-friendly reputation, while also disincentivizing the recruitment of remote workers.

In testimony before the Committee, Department of Taxes Commissioner Craig Bolio additionally pointed out that the proposal could create confusion and disagreement on the definition of software as a service for businesses and consumers, increasing the likelihood of audits, litigation, and liabilities. Given the potential cost and financial burden to the business community, and the current economic uncertainty caused by the pandemic, the Vermont Chamber submitted testimony opposing the tax and joined other business organizations in a coalition letter expressing unified opposition. Please contact Vermont Chamber Government Affairs Director Charles Martin if you have questions or would like help providing your input to the Legislature.

Vermont Chamber Testifies on Unemployment Insurance Proposal

Vermont Chamber Government Affairs Director Charles Martin and Vermont Independent Restaurants (VTIR) Leadership Council Member Leo O’Reilly jointly testified in the Senate Committee on Economic Development, Housing and General Affairs on potential changes to unemployment insurance (UI) criteria. The testimony was supportive of the Department of Labor’s proposal to freeze the UI Tax Schedule at Tax Schedule 1 for an additional year and freeze the UI taxable wage base at its current level of $14,100. If implemented the changes would save employers from having to pay higher UI taxes in the short-term, during some of the most economically challenging months of the pandemic. Under the proposal, the UI Trust Fund would be replenished with increased employer contributions in future years. The pair also testified largely in support of legislation that relieves employers of charges against their UI experience rating for benefits paid to an individual between March 15, 2020, and December 31, 2020, if the associated furlough was a result of circumstances caused by COVID-19. The legislation additionally provides a mechanism for employers to receive charge relief in 2021.

Vermont Chamber Briefs Caucus on Military Retirement Pay Tax Exemption Proposal

During a presentation in the Vermont Legislature’s Social Equity Caucus led by Representative Matt Birong (D-Vergennes) and Representative Daniel Noyes (D-Wolcott), Vermont Chamber Government Affairs Director Charles Martin highlighted some of the benefits exempting military retirement pay from taxation would have for Vermont businesses and communities. Vermont is currently one of only seven states that fully tax military retirement pay, which disincentivizes military retirees from moving to Vermont upon conclusion of their service. The proposal is supported by a bipartisan group of legislators in both the House and Senate, though there are several different bills that seek to provide the exemption. Governor Scott also highlighted the exemption proposal in his budget address, offering a $1.4 million budget proposal to offset short-term associated revenue impacts. One of the legislative proposals that would offer a version of the exemption was also reviewed in the House Committee on Ways and Means in testimony delivered by Representative Birong and Representative Peter Fagan (R-Rutland City) who are both sponsors of the bill.

Military retirees often conclude service in their 40s, are public service oriented, and typically possess a high degree of professional skills that uniquely position them to continue contributing to the workforce until they reach traditional retirement age. The U.S. Military as a whole, including military retirees, is also a significantly more racially diverse population than the general population of Vermont. The Vermont Chamber believes incentivizing military retirees to move to Vermont would increase the diversity of our communities while also strengthening our workforce. The Vermont Chamber has supported this exemption in past legislative sessions and worked to support the issue before the 2021 session. We will continue to advocate for the passage of the exemption as the legislative session unfolds. If you would like to provide input supporting this exemption, please contact Vermont Chamber Government Affairs Director Charles Martin.

Vermont Chamber Testifies in Support of Economic Development Package

Vermont Chamber Government Affairs Director Charles Martin testified in support of an economic development package in the House Committee on Commerce and Economic Development. The wide ranging package includes funding to create a Tourism Marketing Promotion Fund within the Department of Tourism and Marketing, a Buy Local Consumer Stimulus Program to re-establish and increase local consumer spending in Vermont to support small businesses and communities recovering from the pandemic, provisions that would consolidate and allocate additional resources for workforce recruitment programs, additional funds and changes to the Better Places Program within the Department of Housing and Community Development, funds to support expansion of Vermont’s tech sector, and expansion of eligibility under the Downtown Tax Credit Program. Additionally, the omnibus legislation would support funding for a Canadian foreign trade representative firm to generate foreign direct investment leads and prospects for Vermont in the areas of aerospace, biotechnology, and renewable energy, and provide Vermont with statewide representation in Québec. The economic package was originally brought forward by the Scott Administration and is expected to be included as an amendment to H.159.

Vermont Chamber Supports Creation of Statewide Short-Term Rental Registry

The Senate Committee on Economic Development, Housing & General Affairs continued deliberations around S.79 which includes the creation of a statewide short-term rental (STR) registry. The Vermont Chamber submitted testimony in support of the creation of the registry. The Legislature has taken progressive actions, most recently in 2018, to regulate the STR market in Vermont. A rental registry would be the next logical step.

With their existing anonymity and little oversight, STRs are afforded an unfair and significant competitive advantage over licensed properties. Removing the anonymity STRs currently operate under is an important step to ensure a safe rental environment. The pandemic has highlighted the difficulties during a public health crisis when unlicensed properties providing overnight accommodations remain anonymous and state officials do not have the means to contact them.

House Continues Consideration of Dedicated Tourism Marketing Funds

Amy Spear, Vermont Chamber Vice President of Tourism, testified in the House Committee on Commerce and Economic Development in support of Governor Scott’s proposed Tourism Marketing Promotion Fund. Amy pointed out that as we imagine emerging from the pandemic, marketing Vermont as a destination and welcoming guests will be critically important. Vermont will need to tell visitors that we are “open for business,” and we will need resources to do that in a crowded marketplace.

Years of level funding have put Vermont’s destination marketing at a disadvantage. In competition within a global marketplace and with neighboring states, Vermont is consistently outspent. Vermont has the smallest tourism marketing budget in the Northeast and the second smallest tourism marketing in the budget in the country. The creation of a Tourism Marketing Promotion Fund to augment VDTM’s general fund budget allocation would serve as an important mechanism for supporting communities and our tourism infrastructure as we recover and look to the future.

House Begins Review of Alcohol-Related Legislation

A series of alcohol-related bills were introduced in the House Committee on General, Housing & Military Affairs this week. Adjustment and modernization of alcohol regulatory and financial policies is a priority for both the Vermont Chamber and our partner organization Vermont Independent Restaurants.

Representative Birong (D-Vergennes) introduced bills H.314 and H.313. H.314 would reduce the renewal fees for first- and third – class licensee fees for 2021. H.313 contains several provisions that would provide meaningful regulatory and financial support for Vermont’s restaurant industry, including:

Authorizing Licensee Pricing of Spirits Sold by the Department of Liquor and Lottery: The establishment of licensee pricing would bring Vermont in line with other control states. Generally, bars are the most profitable line of business for a restaurant; this is not the case in Vermont. In Vermont, licensees and consumers pay the same price for spirits, and due to consumer-driven market pricing, Vermont businesses are losing valuable profit that could be essential to stabilizing and rebuilding our Vermont restaurant industry.

Authorizing First- and Third-Class Licensees to Purchase Wholesale Spirits Using a Credit Card: Allowing licensees to purchase spirits from Department of Liquor and Lottery retail locations with a credit card would remove a logistical burden. This would modernize the purchasing process for licensees and would create a level playing field between consumer and licensee transaction methods.

Temporarily Authorizing the Sale of Alcoholic Beverages for Delivery and Curbside Pickup: A formal extension of the current pandemic-allowed alcoholic beverages to-go provisions would allow for a wind-down period of this service that licensees have provided and customers have come to expect. With a long road to recovery anticipated, the proposed sunset of July 1, 2023, would allow for this.

Third-Party Platform Regulation: While delivery represents one of the most important segments of growth for the restaurant industry, third-party platforms are relatively unregulated. These provisions would protect Vermont’s independent restaurant industry as this segment continues to grow in Vermont.

Rep. Tommy Walz (D-Barre City) introduced H.178 which would allow low-alcohol spirit beverages (canned cocktails) to be sold by the same retailers that sell beer, wine, and hard cider up to percent ABV. Currently, this type of beverage is only available at state liquor stores. New Hampshire, Maine, and New York have all enacted similar legislation. Also introduced was legislation that would legalize happy hours. Vermont restaurants and bars currently cannot offer discounted alcoholic beverages over a few hours a day.

Resource Roundup

Vermont Chamber Virtual Policy Series

You're invited to get up to speed on important local and federal issues in our second Virtual Policy Series, from March 8 – March 29. Presented by the Vermont Chamber of Commerce, this series brings together government and business leaders to get your questions answered on important issues and provide personal access to key Vermont leaders. See our full agenda and save your seat today.

COVID-19 Vaccines in Vermont

The Vermont Health Department is working closely with the Centers for Disease Control and Prevention (CDC) and other partners to distribute vaccines as they become available. Their goal is to administer every available dose each week. Learn about eligibility, the health department’s weekly email updates, and other information about COVID-19 vaccines in Vermont. Find vaccine information in multiple languages here.

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