The legislative session in Vermont wrapped up on May 12, 2022, after beginning on January 4. Governor Phil Scott identified workforce issues as his top priority, emphasizing the need for training, recruitment, and improvements in tax policy, childcare, housing, healthcare, infrastructure, and addressing climate change. Vermont received $600 million of federal COVID-19 relief funds to help transform communities across the state.
Throughout the session, the Vermont General Assembly prioritized several issues, including unemployment benefit increases, a clean heat standard, minimum wage hikes, employer and employee relationship regulations, and budget formulation. The session’s conclusion seemed favorable for the small business sector, but challenges may arise in 2023.
The Vermont budget crossed $8 billion for the first time. Key highlights include the passing of minimum wage and unemployment benefits increases, while many employer/employee relationship mandates did not pass. Efforts to expand a bottle deposit law also failed, and the clean heat standard was vetoed.
The budget for fiscal year 2023 includes $40 million in tax relief, $96 million for broadband, and $104 million for water, sewer, and stormwater infrastructure improvements. Workforce development is allocated $66 million, with economic development initiatives receiving $87 million. $90 million is designated for housing, supporting increased and improved rental housing and aiding families in exiting homelessness.
In the area of energy efficiency, $80 million is assigned for weatherization and $45 million for energy efficiency grants to towns, alongside more than $60 million for electrification initiatives.
For promoting electric vehicles, $12 million is allocated to fund incentives for buying electric vehicles and $6.2 million for installing fast chargers near interstate exits. An additional $10 million is allocated for charging station installations at multi-unit rental housing, state parks, and other public places.
Proposals introducing extensive employer mandates like reliable work schedules and equitable pay failed to pass. Meanwhile, minimum wage will increase to $13.75 on January 1, 2023, and $15.00 in 2024. Employers will incur an estimated $100 million cost increase due to new unemployment benefits, most of which will directly impact Vermont’s UI Trust Fund and subsequently increase UI taxes on employers.
Business recovery efforts were supported through $19 million in relief programs, with plans to open applications later in the summer. The legislation also includes $3 million for skilled trade students with financial need, covering licensing, exam fees, and tuition.
The clean heat standard, despite significant attention, was vetoed by the governor, with no legislative override attempted. Future discussions on climate initiatives and regulations are expected as Vermont aims to meet carbon reduction mandates outlined in the Global Warming Solutions Act.
Efforts to expand Vermont’s bottle deposit law will likely continue in future sessions. The governor proposed a State and Local Tax Deduction Cap (SALT) workaround as part of the tax relief package, aiming to offer federal tax cuts to Vermonters at no state cost. This proposal aligns with measures adopted in many states offering competitive tax advantages.
