Key Issue: Workers

Ensuring the state retains and creates good jobs in a range of fields is the best way to help Vermonters get ahead. And ensuring Vermont employers can survive, grow and thrive is essential to generating the revenue needed to invest in protecting the vulnerable, supporting workers and advancing state priorities. While there is more work to do, the Scott Administration has focused on creating more predictability for employers, slowing growth in costs, making Vermont more competitive – or trying to avoid becoming less competitive – with other states, and supporting small businesses and entrepreneurs, and nurturing targeted industries like outdoor recreation, agriculture, aerospace and financial services.  

Helping businesses survive and recover from the COVID-19 pandemic

• Driving Recovery - Governor Scott proposed multiple initiatives to help Vermont businesses recover from the economic impacts of the pandemic, and secured nearly $120 million in state fiscal recovery funds for Vermont employers. This included the FY22 Economic Recovery Bridge program, and the FY23 VEDA Forgivable Loan and Community Recovery and Revitalization programs.

• Capital Investments - Governor Scott proposed and worked with the Legislature to pass a Capital Investment Grant program, providing $10 million to help Vermont employers impacted by the pandemic make capital investments to ensure they could survive and grow. Awardees have included non-profits, child care centers, arts and entertainment venues and other employers critical to their communities and local economy. 

• Emergency Aid - In the height of the COVID-19 pandemic, the Governor worked with private partners to implement Federal programs and with the Legislature to ensure more than $100 million in State coronavirus relief funds were used to help businesses survive closures and operational restrictions. This included State programs like the Emergency Economic Recovery Grant Program, and Federal programs like PPP and SBA's EIDL.

Strengthening Our Rural, Farm and Forestry Economies

• To support lower workers’ compensation rates for employers, the Departments of Financial Regulation and Forest, Parks and Recreation directed the National Council on Compensation Insurance to combine the log hauling employer class with the contract trucking class, resulting in a 24% rate reduction for log haulers. This will result in significant cost savings for employers in this sector.
• Proposed and passed a Sales and Use Tax exemption for logging and processing equipment and parts.
• Proposed and passed clarification to existing law that dyed diesel is not subject to Vermont’s sales and use tax.
• Proposed and passed a change to Act 250 permitting to allow sawmills under 3.5 million board feet to be processed as "minor" applications, making it easer for these businesses to responsibly operate. 
• Proposed exempting recreational trails from Act 250 jurisdiction. The Legislature passed a directive to the Commission on Act 250 to evaluate regulation of trails and alternative structures for the planning, review, and construction of future trail networks and the extension of existing trail networks.
• The Agency of Commerce and Community Development is working on recommendations for a program to designate parcels in rural areas as industrial parks for the purposes of providing regulatory and permitting incentives to businesses sited in the industrial park. 
• Proposed and passed requirement for the Department of Public Service to report on the effect of electric utility demand charges on the ability of industrial enterprises to locate in rural towns.
• Proposed and passed protections for forest operations from liability as a public or private nuisance.
• Signed into law Act 77 of 2017, supporting an initiative from the Legislature that caps the air contaminant permit fee for emissions from anaerobic digesters at $1,000 and clarifies that phosphorus removal technology is eligible for assistance under Agency of Agriculture.
• The FY20 budget invests $1 million to support working lands—with $500,000 dedicated to the dairy industry—as well as $120,000 to strengthen our forest products economy and support logger safety.
• Boosted funding for farm-to-school by an additional $50,000 in the FY20 budget.

Supporting the Aviation and Aerospace Corridor

• Proposed and passed legislation, Act 69 of 2017, to make permanent the airplane part sales tax exemption, supporting the aviation sector and strengthening the emerging Vermont-Quebec aerospace corridor.

Growing the Financial Services Sector

• When changes in federal law meant many reinsurance businesses – previously ceded to offshore affiliates – will be returning to the U.S. Capitalizing on Vermont’s leadership in the captive insurance industry, the Administration and Legislature acted quickly to update Vermont law so the State could support these businesses, making Vermont a top destination for re-locating businesses in this sector.

Supporting Small Business Development

• Proposed and passed an increase in the number of small business advisors in Vermont, with priority for underserved counties, to provide small businesses greater access to resources and counsel, helping them thrive.
• Proposed and passed the ThinkVermont Innovation initiative to accelerate small business growth by making funding available, leveraging federal programs, testing cutting edge broadband deployments, and assisting in the development of co-working and other non-traditional work environments.
• Proposed legislation that would modernize the Vermont Employment Growth Incentive (VEGI) by making it easier for small businesses and mission-drive businesses (B-corps, L3Cs, etc.) to utilize the program.

Reducing Workers' Compensation insurance costs 

• Workers’ Compensation rates have decreased for six consecutive years under the Scott Administration, resulting in Vermont employers collectively paying an average of 41% less in premiums than they did in 2016. This is the result of a concerted effort by the Scott Administration, led by the Department of Financial Regulation, to design new programs and new constructs to lower rates while maintaining benefits, alongside employers’ success in keeping employees safe.
   

One of Governor Scott’s top strategic priorities is to make Vermont more affordable for Vermonters and businesses. This is an essential strategy to making sure more young professionals, families and retirees can stay – and move to – Vermont, which is essential to addressing our workforce shortage, protecting the most vulnerable and ensuring a more prosperous future for Vermont families and communities.

Tax Relief

• Elimination of the Tax on Social Security Benefits for Low- and Moderate-Income Vermonters - Proposed and passed the elimination of the income tax on Social Security benefits for low and middle-income retirees, benefitting approximately 35,000 Vermonters. (FY19). In the FY23 budget, Governor Scott proposed increasing this exemption from $45,000 to $75,000 for single filers, but the Legislature did not support or pass this expanded exemption.

• Working Family Taxpayer Protection Act - Changes in federal tax laws at the end of 2017 impacted Vermont's tax system, so while many Vermonters were projected to see lower federal rates, these changes meant the State would have collected a net increase of $30 million in income tax, primarily from working families. To prevent this, the Governor proposed and passed a revenue-neutral plan to update our income tax laws. This legislation, coupled with the exemption of social security benefits, reduced income tax rates and prevented the collection of a net $30 million in higher taxes on Vermonters (FY19). Specifically, this legislation:
  • Lowered tax rates across the board by 0.2% for all filers;
  • Increased the Vermont Earned Income Tax Credit from 32% of the federal credit to 35% of the federal credit; 
  • Reintroduced personal exemptions at $4,000 each;
  • Created a Vermont-defined income deduction, equal to $6,000 for single filers, $12,000 for joint filers, and $9,000 for heads of household;
  • Introduced a 5% tax credit for charitable contributions (the as-passed bill includes a cap introduced by the Legislature); and
  • Moved to a system more closely tied to Adjusted Gross Income (AGI) to add resiliency and stability to the Vermont tax system.

• Cutting the Land Gains Tax - Drawing on the Governor’s proposal, the FY20 revenue bill virtually eliminates the Land Gains Tax by substantially reducing the properties to which it applies.

• Protecting Vulnerable Taxpayers - The FY20 revenue bill reinstates a deduction for medical expenses within Vermont’s personal income tax. This will allow taxpayers to deduct any medical expenses above Vermont’s standard deduction and personal exemptions.

• Modernizing the Estate Tax - To make Vermont more competitive in retaining and attracting taxpayers, the FY20 budget adopted the Governor’s proposal to gradually increase the estate tax exemption from $2.75 million to $5 million to more closely align us with the exemption amount in surrounding states.

• STILL NEED SUPPORT FROM THE LEGISLATURE: Throughout his tenure, Governor Scott has advocated for additional tax relief to make Vermont more affordable and to help target workers in high-need fields. The below proposals have not been supported or passed by the Legislature in full, but the Governor will continue to champion more relief:
  • Working to eliminate the tax on military retirement income – For FIVE consecutive budgets, Governor Scott has proposed and funded an initiative to eliminate the tax on military retirement income. In FY23, he also proposed extending that exemption to family members as well. The Legislature has not supported or passed these proposals to-date.
  • Working to expand the exemption for social security benefits - In the FY23 budget, Governor Scott proposed increasing this exemption from $45,000 to $75,000 for single filers, but the Legislature did not support or pass this expanded exemption.
  • Working to increase the Earned Income Tax Credit – The EITC is regarded as one of the best antipoverty measures, encouraging workforce participation and helping low-income working families keep more of what they earn. In FY23, Governor Scott proposed increasing Vermont’s EITC from 36% of the federal credit to 45%. The Legislature supported an increase of only 2% (to 38%).

Reducing Costs for Families & Businesses

• Tax relief (See Tax Relief section above)

• Working to make housing more affordable (See Housing section above)

• Making childcare more affordable
  • Increased investment in Childcare Financial Assistance Program - Governor Scott has secured $12 million in increased investments in the Child Care Financial Assistance Program (CCFAP) since his first term. While the Legislature has lowered each of Governor Scott’s proposed increases, as-passed budgets have increased investment in this program by more than 30% since the Governor came to office. This investment results in reducing the cost of childcare for low- and moderate-income families.
  • STILL NEED SUPPORT FROM THE LEGISLATURE – Governor Scott has repeatedly proposed permanent funding sources to make childcare more affordable, but the Legislature has not adopted these proposals. In 2019, Governor Scott proposed modernizing online sales tax and dedicating those revenues as a permanent funding source – which has grown annually – for the Child Care Financial Assistance Program (CCFAP). The Legislature passed the modernization initiatives but did not dedicate the funds exclusively to childcare. In 2020, the Governor proposed allowing for Keno sports betting and to dedicate those funds to CCFAP. The Legislature did not pursue this initiative.

• Reducing Workers' Compensation insurance costs - Workers’ Compensation rates have decreased for six consecutive years under the Scott Administration, resulting in Vermont employers collectively paying an average of 41% less in premiums than they did in 2016. This is the result of a concerted effort by the Scott Administration, led by the Department of Financial Regulation, to design new programs and new constructs to lower rates while maintaining benefits, alongside employers’ success in keeping employees safe.

Holding the Line on New Taxes & Fees and Slowing State Budget Growth

• Governor Scott has held the line on adding new, or increasing existing, taxes throughout his tenure.
• The FY18 state budget did not raise or add taxes or fees and held statewide property tax rates level for residential and non-residential rate payers.
• The FY19 state budget did not raise or add taxes or fees and held statewide property tax rates level for residential rate payers for a second consecutive year.
• In 2018, the Governor worked to implement a new approach to managing the State’s Education Fund, which – with the support and hard work of school boards across the state – helped Vermonters avoid about $71 million in forecasted property tax rate increases. Of those total savings, $29 million were a direct result of the Governor’s budget vetoes.

Since coming to office, Governor Scott has prioritized the creation, preservation and revitalization of available housing and rental units in Vermont, recognizing this is also a priority issue to retaining and attracting more workers.

On three different occasions, the Governor has proposed – and worked with the Legislature to pass – the largest investments in housing in the state’s history, including a $37 million Housing for All bond in 2017 (FY18), and $250 million of new money for affordable housing creation, revitalization and for those in homelessness in 2021 (FY22) and 2022 (FY23).

Collectively, $338 million of pandemic relief and recovery money was put into these initiatives, on top of $118 million of traditional investments in housing over the same period, for a total of more than $456 million invested over the last two years. These investments have created or preserved about 2,000 units to date, and the Administration and partners expect to create or preserve about 2,000 more by 2026, for a total of about 4,000 state-supported affordable housing units.

Preserving and Creating Housing Units

• Affordable/Mixed Income Housing –
  • Investing $281.5 million for creation and preservation of housing for mixed-income homeownership and rentals, permanent housing for the homeless and shelter beds. This money is allocated by the Vermont Legislature to the Vermont Housing & Conservation Board (VHCB) to execute on these investments (FY22-FY23). To date, these investments have created Nearly 1,200 new affordable homes, and created or preserved nearly 500 shelter beds. 
  • Investing to improve the quality and availability of manufactured homes, with over $5 million in the Manufactured Home Replacement Program and the Manufactured Home Community Program. 
  • Proposed and passed a housing bond, valued at $37 million, to increase availability of homes working families can afford (FY18). With this bond, the state has created 843 new affordable housing units.

• Filling the Gap in Middle-Income Housing – Proposed and enacted the creation of the Missing Middle Home Construction Program. Funded with $15 million, this pilot program will help spur development of housing middle-income families can afford. (FY23)

• Tax Credits to Support Investment in Affordable Housing – Proposed and passed a provision allowing captive insurance companies to purchase low-income tax credits, which will raise additional funds for affordable housing. (FY19)

• Prioritizing housing projects – The Scott Administration and federal and private partners continue to prioritize housing projects through grants available through other economic development programs, including the State Brownfields program; the Community Investment Program; the Vermont Community Development Program; Northern Borders Regional Commission; and more. Additionally, the Governor proposed, and the Legislature supported, investments to help communities expand water, sewer and wastewater infrastructure, which is essential for expanding housing. 

Revitalizing Existing Stock

• Created the Vermont Housing Improvement Program (VHIP), funded with over $32 million over 3 years (FY21-23), to help small landlords revitalize vacant rental units, bringing them back to market with improved quality, an affordable rate. Most of these units go to families exiting homelessness. To date, this program has improved and brought online nearly 350 affordable rental units.

Regulatory Reform to Accelerate Housing

• Making housing development easier in targeted areas - While much more reform is needed, the Scott Administration has worked with the Legislature to make regulatory changes that will expedite housing development in the areas where we want and need more housing, including: 
  • Made it easier for small towns and villages to secure a Neighborhood Development Area Designation in Act 182 of 2022. This designation makes these small towns eligible for development tools like tax credits and Act 250 exemptions for affordable housing projects. 
  • Streamlined and simplified the regulatory process for the development of Priority Housing Projects (PHPs) in Act 69 of 2017, making it easier to build housing in targeted areas.
  • Modernized permitting laws to allow property owners to build Accessory Dwelling Units (ADUs).

• Modernizing municipal rules and regulations - Propose, supported and enacted a series of initiatives to encourage, and help, municipalities modernize bylaws with a goal of allowing more housing in the areas where it is needed, including:
  • Increased funding for the Bylaw Modernization and Municipal Planning grant programs in FY23.
  • Made it more difficult for municipalities to deny development of small multi-family units based on certain criteria (though more needs to be done to address other criteria that can deny these projects) in Act 179 of 2020. 
  • Required cities and towns to respond to Act 250 applicants on any municipal impacts within 90 days to help expedite this review process. 

Supporting Homeowners and Renters

• Home purchasing assistance - Drawing from the Governor’s proposals, the FY20 revenue bill increases available tax credits supporting first-time homebuyers and affordable housing by $250,000, helping to bridge the gap for those searching for housing that’s affordable in Vermont.

• Renter rebate reform - Proposed, and the Legislature passed via H.934 in 2020, reforms to the renter rebate program. By simplifying the application and improving efficiency, we’ll reduce the burden and lower administrative costs resulting in about $800,000 more in rebates for the low-income renters who need them.

Supporting Vermonters Facing Homelessness

• The Scott Administration, led by the Department for Children & Families and the Department of Housing and Community Development, are focused on connecting homeless households to new units, and connecting Vermonters with housing navigation services, while investing in permanent housing, shelter beds, and human services needs.
  • From April 2020 to May 2022, over 1,800 households have exited homelessness to safe and stable housing.
  • State investments, through VHCB, have created 160 new shelter beds and preserved 314 more across 18 shelters.
  • The VHIP program has brought nearly 350 affordable rental units online, most of which are going to families exiting homelessness.

• From 2020 to 2022 alone, the State Auditor has estimated that over $300 million has been spent to directly support homeless Vermonters, more than tripling annual support in any prior year.

Training and Upskilling Workers

• Career Technical Education (CTE) – Governor Scott has championed CTE and trades training, highlighting the value of trades careers, critical need to grow this workforce, and investing in more opportunities, including:
  • $15 million to purchase delipidated homes, for high school and adult CTE students to rehab as part of their training. (FY23)
  • $500,000 to initiate a trial CTE program for electrical transportation (aviation and vehicle) sector training. (FY23)
  • $1.4 million in federal education aid for a CTE recruitment campaign, encouraging more students to seek this important training. (FY23)
  • Governor Scott proposed investing $45 million in Education Fund surplus to strengthen the CTE system. The Legislature did not support this initiative.
  • Beginning the work to, and building support for, changes in the funding and governance systems for CTE to strengthen the experience for both high school students and CTE students, and to address the current competitive nature of funding CTE programs.
  • $1.7 million to CTE centers to offset pandemic-related costs. (FY22)
  • Beginning the work to allow students to attend a state-designated virtual high school as their sending school for academics, which will give students more time for work-based learning and CTE courses. (FY23)
  • Invested $275,000 to expand apprenticeships, training and post-secondary career and technical education for Vermont workers. (FY20)
  • Proposed and passed a $400,000 investment to purchase training equipment, fit up new space and expand adult career and technical education training opportunities at centers across Vermont. (FY19)

• Internships, Apprenticeships and Work-Based Learning –
  • Proposed and secured changes to transition the Department of Labor internship program to a work-based learning and training program to help upskill and reskill Vermont workers for good paying, high-demand jobs. (FY23)
  • Invested $2 million to promote and expand the number of registered apprenticeships, and to reimburse employers and apprentices for up to $300 in tool costs. (FY23)
  • Directed the Department of Labor to review regulatory barriers for apprentices and pursue changes that would provide flexibility for employers who sponsor apprenticeships (ongoing).

• Career Training – Regularly proposed and passed increased investments in VSAC career training programs, most recently (FY23) including $1.5 million for its 802 Opportunity program, $1 million for its Advancement Grant and $2.8 million for its Green Mountain Grad program, all of which provide career training for adults or students for high-demand careers.

• Higher Education – Governor Scott has proposed historic increases to the Vermont State Colleges system, with a focus on affordability for students and emphasis on retaining students for Vermont jobs. Since coming to office, the State has significantly increased its investment in VSC and in FY23 increased the base budget for the University of Vermont for the first time in years, adding $10 million to the University.
  • The Governor also supported and enacted legislative proposals to invest $10 million in one-time federal funds for workforce upskilling and degree completion programs at VSC and UVM in both FY22 and FY23.

Retaining and Recruiting Workers

• Critical Occupations – While the workforce shortage affects every sector, the State invested federal aid and state surpluses in FY22 and FY23 to recruit high-demand workers, including:
  • Trades – $3 million to cover educational expenses for Vermonters pursuing industry-recognized training and certifications for careers such as building, mechanical, industrial or medical trades, emergency services, energy, transportation, robotics, etc.
  • Health Care – Nearly $100 million for retention and recruitment incentives, scholarships, loan repayment and training for nurses and other health care workers and educators. The Governor also proposed an income tax credit for nurses, that the Legislature did not pass.
  • Childcare – $7 million in incentives to help retain child care workers, and nearly $15 million for a critical occupations scholarship, which includes childcare workers. The Governor also proposed an income tax credit for child care workers, that the Legislature did not pass.
  • Infrastructure – Investing $1.6 million to build workforce critical to advancing Governor Scott’s transformational infrastructure investments, including workers to assist with weatherization of homes and broadband deployment.

• Career Placement – Proposed and secured $1.5 million in new funding to test a Regional Workforce Expansion program, which will strengthen local placement efforts by better coordinating between employers, job seekers, students, schools and more. Governor Scott proposed piloting this program in six regions, but the Legislature only funded three for FY23.

• Addressing Barriers to Employment – Governor Scott supported initiatives to reduce barriers to employment for historically marginalized communities, new Americans and those who face other barriers, including those with disabilities, who are in recovery, or who are transitioning out of the correctional system. This includes nearly $2 million in new funding for these efforts in FY23; placement of career coaches in recovery centers (launched in FY19); development of resources encouraging better hiring and more employee support; and more.
  • In 2020, the Governor proposed, but the Legislature did not pass, a grant program to support the development of community-based system(s) for relocating refugees, asylum seekers, and other legal immigrants in partnership with the Vermont Relocation Assistance Program and the State Refugee Resettlement Office.

• Worker Recruitment & Relocation – Since FY2019, secured annual funding and implemented program to recruit and relocate workers to work and live in Vermont. Governor Scott has also consistently proposed additional funding that the Legislature has not supported, for targeted workforce recruitment campaigns and to build out a regional network to ensure every corner of our state has resources to find and attract much-needed workers.

• Voluntary Paid Family & Medical Leave Insurance - The Scott Administration has partnered with The Hartford to begin offering VT PFMLI, a voluntary paid family and medical leave program, which will roll out in three phases. In July of 2023, Vermont State employees will begin receiving the paid family and medical leave benefit and serve as a base for coverage that will then be available for employers with two or more employees to purchase for employees beginning in July 2024, and individuals in July 2025. Read more here.

Modernizing Licensing Requirements & Processes to Expand Workforce

• Military Training Recognition - Working with the Secretary of State's Office of Professional Regulation (OPR), proposed and passed Act 119 of 2018, making it easier for servicemen and women to transition into the civilian workforce in Vermont.

• Licensed Treatment Professionals - Working with OPR, providers and industry stakeholders, reformed administrative rules governing licensed treatment professionals. These reforms allow for growth in the number of professionals in the mental health and substance use disorder treatment fields.

• Improved Licensing Processes - Proposed with the Secretary of State, and passed as Act 152 of 2020, a package that makes it easier for licensed professionals to relocate to Vermont. Specifically:
  • Make it easier for people with licenses in others states to become licensed in Vermont;
  • Give members of the military and veterans credit for military training;
  • Give a second chance to people who have criminal backgrounds and are trying to earn stable, meaningful employment to become licensed; and
  • Require re-evaluation of continuing education requirements to make sure we don’t add unnecessary time and expense for those already licensed and working. 

• Waiving Occupational Licensure Fees: Proposed, but the Legislature did not pass, waiving occupational licensure fees for those 25 and under to help attract and retain more young workers. (FY23)