On Friday, the legislature officially adjourned (at least for now) upon passing an $8.5 billion state budget, the largest in state history. Significant investments, including $120 million in child care reform, $211 million in housing, $100 million in base increases for human service providers, and $30 million in school meals, make progress towards addressing many of the challenges Vermont is up against.
With so many urgent and compelling needs competing for funding, and no shortage of differing opinions when it comes to priorities, tactics and funding mechanisms, the fate of the budget is still unclear. Substantial tax increases make it highly likely that Governor Scott will veto the bill, and lawmakers are already expected back for a veto-session on June 20th. Despite their supermajorities in the House and Senate, Dems and Progs will still have to flip several of their allies’ “nay” votes that were cast in response to funds to extend the emergency housing program not being included in the budget deal.
Even with all that is still up in the air, more information about the budget and other bills can be found below:
H. 217 / Unemployment Insurance
H. 55, the Unemployment Insurance (UI) bill that we have been following closely this session, has had quite the journey to the finish line. You may recall, this bill would eliminate the UI exemption for nonprofits with fewer than four employees as of July 1, 2024 and have the Department of Labor work the Common Good VT and others to provide outreach and education around employer UI responsibilities. Already having absorbed elements of H. 92, it was wrapped into H. 217 on the Senate side with workers’ compensation provisions. In the final hours, the Senate chose H. 217 as the vehicle for its entire childcare package – putting the otherwise relatively uncontroversial bill in jeopardy. While the House finally conceded to the Senate’s payroll tax, passing the monumental bill, the Governor, opposed to increasing taxes, will likely veto the legislation. So even though the language we advocated for made it out, we will have to wait and see how things shake out during the June veto session.
Childcare
Essential to strengthening our workforce, the two chambers managed to pass the aforementioned H. 217 child care bill that would add $120 million per year into our child care system, despite their differences over the funding mechanism. The House preferred an increase to corporate and personal income taxes, as opposed to the payroll tax that was eventually agreed upon. The payroll tax would be .44% with at least 75% of the tax required to be paid by employers.
What does this fund? The bill aims to raise wages for early childhood education, and attract new workers to the field, by increasing provider funding by about 35% through increased rates. The bill would also expand eligibility by making free childcare available to families making up to 175% FPL (currently capped at $150 FPL), raising the subsidy cap first from 350% to 400% FPL in April 2024, then from 400% to 575% FPL in October 2024, and by making Vermont residents who have a citizen status that makes them ineligible for CCFAP, eligible for the same supports covered with state funding. More details can be found in the Fiscal Note and this Vermont Public article.
Housing
Also critical to stabilizing Vermont’s workforce, housing was a major focus this session. While not an issue we’ve been active on, we are acutely aware of the challenges the housing shortage has had on nonprofits – from recruitment to retention, without available, affordable housing, it is difficult to staff our missions.
S. 100, or the using Housing Opportunities Made for Everyone (HOME) bill, largely deals with municipal zoning reform. You can read a summary of the bill here and a summary of housing investments here.
Budget Breakdown
Nonprofits had some wins this session, but in many cases, new gains fall short. Here is a summary of “The Big Bill,” as well as the final language. Some nonprofit highlights are included below:
- Human Service Provider Increases: This year’s budget included almost $100 million in base funding for human service providers, but that doesn’t come close to touching the funding levels increasingly strained organizations were hoping for. Vermont Care Partners representing DAs and SSAs were calling for 10% increases, but only received 5%. Youth Service providers seeking 8% increases received only $200K. These are just a couple of examples of why we still need to Fund the Full Cost of Nonprofit Services.
This document summarizes base increases and one-time funding for providers. - One-time Funding: With pandemic funding running out, and an uncertain economic forecast, many hoping for base or multi-year funding were only granted one-time funds, if anything at all. One of the few initiatives that was cut entirely by the Committee of Conference was $255K that would have expanded United Way’s Working Bridges Program to new parts of the state. This document shows all one-time funding, including $650K to keep Vermont’s 211 service operating and a last minute $12.5 million to support housing transition when the hotel voucher program comes to an end.
- Workforce Development: While no general or nonprofit-specific programs were created this year, programs benefiting nonprofit sub-sectors were funded. Training and incentive programs focused on building the education, health and human services, and childcare workforces. Other workforce programs focused on creating educational opportunities for youth and in higher education, especially to support growing industries and keep graduates in the state. Economic development programs target the arts, agriculture, small business and rural industry. See one-time funding and page 82 of the bill for details.
- Miscellaneous: A few additional items of note for the sector:
- Equity: Funding was appropriated for the Truth and Reconciliation Commission, the New American Labor Force Program, a statewide language access plan, and to establish an Office of Health Equity, as well as health equity community grants.
- Human Services, Prevention and Recovery: Prevention coalitions, afterschool programs, recovery centers and support providers, the VT Foodbank and Prevent Child Abuse Vermont received funding for their work.
- Recreation: State funding to match federal funds will support the Small Communities Outdoor Recreation Grant Program.
Other Bills & Updates
- Paid Family Medical Leave: H. 66 did not make it through this year, as the Senate preferred to prioritize childcare. The bill is still in the Senate Economic Development Committee, so lawmakers will have to pick it up again next year.
- Vermont Saves Retirement Program: H. 135 would establish a new “opt-out” retirement savings program for employees whose employers do not already offer a retirement plan. Employers with more than five employees (or more than 25 employees for the first year of the program in 2025) would be required to notify the State Treasurer, who will facilitate the program, of their employees’ decision to opt-in or opt-out. Employers cannot contribute to the plan due to federal regulations. The bill was passed by both chambers and is on the way to the Governor.
- Privacy Legislation: H. 121 is a bill related to consumer privacy, including provisions addressing the protection of biometric data, data minimization, and data brokers. This dense bill was pieced together from legislation in other states, making it difficult to comprehend, even for those impacted by it.
It has been brought to our attention that the bill may have implications for nonprofits. Not just those that manage biometric data, but also for those who use third party services to handle sensitive information such as donor databases. Some states that have passed/considered data privacy legislation have included a nonprofit exemption. You can learn more about data privacy bills and the potential impact on nonprofits here.
The committee plans to work on this bill over the summer to make it easier to understand, as well as to hear from additional stakeholders, with plans to pass it by the end of the biennium. At this time, the Committee is looking to mirror language from California and/or Connecticut, but are opposed to an entity exemption (like the nonprofit exemption in CA’s law). We feel it is critical to have nonprofit voices heard on this issue. If you have concerns about what data privacy legislation could mean for your organization, please email [email protected] or reach out to the Committee directly.
We’re already preparing for next legislative session, and plan to continue to scale up our presence at the State House. Please reach out to [email protected] with any questions, concerns or feedback about legislation impacting Vermont’s nonprofit sector.