Legislative Report

Vermont Grocers' Association

Legislative Report

May 14, 2008

Prepared by Shouldice & Associates

2008 Session Summary Report

Going Once, Going Twice, Gone!

After years of relatively easy spending, this year the Vermont Legislature and Governor found out what it is like to be poor!  The tradition has been to start new programs with unanticipated, end of year, extra revenues from the general fund. This session started out no different, but the Lawmakers who were most accustom to the economic gravy train, had to deal with the very stark reality - no money.  For example:

Health Care

Since l988, the Vermont Legislature has been reforming health care.  They have been spending more and more money on health care studies, health care commissions, health care consultants, health care directors, health care reform, Medicaid, uninsured coverage, under-insured coverage and last but certainly not least, health care for the over insured.  After much study and spending little has been done to slow down the ever increasing cost of health care.  So, with no money to spend, election season looming, they seriously contemplated mandating new programs for businesses and their employees, all of whom are already paying high premiums for health insurance.  But this year, expanding the health care system and cost shifting on to those that are already paying the bill wasn’t a “nut” that they could crack as they have in past years.  Taxpayers are suffering from the slowing economy and tightened spending and as a consequence tax revenues are falling short of expectations. 

Transportation

After decades of neglecting our roads and bridges, Vermont is at a point where procrastination is costing more than actually putting together a strategy to complete projects.  Bridges are crumbling, roads are falling apart and downtown projects are being put on the back burner!  Borrowing from “Peter to pay Paul” has the State in the conundrum of now having to “pay the piper”.   So, in order to fix or repair our decaying infrastructure, the Legislators and the Governor have finally agreed to bond for money as part of the “catch-up” strategy. 

Add to the above, Legislative Committee’s spent weeks discussing other funding mechanisms which only provided great humor for the political spectator:  selling or leasing the lottery as proposed by Governor Douglas, increasing the decommissioning fund at Vermont Yankee and cutting jobs across State Government to reduce budgets.  The only major initiative that Legislators compromised on was the Governor’s Economic Stimulus Package, which was said to infuse more than $214 million into Vermont’s economy. 

The Legislature came to work in January soon realizing that they needed to pass a budget with the money they had.  They claimed they would not raise taxes in an election year - but didn’t entirely hold that line.  They added a tax on health insurance claims to provide grants to Vermont doctors for Electronic Medical Records, believing it is a “system cost” that everyone should pay for and in the long run, will save money.  In addition, the administration discovered the Petroleum Clean-Up Fund was healthier than needed, so rather than reduce the gas tax, $2.8 million was transferred out of the fund and used to offset costs of the “sales tax holiday”.  All economic indicators report that Legislators could still be faced with a deficit in 2009.  And in 2010, the general fund is expected to have a $40 million shortfall with Medicare needing another $50 million.  Might this scare off freshman Legislators from returning, or maybe some of the higher-ranking Legislators will decide enough is enough and retire?  More than a dozen Legislators are rumored to not be returning, while other potential candidates have stepped down from full-time jobs to begin organizing their campaigns.  Just this week, Speaker of the House, Gaye Symington, held a press conference on the State House lawn announcing her ambitions to become Vermont’s next Governor.  All statewide campaigns will officially kick off June 2^nd at which point Vermont will again become littered with campaign signs, commercials, public debates and more rhetoric.

Alcohol & Tobacco Related Issues

H.94 Retail Sale and Taxing of Specialty Beers: awaiting the Governors action.

The bill permits second class licensees to sell beer with the same alcoholic content as wine and would impose the same tax on malt beverages with higher alcohol.  The Vermont Grocers’ Association and the Vermont Brewers’ Association have worked hard throughout the session to support H.94.  The bill passed by the House last session and finally passed the Senate late in this session.  While in the Senate, the Department of Liquor Control asked that a study be attached to the bill looking at “flavored malt beverages”.

H.149 Liquor Identification and Tobacco Licenses: Governor Douglas signed into law 5.5.08. 

The bill defines a valid identification card and includes the “enhanced” driver’s license language.  The bill also moves the application process for liquor and tobacco licenses to the Department of Liquor Control rather than with the municipality, but does allow the municipality to retain a portion of the application fee. 

H.574 Beverage Container Redemption: awaiting the Governors action.

This bill amends the state bottle bill law to require the operators of certified redemption centers to participate in a container co-mingling program.  It will also require beverage container manufacturers or distributors to pay an additional one-half cent per container, for a total of four cents, for returned containers that are not part of the co-mingled agreement. The products would be separated by beer and soda and then further separated by glass, plastic and aluminum, reducing the sorts at redemption centers.  The new system will be on a trial period until January 2010, at which point ANR will report to the General Assembly on how the system is working and if the cost to redemption centers has been reduced.

H.700 Sale of Bottles of Wine at Festivals: awaiting the Governors action.

The bill allows for festival organizers to obtain a “festival permit” from the Department of Liquor Control (DLC) to allow the sale of unopened bottles of wine to be purchased for the consumer to take home.  The host of the festival would need to obtain a permit from DLC at least 15 days prior to the event.  Each manufacturer or rectifier planning to attend a single special event under this permit may be listed on a single permit. However, each attendance at a special event shall count toward the manufacturer’s or rectifier’s 12 special event permit limitation.

S.231 Studying Lowering the Drinking Age: did not pass.

This bill proposes to create a commission to provide a comprehensive analysis of the benefits and the disadvantages of the present drinking age which is 21 as well as the implications of lowering the drinking age to 18. The Legislature believes that real statistics and serious consideration must be given before lowering the drinking age in Vermont. 

S.259 Extension of Credit by Wholesalers of Alcoholic Beverages: did not pass.

This bill proposed to permit wholesale dealers to extend credit to first and second class licensees for up to 15 days.  This is a bill that many retailers have long been in favor of and wholesalers strongly oppose extending credit.

S.313 License to Store and Ship Wine:  awaiting the Governors action. 

The bill is designed to create a permit which is obtainable from the Vermont Department of Liquor Control to provide permits to store and ship wine. The permit fee will be available to a person who operates a climate-controlled storage facility where wine owned by another person is stored.  The permit fee will be $200 per year and all applicable taxes must have been previously paid.   The storage facility will have the ability to accept shipments from any licensed in-state or out-of-state business.  Wine may be stored and transported only for shipment to the owner of the beverages or to another licensed wine storage facility and can be shipped only by common carrier.

S.324 Beer and Wine Tasting: awaiting the Governors action.

The bill adds beer tastings to the current wine tasting law which sets specific guidelines and limits to second class (retail) licensees through the purchase of a permit.   The bill increases the number for tastings from one a month to 30 annually and increases the number of customers allowed at the tasting at one time from 4 to 8. The legislation was introduced by Senators Hinda Miller, D-Chittenden, and Bill Carris, D-Rutland, at the request of VGA. Companion legislation was sponsored in the House by Rep. Joyce Errecart, R-Shelburne.

Vinous Shipping License Report to Legislature

Vermont Department of Liquor Control (DLC) has provided a report regarding the FY 2007 revenues of the Direct Shipment of Vinous Beverage Legislation of 2006. Look for it here:

http://liquorcontrol.vermont.gov/reports/vinous_licenses.pdf

Confirmations: Vermont Liquor Control Board

The Legislature confirms the current Liquor Control Board to another term.  The Board is as follows: 

·         John Cassarino replaced long time member Harry Daniels after he passed away two years ago.  John is the former Mayor of the City of Rutland.

·         Walt Freed is a retired oil dealer and convenience store operator in Southern Vermont and New York.  Walt is a former member of the Vermont General Assembly and was Speaker of the Vermont House of Representatives.

·         Stephanie O’Brien is the daughter of a former member, and like her father is involved in real estate development in Chittenden County.

S.344 Internet and Mail Order Sales of Tobacco Product: Governor Douglas signed into law 5.6.08. 

This bill bans internet tobacco sales in Vermont in an attempt to capture additional tax revenue and limit access to youth.  The Vermont Grocers’ Association supports the ban of internet tobacco sales.  The Vermont Attorney General’s Office testified that this loophole needed Legislative action because internet tobacco products are a cheap and easy way for under-age smokers to obtain products. 

S. 247 Scrap Metal was amended to H.599 Boating While Intoxicated and Driving While Intoxicated: awaiting the Governors action. 

The scrap metal provision that was added to H.599 will require scrap metal processors who purchase metal from an “unauthorized seller” to record the seller’s identification information, the time and date of a transaction, a description of the items purchased, and requires the information be kept in a permanent ledger.  The record would then be available for inspection by law enforcement. All sales will be reported to law enforcement upon a request by the chief of police or any other law enforcement officer of the locality in which the scrap metal processor does business.  

A violation is subject to a $1,000.00 civil penalty, and a willful violation is punishable as a misdemeanor.  The reporting of these metal products was established as a deterrent for items like beer kegs and catalytic converters from being stolen. 

Energy

S.209 The Vermont Energy Efficiency and Affordability Act: signed by Governor Douglas on 3.19.08.   The framework of the bill was passed by the Senate during the veto session July 2007.  The House continued to work on the bill and it was signed by the Governor in March of 2008. 

The bill proposes to meet three goals for Vermont:

1.     Securing energy independence

2.     Creating more economic development

3.     Protecting our natural environment

The bill provides a clear taxing policy on wind development in Vermont and provides reduced electric rates for low income Vermonters. 

The bill accomplished its’ goal by creating a new program to encourage energy efficiency within spaces heated by oil, propane and biomass.  The program will be run by the Department of Public Service, but the electrical energy efficiency utility, Efficiency Vermont, will also be responsible for the new program.

S.350 Energy Independence and Economic Prosperity: awaiting Governors action.

This Legislation seeks to expand our State's energy independence by providing, where feasible, for the installation of renewable energy systems in state buildings, creating goals and measures for greenhouse gas reductions, energy efficiency, and state transportation goals.

The bill will require a review of the State Energy Plan at least every five years and a thorough review of solid waste planning. In the future, solid waste planning will include commercially generated and other organic wastes, used clothing, construction and demolition debris and obsolete electronic equipment.  It will also include an assessment on the feasibility of providing the option of single source recycling.  Particular consideration shall be given to the need for additional regional or local composting facilities, the need to expand the collection of commercially generated organic wastes, and the cost effectiveness of developing single stream waste management infrastructure adequate to serve the entire population, which may include material recovery centers.

S.373 Full Funding of Decommissioning Costs of a Nuclear Plant: vetoed by Governor Douglas on 5.7.08. 

This would have required Vermont Yankee to pay upfront for the expected “decommissioning” of the plant if Entergy re-organized its nuclear plants into a new corporate entity. There are currently financial and management guarantees in place to address the needs of a premature shutdown or decommissioning.  Forcing Vermont Yankee to "top-off" the fund at this early date, however, could have cost up to $400 million.  This would have marked the first time that the Legislature would have directly interfered with an open docket before the Public Service Board.

Environmental Issues

S.261 Phthalates in Products for Young Children- passed.

Phthalates are chemicals used generally as a softener in plastic products.  The European Union and California already have laws restricting the use of Phthalates.  The Phthalates bill is very similar to legislation passed in California.  The bill covers phthalates in products intended for children under three. The link is below

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/passed/S-261.HTM

S.152 Lead in Consumer Products- passed.

The legislation sets new limits on allowable lead in certain products for children including food packaging and jewelry. While FDA guidelines already forbid any amounts of lead in food packaging there have been some reports of Mexican candy wrappers with trace amounts of lead in them. Also, retailers selling jewelry must post informational signs on jewelry intended for adults that does not meet the lead standards included in the bill.  The bill is not intended to cover electronics that are not specifically targeted to children under 12. The complete text of this bill can be found at the following link:

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/passed/S-261.HTM

H. 515 Disposal of Mercury Thermostats- passed.

This bill is a manufacturer responsibility bill. Manufacturers are accountable for the costs of the program.  At the same time this bill does require retailers’ participation in the recycling programs.  All stores who sell thermostats should read this bill carefully. 

The Vermont Agency of Natural Resources recently conducted a pilot project of thermostat recycling and some retailers have already participated.  The complete text of this bill can be found at the following link:

http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/passed/H-515.HTM

H.656 Management of Waste Tires:  did not pass.

This bill would have charged a tax of 50 cents per tire to raise $300,000 for solid waste districts to have an annual “Amnesty Day” for Vermonters to return old tires for recycling.  The Agency of Natural Resources (ANR) said they currently have their own program that is recycling approximately 95 – 98% of the tires in Vermont. 

H.106, S.17 and S.256 Disposal of Electronic Waste: did not pass.

The purpose of all of these bills was to implement a system of collection and recycling for all electronic devices.  The bill(s) would have proposed a manufacturers registration fee and required manufactures to either provide a convenient disposal site or collect them at retail outlets.  The manufacturer would also be required to report sales data in comparison with “E-Waste” collected.  The bill would have stopped the disposal of electronics at solid waste facilities, ultimately keeping them out of Vermont landfills.  Legislation will be introduced next session and action is expected.

H.743 Plastic Bag Tax- did not pass

Legislation calling for a new 15 cent tax on all plastic bags sold or provided by retailers to customers was introduced but not seriously considered.

Fees and Taxes

H.691 Executive and Judicial Branch Fees: awaiting the Governors action. 

Each year a “fee” bill is introduced, which adjusts executive and judicial branch fees that provide State government with more revenue. Various fees were increased which raised almost $6 million. Workers Compensation took the biggest hit with an increase of 93% in their administrative fund. This tax was .42% and was raised to .81%, raising $ 831,000, Judiciary fee increases raised almost $2 million, BISCHA fee increases totaled more than $2 million, with the Secretary of State’s Corporation Division raising close to $500,000.

H.888 Miscellaneous Tax Amendment: awaiting the Governors action.

This bill provides a vehicle for technical and miscellaneous tax changes required by the Legislature. This session the bill played major host to the Governor’s Economic Stimulus Package.

The bill makes the following changes to Vermont State statues:

·         July 12^th and 13^th sales tax holiday on items under $2,000 each

·         July 12^th through 18^th sales tax holiday on energy star appliances under $2,000 each (note: municipalities who have a local option sales tax will be reimbursed by the State and businesses who must reprogram their registers may be reimbursed for limited outside expenses)

·         extends exemption of sales tax on airplane parts for ten more years

·         reduces hospital provider tax rates from 6.0% to 5.5%

·         increases fire service training councils budget from $400,000 per year to $800,000 paid for by insurance companies

·         extension of 2007 filing deadlines for certain property tax adjustment claims

·         education property tax exemptions for skating rinks used for public schools for two more years

·         beginning the process of taxing e-business entities

·         creates a Vermont employment growth incentive (VEGI) for green industries

More on the Vermont Sales Tax Holiday 

Questions & Answers available on State of Vermont, Tax Department website:

http://www.state.vt.us/tax/salestaxholiday2008QA.htm

Financial Issues

H.600 Credit Card Merchants Fees: did not pass, but resolution urging Congressional action did.

Credit card interchange fees will be considered at the Federal level. Congressman Peter Welch has co-sponsored a bill to level the playing field and allow merchants to negotiate fees with credit card companies.  If this Legislation is not passed, the unfair practice of exurbanite interchange fees will continue to be charged to merchants.  Thus lowering profits and increasing the cost to consumers.

H.600 would have established transparency in the rates and rules, something the major card associations, Visa and MasterCard are working towards.

S.26 Payroll Cards: did not pass.

This bill would have allowed for electronic payment of wages via payroll cards provided you are a business that has employees and are doing business in Vermont.  The bill was considered later in the session as part of the Appropriations Bill to save money for government agencies.  However, a more modest proposal was included to provide free checking accounts and direct deposit of wages for all state employees.   http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2008/bills/senate/S-026.HTM

Health Care

H.886 Vermont Health E-Fund: incorporated into the State’s budget bill: awaiting the Governors action. 

The Senate Appropriations Committee amended the House Budget bill to increase the tax on health care claims from .12 or 1% to 0.199 of 1% tax on health insurance claims until 2015. The tax will fund the Vermont Information Technology Leaders (VITL) to support Electronic Health Records (EMR).  Taxes collected will go into a “special fund” to provide grants for the money necessary to doctors and hospitals to set up EMR.  The anticipated amount of revenue needed is $32 million. A report to the Legislature in 2011 will provide an outline of the health of the fund and number of grants distributed to Vermont doctors.

In summary, as a result of the Senate action, health insurance claims will be taxed to pay for:

1.     Grants of up to $45,000 each for 228 physicians to buy computers and EHR =  $10,260,000

2.     Grants of up to $22,500 each for 172 mid-level practitioners to do the same = $3,870,000

3.     Interfaces ($2,200 each), maintenance costs (18% of deployment, $8100/provider/year) and user fees ($600/provider/year) =  $12,922,124

4.     To VITL for consulting on clinical transformation = $2,800,000

5.     To VITL for operations = $1,708,000

H. 887 Health Care Reform:  awaiting the Governors action.

Under intense budget constraints, the Senate and House Health Committees agreed on a much “leaner package” then they had set out to pass in January.  The final bill contains the following provisions:

·         Amending the 75% rule to 50% for employers with fewer than 10 employees and adding that employees enrolled in Catamount, Medicaid, Medicare, VHAP, and ESI do count towards both the 75% and 50% thresholds.

·         Instructing the Commissioner of Health, to work with communities to develop comprehensive plans that identify and prioritize community needs relating to wellness and healthy living, establish nutrition guidelines for competitive food and beverage sales in schools, convene a work group to enhance collaborative learning and interactive sharing of best practices in worksite wellness and employee health management, convene a workgroup to explore programs and best practices for addressing child and adolescent obesity, and recommend methods for making Vermont free of artificial trans fats in prepared foods by 2011.

·         Provides expedited “rule-making authority” to the Commissioner of Banking Insurance Securities and Health Care Administration (BISHCA) that would allow health plans to establish rewards, premium discounts, split benefit designs, rebates, or otherwise waive or modify applicable co-payments, deductibles, or other cost sharing amounts in return for adherence by a member or subscriber to programs of health promotion and disease prevention.

·         Requiring the Secretary of Human Services to request a waiver from Center for Medicare and Medicaid Services that would lower the waiting period for Catamount and VHAP from 12 to six months but leave the final decision to the Legislature.

·         Expanding the definition of "uninsured" to include an individual who has had a non-group health insurance plan with an annual deductible of no less than $10,000.00 or no less than $20,000.00 for two person or family coverage for at least six months - in effect, making them eligible for Catamount Health after a twelve month waiting period.

·         Amending the definition of loss of employment, a qualifying event for Catamount, to include a reduction in hours that results in ineligibility for employer-sponsored coverage, unless the employer has terminated its’ employees or reduced their hours for the primary purpose of discontinuing employer sponsored coverage and establishing their eligibility for Catamount Health.

As well as the following studies:

·         Consideration of system-wide budgeting at the regional level within the state, including a design based on the "accountable care" organization model.

·         Considerations of a merger by calendar year 2011 of the non-group (including Catamount Health), small group, and association markets.

·         Public financing of health care, explore broad-based revenue sources, identify and assess major federal issues with public financing, and analyze the impact of different financing options on the underlying cost drivers in health care.

Senate Health Care Chair, Doug Racine, D-Chittenden, deserves special thanks for holding the line on a couple of new mandates that would have increased premiums to Vermont employers and their employees.

S.340 Mammography Patient Cost Containment: awaiting the Governors action.

This bill is to provide the full cost of an annual mammogram to females 40 years or older subject to co-pays no greater than $25 and shall not be subjected to either a deductible or a coinsurance requirement. Prior to this new legislation, mammograms were provided to females at age 50 and could be subject to a deductible.

Motor Vehicle Issues

S.358 Enhanced Drivers Licenses: awaiting the Governors action. 

This Legislation is needed in order to move forward with the implementation of an enhanced driver’s license program in Vermont and paves the way for an alternative form of identification which will likely ease the transition to the Federal passport requirements. 

JRH 39 Truck Weights- passed.

The Vermont Legislature passed JRH 39, urging Congress to authorize the increased truck limits on Vermont roads to 90,000 with a minimum of five axles.  Governor Douglas supports the resolution which will then be sent to Congress for consideration.  Congressman Peter Welch is actively pursuing this piece of Legislation.  New York, Maine, Massachusetts and New Hampshire all have comparable limits.

Other benefits identified were:

·         reduce the cost of shipping heating oil, gasoline and kerosene

·         reduce truck traffic on secondary highways

·         fewer truck trips equal safer travel

·         reduction in carbon footprint

Other Issues

S.322 The Slaughter and Processing of Livestock, Dairy Promotion Council: awaiting the Governors action.

The House Agriculture Committee amended the Senate passed bill to re-define Local and Locally Grown where it pertains to Vermont produce.  The definition was changed from requiring that all agriculture products labeled local be grown within 30 miles of the retail outlets.  The new definition is changed to mean within Vermont or 30 miles of where the product is grown.  This will allow the border towns to purchase products from a farm in a neighboring state and still call it local.  The new law will allow for other description as well, such as local to New England.

H.865 Vermont Milk Commission- awaiting the Governors action.

The bill expands the Vermont Milk Commission to include two legislators; makes changes to the statutes on when the commission should act on milk prices and delays the deadline for a Vermont change in milk hauling charges to July 2010.

S. 345 Lowering the Cost of Workers Compensation Insurance: awaiting the Governors action.

It is the purpose of this act to address the problems of employee misclassification and farm safety and make other changes that would reduce the cost of workers compensation.

Some of the changes are:

·         considers a $500 deductible policy if desired by employer that binds employer to reimburse insurer for the first $500 due to injured employee

·         work related, first aid only treatment that generates a bill of $750 or less and employee looses no time from work

·         increased the average weekly wages piece from 12 to 26 weeks

·         added that benefits provided shall not exceed 104 weeks unless claimant is likely to go back to work if continued for a defined period of time

·         collaboration between the Agency of Agriculture and the UVM Extension Service to identify farm safety and occupational health best management practices for protection of agricultural employees among other things

·         the Legislators serving on the task force will receive same per diem as others members

The bill also provides for the creation of a Workers Compensation Employee Classification Task Force that is charged with analyzing employee misclassification along with a host of other requests and offer recommendations to the general assembly by November 15, 2009.  The task force will be comprised of:  Commissioner of Labor, Commissioner of Banking, Insurance, Securities, and Health Care Administration, Attorney General (or their designee) two members of the House of Representatives, two members of the Senate, a member from the insurance industry appointed by the American Insurance Association, two members of the Vermont Department of Labor Advisory Council, one member who represents labor and one member who represents management.

S.278 Campaign Finance: vetoed by Governor Douglas, veto override passed in the Senate, failed in the House.

The House suspended rules to override the Governor’s veto on S.278.  The attempt failed by a vote of 99 to 51. To override a veto, more than 2/3 is needed to support the action.  The override failed by 1 vote.  The bill would have set the limit of $1,000 for the primary election and $1,000 for the general election on donations to candidates for statewide office.  It would also cap contributions from political parties to $30,000 for gubernatorial candidates and lesser amounts for other statewide office seekers. 

Food Industry Golf - June 11

Plans are underway for the annual VGA scholarship golf outing, one of Vermont’s premier golf outings. The tournament, which attracts over 200 participants each year, will consist of both morning and afternoon starts on Wednesday, June 11 at the Green Mountain National Golf Course, Route 100, Killington. Information on the event is available at: http://www.vtgrocers.org/golf_outing_2008.html.  Individual registrations are just $99 and foursome packages with tee sponsor are $460. Proceeds benefit the Grocers Scholarship Fund. For additional information or questions, please contact the association office, 1-800-842-8503.