Legislative Report /Word in the House 5/16/2018 - Not Quite the End of the Session



The last two weeks of a legislative session are a whirlwind of activity. Dozens of bills that have been worked on during the previous 16 weeks of the session in both the House and the Senate reached final stages of passage. Most traveled back and forth between the two bodies as amendments were made to reflect the different concerns of the responsible committees. Twenty-eight bills this year required a conference committee made up of three representatives and three senators to resolve disagreements in language that couldn't be settled by amendments. 

The budget is the final bill passed in a session. Any bill that was still outstanding when the budget passed would be dead. As the session ended just after midnight Sunday morning, we managed to complete all of those bills as well as many more. The bills included raising the minimum wage, providing paid family leave, establishing toxic materials responsibility, protecting sexual harassment victims, funding clean water efforts, setting appliance efficiency standards, helping Vermont manufacturers improve energy efficiency and productivity, providing free tuition for National Guard members, several consumer protection and economic development bills, and an income tax reform and education funding bill as well as the budget.

Our legislative agenda reflected in the bills we passed promote a caring economy that makes Vermont more affordable for lower and middle income families, protects all Vermonters from various social and environmental impacts, and provides opportunities for economic growth. While we did not adopt the Governor's proposal for using one-time money to keep our education property taxes from increasing, the funding changes made by the legislature will hold the residential property tax rate increase to two cents in a sustainable way that avoids the need to find one-time money again next year. One-time money is just that. There’s no guarantee that it will be there next year, which just defers a tax increase. Instead, this year's one-time money will be used to pay for one-time expenses like fully funding our reserves and paying down the teachers' retirement fund obligation saving Vermont taxpayers $100M in future budgets. Our income tax changes will return $30M in extra tax revenue generated by the federal income tax changes back to Vermonters by lowering the income tax rates for everyone. Overall state spending increased less than 1 percent, significantly lower than the rate of inflation. Here are links to the details of the tax changes and to the budget.

Unfortunately, the Governor has stated that he plans to veto the budget as well as several other bills that address affordability and the health and welfare of Vermonters. The budget passed with a tri-partisan vote of 117 – 14. If he does carry out his veto promise, he will have to call the legislature back into session. There have been plenty of opportunities for the administration to engage with the legislature to work out a compromise, but that didn't happen. Now we are faced with the additional expense of an extended session.

Finally, I would like to make a correction. It was called to my attention that in my previous article about the minimum wage bill, I reference some total wage numbers that seemed to be based on different assumptions. The $15/hour total should have been $31,200 based on the same 40 hours/week and 52 weeks/year used for $10.50/hour.

As always, I can be reached by phone (802-233-5238) or by email (myantachka.dfa@gmail.com).

Legislative Report 5/2/2018 - A Case for Raising the Minimum Wage


We are now in the last weeks of the 2018 legislative session. Barring any surprise demands by the Governor or legislators, like the call for passing a taxing and regulating marijuana sales that occurred last week, we should be finished by mid-May. There are a number of important bills that we continue to deal with before we pass the budget and adjourn. One of these bills is the Minimum Wage bill (S.40), which was passed by the Senate and has been studied for several weeks by the House General, Housing & Military Affairs Committee.

The current Vermont minimum wage is $10.50/hour which became effective on January 1, 2018. The bill under consideration would continue increasing the minimum wage to $15/hour by 2024, about a 75 cent increase per year on average, starting at 60 cents in 2019. The minimum wage exemptions would remain the same, including for students under age 18, agricultural workers, nannies/babysitters, newspaper deliverers, and employees of nonprofits that receive state funds. The bill would also adjust state child care subsidies to account for the minimum wage increases in order to maintain those benefits for low wage workers with children.

So, why do we need to keep raising the minimum wage since Vermont has one of the highest minimum wages in the northeast? The simple answer is that for a large number of people, it is simply not enough to live on. Governor Scott has talked repeatedly about making Vermont more affordable and protecting the most vulnerable. For the approximately 25,000 Vermonters who work one or more minimum wage jobs, it is still too hard to pay for the basic necessities of supporting their families. For single parents making minimum wage, there are repercussions for their children as well. According to the Economic Policy Institute (EPI) of all minimum wage earners in Vermont, 62% work full time, 88% are at least 20 years old with an average age of 38, 56% are women, and 22% have children. On average, those with families earn 55% of their family's total income. A person working 40 hours per week at the current minimum wage makes about $21,840/year, slightly above the federal poverty level for a three person family. However, according to the EPI study, a modest but adequate standard of living in Vermont for one adult without children costs about $32,000/ year, including housing, food, transportation, taxes and health care. With children, necessitating child care, the costs are even higher. At $15/hour, the 2024 target, a full-time minimum wage job would pay $31,200*, which would no longer be a poverty-level wage.

Objections to raising the minimum wage revolve around the increased costs to business, the potential loss of jobs, and economic impacts. Most minimum jobs are in the service sector of the economy. In the first year, a full-time employee's earnings would increase $1250, a cost to the employer. This cost would presumably be passed on to consumers. However, the increased income would also be spent, thereby injecting more money into the local economy. The impact on jobs would be minimal compared to the increase in wages. Moreover, the high turnover rate seen in minimum wage jobs may be reduced thereby saving employers training costs. The EPI study estimates that while 2% of low wage jobs would be lost, 98% of low wage workers would benefit. Overall, the economy would benefit from raising the minimum wage gradually over several years while improving the affordability factor for those who need it most.

As always, I can be reached by phone (802-233-5238) or by email (myantachka.dfa@gmail.com).

*Note: The original publication of this article incorrectly had $26,500 as the annual income at $15/hour for a full time job.