Updated at 8:52 p.m.
On the eve of their planned adjournment date, the House and Senate have broken an impasse that threatened to sink child care legislation that Democrats in both chambers championed as one of their biggest priorities coming into the session.
The two chambers have been at loggerheads for weeks about how to finance their historic investment in Vermont’s beleaguered child care sector. While they generally agreed on the price tag — a little over $120 million a year — each body held fast to profoundly different ideas about how to raise the money. The Senate favored a payroll tax; the House wanted to raise corporate and personal income taxes.
As recently as Tuesday, House Speaker Jill Krowinski, D-Burlington, had promised to bring a bill to the floor Thursday with the House’s financing package. But Senate President Pro Tempore Phil Baruth, D/P-Chittenden Central, made clear his caucus was immovable — and suggested he was willing to walk. By Thursday, House leadership had caved, and the Senate voted to advance a bill, H.217, that carried its preferred funding mechanism, with House leadership’s assent.
“Only those who have been involved in the negotiations know how hard fought this concession on the funding source has been. As of 7:30, 8 o’clock last night we did not have agreement,” Sen. Ann Cummings, D-Washington, told her colleagues on the Senate floor Thursday afternoon. “And the other body has come around and has agreed to a payroll tax.”
The House did win one significant concession: H.217 preserves Vermont’s child tax credit, the $1,000 benefit enacted into law last year for income-eligible families with children 5 and under. The measure was championed by the House last year and reluctantly agreed to by the Senate. A Senate-passed version of the original child care bill, S.56, would have killed the tax credit to save the state about $30 million annually and very slightly lower the cost of a payroll tax.
Baruth said he’d stuck to the message in negotiations that a payroll tax had already passed both chambers, since the House had included such a tax in a paid family and medical leave bill that the Senate nixed.
“It wasn’t risky for anybody. Everybody understood it,” he said.
As for what changed between Tuesday and Thursday, Krowinski referred to “a lot of conversations back and forth between the bodies with members.”
“Frankly, at the end of the day, we’re running out of time. And so it’s really important that again, we get this bill passed, and we get it to the governor,” she said.
“I think we both made sacrifices and we both made compromises and we all got something to take home to our communities,” she added.
The House is expected to take up the new child care bill Friday. The legislation will increase the payroll tax by 0.44%; employers will be required to pay three-quarters of it. That will generate about $80 million, according to the Legislature’s Joint Fiscal Office, and the General Fund will chip in another $50 million.
In hopes of reviving legislation to create a comprehensive paid family and medical leave program next year, the House had also requested to remove a 12-week parental leave benefit included in the Senate’s original child care bill. The Senate agreed to this in the legislation that advanced Thursday, although Baruth reiterated that paid leave’s chances remain dim in the Senate next year.
Aly Richards, the CEO of Let’s Grow Kids, a child care advocacy group, celebrated the bill’s advancement outside the House and Senate chambers Thursday.
“Hundreds of programs would close if we did not make an investment in child care right now. Everyone felt that urgency,” she said. “We also know that when we get it right, we put people back to work, we give kids what they need, we start putting our economy on a sustainable path. So literally Vermonters could not afford for us to leave the session without a bill. So this is huge.”
The legislation is likely to need to overcome a gubernatorial veto. Gov. Phil Scott has supported increased investments in child care, but has drawn the line at raising taxes to do it. His state budget proposal in January included about $50 million to boost child care subsidies — a sum his administration estimated the state could pay for without any new levies.
His press secretary, Jason Maulucci, released a statement Thursday afternoon saying it was “unacceptable to raise taxes on already overburdened Vermonters, especially when we have record surpluses, Vermonters face high inflation, and we can accomplish shared priorities without worsening Vermont’s affordability crisis.”
“Vermonters overwhelmingly elected Governor Scott to be the last line of defense between the Legislature and their pocketbooks. He will fulfill that mandate,” he wrote.