Senate Update #3: Paid Family Leave

Paid family leave took up a lot of time during last year’s legislative session and was brought up numerous times during the 2018 campaign.  This past week the administration and the legislative majority both outlined their plans for establishing a paid family leave program during this legislative session.
For full disclosure, I was in the House last year and voted against the paid family leave bill at the time.  I feared that it was whole fully underfunded, and it was passed with a “teaser” tax rate that would only grow in out years.  The bill last year would have covered 70% of weekly income up to $1,042 per week for 6 weeks for a family member with a severe illness and 12 weeks for parental and bonding leave.  The estimated cost for this was $16.3 million annually and was to be paid for by a 0.136% payroll tax on income up to $150,000 for Vermonters.  
On Wednesday – Governor Scott, along with Governor Sununu of New Hampshire announced a plan for a voluntary paid family leave program.  If passed it will be open to employers and employees from both Vermont and New Hampshire.  To make sure there are enough people in the program both states will enroll their state employees, about 18,000 people.  There would also be an opportunity for employers to offer this benefit to their employees at the state rate and if your employer didn’t provide it – an opportunity to buy into the program as individual citizens.  The program would be administered by a third-party insurance company which would eliminate unknown claim risk for Vermont and New Hampshire taxpayers.  The plan would cost somewhere between $250 and $275 per person and would offer 60% of weekly income up to social security taxable income ($132,600) for six weeks.  
Not to be outdone by the Governor, leaders from the majority party in Montpelier outlined a plan for 12 weeks fully paid family leave program and have suggested a 0.93% payroll tax to cover the cost.  Half of it paid for by the employee and half paid for by the employer.  
A few things become clear after this week’s proposals.  Paid family leave is more than likely going to happen – but the debate now becomes how should it be done and at what level is sustainable.  My biggest concerns are with the legislative proposal.  While the details aren’t entirely out – I wonder where they get their tax rate of 0.93%?  I know the benefit is more generous than the proposal passed last year – but the benefit isn’t nearly 7 times larger as the new tax rate would suggest.  What the legislative leadership proposal does show is that those of us who voted no last year and questioned their math were correct to do so.  The tax in their bill last year was not enough and was to be used as a teaser rate leading future legislators to increase taxes – and significantly – to keep the program solvent.  
I believe we need to look at all programs skeptically in the weeks ahead – including the Governors to make sure that we aren’t implementing a program that will have costs that rise beyond our ability to pay for them.  We also need to understand what impact both proposals would have on employers and small businesses in Vermont - many of which are already struggling to make a go of it.   
What are your thoughts?  I look forward to hearing from you!  Please email me at [email protected].

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