A House bill that would provide up to 12 weeks of paid leave for workers continues to grow in size and scope, raising concern among some lawmakers and the governor that the costs may outweigh the benefits.
The bill, H. 66
, passed the Ways and Means Committee by an 8-4 vote on Tuesday afternoon, with Republicans united in opposition and even some Democrats admitting sticker shock.
The bill would pay workers 90 percent of their salary to take up to 12 weeks to care for a newborn, address a medical condition or escape domestic abuse. It would offer two weeks of bereavement pay. Lawmakers received updated cost estimates shortly before the vote.
It would now require $112 million in startup costs, including the hiring of up to 65 state employees, and cost $117 million to run annually.
“This is a lot of one-time money,” Rep. Katherine Sims (D-Craftsbury) said on Tuesday. “I guess I see this as an investment in Vermont and our workforce.”
Startup costs would be paid for out of state coffers, while operating costs would be funded by a future 0.55 percent payroll tax.
For a worker making $50,000, the 0.55 percent tax would cost $275 per year. An employer would be required to pay half, or $137.50. That would leave workers on the hook for the other half. Employers could opt to cover the entire cost for workers, and some have said they would.
The payroll taxes would be sent to the state treasurer, whose office would run the new Division of Family and Medical Leave.
A previous estimate had put the annual program cost at $94.4 million. The figure was recently updated to reflect inflation's effect on a program that would not be operational until July 1, 2026.
A more modest bill, which would have provided 12 weeks of leave for new parents and eight weeks of medical leave, was passed by the legislature in 2020 but got vetoed by Gov. Phil Scott. He cited the burdens of what was then envisioned as a $29 million payroll tax.
The new House proposal, which has expanded beyond child and medical leave and lengthened the time off for the latter from eight to 12 weeks, is almost certain to be vetoed by Scott. Spokesperson Jason Maulucci said Scott “remains deeply concerned” about the “regressive payroll tax” to build and maintain a “large new bureaucracy” at a time when state government has trouble filling the vacancies it has.
Scott has proposed a voluntary leave program anchored by state workers but open to any worker or employer willing to pay on their behalf.
“We are continuing to move forward and implement the Governor’s paid family and medical leave program, which every working Vermonter and employer can choose to opt-in to, without the need for a payroll tax, or dramatically growing a bureaucracy and assuming higher risk for the State,” Maulucci wrote in an email.
Senate Democrats are also clearly concerned about growing cost estimates. Sen. Jane Kitchel (D-Caledonia) has proposed a more modest 12-week parental leave program that would be offered through the Department for Children and Families.
How much Kitchel's program would pay has not been determined, but it would be available to families making 600 percent of the federal poverty level, or $180,000 for a family of four. The benefit would only be available to one parent per household following a birth or adoption. The plan was hastily tacked onto S.56, a childcare subsidy bill that the Senate Health and Welfare Committee has been working on for weeks.
As the state grapples with an acute childcare crisis, it makes sense to pay parents to stay home with their children if possible, Kitchel told colleagues.
“That’s exactly what this does,” she said of her amendment.
If the Senate passes a bill with her program, that would likely set up a tense negotiation between the two chambers. House leaders have called this issue one of their top legislative priorities.
Kitchel also told colleagues her program would be simpler to administer because it merely replaces wages of a worker who has a newborn or adopts a child.
“It doesn’t take an army of eligibility workers to process,” she said, in a not-so-subtle swipe at the House version.
The new workers needed to administer that plan — 45 to 50 in the treasurer’s office and another 15 in the tax department — would drive the annual administrative costs up to $13.5 million.
The program would also provide annual credits to reimburse low-income workers for its cost. People who make between $15,000 and $25,000 a year would qualify for a $70 credit; those earning less than $15,000 would be entitled to a $40 credit. The cost of such credits is estimated to be $10.2 million every year.
The balance of the $117 million annual cost, or $94.1 million, would be paid out in benefits to workers on leave.
Democrats on the House Ways and Means committee argued that the program would provide important benefits for people in times of need and would strengthen the state’s workforce.
Republicans countered that the program would require setting up a large bureaucracy, even while the cost of having a private insurer provide the same benefits isn't known. And they balked at the notion that the state was providing the benefits at all.
“Vermont is not investing anything in its workforce,” Rep. Scott Beck (R-St. Johnsbury) said. “We’re pulling this money out of people and businesses’ pockets.”