State House Report: Inauguration week

EXECUTIVE ORDERS
Governor Phil Scott issued three executive orders this week designed to restructure the administrative branch. The orders would create a new Agency of Digital Services to oversee information technology in state government, combine the Department of Liquor Control and Lottery Commission into a single department and create a new Agency of Economic Opportunity. The legislature has a 90-day window to act on the orders. The House or Senate can vote to block an order by resolution but if no action is taken the orders will go into effect in mid-April.

Agency of Digital Services

Governor Scott proposes to create a stand-alone Agency of Digital Services, replacing the existing Department of Information and Innovation. The agency would be run by a new Secretary of Digital Services who would report directly to the governor and have authority over IT personnel throughout state government. Currently, IT directors and staff throughout state agencies and departments report to their respective secretaries and commissioners. Under the new structure, IT personnel would report directly to the Secretary of Digital Services.

Administration officials told legislators this week the reorganization will result in better oversight and management of state IT services. They say the current Department of Information and Innovation, which is housed within the Agency of Administration, does not have the authority or reach to be able comprehensively manage IT. They say a stand-alone agency will make state IT operations more efficient and be better equipped to develop a vision for the future of IT in state government.

Liquor Control and Lottery

Combining the Department of Liquor Control and the Lottery Commission into one department with one commissioner and board will create regulatory and business efficiencies according to administration officials. Currently both departments sell to many of the same customers – namely stores. Having one department to regulate and sell liquor and lottery products will help streamline functions like licensing and oversight.

Agency of Economic Opportunity

Governor Scott proposes to combine the Agency of Commerce and Community Development and Department of Labor into a single Agency of Economic Opportunity. The order would also pull workplace safety oversight out of the Department of Labor and put it into the Department of Public Safety.

CLEAN WATER REPORT
State Treasurer Beth Pearce made the rounds this week to many committees to present the highlights of her office’s Clean Water Report. Clean water is a priority for the state as visitors and vacation owners spend $2.5 billion annually on tourism. Much of this spending can be linked to the waters of the state.

In 2014, the legislature passed Act 64, which strengthened the statutory authorities aimed at reducing water pollution and established an initial stop-gap funding source through the Property Transfer Tax to fund the Clean Water Fund for three years. Act 68 also directed the Treasurer’s office to produce a report that outlines potential funding mechanisms for water cleanup initiatives. The total 20-year cleanup costs are estimated to be $2.3 billion, while existing funding sources are projected to generate just $1.06 billion.

The report puts forward several recommendations for bonding and outlined 34 potential revenue sources for lawmakers to consider. The Treasurer recommended that a per-parcel fee be included if existing revenue sources cannot be utilized. To read the full report click here. The full list of revenue sources can be found beginning on page 59.

THE FUTURE OF VERMONT HEALTH CONNECT
During the 2016 legislative session the General Assembly instructed the Joint Fiscal Office to retain Strategic Solutions Group (SSG) - a consulting firm - to study and report on the IT problems associated with the state’s health benefits exchange, Vermont Health Connect (VHC) and whether, in light of those problems, there are feasible alternatives to continuing to operate VHC.

On Wednesday representatives of SSG made a presentation at a joint meeting of the House Committees on Health Care, Energy & Technology, and Corrections & Institutions. They explained that a driving factor in SSG’s recommendation that the state fix and stick with VHC is the fact most of the people who interact with the exchange do so for the purpose of receiving health coverage from the state’s Medicaid program, as opposed to purchasing insurance policies from commercial insurers. Because of the significant Medicaid component to VHC the federal government has committed to providing $62 million (with the state’s match being an additional $6.8 million) in funding for the fixes needed to VHC’s IT systems. On the other hand, the federal government will not fund the costs associated with switching to an alternative to VHC.

CONGRESSMAN WELCH ON UPCOMING CHANGES IN FEDERAL HEALTH POLICY
U.S. Congressman Peter Welch spoke to legislators on Wednesday about changes in health care policy at the federal level; namely, the prospect that the Affordable Care Act will be repealed. He said the Congressional Republicans, who have long sought the repeal of the ACA, are now like “the dog that chased and caught the bus,” i.e., now that they are in a position to accomplish their goal they are struggling with exactly what to do.

He said it is likely they will repeal the taxes imposed by the ACA, i.e., the tax on medical devices, the so-called “Cadillac tax” on high end health plans, and the surcharge on higher income Medicare beneficiaries. He pointed out that those taxes have funded the expansion of Medicaid, which Vermont has heavily relied on. However, beyond that Congressman Welch said it is unknown at this time exactly what changes Congress and the new Trump administration will make to federal health care policy. Representative Welch did praise President Trump’s position that the federal government should use its buying power to negotiate with prescription drug manufacturers for better drug prices.