Advocacy Update – Week 15 – 2026

A Fiscal Three-Body Problem: Tax Yields, School Maps, and the Budget Brink 

Three bills are interconnected and will decide what the session’s adjournment looks like and how much Vermonters will pay in the coming year: the education transformation bill, the budget, and the yield bill. 

• Additionally, two other bills are affecting this complicated interaction: a proposed income tax increase for higher earners and the miscellaneous tax bill. 

The Education Transformation Bill: With education as the defining issue of this legislative biennium, the stakes are high for what comes of this two-year battle to reshape Vermont’s largest expenditure. 

• The Governor has browbeaten the legislature for backtracking on school consolidation and slow-rolling other components of last legislative session’s landmark education package, Act 73. 
• The House has advanced its version of an “education transformation” bill that creates seven new regional school governance structures to facilitate cost-sharing of services and to force conversations around consolidation with mediators, rather than the top-down, forced consolidation of Act 73.  
• The Senate, after hearing testimony from House Chairs this week, signaled that while the House touts H.955 as a balance of local control, the Senate remains skeptical of its scale and is expected to make significant changes to possibly align more with the Governor’s vision, though they will land somewhere between the two visions. 

The Yield Bill: As a reminder, Vermont education is different than anything else in government because the legislature gets told by 121 different school districts how much to spend, and then they set the yield to raise enough property tax revenue. 

• The Governor wants to use the $104.9 million in surplus available to buy down the property tax rate to an estimated average property tax increase of 3.8%
• The House instead decided to split that surplus in half and spread it over two years, for an estimated 6.7% increase this year. 
• The Senate has now advanced a yield bill that sides with the Governor and folds back in S.220, which they already sent to the House, and attempts to curb future spending by lowering the “excess spending” threshold from 118% to 112%.

The Budget: The “Big Bill” is often thought of as the must-pass bill and is what everyone looks to as signaling the end of the session, though that’s increasingly untrue. 

• The Governor has threatened to veto the budget unless the education transformation bill includes a new school district map. He’s also taken issue with the budget passed by the House on several changes. 
• The House has already advanced its budget, with House Democrats framing the budget standoff as a high-stakes game of chicken and prepping their caucus to message the dire consequences if a budget and yield bill aren’t signed by the July 1 deadline.
• The Senate money committees this week completed their work on the budget ahead of a vote next week.  

Zoom Out: Vermont education spending is unsustainable. 

• The 40% Tax Trend: Education property taxes have risen by more than 40% over the last five years.
• Structural Revenue Gap: This is frequently described as the “alligator mouth” problem, where education fund costs grow at roughly 6% annually while the non-property tax revenues supporting the fund grow at only 3%.
• Plummeting Enrollment: The student population has dropped from over 110,000 students decades ago to approximately 80,000–84,000 today.
• High Employee Count: There is a striking focus on Vermont’s status as having the lowest student-to-staff ratio in the country (4.4 to 1). 
• Skyrocketing Fixed Costs: Approximately 70-80% of education spending is dedicated to salaries and benefits. 
• The Performance Gap: Despite being the second-highest spender per pupil in the nation, Vermont ranks in the bottom third of states for 4th-grade math and reading scores. The high school graduation rate of 83% also trails the national average of 87%.

But, wait, there’s more… Two more important bills that will shape how this session shakes out; 

• A proposed higher income tax bill would generate an additional $100 million in revenue, which is a no-go for the Governor, the Senate, and likely most of the House. Read more below (lnk)
• Transportation funding: There is a $33 million structural deficit that threatens the state’s ability to maintain its physical infrastructure and secure vital federal support. This problem touches every other piece of financial legislation, as lawmakers debate how best to fill it. The miscellaneous tax bill redirected $10 million to transportation, creating a holein the general fund.