Thank you to this week’s sponsor of our Advocacy Update:
January 30, 2026
The three buckets that most closely align with Vermont employers’ concerns are affordability, housing, and public safety. This week, we have insight into all three.
- The Senate Economic Committee continued to refine its omnibus housing bill; however, a lingering, ominous proposed tax on lodging will concern many, and the committee suffered a jurisdictional defeat that will sideline it from some of the most important housing decisions.
- Education transformation continues to consume most of the oxygen under the golden dome, and this week, business leaders backed a controversial plan from the Senate President Pro Tem to chart a stable and affordable course for the next three fiscal years.
- The House Healthcare Committee is considering addressing two areas in which Vermont healthcare regulation has made us an outlier and disadvantaged our workforce.
- Meanwhile, the Budget Adjustment Act passed the House and highlights pressing needs around public safety and substance misuse.
Of course, there is much more in the Laundry List, including a range of bills the House Commerce Committee worked on this week, which we cover, spanning noncompete agreements, ticket resale, and more.
We strive to make these concise and easy to read. Feedback is not just welcomed, it’s encouraged – [email protected]
LCC LEgislative Breakfast Series
Every year, we bring legislators, policymakers, and LCC members together to celebrate business ownership and entrepreneurship and advocate for economic opportunity for our region. Sponsored by EastRise Credit Union, our Legislative Breakfasts are opportunities to connect with legislators and those in higher office.
January Legislative Breakfast
- When: Working to Reschedule
- Where: The Nine | 1205 Airport Parkway, South Burlington
March Legislative Breakfast
- When: Monday, March 16 | 8:30 am
- Where: Dealer.com | 1 Howard Street, Burlington
Thank you to our hosts, The Nine and Dealer.com, for their generous support of our Legislative Breakfast Series!
Thank you to our breakfast sponsor
Omnibus Housing Bill Emerges in Senate; Ominous Tax for Lodging with It?
90 second readtime
The Senate Economic Development, Housing & General Affairs Committee is developing a broad omnibus housing bill to build on its prior work to address the state’s housing supply crisis through a combination of zoning reform, regulatory streamlining, and new financing tools.
- The Committee lost a jurisdictional showdown this week, however, with Senate leadership restricting the Committee’s ability to cover Act 250 and land-use heavy work, instead leaving that to the Senate Committee on Natural Resources.
What’s in the draft bill:
- HOME Act Cleanup: The proposal mandates that duplexes be treated the same as single-family homes, as a permitted rather than conditional use, and allows for up to four units by right on any property served by sewer and water infrastructure.
- Act 250 Exemptions: To avoid the delays of dual permitting, the bill extends current housing exemptions to 2030, removes acreage limits, and expands eligibility for projects located near transit routes and urbanized areas.
- Tier 1B Designation: The bill proposes changing the Tier 1B designation from an “opt-in” to an “opt-out” system, though this is expected to be controversial.
- Infrastructure Definition: It clarifies that “sewer and water service” includes areas within one-quarter mile of a road with available capacity.
- VHFA and VEDA Authority: It extends the Vermont Housing Finance Agency’s (VHFA) authority to issue housing tax credits until 2031 and expands the Vermont Economic Development Authority’s (VEDA) power to finance multi-unit housing of five or more units.
- Off-Site Construction Pilot: It directs the Agency of Commerce and Community Development to establish a modular/off-site construction pilot program using bulk purchasing and streamlined regulations.
- Union Labor Density Bonus: Projects that utilize union labor or registered apprenticeships would be eligible for a 20% density bonus.
- Service-Supported Housing: The bill re-establishes a task force specifically focused on housing needs for individuals receiving developmental disability services.
- Municipal Planning: Municipalities would be required to analyze fiscal and regulatory barriers to housing and inventory buildable or underutilized sites within their plans.
Conspicuously missing from the bill: Funding is missing, yet a quick look at other bills the Chair has sponsored indicates that S.238 could be added soon. The bill proposes a 2% surcharge on lodging and a tax on sugar-sweetened beverages to raise revenue for nonprofit housing developers.
Action: If you believe our tourism economy is vital or are a lodging property, we highly suggest that you reach out to your Senator in opposition to any additional tax on lodging. Suggested talking points;
- This is an uncertain time for lodging; In Chittenden County, home to fully 25% of the state’s visitor economy, 2025 saw hotel occupancy drop by 13%, with average daily rates decreasing by 5%.
- Housing is a real crisis; however, our hotels, inns, and bed and breakfasts do not compete with housing, and the fundamental constraints on housing production in Vermont are well known: regulatory complexity, permitting delays, development risk, and high construction costs.
- Vermont’s fiscal challenges are harder, not easier, to solve if Vermont’s economy is hindered by new lodging taxes.
- The visitor economy is a cornerstone of our state’s economy, supporting tens of thousands of jobs, generating substantial tax revenue, and serving as the first step in attracting talent, students, and new residents, all of which we desperately need.
Education Continues to Consume Much of the Oxygen Under the Golden Dome
2-minute readtime
Education transformation continues to dominate legislative work, and this week that meant conversations across multiple committees. We’ve covered;
- One piece of cost containment proposed and supported by Vermont’s business community, and
- Important updates on revenue in the context of education.
Catch up quick: The legislature passed a massive transformational education bill (Act 73) last summer that, while impressive in scope and goals, did nothing except tee up future reform.
- A linchpin of the entire piece of legislation was new district maps, which the committee tasked with creating them resisted.
- House Education has been working on H.698 to “fix” Act 73 by separating the new funding formula from the controversial district consolidation. The bill also seeks to repeal mandatory class-size minimums, giving districts greater flexibility to manage budgets.
The “Tourniquet” & Cost Containment
The Senate Finance Committee is advancing S.220 as a temporary “bridge” to the new foundation formula slated for FY28 and FY29.
- The Problem – The Tail Wagging the Dog: Anyone who has been around budgeting knows how it starts: you receive instructions on priorities and allowable growth or savings targets.
- Except that’s not how it works in Vermont education: school boards set local budgets first, based on local priorities, rather than a top-down state limit. Once a local community adopts a budget, the state education fund must cover it, regardless of whether the state has the revenue on hand.
- This bottom-up autonomy is exactly what the Act 73 Foundation Formula is designed to end by 2028, replacing local budget-setting with state-set spending limits. This year, it might be done more bluntly with caps. More on that later.
- The Bridge to the Foundation Formula: As a spokesperson for the Tax department put it, “it leverages algebra, which I love…” to create a graduated spending cap on per-pupil growth.
- Low-spending districts get more “room” (up to ~9%), while high-spenders are squeezed to ~3%, which committee members noted was still “very generous” given the state’s fiscal forecast.
- Support for Stability: Business leaders testified in support, calling this a “tourniquet” to provide stability and predictability in a volatile economic climate.
- “In the face of instability, uncertainty, and unpredictability at the federal level, the greatest thing this body can do for Vermonters is provide stability, certainty, and predictability,” the Director of Government Affairs from the Lake Champlain Chamber said.
- It was stressed in the letter from business groups, “This is not a substitute for the larger-scale educational transformation the Vermont education system needs; it is a temporary tourniquet to contain costs while the more surgical work is done toward reform.”
- The Pushback: Critics warn that caps don’t stop fixed costs such as healthcare, special ed, and transportation. To stay under the limit, boards say they may be forced to reduce teacher positions or student programs.
- The retort: “I think the education system has had the privilege of not having top-down guidance for many years, and the absence of that privilege can feel like punishment; however, that is the reality we all live in,” the Lake Champlain Chamber responded.
Show Me the Money: FY27 Budget & Revenue in the Context of Education
Of course, this year’s educational system is looking at a 12% average property tax increase.
- The Buy Down: The Ways and Means Committee continued to grapple with a proposal to transfer $105 million from the General Fund to “buy down” education tax rates to about 6%.
- The Purchase and Use Controversy: While the Governor is calling for a buydown, he’s also recommending moving $10M in motor vehicle Purchase and Use tax from Education to Transportation to chase federal matching funds.
- School Construction Funding: There was a discussion this week on how to restart school building aid.
- In the Senate, a proposal came forward to levy a 2% surcharge on Meals & Rooms taxes.
- In the House, a proposal was discussed to redirect excess estate tax revenue after the state had the highest revenue from this tax on record, $55 million, due sadly to our state’s demographic trends.
- Salvaging second homes tax: The House Ways and Means Committee continued work on the “Nonhomestead Residential” category, which will tax second homes and short-term rentals (STRs) at a separate, presumably higher, rate. There are two obstacles for them to overcome;
- The Mixed-Use Puzzle: For buildings that contain both an STR and a long-term rental, the state plans to split the tax bill based on the proportional floor area
- Act 73 Implementation: Similar to other components, such as the foundation formula, this is dependent on the implementation of new district maps.
Education Continues to Consume Much of the Oxygen Under the Golden Dome
2-minute readtime
Education transformation continues to dominate legislative work, and this week that meant conversations across multiple committees. We’ve covered;
- One piece of cost containment proposed and supported by Vermont’s business community, and
- Important updates on revenue in the context of education.
Catch up quick: The legislature passed a massive transformational education bill (Act 73) last summer that, while impressive in scope and goals, did nothing except tee up future reform.
- A linchpin of the entire piece of legislation was new district maps, which the committee tasked with creating them resisted.
- House Education has been working on H.698 to “fix” Act 73 by separating the new funding formula from the controversial district consolidation. The bill also seeks to repeal mandatory class-size minimums, giving districts greater flexibility to manage budgets.
The “Tourniquet” & Cost Containment
The Senate Finance Committee is advancing S.220 as a temporary “bridge” to the new foundation formula slated for FY28 and FY29.
- The Problem – The Tail Wagging the Dog: Anyone who has been around budgeting knows how it starts: you receive instructions on priorities and allowable growth or savings targets.
- Except that’s not how it works in Vermont education: school boards set local budgets first, based on local priorities, rather than a top-down state limit. Once a local community adopts a budget, the state education fund must cover it, regardless of whether the state has the revenue on hand.
- This bottom-up autonomy is exactly what the Act 73 Foundation Formula is designed to end by 2028, replacing local budget-setting with state-set spending limits. This year, it might be done more bluntly with caps. More on that later.
- The Bridge to the Foundation Formula: As a spokesperson for the Tax department put it, “it leverages algebra, which I love…” to create a graduated spending cap on per-pupil growth.
- Low-spending districts get more “room” (up to ~9%), while high-spenders are squeezed to ~3%, which committee members noted was still “very generous” given the state’s fiscal forecast.
- Support for Stability: Business leaders testified in support, calling this a “tourniquet” to provide stability and predictability in a volatile economic climate.
- “In the face of instability, uncertainty, and unpredictability at the federal level, the greatest thing this body can do for Vermonters is provide stability, certainty, and predictability,” the Director of Government Affairs from the Lake Champlain Chamber said.
- It was stressed in the letter from business groups, “This is not a substitute for the larger-scale educational transformation the Vermont education system needs; it is a temporary tourniquet to contain costs while the more surgical work is done toward reform.”
- The Pushback: Critics warn that caps don’t stop fixed costs such as healthcare, special ed, and transportation. To stay under the limit, boards say they may be forced to reduce teacher positions or student programs.
- The retort: “I think the education system has had the privilege of not having top-down guidance for many years, and the absence of that privilege can feel like punishment; however, that is the reality we all live in,” the Lake Champlain Chamber responded.
Show Me the Money: FY27 Budget & Revenue in the Context of Education
Of course, this year’s educational system is looking at a 12% average property tax increase.
- The Buy Down: The Ways and Means Committee continued to grapple with a proposal to transfer $105 million from the General Fund to “buy down” education tax rates to about 6%.
- The Purchase and Use Controversy: While the Governor is calling for a buydown, he’s also recommending moving $10M in motor vehicle Purchase and Use tax from Education to Transportation to chase federal matching funds.
- School Construction Funding: There was a discussion this week on how to restart school building aid.
- In the Senate, a proposal came forward to levy a 2% surcharge on Meals & Rooms taxes.
- In the House, a proposal was discussed to redirect excess estate tax revenue after the state had the highest revenue from this tax on record, $55 million, due sadly to our state’s demographic trends.
- Salvaging second homes tax: The House Ways and Means Committee continued work on the “Nonhomestead Residential” category, which will tax second homes and short-term rentals (STRs) at a separate, presumably higher, rate. There are two obstacles for them to overcome;
- The Mixed-Use Puzzle: For buildings that contain both an STR and a long-term rental, the state plans to split the tax bill based on the proportional floor area
- Act 73 Implementation: Similar to other components, such as the foundation formula, this is dependent on the implementation of new district maps.
Budget Adjustment Act Advances to Senate, Highlighting Pressing Public Safety Needs
Less than 60-second readtime
The Budget Adjustment Act is a mid-year true-up to the previous year’s budget and was passed by the House this week, allowing House Appropriators to dedicate all of their time moving forward to the FY 27 budget.
Elephant in the Room: The “Big Bill,” as the budget is usually called won’t be the most important this year. A quick reminder, Governor Scott said he would veto the FY27 state budget in May if the legislature doesn’t approve new, consolidated school-district maps as envisioned in Act 73.
Zoom out: Aside from its administrative importance, the budget adjustment serves as an indicator of pressing needs. Here are some of the key appropriations that were included.
- $500,000 to reimburse expenses associated with the expansion of Community Accountability Court Projects
- $870,000 to State Police overtime costs.
- $180,000 for Sheriff transportation, overtime, and administrative costs.
- $390,000 General Fund to the Department of Mental Health for traveling nurse contracts.
- $1.3 million General Fund to Housing Opportunity Program partners to sustain homelessness prevention services.
- $192,000 General Fund and $228,000 Substance Misuse Prevention Fund to six recovery centers across Vermont.
- $14.1 million Global Commitment for Extraordinary Financial Relief for nursing homes.
Related to the subject, VPR did a deep dive on the over $41 million in national opioid settlement funds Vermont received.
House Healthcare Discusses More Options for Healthcare
60-second readtime
The House Committee on Healthcare began work this week on H.585, a sweeping bill aimed at lowering costs by rethinking how premiums are calculated and who can bundle their buying power.
- For now, covering two pivotal provisions that could have an impact on our labor force and demographic issues.
- Both places represent areas of regulation in which Vermont is an extreme outlier.
But first, zoom out: Vermont has the second-oldest population in the county and by 2030 more than 30 percent of the population will be over 65.
- This month, the Vermont labor force dropped below 350,000 for the first time in 30 months, after recovering from the effects of the pandemic.
- The news highlights the demographic pressures on Vermont’s labor as a state, as it nears record levels of population, while the labor force continues to fall short of historic highs.
Moving Away from “Pure” Community Rating to Give the Young Folks a Break
- The Status Quo: Vermont currently uses a “pure” community rating, in which your age or habits don’t change what you pay, and it is the strictest in the country, far exceeding what is required under the Affordable Care Act.
- Our system treats a 25-year-old marathoner and a 65-year-old chain smoker as the same person.
- The proposed change: under this legislation, premiums could vary by up to 5% above or below the community rate based on age.
- The Goal: By lowering costs for younger enrollees, who typically have lower medical expenses, the supporters hope to pull them into the exchange and stabilize the overall “risk pool.”
Association Health Plans (AHPs)
- The Change: H.585 aligns Vermont’s rules with federal standards, making it easier for small businesses and nonprofits to band together to buy insurance.
- Rewind: Vermont’s associations used to be able to do this, offering lower-cost plans to their small-business members; however, the legislature took away this right.
- The Pushback: While this offers more affordable options for groups, critics warn of “adverse selection,” with healthier groups leaving the main exchange for AHPs.
- The flip side: If Vermont employers can get some relief, that will be felt in the economy and provide the revenues the state needs to address challenges.
Ask: If you benefited from an association health plan before they were banned, we highly suggest you reach out to your Representative(s) to support this provision in H.585.
The Laundry List
Hundreds of hours of committee discussion each week culminate in our advocacy update, so not everything makes it into the overall update; however, we often cover what is left on the cutting-room floor here for our most dedicated readers.
- Read previous updates: Week 1, Week 2, and Week
- Non-Compete Agreements: The House Commerce Committee reviewed a new amendment to H.205 that would generally prohibit non-compete agreements, with the exception for “executive-level” employees earning over $100,000. The Committee appears poised to amend the bill again to address concerns raised during testimony from the Vermont Bankers Association and the Lake Champlain Chamber.
- Data Broker Regulation: House Commerce also discussed H.211, moving to strengthen registration requirements and raise fees for data brokers to $900. The bill would grant consumers the right to request the deletion of their brokered personal information.
- Ticket Resale Regulation: The House Committee on Commerce and Economic Development discussed legislation to cap ticket resale markups at 10% and prohibit “speculative” ticket sales involving selling tickets the reseller does not yet possess.
- Business Development Task Force: The Senate Economic Development Committee is finalizing a task force to inventory all state and non-state business resources to address access to capital.
- The Caucus for Vermont’s Economy is hosting its first Business Listening Session on Thursday, Feb. 5, from 8-8:45 a.m. in Room 11. We are inviting businesses involved in outdoor recreation.
- More Professional Regulation for Childcare? The Senate Health and Welfare Committee took up a bill to license early childhood educators under the Office of Professional Regulation (OPR), adding more regulation to a sector that has recently been highly subsidized with a new payroll tax to counteract the impact of previous regulations.
- This month the Vermont labor force dropped below 350,000 for the first time in 30 months, after recovering from the effects of the pandemic. The news highlights the demographic pressures on Vermont’s labor as a state, as it nears record levels of population, while the labor force continues to fall short of historic highs. The Vermont seasonally-adjusted unemployment rate remained at 2.6 percent in December. The comparable United States rate in December was 4.4 percent.
- Supreme Court Nominees: Next week, the Senate will vote on the Governor’s Supreme Court Nominees. This week, the Judiciary Committee voted unanimously to support Christina Nolan, but did not recommend Michael Drescher (2-3 vote). Regardless, both nominees should get a full vote from the Senate on Tuesday. Read more via VTDigger.
Hey! You read the whole update. You probably have some thoughts on the content or how we delivered it. Feel free to reach out with those at [email protected].