Advocacy Update - Session Summary - 2026

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June 5, 2026

Last week, we covered the top ten trends of the 2026 legislative session, which was a 10,000-foot view of what happened. Now, with the final fall of the gavel bringing adjournment, we’ll go more in-depth on what happened.

Taxation & State Finances

Framing the session: The 2026 session was defined by existing in a space bookended by the era of federal abundance behind us and tighter financial times ahead.

The state faces an affordability crisis and a structural “alligator mouth” fiscal gap: education spending grows at 6% annually while supporting non-property tax revenues grew at just 3%.
The session was characterized by what we referred to as the “fiscal three-body problem,” structurally locking the state budget, property tax yields, and education transformation together in negotiations.

Meanwhile, the so-called One Big Beautiful Bill Act at the federal level created decisions for the state’s tax code.

The State Budget – H.951:

The $9.38 billion state budget (H.951) for fiscal year 2027 was passed in the final hours of the 2026 legislative session, representing a modest 2.9% increase in spending. This budget reflects a period of relative fiscal discipline as the state navigates the end of “abundant” pandemic-era federal funding.

Key Appropriations

Property Tax Relief: Lawmakers deployed $101 million to $105 million in General Fund surplus and reserves to “buy down” projected education property tax increases to an average of approximately 3.5%.
UVM Athletic Complex: Negotiators agreed to provide $12 million for a 5,000-seat multipurpose sports facility at the University of Vermont. This was funded through a compromise: $2 million from the Higher Education Endowment Trust Fund and $10 million from an unexpected windfall in unclaimed financial property.
Business and Economic Support: The budget preserved vital growth tools, including funding for Small Business Development Centers, the Small Business Law program, and $2 million for the Rural Industry Development Program.
Housing and Homelessness: The budget maintained $21.2 million for the homelessness response continuum, focusing on the transition from motels to permanent shelters.
Public Safety: Earmarks included $500,000 to expand “accountability courts” to clear backlogs of repeat offenders and funding for State Police and Sheriff overtime.

Property Tax Relief & Education Finance – H.949 & S.220

The Surplus Buy-Down: To counter a 40% spike in property taxes over five years, lawmakers deployed the entire $104.9 million General Fund surplus in a single year. This brought down the average property tax increase to 3.5%. This was the Governor/Senate approach, as opposed to the House plan, which wanted to spread the funds over two years.

Cost Containment: Ramps down the “excess spending threshold” (which double-taxes high-spending districts) from 118% down toward 112.5%–113% by FY 2032.
Renter & Circuit Breaker Credits: Expanded the renter credit for one year (raising the cap to $3,250 with a $4 million injection) and increased the “circuit breaker” property tax income threshold from $47,000 to $50,000.
Education Transformation: There are numerous provisions in the education transformation bill H.955 that further the implementation of Act 73 tax provisions; a new “nonhomestead residential” tax classification was introduced to target second homes and short-term rentals at a separate, higher rate, alongside regional assessment districts.

Municipal Authority & Local Option Taxes (LOT)

LOTs and the PILOT (Payment in Lieu of Taxes) fund have been a topic of debate over the past few years as the PILOT fund continues to grow a surplus and more legislators look to use that surplus.

LOT Proliferation: On Town Meeting Day 2026, 14 additional towns approved a 1% Local Option Tax, bringing the state total to 38 as towns try to diversify revenue away from crowded-out property taxes.
The Stowe Charter – H.954: Stowe approved a milestone charter change to levy a 2% local option tax; however, the legislature did not approve it.

Miscellaneous Tax Bill – H.933:

This bill involved deliberately decoupling from the federal tax code in a few places. The state maintained general federal tax conformity but selectively decoupled from specific provisions such as the R&D credits, bonus depreciation, and a one-year delay on qualified small business stock to protect against a $21 million revenue hole caused by the federal OB3 Act.

Defeated & Shelved Proposals

Aggressive tax proposals were brought forth this session that would have had detrimental impacts on state competitiveness.

The Vermont Investment Proceeds (VIP) Tax: A proposed 4% surtax on “unearned” investment income (dividends, interest, capital gains) for high earners was shelved for the remainder of the biennium in early May.
Top Marginal Rate: A plan to create a new top income tax bracket of 12.7% to 13.3% for earners over ~$587,000, which would have been the highest in the US, failed to pass.
Lodging Surcharge: A 2% lodging surcharge intended to fund affordable housing was killed following intense tourism industry opposition.
Rooms and Meals Surcharge for School Construction Funding: Proposals to fund infrastructure via a 2% Meals & Rooms tax surcharge or redirecting excess Estate Tax revenue were rejected.

The Next Battlegrounds: Because of these mounting pressures, expect upcoming sessions to see renewed progressive pushes for high-earner wealth taxes, a scramble to expand PILOT (Payment in Lieu of Taxes) frameworks, broader adoption of Local Option Taxes, and legislative intervention regarding municipal tax delinquency.

State Risk & Threat Profile

The 2027 “Tax Cliff” and Buy-Down Whiplash: Deploying the entire $104.9 million surplus in a single fiscal year creates an immediate funding vacuum for the next cycle. Without immediate, deep structural spending cuts to education, property owners face a sharp, artificial “whiplash” tax spike in 2027 when those one-time funds are completely exhausted.
Taxpayer Delinquency & Municipal Exposure: A critical, low-profile fiscal strain is emerging for local governments. Municipalities are legally obligated to collect and remit education property taxes to the state. When local taxpayers default or fall delinquent, towns are still forced to cover the gap and remit the full amounts, shifting the financial liability and cash flow strain entirely onto local municipal budgets.
Demographic Revenue Shrinkage: By 2030, one in every three Vermonters is projected to be over the age of 65. As a massive portion of the population transitions into retirement and lower fixed incomes, traditional income and consumption tax bases will contract, severely weakening the state’s long-term revenue yields.

Education Transformation

Framing the session: Coming into the session, legislators already knew that this issue would take most of the oxygen in the room. The previous session, they had narrowly passed Act 73, which set in motion a major overhaul of the education system involving a foundation formula, shift to a homestead declaration, tax on second homes, all contingent on the merging of districts, which would be charted by a task force that met over the summer and fall.

The task force’s decision to not recommend a merger map drew criticism and mired the start of the session’s conversations on the topic.
The Governor vowed early on that he would not sign the budget unless he got district consolidation.

What Passed: The 2026 legislative session concluded with the passage of H.955, a landmark education reform bill resulting from a high-stakes compromise between Governor Phil Scott and the Vermont Legislature. After months of deadlock over whether to mandate school district mergers, the final agreement pivots to an accelerated, facilitated voluntary process supported by a new regional service structure. Governor Scott dropped his demand for forced mergers in exchange for speeding up the implementation of the new funding formula and tightening spending controls on local districts.

Here are the five main pillars of the legislation:

Governance and Consolidation Strategy

Mandatory Regional Service Areas (CESAs): The bill creates seven mandatory Cooperative Educational Service Areas (CESAs) to replace the current voluntary collaboration model. Every supervisory union in the state is assigned to a CESA, which functions as a regional service provider for special education, business services, and administrative support rather than a governing body.
Facilitated Merger Committees: the bill mandates that all districts not currently structured as unified K-12 districts are organized by state-appointed facilitators into contiguous study groups, with a target size of at least 2,000 students per group where practical.
Voluntary Outcomes: While participation in the study committees is required by law, the mergers themselves remain subject to a local community vote.

Accelerated Implementation Timeline

To avert a veto and satisfy the Governor’s demand for urgency, the implementation schedule was compressed by one year.

Facilitator Hiring: Must be completed by September 1, 2026.
Merger Committee Reports: Final reports from all regions are due by September 1, 2027.
Local Votes: Any proposed mergers must be voted on by Town Meeting Day, March 7, 2028.
New Funding Formula: The foundation funding formula is now scheduled to become operational on July 1, 2029 (FY 2030), shifting budget-setting authority from local districts toward the state.

Property Tax and Finance Reform

New Tax Classifications: The bill officially continues the trajectory that restructures the property tax system into three distinct classes: homestead, nonhomestead nonresidential, and nonhomestead residential (second homes). This classification aims to generate revenue from vacation properties to lower primary homestead tax rates.
Regional Assessment Districts (RADs): Starting in 2031, the state will implement RADs to standardize property appraisals across municipalities on a mandatory six-year cycle.
Spending Constraints: To control costs before the foundation formula takes effect, the bill lowers the excess spending threshold over several years, starting at 118% and phasing down to 112.5% by FY 2032.

School Construction and Infrastructure

H.955 revitalizes state aid for school construction with a hybrid funding model:

Bonding Capacity: The bill envisions using up to $50 million annually in additional State bonding capacity to support school construction projects that facilitate governance consolidation and improve educational opportunities.
Legacy Debt Aid: The final agreement offers 75% state aid for “legacy debt” (construction costs incurred prior to December 31, 2024).
Incentives for Consolidation: Eligibility for full construction aid is explicitly tied to a district’s “good faith” participation in the merger committee process.

Career and Technical Education (CTE) Integration

A major outcome of the Senate’s work was the elevation of CTE access as a foundational requirement of the reform. Merger committees must now specifically analyze how their proposed structures will provide universal access to CTE for all resident students, and standalone CTE districts are integrated into the regional CESA framework.

Looking Ahead

The education transformation saga will not end with the signing of this legislation; expect more work on this next year. Just as one could not predict the outcome of the Act 73 Redistricting Taskforce when created, we cannot predict what will happen to the contents of H.955 when it gets out into Vermont.

Housing & Land Use

Framing the session: Act 181 was passed over the Governor’s veto last legislative biennium and only became more unpopular as people learned about the “road rule” and “Tier 3” elements, which represented a dramatic increase in Act 250 jurisdiction in most of the state. When the supermajority was broken, many legislators going to Montpelier for the first time saw repealing 181 as part of their mandate.

Act 250 Jurisdiction – S.325

Over the course of the session, this bill transformed from a bill meant to simply delay deadlines into a historic rollback of 2024’s Act 181. Following intense public pressure and a major rally on the State House steps, the bill evolved to address deep-seated concerns regarding state-level land-use control.

The following are the key outcomes of S.325:

Repeal of Major Jurisdictional Triggers: In a unanimous House vote (141-0), lawmakers moved to completely repeal the most controversial components of Act 181: the “road rule” (which triggered Act 250 review for driveways or roads over 800 feet) and “Tier 3” mapping for extraordinary conservation areas. Analysis showed that without this repeal, these rules would have placed over 60% of Vermont’s land area under new Act 250 jurisdiction.
Housing Exemptions: The final compromise extended temporary Act 250 exemptions for housing developments until 2028. While the Senate initially pushed for an extension to 2030, the 2028 date was settled on in the conference committee.
New Oversight and Process: S.325 established a Joint Legislative Environmental Oversight Committee, consisting of three Representatives and three Senators, to oversee the Land Use Review Board and Agency of Natural Resources permitting processes. Additionally, it directed the creation of a facilitated public engagement plan to study risks to natural resources and evaluate future regulatory tools.
Regional Planning Changes: The legislation streamlined the process for amending regional plans, allowing minor amendments to proceed without public hearings and simplifying the process for towns to request Tier 1B growth area status.

Housing Tool Box – S.328 and H.775

Two bills moving separately much of the session were combined later into S.328 and represent many technical changes in housing and municipal planning.

Municipal Planning & Housing Targets

The bill injects stricter tracking and accountability mechanisms into local housing development plans:

Target Accountability: It amends the statute to require a formal “housing element” within municipal plans. Local governments must use regional planning data to outline specific public and private actions needed to hit year-round and seasonal housing targets.
Constraint Analysis: Municipalities must explicitly analyze and document the specific regulatory and physical constraints (such as restrictive zoning bylaws, infrastructure capacity deficiencies, or high development costs) preventing them from meeting these goals.
Progress Tracking: Local governments are required to explicitly document and update their progress toward building these needed units whenever their municipal plans are amended or readopted.

State Treasurer Credit Facility via Changes to the 10% for Vermont Program

S.328 expands a key state infrastructure and development lending mechanism run by the Office of the State Treasurer:

Cap Increase: The bill raises the cap on the Treasurer’s local investment credit facility from 10% up to 12.5% of the State’s average cash balance.
Impact: Because federal funds temporarily swelled the state’s cash balances in recent years, this shift provides the Local Investment Advisory Committee (LIAC) with substantial additional capacity to deploy low-interest loans (typically yielding between 1% and 2.5%) directly into affordable housing developments.

State Community Investment & Town Centers

The bill alters how designated “New Town Centers” (NTCs) access state-level economic resources under the State Community Investment Program:

Step Three Acceleration: S.328 allows Vermont’s existing New Town Centers (currently Berlin, Colchester, and South Burlington) to advance to “Step Three” of the designation process, provided they meet planning and infrastructure benchmarks.
Funding Access: Achieving Step Three unlocks higher eligibility for lucrative state incentive programs, including Downtown Vibrancy Grants and the Sales Tax Reallocation Program, which allows municipalities to recapture a portion of local sales tax revenues for municipal improvements.

Down Payment Assistance & Mobile Home Parks

VHFA Tax Credits: S.328 extends the Vermont Housing Finance Agency (VHFA) Down Payment Assistance Program by authorizing $350,000 in first-year tax credit allocations annually from fiscal years 2027 through 2031, supporting low- and moderate-income home buyers with revolving, repayable down payment loans.
Mobile Home Lot Rent: The bill introduces provisions aimed at stabilizing costs for mobile home park residents, including mediation frameworks and caps on the allowable rate of increase for lot rent.
Modular Construction Pilot: It tasks the Agency of Commerce and Community Development with exploring bulk procurement, pre-approved modular designs, and aligning local permitting to drive down the cost-per-square-foot of new builds.

Other issues:

Private Equity in Housing – H.607: The bill aimed to prevent entities with $30 million in assets from purchasing more than 10 single-family units and was pushed to a study.
Landlord-Tenant – H.772: The bill proposed shorter eviction timelines for nonpayment while adding rent increase caps and got weighed down more heavily each step of the legislative process, ultimately falling apart at the end.
Statute of repose: Legislation to create a statute of repose for homebuilders died in the House Judiciary Committee this year.
Wetlands: The Legislative Committee on Administrative Rules voted 5–3 to object to ANR’s proposed Vermont Wetland Rules (25-P040), which were part of the Scott Administration’s push to ease certain wetland restrictions to support housing development. The proposal would have reduced certain Class II wetland buffers from 50 feet to 25 feet and would have allowed certain housing projects to proceed as an “allowed use” in unmapped Class II wetlands located in designated growth areas, Tier 1A/1B areas, and locations eligible for the Act 250 interim housing exemptions.

Economy and Labor

Framing the session: This year saw the return of some perennial issues, such as noncompete agreements, data privacy, and the sunset on the state’s only economic incentive program, VEGI. It also saw the formation of the Caucus for Vermont’s Economy, which focused in its initial year on building cohesion and understanding on structural impediments.

Economic Development Bill – S.327

VEGI Permanence: The Legislature eliminated the 2027 sunset on the Vermont Employment Growth Incentive (VEGI), making the program permanent. However, the maximum annual award capacity was reduced from $15 million to $10 million.
Convention Center Feasibility: The bill extends the Task Force exploring the economic feasibility and potential funding mechanism for a convention center in the greater Burlington area.

Symmetrical Rounding (H.837): To address the decline of the penny, lawmakers passed a bill allowing businesses to round cash transactions to the nearest nickel using a standardized symmetrical formula.
Franchise Disclosures: Starting January 1, 2027, businesses registering with the Secretary of State must disclose whether they operate as a franchisor or franchisee.

Data Privacy – S.71:

For the last three years, the Vermont Legislature has experienced ongoing debate regarding data minimization versus disclosure-and-consent models and the inclusion of a “Private Right of Action.” This session has resulted in a version that, while not perfect, may accommodate the needs of all partners.

The Vermont Legislature is once again sending a data privacy bill to the Governor, and this time, due to weeks of debate and deliberation, it is likely that he might sign it. Here’s what is in the bill.

Consumer Rights: Vermont residents gain the rights to access, correct, delete, and copy their data, and can opt out of targeted ads, data sales, and automated profiling. They can also challenge automated decisions that affect vital areas of life, such as housing, employment, and credit.
Applicability & Exemptions: It applies to businesses operating in Vermont or targeting residents that annually process data for at least 35,000 consumers, or process sensitive/sell data for 3,000+ consumers (health data rules apply even more broadly). Key exemptions include government entities, HIPAA-covered healthcare, GLBA financial institutions, FERPA education records, journalism, and employment data.
Sensitive Data & AI: Protections are highly broad, treating health, genetic, biometric, precise location, neural, and demographic details as “sensitive data.” Geofencing around healthcare facilities is prohibited. Notably, it introduces special protections for teens (ages 13–17) and requires businesses to disclose if they use consumer data to train large language AI models.
Business Obligations: Covered businesses must follow data minimization, obtain consent for sensitive data, honor universal opt-out signals, and conduct confidential data protection impact assessments for high-risk data practices.
Enforcement: Enforcement is handled exclusively by the Vermont Attorney General; there is no private right of action for consumers. The Act is set to take effect on January 1, 2028, and includes a temporary cure period for business non-compliance through June 30, 2029.

Safe Leave & Noncompetes – S.230, S.313: Focuses on safe leave protections for domestic violence victims and clarifies teacher leave; it also became a vehicle for noncompete agreement prohibitions as the session dragged on.

Noncompetes are a perennial issue that has been a topic of discussion for the past eight years and presents immense difficulty due to the complexity, nature, and lack of necessity.
- H.205: Originally, the House Committee on Commerce and Economic Development worked on a broad ban on noncompetes for workers earning less than $90,000 (300% of the minimum wage). The bill could not pass the floor due to an 11th-hour amendment aimed at teachers’ agreements.
- S.230: Legislative leadership wanted to see something pass, so the House Committee on General and Housing added to the miscellaneous labor bill parsimonious language that would make non-exempt employees ineligible for the agreements. The Senate stripped this language after issues were raised during testimony; however, it banned noncompetes in the healthcare space, where there was widespread agreement. This bill, however, died because of 11th-hour language from the state employees union.
- S.313: In a final attempt to salvage S.230, its language, covering only healthcare workers, was added to a Career Technical Education bill which is expected to be signed by the Governor.

Ticket Resale – H.512: Caps ticket resale markups at 110% to prevent deceptive practices.

Bottle Bill – H.915: This bill passed with the increased handling fee intact for redeemable beverage containers, estimated to cost distributors nearly $2 million, which will need to be passed to consumers.

Childcare: A bill aimed at further regulating early childhood educators died in the House over concerns. This year’s budget included a record high level of funding for the childcare financial assistance program.

Looking Ahead:

- Noncompete Agreements – H.205, S.230, S.313: Expect this legislation to return and legislators to want to look beyond the prohibitions created for healthcare.
- Extreme Temperature Protections – S.230: A proposed “Extreme Temperature Worker Protection Act” sought to impose prescriptive workplace regulations for common Vermont weather—above 80°F or below 35°F. After strong backlash from a coalition of employers who argued the rules would regulate routine daily operations, the committee did not pursue the language.

Responding to the convention center task force: The task force exploring a convention center will need to deliver a second report in November.

Private equity: Many pieces of legislation sought to address private equity, with legislation targeting it in healthcare and housing passing. Expect more interest from Vermont legislators as this continues to be a prominent national issue.

Population Decline, Labor Force Contraction, and Aging Workforce: Vermont’s population fell by 215 people in 2024, the first decline since 2019, driven by deaths outpacing births and a return to negative domestic migration. Meanwhile, the state labor force recently dropped below 350,000 for the first time in 30 months, highlighting that even as population totals remain near record highs, the available working-age population is shrinking. The average age of a tradesperson in Vermont is now over 54, while one in three Vermonters will be over 65 by 2030.

Healthcare

Vermont has the most expensive healthcare in the United States, which has the most expensive healthcare in the world.

Framing the Session: The 2025 legislative session saw a flurry of activity in healthcare. The 2026 session was mostly about building on that foundation while bracing for a massive looming “Federal Cliff.” Lawmakers spent significant energy grappling with the sunsetting of expanded federal ACA health insurance credits, which is projected to result in a $65 million annual loss in support for Vermonters. This change could cause average net premiums to more than double for approximately 30,000 residents. Additionally, the state is under immense pressure to fast-track plans that lower what insurers pay hospitals while transitioning to long-term federal healthcare transformation funding models.

Passed Legislation:

Reference-Based Hospital Pricing (S.190): This emerged as one of the session’s most consequential and heavily debated bills. Moving away from early proposals for rigid multi-year caps, the final version directs the Green Mountain Care Board (GMCB) to implement reference-based pricing by hospital fiscal year 2027. It directs the Green Mountain Care Board to implement reference-based pricing for qualified health benefit plans (QHPs) and Vermont Educator Health Initiative (VEHI).
Primary Care Reform – S.197: To shift away from the volume-driven “fee-for-service” model, this bill modernizes the Blueprint for Health payment system. It mandates per-person, per-month flat payments to primary care providers alongside traditional fee structures, requiring private insurer payment parity with Medicaid by 2027. It tasks the Agency of Human Services (AHS) with setting progressive primary care spending targets, supported by an implementation baseline report due in January 2027.
Private Equity Guardrails – H.583: Originally introduced as a sweeping ban on private equity and hedge fund involvement in healthcare, the bill was slimmed down following pushback from providers worried about access to capital. The final compromise codifies the “corporate practice of medicine” doctrine, ensuring that only licensed professionals can make clinical decisions (like treatment, scheduling, and staffing). It also establishes strict new ownership disclosure requirements starting in 2027 to map out the true scale of private equity in Vermont’s healthcare system.
Prescription Drug Discount Card – H.577: Unanimously passed by the Legislature, this initiative—brought forward by the State Treasurer—partners Vermont with the multi-state ArrayRx consortium. It creates a free, universal prescription drug discount card for all residents, regardless of income or insurance status, offering up to 80% off generic medications. Crucially, a unique Vermont provision allows these out-of-pocket expenses to count toward a patient’s insurance deductible if a claim is submitted.

Looking Ahead: As lawmakers look toward the next legislative cycle, three major fiscal and regulatory pressures will dominate the State House:

Association Health Plans (AHPs): Following up on studies initiated in the administration’s reform packages, discussion will continue over whether to allow small businesses to band together to form AHPs.
Community Rating Pressures: As commercial premiums rise, Vermont’s strict “community rating” laws, which prevent insurers from charging different rates based on health status, age, or gender, will come under intense scrutiny. Lawmakers will have to balance protecting high-risk individuals with mounting pressure from employer groups seeking relief from escalating costs.

Transportation

Framing the session: Heading into the session, legislators knew that they had a $33 million structural deficit that would need to be addressed due to fuel tax receipts continuing to fall as vehicles grow more efficient while construction costs are up 62% since 2020.

The Transportation Bill – H.944: The deficit was closed this year as the Agency of Transportation has already cut dozens of vacant positions, and a one-time transfer of $10 million in Purchase and Use taxes on vehicle sales from the Education Fund back to the Transportation Fund.

The annual Transportation Bill includes a 20% increase across nearly all DMV fees, including commercial vehicle registrations.
(MBUF): Transitions electric vehicle owners to a Mileage-Based User Fee starting in 2027. The bill’s most significant policy change: starting January 1, 2027, EV owners will pay $0.014 per mile, capped at $178 annually, replacing the current $89 flat fee. Hybrids and plug-in hybrids follow in 2029. An earlier proposal to extend the mileage fee to all light-duty vehicles by 2031 was dropped.

Next Year: Fuel tax receipts continue falling as vehicles grow more efficient. Funding for FY 27 covers repaving of just 46 miles of interstate and 56 miles of state highway, leaving roughly a third of state highways in poor or very poor condition. Without structural change, 60% of Vermont roads will be in very poor condition by decade’s end.

This year there was discussion about the ability for municipalities to levy a new local options tax with a “50-40-10” model proposed to allow towns to assess a second 1% LOT specifically for local transportation infrastructure.

Public Safety and Quality of Life

Framing the session: progress is being made through various actions in Vermont communities; however, much work needs to be done on these issues. Many of the issues that were addressed this session were items proponents have been pushing for years.

Addressing Repeat Offenders and Accountability

The Accountability Docket: Originally a temporary pilot in Burlington to address a backlog of non-violent repeat offenders, the program has been a major success. It resolved approximately 78% of its cases (nearly 400 dockets), clearing “stuck” offenders out of the judicial system. Lawmakers have earmarked $500,000 to expand this model to other parts of the state, such as Rutland.
Redefining Recidivism – H.410: This bill, which has been sent to the Governor, broadens the state’s definition of a “repeat offender” to include re-arrests and shorter sentences. The goal is to provide a more accurate picture of crime rates, as the previous definition only counted individuals sentenced to one year or more.
Bail Procedural Fix – H.409: This legislation clarifies that prosecutors have the right to appeal a bail denial and attempts to speed up the process by pushing these cases directly to the Supreme Court. While this procedural fix passed the House early in the session (January 2026), it stalled out completely in the Senate Judiciary Committee and did not make it across the finish line before adjournment.

Secure Facilities and Policing

Forensic Facility – S.193: This bill authorizes the creation of a secure facility for defendants charged with violent crimes who have been found mentally incompetent to stand trial. It aims to end the “legal limbo” where dangerous individuals are either held in prison without treatment or released into the community without supervision.
Regional Policing Pilot – S.255: Governor Scott has signed this bill, which establishes a five-year pilot program for a Regional Law Enforcement Governance Council in Windham County. It allows towns to share dispatch, animal control, and law enforcement services to overcome the limitations of the traditional town-by-town governance model.

Opioid Response and Harm Reduction

Declining Fatalities: New data for 2025 shows that 170 Vermonters died from drug overdoses, a 37% decrease from the historic peak of 269 deaths in 2022. Opioid-involved fatalities continue to account for the majority of these cases, frequently involving fentanyl and cocaine.
Overdose Prevention Centers (OPC): While a pilot facility was authorized for Burlington, the project remains in a planning and capacity-building phase. Friction has emerged over a request for an additional $1.1 million (H.660); the Department of Health argued the extra funds are not needed yet since a site has not been selected and nearly $1.9 million in previously allocated funds remain unspent.

Firearm Regulations

House Gun Bill – H.606: as enacted, primarily establishes clearer procedures for the relinquishment, storage, transfer, and return of firearms when a person becomes prohibited from possessing them, including under Extreme Risk Protection Orders (ERPOs), Relief from Abuse (RFA) orders, and certain mental health-related firearm prohibitions.
Originally introduced as a broader omnibus firearms bill, H.606 also included firearms industry liability provisions, broader rapid-fire device restrictions, and other firearm-related policy changes that were removed or narrowed during the legislative process.

Reintegration Support – H.549 – now Act 85: This new law waives the fee for state-issued nondriver IDs for individuals who have been detained or sentenced for six months or more. Providing these IDs upon release is intended to break the cycle of recidivism by helping formerly incarcerated people secure housing and jobs.

Homelessness

Continuum of Support – H.938: This session saw agreement, after a veto of legislation last year, to successfully strike a compromise between the Scott administration, which wanted to aggressively draw down the costly pandemic-era general assistance motel voucher system, and housing advocates. The bill funds a tiered $83 million system, establishing alternative congregate shelters while preserving a strictly capped, limited pool of funding (~$23 million) for emergency hotel/motel use.

Looking Ahead: significant conversations will continue next year:

- Firearms on Premises with Alcohol: Burlington has long sought a charter change to prohibit guns in bars or establishments that serve alcohol. When met with pushback around this creating a patchwork system, proponents of the provision proposed a statewide ban of this nature, which passed the Senate yet was dead on arrival in the House.

Felony for theft of a firearm: This provision of H.606, long sought after by business groups, would have made theft of a firearm a felony, whereas currently that is dependent on the monetary value of the firearm; the bill failed to make it across the finish line.

Accountability Docket: The expansion to Rutland will be revisited for lessons learned and likely inspire more legislative action.

Energy and Climate

This year saw less of a push on climate legislation than in recent years and more unraveling of the previous year’s work.

Greenhouse gas inventory bill – H.740

This major piece of environmental legislation ultimately failed to pass before the 2026 legislative session adjourned. The bill’s primary objective was to create a fuel dealer registry managed by the Agency of Natural Resources (ANR).

Data Collection: It would have required fuel dealers to report specific data about the types of fuel they sell, where those fuels are sold, and for what purpose.
Climate Goals: This registry was intended to provide the state with a more accurate accounting of fuel usage and emissions to satisfy the requirements of the Global Warming Solutions Act.
Clean Heat Repeal: H.740 became the central vehicle for a significant political battle over the Clean Heat Standard (CHS), a landmark 2023 law that had been effectively abandoned by the Public Utility Commission earlier in the session.

The data center bill – H.727

This legislation was designed to establish a new regulatory framework to manage the potential arrival of large-scale, AI-driven data centers in the state. Although it passed both the House and Senate, it ultimately failed to become law after Governor Phil Scott vetoed it, citing the message it sends to those looking to invest in the state. The Legislature was unable to override the veto, falling short by seven votes.

The bill specifically targeted high-load data centers using 20 or more megawatts of power. Its primary provisions included:

Act 250 Jurisdiction: It would have explicitly placed these large facilities under Act 250 review.
Utility Rate Class: The bill proposed a separate utility rate class to ensure these facilities—which can consume as much water as 15,000 homes—paid for their own infrastructure upgrades rather than shifting those costs to residential ratepayers.
Environmental Guardrails: It would have required facilities to bear all grid impact costs, maximize on-site renewables, prohibit PFAS discharge, and limit combustion backup power to emergency use only.
PUC Oversight: It required Public Utility Commission (PUC) review of utility contracts to protect ratepayers.

Zoom out: Nationally, data centers are a hot-button issue as neighbors of proposed centers, and those who host them learn their impacts. The Vermont Legislature looked to address hyperscale data centers at the beginning of the legislative session this year.

Vermont already has very small data centers supporting communications systems, cloud computing, hospitals, businesses, and government operations. These are not the hyperscale facilities creating large impacts elsewhere.

Reality Check: When a company is looking to site a data center, they are generally looking for a place with easy-to-navigate land-use regulations and abundant, cheap energy. It is highly unlikely that Vermont will have many data centers move here.

Other items:

H.739, a first-in-the-nation ban on paraquat, an herbicide that has been linked to Parkinson’s disease.