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April 4, 2025
We’re experiencing unprecedented volatility at the federal level and significant disruptions locally. This week foreshadowed monumental changes, both at the federal and state level, that will have lasting impacts for decades to come.
The Lake Champlain Chamber is asking Vermont businesses to confidentially share how they will be affected by the new tariffs. Your responses will inform our advocacy efforts.
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In this week’s update:
- Federal cuts, tariffs, and the “one big beautiful bill”
- Education transformation bill inches closer to house passage
- Military retirement exemption debate prompts ongoing stalemate
- Quick updates on bills
- The Laundry List
We strive to make these concise and easy to read. Feedback is not just welcomed, it’s encouraged – [email protected]
Federal Cuts, Tariffs, and “The One Big Beautiful Bill”
3-minute read
This week injected many variables into the Vermont economy. Conventional wisdom is Vermont’s economy never runs too hot or too cold, something that has held us back as we haven’t seen the growth in boom times yet protected us in financial slumps.
- The caveat is that national slumps have traditionally meant more federal funds injected into the economy or at least steady federal funds, which had an outside impact on Vermont’s small economy
- This time is proving different, as any economic downturn will be paired with cuts to federal funds.
Hemorrhaging federal funds: This week saw more news of cuts of federal funding to Vermont – Vermont Food bank, $16.7 million in COVID-era funding was clawed back (the equivalent of roughly 1% on a Vermont property tax bill) from the education fund, and the future of Vermont’s $23 million in LIHEAP is in question.
Tariff-iying: The State Treasurer’s Office estimates Vermont households could see about $3,800 in additional costs per year due to tariffs, or approximately $1 billion annually in aggregate for Vermont, based on data from the Yale Budget Lab. Read more about that here.
In the nation’s capitol, the President’s budget advocates are counting $600 billion in tariff revenue over the next decade to cover the cost of their tax package, which the President refers to as “one big beautiful bill.”
The U.S. Senate passed a procedural hurdle Thursday that allows them to move forward with their budget resolution under reconciliation.
- The package would raise the debt ceiling, make the 2017 Tax Cuts and Jobs Act permanent, and go further with another $1.5 trillion additional in tax cuts.
- To make the math work, the resolution instructs committees to find a minimum of $4 billion in savings, which is why you hear so much concern from observers about Medicaid.
The Lake Champlain Chamber is asking Vermont businesses to confidentially share how they will be affected by the new tariffs. Your responses will inform our advocacy efforts.
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Education Transformation Bill Inches Closer to House Passage
The House Committee on Ways and Means spent the week plugging away at the Education Transformation package with the aim of voting the legislation out by today.
- However, they instead will straw poll on items in the bill in order to direct drafting staffs’ weekend work and then return to vote on the 127 page bill.
- The Committee will vote on Tuesday before the floor so they can attempt to have the legislation on the floor for votes on Thursday and Friday.
- You can read the latest version of the bill here.
The Broad Stokes:
- A foundation formula – would be in effect when the first new school board approves its first new budget.
- Districts will be granted a foundational payment called an Educational Opportunity Payment (EOP) per each weighted student.
- The school district will be able to vote to spend up to 10% above that grant in what is called Supplemental District Spending.
- Scale – The House bill includes (effective 2026) a 12 student minimum class size for Pre-K, 15 for grades 1-4, and 18 for grades 5-12. Our current average class size is just over 10 across all grade levels.
- If minimum class sizes are not met for two years, it would be treated as if they failed to meet educational quality standards, and then an administrative process begins.
- Homestead Exemption: The Committee is moving forward with a transition from a property tax credit to a homestead exemption.
- Districts – The bill tasks a new subcommittee comprised of five appointed, retired superintendents to draft potential district maps with no fewer than 4,000 students per district.
- Not having districts yet creates a stumbling block as committee discussions keep tripping over not having districts mapped.
More details on components
New Property Tax Classifications
Last week, we covered the nine new, proposed classifications of nonhomestead property tax and the startling implications of each of them having their own tax rates, for a total of 11 tax rates. This week, after additional testimony, the Committee has decided to move forward with three new classifications of nonhomestead, for a total of four tax rates.
- These classifications of nonhomestead include, apartment, residential, and non-residential.
- The concerns we highlighted last week, that this might be used by future legislatures to push more of a property tax increase onto businesses still exist.
Homestead Exemption:
The Committee is moving forward with a transition from a property tax credit (PTC) to a homestead exemption.
What’s the difference? The current PTC sets a rate for which a homestead can pay into the education fund and then reimburses the taxpayer the difference between that and what they pay on property as a tax credit.
- The homestead exemption would allow a homeowner to exempt how much of their property tax they must pay based on a sliding scale depending on their income. This change improves transparency and reduces complexity.
- However, in both scenarios, the limit for assistance caps out at $115,000 of household income, which means many dual income households are afforded no support and will likely be faced with higher ills, as they shoulder the tax burden of everyone who gains income sensitivity.
Career Technical Education
While not included in the bill, the House Committee on Commerce and Economic Development has spent the last few weeks diving deep into governance of CTE and shared their findings with the House Committee on Education.
- They’re in a holding pattern until school districts are determined, however, they feel they have the groundwork for reform by moving to a single statewide CTE district and aligning CTE governance with newly drawn K–12 school districts.
Military Retirement Income Exemption Prompts Ongoing Stalemate
2.5-minute read
An area of common agreement has been stalled in the House as a perennial policy debate about exempting military retirement income from Vermont tax.
Catch up quick: As part of his budget address, the Governor recommended about $9 million in tax cuts, including expanding child tax credit eligibility, expanding the Earned Income Tax Credit, and expanding the income threshold for exemption of social security from taxation.
An area of agreement: The House Ways and Means Committee passed this proposal and sent it to the floor for a vote in H.483.
A perennial issue of disagreement: For years, a proposal to exempt military retirement and survivor benefit income from Vermont’s income tax has seen bipartisan support, but a groundswell this year has given it the best chance yet with dozens of sponsors signing on to H.43.
Zoom Out: This policy is not just about retirement benefits. Military retirees are still of working age. They are a skilled and dependable workforce who, upon leaving service, need to decide where to settle down after years of living untethered. They often make decisions based on tax policy.
Between the lines: In this new era, without the veto-proof majority that characterized the past six years, votes that have members cross party lines are a vulnerability and it’s in the interest of leadership to not allow these votes to happen.
- However, while you can stop a bill from moving, it is much harder to stop an amendment.
- That was the predicament leadership found themselves in when Representative Jed Lipski brought forward H.43 as an amendment to H.483.
- Facing almost half of the House voting for the Lipski amendment, leadership pulled H.483 and sent it back to committee, where it still resides.
What’s Next? Lipski’s amendment very likely has Democrat and Republican votes to pass if H.483 comes back to the floor, which leaves leadership in an awkward position.
Quick Updates:
2-minute read
Here is a check-in on a few key pieces of legislation that have been moving.
Clean Heat Standard Repeal* Sent Back to Committee
S.65, which would have changed the jurisdiction of Efficiency Vermont from lowering Vermonter electric demand to lowering Vermont emissions as well as partially repealing the Clean Heat Standard, was dealt a large setback this week.
- The bill was sent back to the Natural Resources Committee by unanimous voice vote, which means it’s dead for the session, though the Clean Heat Standard repeal could resurface.
Housing Bills
The House and Senate have exchanged housing bills aimed at developing more housing despite headwinds and are examining what they’ve received, finding more similarities than differences.
- The Senate sent the House their Community Housing Infrastructure Program (CHIP) proposal. It would allow municipalities to self-fund infrastructure investments using projected property tax revenues, reducing reliance on new state or local appropriations.
- The House sent the Senate appeals language aimed to ensure that those who challenge housing appeals have to show specific harm to their personal interests and demonstrate that the proposed housing violates the applicable zoning laws.
See a side-by-side of the bills here.
Last week, the Secretary of the Agency of Commerce and Community Development penned an op ed about how appeals drive up housing costs that is worth a read.
Governor Signs “Raise the Age” Compromise
When signing H.2, Governor Scott issued the following statement:
“While I continue to believe repealing “Raise the Age” for 19-year-old criminal offenders altogether is the best approach, I do appreciate the Legislature’s willingness to at least delay it for another two years. In the meantime, we will continue to make our case for a full repeal, so we don’t proceed down this path again in two years.”
The Laundry List
Hundreds of hours of committee discussion each week culminate into 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, Week 3, Week 4, Week 5, Week 6, Week 7, Week 8, Week 9, Week 10, and Week 11.
- The Vermont Climate Council is hosting a number of virtual and in-person events throughout the state this spring to gather feedback on the update to Vermont’s Climate Action Plan. Below, we’ve included information about an event happening in Chittenden County (in Hinesburg) on April 15, as well as more information about the Plan itself, a link to the full event list, and other ways to comment. Learn more here.
- After a long saga, late Friday, FinCEN issued a temporary rule suspending Beneficial Ownership Information reporting requirements for all U.S.-formed business entities. Only foreign-formed companies registered to do business in the U.S. still need to file. The rule is effective immediately, with a 60-day comment period before a final version is considered. While FinCEN’s authority to eliminate reporting for 99% of affected businesses is questionable, any legal challenge would take time. For now, BOI reporting is effectively on hold. Read more via this press release.
- Act 181, passed last year, transitions Vermont’s land-use regulation to place-based jurisdiction. As part of that, land needs to be categorized. An initial draft of that is now available via the Act 181 Map Viewer. This map viewer displays the draft regional future land use map and allows users to provide direct feedback on the map.
- Governor Scott announced three new appointments this week;
- Kaj Samsom as commissioner of the Department of Financial Regulation (DFR),
- Jill Briggs-Campbell as deputy secretary of the Agency of Education (AOE), and
- Neil Kamann as deputy commissioner of the Department of Environmental Conservation (DEC).
- The Office of Workforce Strategy and Development announced this week the members of Vermont’s new State Workforce Development Board (SWDB). Read more and see the members here.
Hey! You read the whole update. You probably have some thoughts on the content or how we delivered it. Feel free to reach out to us at [email protected].