Thank you to this week’s sponsor of our Advocacy Update:
February 27, 2026
Legislators are leaving today to go back to their home districts for a week’s recess for Town Meeting Day.
When they return, they will have four legislative days to pass legislation out of their committees to ensure that it can continue to be worked on this legislative session.
This serves as a good check-in point on legislation so far this session, and this week’s update, will be brief and provide some high-level insight into specific areas to get you well informed when you see your elected officials next week at Town Meeting.
- Education transformation: moving so slowly that one could think it’s not
- Taxation: setting property taxes, using surplus, and accommodating federal changes
- Housing: Act 181 timeline punts and rural housing toolbox
- The Laundry List
If you have any questions and want to go deeper on any of these issues, please reach out to us.
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.
March Focus – The Regional Governance Debate: Is Vermont’s “town-by-town” structure holding us back? At LCC, we believe the biggest obstacle to solving our state’s policy problems is often the town line.
- We are actively testifying and engaging with policymakers on potential non-duplicative regional models that streamline governance without adding bureaucracy.
Want to Join the Conversation? Join us on March 16th for our Legislative Breakfast at Dealer.com. We’ll host a panel of municipal and legislative leaders to discuss the future of regionalism in Vermont.
March Legislative Breakfast
- When: Monday, March 16 | 8:30 am
- Where: Dealer.com | 1 Howard Street, Burlington
January Legislative Breakfast –
- When: Tentatively Rescheduled to April 20th!
- Where: The Nine | 1205 Airport Parkway, South 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
Education Transformation: Moving So Slowly One Could Think It’s Not
The debate over Act 73 has reached a new level of tension following the release of the state report card, showing, as VTDigger described, “a majority of Vermont’s students are ‘well below’ math and English language arts proficiency goals, while the state’s public education system ‘is not yet consistently delivering strong and sustained outcomes for all students.’”
Transformation Efforts:
- Redistricting: Two competing visions are clashing in committee.
- The House Proposal: A more rigid map that would mandate 27 consolidated districts to ensure administrative efficiency and uniform curriculum access.
- The Senate Proposal: A voluntary two-year window for mergers. This approach offers incentives for towns to merge on their own terms before the state mandates boundaries in 2028.
- Cost containment: The Senate Committee on Finance continues to work on a way to ensure that property taxes do not increase in future years.
- The Department of Taxes warns of a structural gap where education costs are growing at ~6% annually, while non-property tax revenues grow at only ~3%, forcing property taxes to fill the widening gap.
- Continued unfinished business from last year:
- Debt: The Legislature is still struggling with how to handle district debt in the context of a transition to a foundation formula.
- Regional differences: The House Ways and Means Committee took testimony on how to handle the differences in cost of operations and cost of living between different regions.
- Behind the scenes: Ahead of Town Meeting Day, when towns will vote on school budgets, the Speaker of the House is circulating a memo outlining the the gravity of the education situation.
- The Memo Highlights: absent any one-time General Fund “buy down,” property taxes are estimated to grow by 13% in fiscal year 2027, 7% in fiscal year 2028, and 6% in fiscal year 2029 – an overall increase of 13%.
- Using these assumptions, approximately $480 million in additional non-property tax revenue (buy down) would be needed to keep property tax growth at 5% in fiscal years 2027, 2028, and 2029.
Taxation: Property Taxes, Surplus Dilemma, & Federal Changes
The House Ways and Means Committee is currently working on the yield bill, which sets property tax rates, and modeling scenarios to address a projected average property tax increase of 10.1%.
- The $105M Surplus: Lawmakers in that Committee are debating how to spend a one-time General Fund transfer.
- The “One-Year Fix”: Using all $105 million now would drop the tax increase to roughly 5%, but economists warn this creates a 16% “tax cliff” in 2027.
- The “Smoothed” Approach: The committee is leaning toward a three-year phase-in (10% this year, 8% next, 5% the following) to avoid a sudden spike when the surplus runs out.
Federal Link-up: To avoid a $21 million revenue hole caused by federal tax changes, the Ways and Means Committee is considering selectively decoupling from the federal tax code when it comes to Research and Experimental tax credit, bonus depreciation, and the Qualified Small Business Stock exclusion.
- To offset the loss of federal R&D benefits, the bill proposes increasing the Vermont-specific R&D tax credit from 27% to 75% for expenditures made within the state.
Second homes tax: The Ways and Means Committee continues to work on refining the thorny language on how to tax second homes.
Looking for more revenue: Lingering in the background consistently is the desire to increase taxes on those with higher incomes, with multiple bills interested in a tax on individuals and households making above $250,000.
Housing: Act 181 Course Correction & Housing Finance
The session has shifted from ideological reform to technical reality. Lawmakers have realized that the timelines were too aggressive for Act 181, Vermont’s most recent adjustment to Act 250 which transitioned regulation to place-based jurisdiction.
- Punting with S.325: This bill provides “transitional certainty” by delaying key Act 250 triggers.
- The controversial Road Rule, which grants Act 250 jurisdiction over any road longer than 800 feet, has been pushed back from July 2026 to July 1, 2027.
- Tier 3 mapping, areas of extraordinary conservation, is also being delayed to allow towns more time to align their local zoning with the new state tiers.
- Between the lines: Timelines aside, rural advocates feel that the legislation will bar much of the state from ever growing, while advocates for more densely populated areas feel that their allowances are woefully inadequate.
House Housing Financing Bill
- Housing toolbox: H.775 creates a Rural Housing Finance Pilot for 300 units and authorizes Special Assessment Revenue Bonds.
- Special Assessment Bonds: Municipalities would be authorized to issue revenue bonds to finance public improvements, such as water or sewer lines, that benefit a specific area.
- Expansion of State Treasurer’s Credit Facility: The bill increases the State Treasurer’s authority to establish a credit facility from 10% to 12.5% of the State’s average cash balance.
- Importantly, the House General Committee recently added a requirement for towns to conduct Housing Needs Assessments to prove they actually need the infrastructure funding provided by the bill.
Polling Shows Importance of Housing: numbers this week released by Let’s Build Homes shows Vermonters’ sentiments around housing and a desire for legislative action.
- 75% say it is extremely or pretty important for the Legislature to take action on housing, including nearly half (47%) who say it is extremely important
- Roughly three-quarters of voters across all age groups and every region say legislative action is needed
- When asked to name Vermont’s most important issues, before any other housing questions were asked, 49% named housing as a top concern, outranking taxes (39%), healthcare costs (38%), and jobs (16%)
- 93% say the cost of renting or buying a home is a major or somewhat of a problem, including 68% who call it a major problem
- 89% agree there is simply not enough housing in Vermont that average people can afford.
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, Week 3, Week 4, Week 5, Week 6, and Week 7
- Noncompetes: H.205, a bill that had reached an uneasy consensus on a long-contested topic of noncompete agreements, faced a roadblock this week when teachers attempted to remove an exemption from their contracts, drawing the bill back into committee and more testimony.
- Ticket Resales: The House Commerce Committee passed H.512, which would establish a 110% price cap on ticket resales aimed at protecting consumers from excessive markups in secondary markets.
- New Appointments: Governor Scott officially appointed former Burlington Police Chief Jon Murad as the Department of Corrections commissioner.
- Regional Policing: The Senate advanced S.255, a pilot program to create a regional government council in Windham County to bolster police and emergency response services.
- Rodenticide Ban: H. 758 is being discussed in a Committee we don’t cover much in these updates, House Agriculture. It’s causing some late concern as it would ban the use of substances used to control rodent populations and could cause a threat to the ability of many of our businesses to control pests.
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].