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March 21, 2025
Brave Little State Threatened, Faces Big Scary Budget Cuts
Five years ago, legislators left the State House thinking they’d return to their committee rooms in two weeks after the world could suppress the novel coronavirus – instead, they wouldn’t return for about two years.
- It is a solemn reminder of how quickly things can change, and many contemplate yet another generationally defining moment to which the legislature would need to respond: tectonic shifts at the federal level.
US Senator Peter Welch, who once served in the Vermont Senate, told members of the Senate Committee on Appropriations, “There’s going to be a level of uncertainty that you’re just going to have to deal with.”
- As you read through this update, you’ll notice the alarm bells we first range in early updates reverberate through the whole State House, as this factor is present in nearly every bill we cover this week with debate around the Budget Adjustment Act, property taxes, and healthcare shadowed by the uncertainty of what to expect from Washington.
“Things are pretty fluid in Washington, and we might need every cent we have,” the Chair of the Senate Committee on Finance stated this week. Even if Congressional cuts don’t happen, numerous other changes can have ripple effects on Vermont tax revenues.
- Vermont’s workforce includes over 6,800 federal employees, and the Vermont Department of Labor rolled out resources for those who may lose their jobs this week.
- Loss of federal money in the form of grants is already taking its toll on agriculture, education, and transportation in Vermont.
Aside from budgeting uncertainty, it’s not partisan to say that uncertainty is bad for business, just ask any one of Vermont’s many businesses facing the far-reaching tariffs.
- Lending Tree put Vermont as the third most affected state by tariffs, and indirectly, many businesses have found themselves caught in the crossfire and subject to boycotts from their Canadian customers.
In this week’s update:
- BAA Skirmish over motel program defines new political dynamic
- House and Senate exchange housing bills
- House and Senate each pass healthcare cost containment
- Property tax rates set – segregation of ratepayers with separate rates considered
- Energy efficiency bill, with Clean Heat Standard repeal*, stalls, sputters, and starts again
- The Laundry List
We strive to make these concise and easy to read. Feedback is not just welcomed, it’s encouraged – [email protected]
BAA Skirmish Over Motel Program Defines New Political Dynamics
1-minute read
The Scott Administration and Democratic Legislative Leaders have been sending each other correspondence all week, fiercely debating the Budget Adjustment Act (BAA).
The crux of the disagreement is twofold,
- First, the Governor took issue with using the BAA for substantial policy changes or spending beyond the technical corrections that the bill typically contains, citing vast federal uncertainty as a reason to especially not depart from the norm this year.
- Second, the Governor took issue with the extension and funding of the motel voucher program for those experiencing homelessness.
Rewind: You may remember that the House Republicans used the BAA as the first opportunity to flex their new numbers, and they will be able to sustain the Governor’s veto.
The Counteroffer: The Legislative leadership conceded to the Governor’s requests with the exception of the funding for extending the motel voucher program for around 1,400 people.
- The Governor came back covering about 400 households with children or medical conditions, which AHS has funding to do without the BAA.
What’s Next: The BAA will be on the floor and pass on partisan lines, and it is expected that the voucher program debate will be resolved in H.91, which would transition the program’s operations to the Cap Agencies statewide.
House and Senate Exchange Housing Bills – Here’s How They Compare
1-minute read
Both bodies of the Vermont Legislature are in the process of sending each other a housing bill.
What still might be lost on many folks is that we need housing abundance, not prescriptive affordability requirements, if we are going to pull out of our tailspin.
House and Senate Each Pass Healthcare Bills
2-minute read
If you are reading our updates, I don’t need to convince you that the cost of healthcare in Vermont is far too high and impedes our economic success as a state.
- Both bodies of the Vermont Legislature are in the process of sending each other healthcare reform bills.
The Senate Bill
The Senate Bill, S.126 would:
- Direct the Green Mountain Care Board to implement reference-based pricing and establish standards for global hospital budgets;
- Require hospitals to disclose more information regarding executive compensation;
- Require the Agency of Human Services (AHS), in collaboration with GMCB and the Department of Financial Regulation (DFR), the Vermont Program for Quality in Health Care (VPQHC), the Office of the Health Care Advocate (HCA), and an advisory committee (also created in the bill) to develop an integrated Statewide Health Care Delivery Plan; and
- Require AHS to develop an integrated system of clinical and claims data.
The House Bill:
The House passed legislation that the Chair of House Health Care described as a “tourniquet” for emergent situations where a major insurer is at risk of insolvency.
The House Bill, H.482 would
- Grant the Green Mountain Care Board (GMCB) new authority to adjust hospital finances in response to financial risks in Vermont’s health care system.
- If a health insurer faces imminent insolvency, the GMCB may temporarily reduce the insurer’s reimbursement rates to financially stabilize hospitals to mitigate the risk.
- Allow the GMCB to adjust a hospital’s budget to account for prior-year budget overruns and appoint an independent observer to oversee a hospital’s operations if it has made material misrepresentations or is not complying with its budget.
A backdrop of uncertainty: Front of mind for everyone is a potential cut of Medicaid by Congress.
- Republican leaders in Congress have directed the committee that oversees Medicaid to cut $880 billion from the next budget, and most Medicaid money goes to states, so the best way to think about the proposal is as a cut to state budgets.
- Vermont was cleared for the AHEAD program, however, with changes in D.C., it is uncertain if that is a now viable path.
Property Tax Rates Set – Segregation of Rate Classes to be Considered
3-minute read
The House Ways And Means Committee had many decision points to consider while drafting the yield bill, which sets property tax rates.
The Crux: The Committee struggled to decide what to do with the $77 million in the general fund that was initially set aside to lower the tax rate.
- It will take about two years before any education reform that the Legislature would pass can substantively affect property taxes and education costs.
- With storm clouds on the horizon and big, potentially costly transitions to the education system, some pondered if they should set some of that money aside for the future.
- The Committee contemplated multiple times whether to do a partial buy-down to spread tax relief across two fiscal years or a full buy-down that uses the full $77 million this year to reduce property taxes.
- Furthermore, the Committee contemplated using the buy-down dollars only to help the homestead taxpayers, which would have left businesses and renters with higher bills.
The Conclusion: By the end of the week, the Committee went along with the plan that had been discussed since the session started, using the full allocated amount to buy down the tax rate uniformly across income-based, homestead, non-homestead property taxpayers for an estimated bill average increase of 1.1%.
- The Committee voted the bill out 9-2-0, with two dissenting votes stating they would hope to hold funding for the future uncertainty.
What’s Next: The Committee deliberately chose not to include any reforms or significant changes in their yield bill, as has been the case in previous years. With the bill passed, they’ll pursue four areas of transformation next week.
- Modernizing the Property Reappraisal Process – Ensuring a more consistent system across Vermont.
- Creating New Property Tax Categories – Subjecting different categories of taxpayers to different tax rates.
- Transitioning the Property Tax Credit to a Homestead Exemption – Restructuring how income-based property tax relief is provided.
- Establishing a Foundation Formula – Addressing inequities in school funding via a weighted block grant style payment per student.
Of particular concern is item number 2. The Committee has contemplated creating a standard system to classify properties for property taxation, with each classification type is taxed at a separate rate. The classes include Residential A (assessed under $1M), Residential B (assessed at $1M or more), Apartment, Affordable Housing, Commercial, Resort, Industrial, Undeveloped, and Public Use.
- What could go wrong? Invariably, this will play out in future years as the Legislature will pick winners and losers across these rates.
- Play this out with us: Let’s think of a year where one category will be perceived to have a bad year while another is perceived to have a good year – legislators might want to place more of an increase on one and take more off another.
- Give it a decade of this happening, and what we get is a tax system that requires a history lesson to understand the tax code and disparities between rates.
- We need less complexity, not more, and the Legislature has enough trouble setting two tax rates now, imagine them trying to set 10….
The crossover deadline did not apply to the education reform package being worked on by the Legislature, however, their new deadline is quickly approaching.
Additional Resources:
S.65 Stalls, Sputters, and Starts Again
1-minute read
The Senate Committee on Natural Resources and Energy gave the green light last week for a bill that expands energy efficiency utility (EEU) jurisdiction to include greenhouse gas emissions reductions and electrification projects, increasing the EEU’s flexibility to use Energy Efficiency Charge (EEC) revenue for projects that reduce total energy use across different fuel types
Catch Up Quick: Things got controversial in the Senate Committee on Natural Resources, as the Public Service Department warned that shifting EEC funds could make ratepayers cover the cost of replacing lost efficiency gains, and the Public Utility Commission and the distributed utilities have registered concerns with the legislation.
- As if that wasn’t controversial enough, the bill includes a repeal of the clean heat standard. Some would debate whether it truly is a repeal as the fuel dealer registry remains with a two-year delay.
All of these same concerns were on full display this week in the Senate Committee on Finance and led to the bill stalling for almost 24 hours in which it looked like it might not proceed.
Ultimately, a technical amendment that made no substantial changes was brought forward and it was made obvious that a deal was brokered that allowed the bill to pass out of Finance and make its way to the Senate floor, where it will be voted on next week.
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, and Week 8
- DRM LINKS – Read previous updates: Week 1, Week 2, Week 3, Week 4, and Week 5. Week 6, Week 7, and Week 8
- The House passed H.244, a bill that would require the State of Vermont to spend at least 80% of its annual advertising budget for print, digital, radio, and television on local news and broadcast organizations. It establishes criteria for what qualifies as a “local news organization” or “local broadcast organization,” excludes tourism-related advertising from the requirement, and mandates an annual report on state advertising expenditures.
- The House passed this week H.461, a bill expanding eligibility to unpaid leave.
- The House Committee on Transportation decided not to include a retail delivery fee in this year’s Transportation Bill (T-bill), however, the committee agreed to take testimony about a fee later this session and will consider including one in next year’s T-bill.
- The Vermont Senate voted to reject Governor Scott’s January 15th Executive Order that would have reorganized the Department of Public Safety as the Agency of Public Safety, taking issue with the change not happening via legislative process.
- The House took the initial step towards cutting regulations for at-home food producers this week. 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 to us at [email protected].