April 12, 2025 Legislative Update

The House passed their landmark-ish education reform bill yesterday. It's a mixed bag of results that punts on governance reform while making significant strides on education finance.

The Senate may or may not be inclined to take such a backseat approach to education reform, we're getting mixed messages from them recently. At the very least, we're hoping they aren't inclined to put the same folks who designed and run today's system in charge of building the new one. That's the approach the House has taken and we are inclined to think it will give us more of the same problems we have today with even less control for local communities.

You can read all about what this legislation does in the bill review we released this morning.

Housing

There has been a lot of emphasis on zoning and land-use regulations in the past year or two. One key area of focus this year for both the House and Senate housing bills is the appeals process and who is even allowed to appeal a housing permit. There are certainly complexities to this; the Senate Economic Development Committee grappled this week with defining who qualifies as an "aggrieved person" in the context of municipal appeals. This goes hand in hand with a new, higher, "particularized interest" standard for the appeals process. In the context of the bill, gone are the days when someone could appeal based solely on their proximity to a project without demonstrating a specific injury. However, concern still exists that the new definitions might allow individuals who are not directly impacted by a project to appeal, potentially leading to unnecessary delays in housing development.

The removal of public hearings for certain municipal bylaw amendments also ruffled some feathers due reducing opportunities for community input. One possible solution might be to allow a certain number of residents to petition for a public hearing if they feel strongly about a proposed amendment. 

While the proposed changes in housing bills aim to streamline the appeals process and clarify definitions, concerns about public participation and the potential for misuse of the appeals process remain prominent

The Senate bill, S.27 introduces a project-based approach to tax-increment financing (TIF), called the Community and Housing Infrastructure Program (CHIP). Unlike traditional TIF districts that encompass broad areas, the CHIP focuses on specific housing development sites and their immediate surroundings. The CHIP provisions apply to the parcel where housing is constructed and any immediately adjoining parcels, allowing for a more targeted approach to infrastructure improvements. Like regular TIF's, the incremental revenue generated from property value increases (due to the project) will be allocated specifically for financing infrastructure improvements, not for the housing development itself.

Municipalities must develop a comprehensive plan that outlines the proposed infrastructure project, housing development, and financing details. Municipalities are required to hold public hearings to share information about the proposed project and gather community input. The Vermont Economic Progress Council (VEPC) must review and approve the application, ensuring it meets all project and location criteria.

The overall thought behind CHIP is that it is more accessible to smaller municipalities who could manage a single project but not multiple projects that are typically part of a traditional TIF. This is why legislators in the House have emphasized the need for administrative simplicity. However, these projects must also be located within designated Tier 1A or Tier 1B areas that will be mapped as part of the new Act 181 framework. Depending on how these maps end up being drawn, some municipalities may be left out.

In other housing news, Michael Monte from the Champlain Housing Trust highlighted that Congressionally Directed Spending (CDS) for 2025 has been suspended, which could negatively affect ongoing projects, including a new veteran center in Burlington. He also expressed concerns about the future of NeighborWorks funding, which was previously targeted for elimination during the Trump administration. The $1.9M received from NeighborWorks is critical for supporting various housing programs, including real estate development and homebuyer education. That particularly stream of money is highly leveraged, generating approximately $61M for Vermont housing projects through various grants and tax credits. Monte also emphasized the necessity of continuing to build affordable housing to support not only low-income individuals but also moderate-income families who are increasingly struggling to find affordable options (we agree!).

Economic Development & Infrastructure

The House Commerce Committee continued testimony on S.69 this week, which we recently reviewed. Advocates for the bill claim that that social media platforms use addictive design features, such as infinite scrolling and constant notifications, to keep users engaged, often at the expense of their well-being. They claim the bill's "privacy by default" and algorithm transparency provisions has the potential to create a safer online environment for children. California passed a similar law, but theirs has not shown an ability to do this and has generated hundreds of legal challenges. Vermont's small businesses, required by play by the same rules as big tech companies, could be caught up in the Vermont version of this.

Health Care

A number of health care bills are in the mix this year and encompass some significant reforms to the delivery and financing of health care services in the state. Below is a brief summary of some of the major pieces in play this year.

H.96 aims to amend the monetary thresholds for certificates of need (CON) in healthcare facilities. CON regulations require healthcare providers, such as hospitals or clinics, to obtain government approval before expanding facilities, adding services, or purchasing major medical equipment. The goal is to control healthcare costs, prevent overbuilding, and ensure equitable access to care by avoiding unnecessary duplication of services.

Detractors say that CON's can stifle innovation and competition, leading to higher costs. They are also likely to favor entrenched providers, limiting new entrants into the market (and ensuing competition). Another common critic is that they’re often influenced by politics or lobbying efforts (picking winners and losers).

The bill increases the monetary threshold that triggers a CON for healthcare projects to $10M, applying uniformly to all healthcare facilities, including ambulatory surgical centers. The changes are aimed to eliminate redundancies and streamline the process for healthcare facilities, ensuring that all types of facilities are treated equally under the law. It also allows smaller providers to engage in innovative new technologies or practices without triggering an expensive and time-consuming CON process.

The bill has passed the House and is now being reviewed in the Senate, where it is advancing towards a vote. Concerns were raised about the inflationary factors affecting the monetary thresholds, with discussions on whether the Green Mountain Care Board should be mandated to adjust these thresholds periodically.

S.126, focuses on broader healthcare reform in Vermont. The conversation around this highlights the complexities of healthcare costs, hospital sustainability, insurer sustainability, and the need for innovative solutions to improve access to care and control costs.  Many hospitals in Vermont have been operating at a loss, necessitating financial sustainability plans. And yet, Vermont hospitals have some of the highest per capita costs in the country, revealed by the Oliver Wyman report. The Green Mountain Care Board has been actively involved in addressing these financial challenges, but some argue that they don't have the necessary tools.

The bill proposes enhanced responsibilities for the Green Mountain Care Board to ensure that budget decisions do not lead to the loss of essential services. For example, we know that too much care happens in emergency room and hospital settings and not enough in primary care offices. One policy makers are exploring are motivational incentives to encourage healthy behaviors among patients (i.e. preventative care).

Another major facet of the bill is the introduction of reference-based pricing (RBP) for the Vermont Medicaid program's reimbursement rates. This is meant to ensure consistency in reimbursement across providers (particularly smaller ones). Independent clinicians often receive lower professional fees compared to hospital-employed physicians, leading to disparities in compensation for similar services. Rising costs and stagnant reimbursement rates threaten the sustainability of independent practices, which lack access to additional funding sources that are available to hospitals.

RBP in healthcare is a cost-management strategy where employers or health plans set a fixed reimbursement rate for medical services based on a reference point, typically tied to Medicare rates, regional averages, or a percentage above a benchmark. Instead of paying whatever a provider charges, the plan pays up to this predetermined amount, and employees may be responsible for any difference if the provider’s fees exceed it.

The RBP rates contemplated in the bill are:

This approach emphasizes redirecting resources to primary care and mental health services to improve access and quality of care. The bill has passed the Senate and is now being reviewed by the House Health Care Committee.

A third bill, S.27, allocates $1M from the General Fund to the State Treasurer for contracting with a nonprofit entity. The purpose of these funds is to acquire and repay medical debts for eligible Vermont residents. Residents with a household income at or below 400% of the federal poverty level or owe medical debt amounting to 5% or more of their household income would be eligible. An estimated 60-65K Vermonters are expected to benefit from the program, by alleviating the financial burden of medical debt. Lawmakers have emphasized the importance of ensuring that the program does not inadvertently encourage irresponsible financial behavior among those who can afford to pay.

The bill has passed the Senate and is now up for a vote on the House floor next week.

Looming over all this is the fact that legislators have acknowledged the potential impact of federal policy changes on Vermont's healthcare system, particularly regarding Medicaid funding and insurance subsidies.

Good Government

The House resumed taking testimony on S.23 this week, which would add protections against AI-generated deepfakes in elections. Meanwhile, the Senate has started digging into the elections bill (H.474). The Deputy Secretary of State, emphasized the importance of reducing administrative burdens and improving election services this week. She highlighted the need for all candidates to register in the campaign finance system to promote transparency (due to the new $0 reporting threshold in the bill). The Vermont Municipal Clerks and Treasurers Association expressed support for various aspects of the bill but raised concerns about the feasibility of implementing some of the changes, particularly regarding write-in candidates and the timing of registration. Read our review of the bill.

We've also been informed that the Senate Government Operations Committee is not taking additional testimony on the anti-ethics bill (H.1) after we released our action alert earlier this week. Another legal expert, Paul Gillies, testified in support of our position on the bill last week so we are hopeful this means they are not moving forward. But, just to be sure, you can send a note to the Committee here.

On behalf of Vermonters,