Major initiatives in areas such as education, housing, and health care are nearing the finish line this week as key committee votes take shape. Most notably, the Senate Education Committee advanced the education reform bill in a key vote on Friday. While there is much work left to do, the Senate version (so far) seems better than the House's and the vote keeps the effort on track to kick off the reform process this year.
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Education
Education reform took a significant step forward this week when the Senate Education Committee voted to move the "education transformation" bill (H.454) this week. Committee members themselves admitted that the bill was not perfect, but they needed to move the process forward to set things in motion this year.
The proposal includes recommendations to eliminate certain categorical grants, such as those for technical education and flexible pathways, as these would be covered under the new foundation formula. A few of the Committee members expressed concerns about whether the proposed funding model would adequately address the needs of all students, particularly those in economically disadvantaged situations. This is what the local spending allowance is meant to address, but the Committee left the cap of 10% in place for now.
Independent schools remained a hot topic, the Committee settled on a proposal would reduce the number of eligible independent schools from 55 to approximately 12, which could significantly impact the number of students who could receive tuition support.
The Senate Version seeks to create a coordinated strategy for Career and Technical Education (CTE) that aligns with public education governance transformations and addresses workforce needs. The draft specifies that funding updates should not create competition between sending schools and CTE programs. This is the core issue with our current CTE structure and the sentiment is consent with our recommendation for education reform.
There are also some new responsibility assignments in this version of the bill:
- The Commission on the Future of Education is now tasked an analysis of healthcare costs on the Education Fund, with recommendations for potential cost containment measures.
- The Agency of Education is asked to submit a report on increasing flexible pathways opportunities for students in commercial and nonprofit sectors.
- The School District Boundary Task Force membership was updated to remove special interest groups from the drivers seat; increasing representation from both the House and Senate.
The Senate Finance Committee also looked at the bill, receiving a snapshot of how the proposed foundation formula would affect funding across different counties. Bennington County was noted to receive the largest relative increase in funding at 23.8%, while Addison County would see a decrease of 13.7%.
The Vermont Low Income Advocacy Council, which has been advocating for low and moderate-income residents for over 53 years, also testified on the bill. They emphasized that updating income sensitivity is the most equitable way to achieve property tax relief (I would disagree with this, arresting the increase in school spending will provide more relief long-term). Property values do not always reflect the ability to pay, and arbitrary caps can disproportionately affect low-income households, they argued.
The bill moves away from income sensitivity, proposing a property tax value exemption system. Critics argue this could lead to increased taxes for low and moderate-income residents, particularly in areas with high property values. This may be true, but it also accounts for households with low income but high property wealth, makes the overall mechanism more transparent, and eliminates a lag with the previous credit system.
The Rural School Community Alliance, a newcomer to the advocacy scene, also testified. They highlighted research indicating that consolidation does not guarantee cost savings and may negatively impact communities. We agree with this, our own research indicates that larger districts are no more efficient in Vermont than small ones. This is why we believe that trade off between cost savings and local control is a false choice.
Real-world examples from Arkansas showed that consolidation led to reduced property values and adverse effects on marginalized populations. Concerns were also raised that consolidating districts could lead to increased salaries and operational costs, ultimately raising taxes. We also noted this in our communications with the Committee. The bill, as passed by the House, is likely to increase spending in the first few years of implementation because of the need to buy out and level-up staffing contracts.
The Committee also the FY2026 property tax bill (H.491) this week, ultimately concurring with the House Version of the bill. The bill relies on $118M in one-time monies to buy down property tax rates. We called this out as problematic because it would create a hole to dig out of next year to avoid a significant jump in property taxes.
Allocating $77M to reserves to stabilize future tax rates, would have resulted in a 5.8% average bill increase for FY2026. This increase feels appropriate as it is in-line with the 5.5% increase in education spending.
This use of one-time funds is risky in our view because if we enter a recession due to the federal government's erratic trade policies, those monies may dry up (or be needed elsewhere) and so too may a significant portion of the $619M in sales tax revenue that goes into the Education Fund.
If that sales tax revenue saw even a 10% reduction, this would result in a $180M deficit ($61.9M + $77.2M + $40.9M) in the Education Fund. That revenue would need to be made up by property taxes. Even if we assume schools level-fund (unlikely) we would be looking at a 11.9% increase in property tax rates for FY2027 in this hypothetical situation. If schools increased spending at over 5% again, the rate increase would likely be close to 20%.
Interestingly, House Education Committee also heard testimonies from students regarding the future of education in Vermont. The students shared their perspectives on class sizes, outdoor learning, and the impact of school policies on their educational experiences. Isla Segal (Student, Woodstock Union Middle School) believes that a class size of around 20 students fosters better social interactions. Our research indicates that larger class sizes may actually lead to better outcomes. This may be because larger classes allow students to meet peers with varied interests, promoting compromise and social skills.
Isla also expressed concern that smaller schools limit social interactions, leading to conflicts and a lack of compromise. However she balanced this with the potential negative impact of closing smaller schools, particularly for rural students who may face long commutes. Braeden Schuren Burns (Student, Main Street Middle School) echoed this sentiment, noting that many students face lengthy bus rides today, which can hinder participation in extracurricular activities.
The Committee also heard from Erin Benham (Vice Chair, Connecticut State Board of Education) on a bill (H.54) that would ban personal electronic devices from classrooms. Connecticut's journey towards implementing cell phone guidelines began recently. The state aimed to establish a framework for cell phone use across all school districts, leading to the development of specific guidelines rather than an outright ban.
Interestingly, parents expressed more opposition to restrictions than students, particularly regarding safety during emergencies. Schools emphasized the importance of communicating safety plans to parents, highlighting that cell phones could actually complicate emergency situations.
It was also noted that high school students often used cell phones for educational purposes, especially in subjects like physics and higher-level math. The overall discussion highlighted the complexities of implementing cell phone policies in schools. Connecticut's experience serves as a valuable case study for Vermont as it navigates similar challenges.
Housing
In 2024, approximately 2,500 new housing units were permitted in Vermont, a notable increase from previous years. However, this figure is still not on pace to achieve the estimated need of 25,000 to 36,000 units by 2029, as identified in the housing needs assessment. We have been following S.127 for weeks now and the CHIP program included in it. The program is designed to facilitate housing development, particularly for low and moderate-income families, through tax increment financing. Three different Committees in the House took testimony on the bill this week as they push to complete their work before the end of the legislative session.
Maura Collins (Executive Director, VHFA) emphasized the rising costs of infrastructure, which have shifted in recent years from being socialized across entire communities to being borne by a smaller number of residents in new developments. This shift has significantly increased housing costs.
The latest draft of the bill by the House General & Housing Committee emphasized the importance of including both new construction and the rehabilitation of existing structures in the definition of housing development. This approach aims to address the growing number of vacant buildings and the need for affordable housing. The bill outlines specific infrastructure improvements eligible for funding, including roads, bridges, and sidewalks, to support housing development.
A significant addition to the bill is the stipulation that any housing units developed must be offered exclusively as primary residences. This measure aims to prevent the conversion of properties into short-term rentals or second homes. The bill also set the minimum requirement of 60% of the gross floor area of any development to be dedicated to housing, with provisions for a board to review projects that do not meet this threshold. Last week a 40% threshold was being contemplated.
Collins cautioned that these requirements could deter developers and create potential for unfunded mandates on municipalities if they are tasked with monitoring compliance for affordable housing projects without adequate resources.
Alex Farrell (Commissioner, Department of Housing and Community Development) also expressed concerns about municipalities' ability to enforce primary residence requirements. The discussion highlighted the need for flexibility in location criteria, particularly for Tier 2 areas (under Act 181), which may lack the necessary infrastructure. Farrell proposed that, instead of strict location criteria, a letter of support from the Regional Planning Commission (RPC) could suffice to demonstrate consistency with future land use plans. He emphasized that the bill should not impose additional burdens on developers, especially in areas that are not exempt from Act 250.
Julie Hance (Town Manager, Chester) shared details of a municipal planning grant received by Chester to explore the potential development of 60 to 80 homes on town-owned land. The project aims to address the housing needs of the community. Hance highlighted the necessity of technical assistance for small towns like Chester, which often lack the resources to manage large-scale housing projects. In her view, the proposed bill's provision for technical assistance is crucial for successful project implementation.
The Committee responded with a proposal on Thursday that would set income limits at 80% of the average median income for renters and 120% for homeowners. This approach aims to include a broader range of households, reaching into what is often considered the middle class. The discussion also highlighted the need for financial incentives to encourage developers to build affordable housing. Consensus was also achieved that areas classified as Tier 2 should be eligible for development if they can meet the necessary zoning and infrastructure requirements.
This new direction overcame concerns raised by the House Environment Committee earlier in the week. That Committee sought to limit the CHIP program to Tier 1A and 1B (mostly urban) areas. Members of that Committee also expressed concerns that the bill could lead to funding projects that would have proceeded without public financing, undermining the intent of the CHIP program.
The House Ways & Means Committee also looked at the bill this week. Their discussion focused on background growth rates of property values in the context of tax-increment financing (TIF). Analysts emphasized the importance of understanding the growth trajectory of properties within TIF districts compared to the overall community growth before the establishment of TIF. It was noted that TIF districts result in foregone revenue for the Education Fund, which is estimated at around $6-8M annually (out of $2.4B in spending). This revenue loss must be compensated through other means, such as property taxes or sales taxes.
Analysis from the Department of Taxes revealed that many jurisdictions in Vermont have experienced limited growth, with a significant number showing growth rates below 2% over a decade. Members of this Committee acknowledged that regulatory constraints and the permitting process can slow down housing development. Recent legislative reforms aim to ease these barriers, potentially increasing the rate of housing unit creation.
Given the time and attention this bill has received from several legislative committees, the bill is likely to move quickly in the coming weeks.
Health Care
The Senate Health and Welfare Committee prepared to finalize H.482 this week, which provides new powers to the Green Mountain Care Board (GMCB) over reimbursement rates for hospitals and ensuring compliance with directives from the board. Specifically the bill would provide GMCB the authority to reduce or reallocate reimbursement rates based on insurer solvency. The Board could also appoint an observer if a hospital is found to be materially non-compliant with its budget. The observer would have access to all relevant hospital documents and must report findings to the Board.
The proposed language defines hospital stability has having 135 days cash on hand. The Committee inquired about the rationale behind this threshold its relevance to critical care hospitals. Building trust between hospitals and regulatory bodies was emphasized as crucial for effective governance (although I would add that we don't want hospitals getting too cozy with regulators, there's a balance to be had here). Hospital advocates highlighted the need for a clear process to ensure hospitals are treated fairly during rate adjustments.
Owen Foster (Chair, GMCB) testified in the Committee on Thursday morning. He emphasized that the healthcare system is experiencing "extreme financial distress," with many hospitals categorized as financially vulnerable. GMCB is actively working to preserve the healthcare system's integrity through legislative measures like Act 167. The Board is recommending a minimum of 135 days cash on hand for hospitals because it aligns with credit rating agencies' standards, which categorize 110 to 160 days as adequate.
It was noted that the Board does not currently parse individual hospital and insurer contracts, confidentiality and trade secrets were cited as barriers. However, the importance of transparency in pricing and contracting was acknowledged as a valuable consideration for future discussions.
As the Committee continues to refine the bill, we would expect an emphasis on due process, financial stability, and stakeholder collaboration in addressing the challenges facing the healthcare system.
Similar issues surfaced in the House Health Care Committee this week in the context of S.63, which also addresses the regulatory duties of GMCB. The Vermont Association of Hospitals and Health Systems, expressed opposition to a recent GMCB proposal they say undermines the Vermont Administrative Procedures Act by not allowing for a formalized process in contested cases (i.e. disagreements over budget approvals). Hospitals are requesting that the Green Mountain Care Board adopt clearer procedures for administrative appeals, similar to those used by the Public Utility Commission.
The Vermont Health Care Advocate expressed support for the bill, particularly the proposed changes regarding contested cases. They emphasized the need for accountability in hospital spending and the importance of maintaining a balance between oversight and administrative burden. It was noted that the GMCB has increased its enforcement of budget orders, which some stakeholders (including us) view as a necessary shift in accountability.
The Senate Health and Welfare Committee also voted out H.96 this week and the House quickly concurred with the change. This is a positive step forward in addressing (non-value-added) regulatory burdens on healthcare providers. We have updated our analysis of the bill to reflect the new version. The bill is now expected to be signed into law by the Governor.
Fiscal Policy
Senator Beck introduced amendment to the state budget, which would have repealed certain environmental standards and regulations, including the Clean Heat Standard. The amendment would also have required the publication of a fuel tax report, which is currently available only upon request. Perhaps most importantly, the amendment proposed the repeal of private right of action (which allows anyone to sue the state) under the Global Warming Solutions Act.
The Senate Appropriations Committee debated whether the repeal would hinder future efforts to implement a Clean Heat Standard. It was noted that any future legislation would require a comprehensive process, regardless of the repeal. After discussion, it was clear a majority opposition to the effort, with the Committee voting 4-3 against the amendment.
While some Committee members recognized the need for clarity and transparency in fuel tax reporting, others questioned the appropriateness of addressing such significant policy changes within the budget framework. The conversation underscored the ongoing debate about environmental standards, the cost to implement them, and the legislative process required to enact or repeal them.
The House Appropriations Committee reviewed the Senate changes to the budget on Thursday. Here is a brief summary of the base funding changes made by the Senate:
- Two positions added to the Labor Relations Board as per S.25, which is currently under consideration in the House.
- Funding reinstated for a Solicitor General position and a Home Repair Fraud Coordinator, which had previously been funded through a one-time appropriation.
- Funding restored for the Judiciary Tech Fund, which had been removed by the House due to anticipated deficits.
- Allocate $650K for transport deputy positions, allowing for the retention of existing positions while adding new ones.
- An increase of $50K for the Urban Search and Rescue program, moving it from one-time funding to base funding.
- Increased grants for the Guard Tuition Benefit Program by $100K based on anticipated demand.
- Maintained funding for the Child Care Financial Assistance Program with an increase in reimbursement rates for infants and toddlers from 4.5% to 5.5%.
- Maintained the a $1.4M allocation for the Agency of Commerce and Community Development (ACCD) to support electric vehicle charging infrastructure in the transportation bill (H.488).
The Committee also reviewed one-time appropriations made by the Senate, noting that $139M was available for allocation.
- Restoring of funding for IDEAL Vermont.
- $1m to support housing development assistance.
- An increase in the transfer from the General Fund to the Cash Fund by $2.73M.
- Several projects were funded through the Cash Fund, including:
- $3.1M for housing redevelopment in Bennington, Barre, and Brattleboro.
- $250K for a competitive grant program for building new recovery residences.
Concerns were raised about the implications of using cash funds for private projects, as this could set a precedent for future appropriations. The importance of maintaining base capacity for future budgets was also emphasized, particularly in light of potential economic changes.
Notably, language around the General Assistance Emergency Housing Program (which has been the topic of much reporting and political posturing) was removed from the budget for "further consideration" elsewhere.
Economic Development & Infrastructure
There was less action on the economic development front this week, but the House Commerce Committee did take up S.69 this week. The latest draft of the bill would remove of specific thresholds for data processing, this was seen as a way to avoid targeting smaller companies while ensuring that larger entities remain accountable (debatable). The bill mandates that default privacy settings for minors must be configured to the highest level of privacy, ensuring better protection for younger users.
The Committee is expected to continue contemplating this bill in the coming weeks, focusing on additional bills (like S.71) and the implications of the current economic climate. The next steps include further testimony and potential site visits to local businesses to understand their operations better. The Committee seems committed to ensuring that the legislation effectively protects minors while balancing the interests of Vermont's small businesses.
Environment & Energy
The House Energy Committee continue testimony on a bill (H.181) aiming to address building energy codes and the establishment of a contractor registry.
Michael Desrochers (Director, Division of Fire Safety) noted that his department lacks the resources to manage energy efficiency programs effectively. Key challenges include:
- Insufficient trained personnel
- Inadequate funding
- Opposition to expanding authority over single-family homes
Desrochers proposed enhanced training programs for residential contractors and a compliance certificate system that serves as a self-inspection checklist for builders.
The bill proposes lowering the registration threshold for contractors. Current law requires contractors who take on projects larger than $10K to register with the state. This bill proposes reducing that threshold to $2K. The Association of General Contractors expressed concerns that lowering the threshold could impose unnecessary burdens on small contractors and gig workers, such as college students or retirees doing small jobs.
Committee members reiterated that the intent behind the contractor registry is to protect consumers from fraud and ensure accountability among contractors (remember, this is the Energy Committee and that consumer protection usually falls under the jurisdiction of the Commerce Committee). Despite this stated reasoning, the Committee is also considering whether specific trades, such as painting or tiling, should be excluded from the contractor registry due to their minimal impact on energy efficiency. So, it's a little unclear here what the contractor registry is actually for. Is it consumer protection or enforcing environmental standards?
Kathy Byer, (Vice President of Real Estate Development at EverNorth) emphasized the importance of energy equity in her testimony to the Committee, stating that low and moderate-income households face energy burdens three times higher than median households. The need for policies that ensure these households are not left behind in the transition to a clean energy future was highlighted. Although little focused was placed on how the requirements for clean energy could increase costs for those same households. There is a balance that needs to be struck here.
Unsurprisingly, data from Efficiency Vermont and the Department of Public Service indicated that rural areas experience even higher energy burdens than urban areas.
Three main approaches were proposed:
- Alleviating high energy burdens by keeping electric rates low and mitigating barriers to access energy efficiency and renewables.
- Creating circuit breakers, ensuring lower-income households have equal access to energy efficiency benefits.
- Designing income-sensitive incentives by tailoring energy incentives to prioritize low and moderate-income households.
Honestly, I can get behind all three of these proposals. We know that our current weatherization and renewable energy incentives tend to be utilized most frequently by high income households. We need to find ways of getting making these programs more accessible to the families with the highest energy burdens to start with.
A study indicated that the average cost of energy-efficient construction is approximately $62K unit, while incentives from Efficiency Vermont provide only $3,700 per unit to offset those "efficiency" upgrades. This underscores the mismatch between environmental priorities, available resources, and the costs to consumers that get generated.
Good Government
The new language in the election deepfake bill (S.23) mandates that the disclosure must be "easily readable by the average viewer." An amendment would change some definitions and expand enforcement options from just "injunctions" to "enforcement and additional remedies" to better reflect the "range options."
On behalf of Vermonters,
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Quote of the Week:“We are in an extraordinary time... There's no question that there's a number of hospitals with reserves that would put them in the vulnerable to highly vulnerable category.”
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| Owen Foster |
| Chair, Green Mountain Care Board |
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